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COMESA: 98% of regional non-tariff barriers resolved
A total of 199 out of 204 non-tariff barriers (NTBs) to regional trade that have been reported among the COMESA Member States since the establishment of the Tripartite NTB Online Reporting Mechanism in 2008, have been resolved. This represents a success rate of 97.5%.
That notwithstanding, a disturbing phenomenon is that reports of NTBs keep coming to the COMESA Secretariat and this frustrates the efforts to enhance intra-COMESA Trade, says the COMESA Secretary General Chileshe Kapwepwe.
In her speech at the opening of the 34th COMESA Trade and Customs Committee (TCM) meeting in Nairobi, Kenya, the SG 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 intraregional trade.
“Most Member States have taken long to remove certain NTBs and to operationalize the COMESA Customs Union and the launch of the Common Market,” she said in the statement presented by the Assistant Secretary General Dr Kipyego Cheluget.
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.
Since the establishment of the Free Trade Area in 2000, intra-COMESA exports have increased from US$1.5 billion to US$ 7.9 billion in 2017. The global COMESA exports stand at US$ 86 912.7 million while the share of intra-COMESA exports to COMESA global exports remains low at 9.1%.
The trade and customs committee meeting considered the reports of the 3rd Trade and Trade Facilitation Sub-Committee and the 4th Heads of Customs Sub-Committee that met earlier in the week. The meetings were attended by a record 21 Member States including Tunisia and Somalia which were admitted to COMESA on 18 July 2018.
High on the agenda of the TCM was the implementation of the COMESA Digital Free Trade Area (DFTA) which is being rolled out in Member States. The DFTA has three aspects: e-trade, e-logistics and e-legislation. E-trade will promote online commerce by providing a platform for traders in COMESA region to do business online. E-logistics targets improvement in transportation of goods from suppliers to customers, while e-legislation address the readiness of laws in Member States to cater for digital transactions.
Other key issues in regional integration that were 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 African Free Trade Africa Free Area.
Speaking at the same forum, the Principal Secretary, State Department of Trade in Kenya, Dr Chris Kiptoo, called for scaling up and sustaining awareness campaigns of the COMESA protocols and the intended benefit of regional integration.
“Ultimately trade and investment are spearheaded by the private sector and this is the audience we need to sensitize for them to have the utmost confidence in the opportunities created by regional integration,” Dr Kiptoo said in a speech delivered by the Director of Administration Mr. Samson Wangusi.
Dr Kiptoo cited the COMESA Yellow Card, the COMESA Customs Document, the Simplified Trade Regime, Non-Tariff Barriers Regulations, the COMESA Fund, and the Regional Customs Transit Guarantee as some of the most successful trade facilitation instruments which stakeholders need to know about.
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ECOWAS moves to develop regional strategies for AGOA, TIFA
A Technical Working Group (TWG) comprising of focal points from Directorates of the Commission of the Economic Community of West African States (ECOWAS) recommended that regional and national strategies be developed in order to optimize the African Growth and Opportunity Act (AGOA) with the aim of boosting the economy of the region through trade.
In his remarks during the TWG meeting on 16th August 2018 in Abuja, Nigeria, the representative of the ECOWAS Commissions’ Directorate of Trade, Mr. Kola Sofola stated that the TWG has been convened in order to deliberate on strategies to improve trade, investment and economic cooperation between ECOWAS and the United States of America (U.S.A).
Mr. Sofola highlighted the need for ECOWAS to take into consideration ways of implementing the AGOA and the pdf ECOWAS-U.S Trade and Investment Framework Agreement (TIFA) (127 KB) .
“The AGOA is a non-reciprocal trade preference program that grants eligible sub-Sahara African Countries duty-free, quota-free (DFQF) access to the United States while the TIFA is a platform for dialogue on initiatives for expanding trade and investment opportunities between ECOWAS and the U.S,” he said.
Mr. Sofola briefed the TWG on the status of the AGOA and the TIFA. He stated that following the 17th AGOA Ministerial forum which held in Washington D.C. 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.
He described the dialogue of the future of African trade as important since the AGOA which was initially authorized in 2000 to promote export-led growth and development in Africa will end in September 2025.
Regarding the TIFA, Mr. Sofola explained that the U.S has five Trade and Investment Framework Agreements with African regional economic organizations and eight bi-lateral TIFA partners in sub-Sahara Africa which include three ECOWAS Member States, Ghana, Liberia and Nigeria.
“The ECOWAS-U.S TIFA which was signed in Washington D.C in August 2014 serves as a forum for the United States and ECOWAS to meet and discuss issues of mutual interest with the objective of improving cooperation and enhancing opportunities for trade and investment in the region,” he added.
The Technical Working Group in subsequent meetings will adopt its Terms of Reference which will enable it develop and implement strategies for ECOWAS to improve its economy by increasing trade and investment in West Africa.
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tralac’s Daily News Selection
SADC Summit updates:
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Key speeches from South Africa’s Cyril Ramaphosa (Keynote address as outgoing Chair); Namibia’s Dr. Hage G. Geingob (Acceptance speech as incoming Chair); Botswana’s Mokgweetsi E.K. Masisi maiden address
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The Chairperson of the AUC, Moussa Faki Mahamat, will exchange views on issues relating to continental integration, with particular focus on the African Continental Free Trade Area, the Single African Air Transport Market and the Protocol on Free Movement of Persons and the African Passport, as well as on peace and security and the ongoing African Union institutional reform process.
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SADC People’s Summit: briefing by Southern African People’s Solidarity Network
90% of global malaria cases in sub-Saharan Africa: E8 chair. Speaking on the sidelines of the ongoing SADC summit for the Elimination 8 regional initiative, former Namibian Minister of Health and Social Services Richard Kamwi said: “About 90% of malaria cases and 91% of malaria deaths worldwide occur in sub-Saharan Africa, mostly found in children under the age of 5 and expecting mothers; these are the most vulnerable.” A 2018 study (pdf) by Malaria Futures for Africa said the disease costs the African economy more than $12bn annually and slows the economic growth of countries with high malaria rates by 1.3%. Kamwi said eliminating malaria could help reduce poverty and strengthen economic growth. “An estimated 75% of businesses in sub-Saharan Africa are negatively affected by malaria. Thus eliminating malaria will reduce healthcare costs, improve the health of the workforce, raise productivity and cut absenteeism. No doubt it will strengthen tourism and free up resources previously allocated to countering malaria as a health priority.”
Zimbabwe: ‘SADC Trade Protocol favours South Africa’ (The Independent)
ECOWAS: National experts examine ECOWAS model Mining and Minerals Development Act
A three-day workshop began in Abuja on the 14th of August. The ECOWAS Commission’s Commissioner for Energy and Mines, Mr Sediko Douka, noted that the Workshop “initiates the formal statutory process for the adoption of a Community Act on mining and mineral development”. In the desire to have a harmonised regulatory environment in the medium term, the Commissioner spelt out the tasks on hand to include the development of a geo-extractive database and statistical information framework to guide the reporting of progress along the value chain of the sector as well as the establishment of a regional geo-extractive observatory and cadastre system as a one-stop repository of information on activities in the sector. Similarly, he said the efforts of the experts should be on how to sustain the ECOWAS Mining and Petroleum Forum. The outcome of the workshop will be forwarded, with recommendations, to the sector ministers for their consideration. [Note: The ECOMOF 2018 Forum will take place in Abidjan, 9–11 October]
Morocco’s trade deficit widens 8% year/year in January-July (Reuters)
Imports increased 9.8% to 278.3 billion dirhams in January through July, outstripping an 11.2% rise in exports which reached 160.0 billion dirhams. Equipment imports rose 12.1% to 68.7 billion dirhams; finished consumer goods increased 7.2% to 62.3 billion and semi-finished goods rose 4.4% to 58.8 billion. The automotive sector continued to top Morocco’s exports with a rise of 16.9% to 38.5 billion dirhams, followed by agriculture and agri-food exports with an increase of 5% to 34.5 billion. Exports of phosphates and derivatives were up 15.1% to 29.2 billion dirhams.
Mauritius: Revenue Authority’s 2017/2018 revenue collection rises by 15% (GoM)
Revenue collection by the Mauritius Revenue Authority for the financial year 2017-2018 amounted to approximately Rs 87.5 billion as compared to Rs 76 billion for the year 2016-2017, representing an increase of 15 % over the preceding year. The Director-General of the MRA, Mr Sudhamo Lal, expressed satisfaction regarding the MRA’s performance which has been attributed to the various tax policy measures, economic situation and efficiency gains in tax administration.
Uganda-China Investment and Trade Cooperation Forum: updates
More Chinese companies moving to Africa. “Uganda is now among the top four investment destinations for China in Sub Saharan Africa. The FDI from China to Uganda was $290m in 2017,” China’s ambassador, Zheng Zhuqiang, said. “The industrial parks Uganda is establishing are good because they will enable Uganda achieve import substitution and promote exports.” Investments from China contributed over 40% of the total foreign direct investments in Uganda in 2017. Several Chinese companies are executing a series of infrastructure development projects in Uganda, including roads and power dams. At the conference, Uganda signed MoUs with Chinese companies for new FDI projects valued at $260m. The projects, according to Chinese companies, will generate over 8500 jobs for Ugandans. They will be established in the industrial parks the Government has established in various parts of the country.
Museveni woos Chinese investors; Uganda-China trade deficit stands at $740m
Museveni cautions Chinese against bribing govt officials
China to invest $620m in Uganda’s largest mining project
East Africa to develop policy on aflatoxin to boost food security (New Times)
The EAC states plan to develop a policy framework to address the human and animal health threat of aflatoxin contamination and boost food security, the economic bloc said on Wednesday. Christophe Bazivamo, Deputy Secretary General of the EAC, told a regional forum in Nairobi that aflatoxins from fungi are widespread in the region and cause contamination of staple foods such as maize milk and groundnuts in the field and during storage. Mwangi Kiunjuri, Kenya’s Cabinet Secretary in the Ministry of Agriculture, said aflatoxins contaminate about 25% of agricultural products in Kenya. Kiunjuri said the country has experienced multiple aflatoxicosis outbreaks in recent years, often resulting in fatalities.
Tanzania initiative for preventing aflatoxin contamination: appraisal report (AfDB)
Needs assessment (pdf): As indicated in section 2.2, between 25% and 45% of maize produced in the country is contaminated by aflatoxin. High aflatoxin level exceeding the set limits (5 and 10 ppb for B1 and total aflatoxin has also been observed in groundnuts. A country situational assessment on the aflatoxin problem conducted with the support from Partnership for Aflatoxin Control in Africa (PACA) confirmed low level of awareness on aflatoxin issues, limited access to guidelines for good agricultural practices and poor storage were behind the prevalence of aflatoxin in maize and groundnuts grown and consumed in Tanzania. Also policies and strategies are absent to combat this problem which creates health and nutritional problems. [Resources: Aflatoxin’s economic impacts on East African trade (pdf); African Journal of Food, Agriculture, Nutrition, and Development: special issue on aflatoxins in East Africa]
South Africa: Baseline 2018 Agricultural Outlook 2018-2027 (BFAP)
The 2018 edition of the BFAP South African Baseline presents an outlook of agricultural production, consumption, prices and trade in South Africa for the period 2018 to 2027, within the context of the current uncertainty regarding land reform policies. The information presented is based on assumptions about a range of economic, technological, environmental, political, institutional, and social factors. Some of the boxes in the publication present results of a number of specific or commissioned analyses through the past 18 months. Farm-level implications are included in the commodity specific sections and the scenarios and risk analyses illustrate the volatile outcome of future projections.
Tanzania: Good governance and private sector development programme appraisal report (AfDB)
Private sector review (pdf): Currently, the private sector’s role as a key driver of inclusive and green economic growth is yet to be harnessed. The sector is dominated by many small enterprises (estimated at a ratio of 1 enterprise for every four people), mostly in smallholder agriculture and small informal non-farm businesses. Over 90% of the private enterprises are sole proprietorships, and only 0.6% employ more than 10 workers. The private sector employs an estimated 95% of the workforce, and accounts for about 75% of gross fixed capital formation. The 2014 Integrated Labour Force Survey indicates that 65.6% of the workforce is employed in the agriculture sector, and over 86% in MSMEs – including activities in agriculture. Untapped private sector investment opportunities exist in agribusiness, tourism, natural gas and mineral sectors, and associated industries; as well as in real estate, construction, housing and the financial sector.
Namibia: Economic governance and competitiveness support programme – Phase II appraisal report (AfDB)
Programme goal and objective (pdf): Remaining consistent with the original program approved by the Board of Directors on 10th May 2017, the goal of EGCSP II is to support the implementation of the Namibian government’s medium term development agenda, aimed at accelerating inclusive growth and sustainable development, by preserving macroeconomic stability, and addressing the challenges of lack of diversification, high unemployment and income inequality. The three components are: (i) Advancing fiscal consolidation which supports measures to improve revenue collection, enhance efficiency in public spending, and improve debt management; (ii) Strengthen public financial management and public sector efficiency by improving the public procurement, internal and external audit functions and the governance framework for SOEs; and (iii) Improve the business environment for industrialization through enhancement of the investment facilitation framework, and improving the framework for industrial and MSME development. [Related, IMF analysis: Assessing and managing fiscal risks from Namibia’s state-entities and public-private partnerships]
Friday’s Quick Links: Zimbabwe targets $200m in flower exports Zimbabwe: Fertiliser producers reel as forex crisis worsens Uganda seeks LPG imports from Tanzania Nigeria’s new cultural export: music Nigeria: FG to create 4.2m jobs through raw materials development PIIE trade commentaries: Robert Z. Lawrence: Trump’s trade war with China has everyone confused. Here’s what America’s president really wants. Chad P. Bown, Zhiyao Lu, Jeffrey J. Schott: China’s $60bn tariff announcement |
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SADC Summit: Acceptance speech by incoming Chairperson Dr. Hage G. Geingob, President of Namibia
Delivered on the occasion of the 38th SADC Summit of Heads of State and Government, Windhoek, 17 August 2018
On behalf of the Government and people of the Republic of Namibia, I am delighted to accept the Chairmanship of SADC at a time when a New Africa, The Africa We Want, is on the rise. Africa is on the march, driven by unity of purpose, the pursuit of common objectives and an unwavering determination to bring about shared prosperity.
I have accepted this responsibility knowing well that the leaders of the SADC nations have bestowed full confidence in Namibia to steer the work of this esteemed organisation to greater heights.
We are privileged to host the 38th Ordinary Summit here in Windhoek, the birthplace of SADC, where the SADC Treaty was adopted in 1992.
Permit me to commend the outgoing Chairperson of SADC, His Excellency Cyril Matamela Ramaphosa, President of the Republic of South Africa, for the sterling leadership he has provided to our organisation since assuming the Chairmanship. I further wish to thank the outgoing Chairperson of the SADC Organ on Politics, Defence and Security Cooperation, His Excellency João Lourenço, President of the Republic of Angola, for providing steady leadership in the promotion of peace and security across our region.
My appreciation also goes to the Executive Secretary and her dedicated staff, for the effective manner in which they continue to manage the affairs of the SADC Secretariat.
The Theme for this Summit, “Promoting Infrastructure Development and Youth Empowerment for Sustainable Development,” attests to SADC’s commitment in taking the agenda of infrastructural development forward, and the need for the youth to be at the center of what we do. The theme is a continuation of the industrialization trajectory of the last four Summits, starting with Zimbabwe in 2014, Botswana in 2015, The Kingdom of Eswatini in 2016 and South Africa in 2017. The theme guides us towards the attainment of the goals and aspirations of the Region, as espoused in the pdf Revised Regional Indicative Strategic Development Plan (RISDP) 2015-2020 (1.04 MB) and the pdf SADC Industrialisation Strategy and Roadmap, 2015-2063 (2.34 MB) . Infrastructural development is a catalyst for youth empowerment and job creation. It is one of the avenues through which we can address the issue of youth unemployment in the region.
It would be remiss of me, at this stage, not to mention the important role that our women are playing and must continue to play in pursuit of SADC objectives and integration agenda. Namibia has a fervent commitment to Gender Equality, which is evident in the important role women play in politics. They are well represented in our Executive and Legislature. The participation of women at the highest levels of governance has been consolidated when the ruling SWAPO Party took a principled decision at the 1997 Congress to increase the proportion of female delegates to the Party’s congress up to 50 percent. This was the genesis of the now constitutionally mandated SWAPO Party, Zebra style 50/50 policy.
Due to our significant progress in the area of Gender Equality, Namibia was awarded the prize for being the top performing country in Africa by the African Gender Forum, within the context of the Gender Is My Agenda Campaign (GIMAC). I had the pleasure to receive this award on behalf of our country, from Her Excellency Ellen Johnson Sirleaf, Former President of the Republic of Liberia.
During its Chairmanship, Namibia intends to accelerate progress in terms of the empowerment of women. Namibia shall encourage the harmonization of gender responsive legislation, policies and programmes and projects, as outlined in the SADC Protocol on Gender and Development.
We are all aware that our aspirations of industrialization and subsequent sustainable development cannot be pursued without the existence of robust governance architectures within our respective countries. It is imperative that we build on the significant progress made in our region by adopting a modern approach to Governance, characterized by robust processes, systems and institutions and no longer centered on personalities.
This approach is also part and parcel of the ‘The Africa We Want’, which is characterized by fair and transparent Processes; Systems and the ethos of Institutions that are beyond reproach. Processes, systems and institutions are indispensable in buttressing democracy and effective governance.
I am confident that we will continue to make significant progress in the area of governance, especially given the outstanding work of the SADC Parliamentary Forum (SADC PF) in entrenching democracy in the region. During its chairmanship, Namibia promises to intensify discussions on the establishment of a SADC Parliament.
We believe that the SADC Parliament will not only help buttress the governance architecture of the region, but will also be a key driver of our integration and development efforts.
We are pleased to note that in SADC, we have a legacy of peaceful transition of power. Following our successes against the forces of colonial occupation, many of our countries were ushered into the era of independence by extraordinary personalities.
We are proud to have in our midst, some of those extraordinary personalities. We therefore acknowledge the presence of Comrade Sam Nujoma, the First President and Founding Father of the Republic of Namibia; Comrade Hifikepunye Pohamba, Second President of Namibia and His Excellency Joaquim Chissano, Second President of Mozambique.
Their presence here today is testament to the legacy of peaceful transition of leadership within SADC.
In the SADC Treaty, which I should remind was adopted here in Windhoek; we committed “to ensure, through common action, the progress and wellbeing of the people of Southern Africa”. I want to reassure this summit that during my Chairmanship, Namibia will ensure that SADC pulls together in the same direction, and works harder in order to succeed in its agenda of development, economic cooperation and regional integration. We will continue to promote the SADC Agenda in order to realize sustainable development, poverty eradication, food security, peace, youth and gender empowerment. And additionally, a conducive environment for economic development, shared prosperity and enhancing the quality of life of the people of this region is a mandate we should fulfill.
This year, we are celebrating the centenary of Nelson Mandela, a great statesman of our region and the world at large. Nelson Mandela had the ability to inspire. He reminded us, “There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.” As a people of this region, we should draw inspiration from these words, from the wise Madiba. We can no longer play small.
Our vision of a common future driven by a conviction that the people of this region will no longer settle for a life that is less than the one they are all capable of living.
Even when we encounter difficulties, we should persevere and remain committed to the lofty goals of regional integration.
Integration is a sine qua non condition for the economic advancement of our region. Today, we stand at the crossroads as a region and as a continent. It is time for us to take a great leap forward by harnessing the opportunities provided by regional value chains and the Fourth Industrial Revolution.
At a time when artificial intelligence and robotics are defining the way we live and work, we must ensure that we collectively utilize these technologies as a means to catalyze our development agenda.
I wish to underscore the importance of unity in our pursuit to enhance the living standards and wellbeing of our people. When we move forward as a united force and as a coordinated team, we will overcome challenges and accomplish our goals of ensuring that the citizens of SADC, and of Africa in general, realize the benefits of socio-economic and political integration.
At this juncture, I wish to express my appreciation for the progress made so far in ensuring that intra-Africa trade and investment, which has the greatest potential for building sustainable economic development and integration in Africa, is at the core of our discussions.
One of the objectives of SADC, as stated in Article 5 of the SADC Treaty, is to promote self-sustaining development on the basis of collective self-reliance, and the inter-dependence of Member States. To spur inter-dependence and intra-Africa trade, some SADC Member States signed the COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) Agreement. The main objective of the TFTA Agreement is to strengthen and deepen economic integration of the southern and eastern Africa regions, and to harmonise policies and programmes across the Regional Economic Communities (RECs) in the areas of trade, customs and infrastructure development and movement of goods and people.
It is disheartening to learn that some citizens are encountering difficulties moving across borders within our region.
South Africans, who should benefit from the five flights a day that take place between Johannesburg and Windhoek, are hindered by the fact that they are required to apply for an entry Visa for every single visit. This is a barrier to business and ultimately, our aspirations of integration. This is why we have taken a decision that Africans carrying diplomatic passports can come to Namibia without visa requirements. Eventually we plan to do away with visa requirements for all passports. Only then, will we walk the talk.
Staying on the topic of integration, I note that SADC countries have signed the African Continental Free Trade Area (AfCFTA), which is a flagship project of Agenda 2063, where goods and services will move freely among member states of the African Union (AU), with the objective of boosting intra-African trade.
The Agreement, which will bring together a market of 1.2 billion people with a combined GDP of over $2.5 trillion, reinforces our commitment to the multilateral trading system.
During my tenure as Chairperson, I will strive to ensure that SADC remains focused on the promotion of intra-Africa trade. I plan to work closely with my peers to ensure that our economic growth and industrialisation agendas are supported by infrastructure development. The aim is to foster the consolidation of synergies that will result in the effective implementation of the SADC Industrialisation Strategy and Roadmap. We should not falter in our pursuit of industrialization. As a Regional Economic Community we have contributed meaningfully to the African Union Institutional Reform process. And we shall continue to make our voice heard.
The decision for all African Union Member States to implement a 0.2% levy on eligible imports to finance the African Union is understandable, since Africa should finance its own institution. It’s embarrassing when we ask the very people we condemn, to fund our own organization. We therefore support the decision to ensure that African countries should be responsible for funding the AU. We also welcome the flexibility allowed with regards to remittance of Member States’ financial contributions, and the linkage of the 0.2% Levy to the assessed contributions. However, in SADC, most of our countries are net importers of finished products including food. We are import dependent countries. Furthermore, some of our countries are classified as upper-middle income, using the World Bank method of dividing GDP by the population. Namibia and Swaziland among others are classified as Upper-Middle Income countries, notwithstanding the fact that we still face many challenges at the socio-economic level.
I am sure that over the course of this summit, we shall interrogate some of these matters. We therefore thank His Excellency Paul Kagame for the leadership and exemplary work ethic displayed in spearheading the AU Institutional Reform Process.
Without peace and stability, economic growth and development will remain nothing but a dream on the horizon. So far, the SADC Region is currently one of the most stable and secure regions in Africa.
The political and security situation in the region remains relatively calm and I would like to take this opportunity to congratulate His Excellency Emerson Mnagagwa and the people of Zimbabwe, for having organized the Harmonized General Elections on July 30, 2018.
We are aware that the matter regarding the outcome of those elections is in the courts, and we are confident that whatever the result of the case, peace will prevail.
I note with satisfaction progress made in the Democratic Republic of Congo (DRC), the Kingdom of Lesotho and the Republic of Madagascar, following interventions and mediation efforts by SADC and international partners. I would like to thank His Excellency Joseph Kabila Kabange for having carried out the groundwork for elections to take place in the Democratic Republic of Congo, as scheduled in December 2018.
Colonialism represents a serious violation of national sovereignty and is in breach of international law. While colonialism has ended in the large majority of Africa, there is still one area that is outstanding. It is only fitting for the people of SADC to reaffirm their unwavering support and solidarity with the people of Saharawi Arab Democratic Republic (SADR) in their struggle to achieve their inalienable rights to self-determination.
In this regard, I wish to commend the Republic of South Africa for offering to host the SADC Solidarity Conference with the Saharawi Arab Democratic Republic before the end of this year.
When the SADC Treaty came into force in 1992, our leaders made a commitment on behalf of the people of our region. That commitment was, “Underdevelopment, exploitation, deprivation and backwardness in Southern Africa will only be overcome only through economic cooperation and integration.”
Namibia’s chairmanship of SADC will reaffirm this core commitment. Under our chairmanship, we shall leave no stone unturned in working with all of you in promoting economic cooperation and integration within SADC. For we believe in a SADC without underdevelopment, a SADC without exploitation, a SADC without deprivation and a SADC without backwardness.
With that being said, I wish the Summit successful deliberations.
I thank you.
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SADC Summit: Maiden speech by Mr. Mokgweetsi E.K. Masisi, President of Botswana
Remarks at the official opening of the 38th Ordinary Summit of SADC Heads of State and Government, Windhoek
Your Excellencies, It is indeed an honour for me to address you for the first time as the President of the Republic of Botswana.
It is therefore befitting that I should express my gratitude to my predecessor, His Excellency Lt. General Dr. Seretse Khama Ian Khama, for his selfless contribution towards the SADC agenda during his tenure as the President of the Republic of Botswana for the last ten years, particularly, as the Chair of SADC from August 2015 to August 2016.
Distinguished Guests, I wish to take this opportunity to pledge my unwavering commitment to the SADC regional integration agenda. I am aware that tremendous progress has been made in the areas of trade, peace and security.
In this respect, I am happy to note that one of the major achievements in the region include the development of a Regional Infrastructure Development Master Plan focusing on the six (6) sectors of Energy, Water, Transport, Information and Communication Technology (ICT), Tourism and Meteorology.
I am happy to inform you that in pursuit of these goals, Botswana is undertaking several infrastructure projects which have a regional dimension. This includes the construction of the Kazungula Bridge in collaboration with the Republic of Zambia, which will connect Botswana to the northern part of the SADC region; the Nata – Pandamatenga road and the Palapye-Martins Drift Road that connects Botswana to South Africa. Other future projects include the expansion of the Morupule Power Plant; as well as the Mosetse-Kazungula railway line for the transportation of goods to the northern part of the SADC region.
Another achievement worth noting, is the approval of the pdf SADC Industrialisation Strategy and Road Map (2015-2063) (2.34 MB) as well as the pdf Costed Action Plan for the implementation of the Strategy and Roadmap (1.51 MB) focusing on the first fifteen (15) years (2016-2030).
I am also happy to note that currently, work is in progress to develop value chains for leather, soya beans, aquaculture, iron and steel, copper, cement, Antiretroviral Drugs, Malaria medicines and bed nets as well as the profiling of the regional agro-processing sector.
These, I must say, are steps in the right direction towards the realization of our goal of regional economic transformation, which will facilitate the process of our industrialization. The implementation of the Strategy will transform our economies to be productive, efficient, diversified and competitive.
It should be noted that some of the enablers of regional integration include; well-developed financial systems; adequate human capital; supporting infrastructure; and the necessary finances, among other things.
I am, however, aware that the SADC region is grappling with financial constraints and impediments to resource mobilization. I am informed that work is ongoing to develop a resource mobilization framework as well as other initiatives such as the creation of a fund to bridge the resource gap. It is for this reason that we must strengthen collaboration with regional and global development financing institutions, to fast-track infrastructure development in the region.
Your Excellencies, Opportunities also exist through Public Private Partnerships to further boost development financing in the SADC region. Therefore, it is my wish that the SADC region should effectively take advantage of these opportunities.
Distinguished Guests, You will agree with me that youth unemployment remains a serious challenge in the region. In our quest to pursue regional integration and enhance productivity and competitiveness of our economies, there is need to prioritize the empowerment and capacitation of the youth.
It is worth noting that peaceful and democratic elections continue to be held in the region, which is very commendable indeed. This is a clear sign of our unwavering commitment to achieve peace and political stability which are key to socio-economic development in the region. Let us remain committed to upholding democratic principles and let us also continue to provide the necessary support to Member States that are undertaking efforts to achieve durable peace and political stability for their peoples.
Your Excellencies, Let me reiterate the fact that we must remain committed to the implementation of agreed SADC priorities and principles in order to improve the livelihoods of our people.
Finally, allow me to take this opportunity to commend the successive leadership of SADC for its visionary leadership and exceptional guidance to drive the organisation’s policies and programmes. I also wish to recognize the Secretariat for its work in facilitating the implementation of the aspirations of our people. With the guidance of the leadership of SADC, and with the support of our people, the region has the potential to become a highly successful economic community.
I thank you for your attention.
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SADC should push for industrial growth: Ramaphosa
The Southern African Development Community (SADC) needs to continue pushing for industrial growth and development in the region, says President Cyril Ramaphosa.
With the help of the private sector, the region must also put special focus on developing skills in agro-processing, mineral beneficiation, energy and pharmaceuticals.
This will enable the region to find lasting and sustainable solutions to poverty, inequality and underdevelopment.
“We, therefore, need to ensure that we create a conducive environment for business to thrive, and to deepen our engagement with the private sector.
“Collaboration with the private sector is important not only in designing SADC regional strategies and initiatives but also in identifying impediments to greater regional economic integration,” said President Ramaphosa.
The President was addressing the 38th Ordinary Summit of the Heads of State and Government of the Southern African Development Community (SADC) underway in Windhoek, Namibia.
As the outgoing chair of the regional body, the President delivered his report to the summit outlining the work of the regional body for the duration of South Africa’s tenure as chair from August 2017 to August 2018.
As chair, South Africa was guided by its tenure theme, ‘Partnering with the Private Sector in Developing Industry and Regional Value Chains’.
“Over the period of our chairship, we have been able to secure more than $500 million of committed productive investments by South African companies in each of the priority value chains across the region.
“The investments cover forestry, agriculture and agro-processing, fertilisers, mining and mineral processing, and pharmaceuticals,” President Ramaphosa said.
Progress in SADC projects
He used his address to give an update on a number of projects undertaken by the region such as the framework model on the control and management of the Fall Army Worm, which is being rolled out with the Food and Agriculture Organization.
Capacity building workshops have been held in Mozambique, Madagascar and Zambia.
The SADC Integrated Regional Electronic Settlement System has gained significant momentum, establishing a firm platform for increased intra-SADC trade and investment and further strengthening regional financial integration.
The SADC Energy Foresight and Assessment Study in support of the SADC Industrialisation Strategy and Roadmap are underway, with data gathered from six of the member states.
President Ramaphosa reported that the SADC Engineering Needs and Numbers study is close to completion. It aims to obtain a better understanding of the engineering capacities in the SADC region to allow for better planning and implementation of infrastructure programmes.
Progress has been made in addressing tuberculosis in the mining sector across 10 SADC countries. More than 10 000 claimants received payment and one-stop service centres were opened in Botswana, Lesotho, Mozambique and Eswatini, thereby increasing access of ex-mineworkers to decentralised services.
Other progress reported include the Medicines Regulatory Harmonisation project that is focusing on establishing and strengthening regional and sub-regional networks of regulatory authorities, as well as the implementation of Phase III of the SADC Roam-Like-At Home Initiative, which began in October 2017. This entails the development of a harmonised cost model for wholesale and retail roaming tariffs to be used by all national regulatory authorities in SADC.
“Through our joint efforts, the region has now established a healthy pipeline of bankable projects, which we now need to see through to completion,” the President said.
Investment in infrastructure, President Ramaphosa said, must be the central priority to lower transaction costs, enhance regional markets and make production and exports more competitive.
Looking into the future, President Ramaphosa said SADC needs to harness the youthfulness of the region by developing human capital, speed up economic growth and foster sustainability.
“There is an increasing number of young entrepreneurs, who are exploring a range of business possibilities. We need to support them by promoting the development of small businesses, creating vocational training programmes and preparing them with the skills they need for a rapidly changing economy.”
Another key focus should be the diffusion of digital technologies to secure the future. The digital economy is an increasingly important driver of economic growth and can play a significant role in accelerating development, enhancing the productivity of existing industries, cultivating new markets and industries, and achieving inclusive, sustainable growth.
As such, the President called for digital cooperation across the region.
Keynote Address by President Ramaphosa at the 38th SADC Summit, Windhoek
It is a great privilege for me to welcome you to the 38th Ordinary Summit of the SADC Heads of State and Government.
It is a particular honour to do so on SADC Day, the 17th of August.
This day marks 26 years since we signed the Treaty that established our organisation – a treaty that I had the privilege to sign on behalf of the African National Congress.
Let me express my gratitude to my brother, His Excellency President Hage Geingob and the people of Namibia for the warm reception and gracious hospitality accorded to all of us.
I wish to thank you, Your Excellencies, for the guidance and support you accorded South Africa since our country took over the Chairship of SADC last year.
It has been an honour to work with fellow Member States in advancing all areas of the SADC agenda.
Let us continue to work in unity to do more for our people, together with our people.
The year 2017/18 marked the third year of implementation of the Revised Regional Indicative Strategic Development Plan 2015-2020.
While we recorded significant achievements in the implementation of programmes across all priority areas, there are still areas that require our urgent attention.
As regional leaders, we have a responsibility to prioritise the needs of our people and find lasting and sustainable solutions to poverty, inequality and underdevelopment.
That is why the 37th SADC Summit held last year in Pretoria adopted the theme of “Partnering with the Private Sector in Developing Industry and Regional Value Chains”.
Member States were urged to operationalise the theme through implementation of projects in the focus areas of agro-processing, mineral beneficiation, energy and pharmaceuticals.
Members States were also called upon to work to develop skills and create mechanisms for the involvement of the private sector.
South Africa hosted the second SADC Industrialisation Week during 2017, which created a platform for targeted engagement with the private sector and deepened the focus on key investment opportunities in the region.
The Industrialisation Week that was recently held in Windhoek is a further testimony to our collective efforts to strengthen public-private partnerships within our region.
Over the period of our chairship we have been able to secure more than $500 million of committed productive investments by South African companies in each of the priority value chains across the region.
The investments cover forestry, agriculture and agro-processing, fertilisers, mining and mineral processing, and pharmaceuticals.
They reflect South Africa’s commitment to moving from a trade-based to an investment-led development strategy for the region.
The previous Summit directed the Secretariat to facilitate the establishment of a regional Natural Gas Committee to promote the inclusion of gas in the regional energy mix.
The Terms of Reference on the Working Group for the Inter State Natural Gas Committee were approved, culminating in the signing of a Statement of Intent on Cooperation on the Development of Regional Gas Market and Infrastructure during the joint meeting of SADC Ministers responsible for energy and water in June 2018.
There have been a number of concrete initiatives over the last year that now form part of the SADC work programme:
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The framework model on the control and management of the Fall Army Worm is being rolled out with the Food and Agriculture Organization. Capacity building workshops have been held in Mozambique, Madagascar and Zambia.
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A programme to develop capacity in industrial policy making has been initiated, with South Africa hosting a SADC Industrial Policy for Policy Makers training programme in September 2017 as a pilot initiative.
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The SADC Integrated Regional Electronic Settlement System has gained significant momentum, establishing a firm platform for increased intra-SADC trade and investment and further strengthening regional financial integration.
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The SADC Energy Foresight and Assessment Study in support of the SADC Industrialisation Strategy and Roadmap is underway, with data having been gathered from six of the member states.
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A SADC Engineering Needs and Numbers study is close to completion. It aims to obtain a better understanding of the engineering capacities in the SADC region to allow for better planning and implementation of infrastructure programmes.
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As part of World Food Day, a model has been developed for regional food security. The model will be launched during this year’s World Food Day in Namibia.
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Progress has been made in addressing tuberculosis in the mining sector across 10 SADC countries. More than 10,000 claimants received payment and one-stop service centres were opened in Botswana, Lesotho, Mozambique and Eswatini, thereby increasing access of ex-mineworkers to decentralised services.
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The shared procurement of essential medicines and commodities in SADC has been identified as a priority with the aim to establish an autonomous non-profit organisation called the SADC Pooled Procurement Services.
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The Medicines Regulatory Harmonisation project is focusing on establishing and strengthening regional and sub-regional networks of regulatory authorities.
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The implementation of Phase III of the SADC Roam-Like-At- Home Initiative began in October 2017. This entails the development of a harmonised cost model for wholesale and retail roaming tariffs to be used by all national regulatory authorities in SADC.
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A task team was appointed to work on a framework to operationalise the SADC Declaration on the Fourth Industrial Revolution.
Over the years, SADC Member States have acknowledged that the private sector should play a leading role in creating jobs, driving trade and industrialisation and fostering regional integration.
We therefore need to ensure that we create a conducive environment for business to thrive, and to deepen our engagement with the private sector.
Collaboration with the private sector is important not only in designing SADC regional strategies and initiatives, but also in identifying impediments to greater regional economic integration.
The ability of SADC countries to establish a competitive industrial sector and promote greater industrial linkages has been hindered by the lack of infrastructure in areas such as energy, transport and communications.
Regional cooperation in the development of infrastructure will lower transaction costs, enhance regional markets and make production and exports more competitive.
Investment in infrastructure must therefore be a central priority.
Through our joint efforts, the region has now established a healthy pipeline of bankable projects, which we now need to see through to completion.
The region remains peaceful and stable, underlining the value of the successful mediation and conflict prevention strategies undertaken by Member States in collaboration with the SADC Secretariat.
We should continue to be guided by adherence to democratic values and practices, good governance and credible and regular national elections.
The consolidation of democracy and the elevation of the rule of law across the region is a sign of the improved effectiveness of our regional institutions and mechanisms.
Parliamentary democracy is at the centre of our collective mission to give expression to the will of the people.
Our colleagues in the SADC Parliamentary Forum have indicated their readiness to transform the Forum into a SADC Parliament.
The establishment of a SADC Parliament is therefore a matter to which we need to give due consideration.
With the expiration of both the Regional Indicative Strategic Plan and the Strategic Indicative Plan for the Organ by the end of 2020, SADC needs to begin formulating a long-term vision and a strategic plan, in line with the decision of the June 2012 Summit.
It should identify where the region wants to be by 2050, and should direct our resources and mobilise our people towards the achievement of our shared goals.
We should aim to have the strategy presented at our Summit in 2019.
Our region offers a young demographic, a growing consumer class and great opportunities for industrialisation.
We need to harness the youthfulness of our region to develop our human capital, speed up economic growth and foster sustainability.
There are an increasing number of young entrepreneurs who are exploring a range of business possibilities.
We need to support them by promoting the development of small businesses, creating vocational training programmes and preparing them with the skills they need for a rapidly changing economy.
Key to realising this is the introduction of regional centres of excellence and specialisation which can equip the youth with skills and expertise.
The growth and diffusion of digital technologies is another key area which SADC needs to promote to secure the future of its people.
The digital economy is an increasingly important driver of economic growth and can play a significant role in accelerating development, enhancing productivity of existing industries, cultivating new markets and industries, and achieving inclusive, sustainable growth.
Many countries are increasingly embracing innovation and using information and communications technology to deliver public services and involve people in decision-making processes.
The ICT sector is powering growth and change in areas such as banking, retail, health, education and entertainment.
While the economic potential associated with the digital economy is undoubtedly significant, not all countries are equally equipped to capitalise on such opportunities.
It is therefore critical that digital cooperation should be an important part of our regional integration agenda.
Progressing towards a digital economy is a critical step in the region’s path to sustainable development.
A regional strategy for a digital economy would include the promotion of digital innovations and technologies, sharing experiences on e-Government, promoting e-commerce, promoting regional digital payments, strengthening broadband infrastructure, building cloud computing infrastructure and moving towards a digital single market.
In conclusion, I wish to acknowledge the role played by the SADC Executive Secretary, Dr Stergomena Lawrence Tax, her Deputies and the staff of the SADC Secretariat for their dedication and commitment in ensuring that SADC continues to pursue its mandate.
SADC continues to cherish the collaboration and support of our international cooperating partners, who continue to make a significant contribution towards sustainable development in our region.
I wish to thank Your Excellencies for the confidence you placed in South Africa during the period of our Chairship.
When we took the baton from our predecessor, His Majesty King Mswati III of the Kingdom of eSwatini, we chose a theme that builds on the foundation laid by previous Chairs.
I have no doubt that with His Excellency Hage Geingob, President of the Republic of Namibia, at the helm of our organisation, the SADC integration agenda will be advanced even further.
I wish all of us very productive deliberations.
It gives me great pleasure to hand over the Chairship of SADC to his Excellency, Dr Hage Geingob, President of the Republic of Namibia.
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Diarise: Tony Elumelu Entrepreneurship Forum (25 October, Lagos). The Forum will also see the launch of TEFConnect, the world’s largest digital platform for African entrepreneurs, dedicated to connecting African entrepreneurs and the entrepreneurship ecosystem. TEF entrepreneur-ship programme: abridged impact report (pdf)
SADC Summit updates:
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Briefings by SADC Directorates
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SADC moves towards multi-currency regional payment settlement system. “Settlement in US Dollars on the current platform is expected to go live in October 2018, while the whole multi-currency platform is expected to be fully operational by December 2019,” Dr Tax said during the official opening of SADC Council of Ministers Meeting in Windhoek, Namibia.
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Implement visa exemptions. Namibia’s International relations and cooperation minister and new chairperson of the SADC council of ministers, Netumbo Nandi-Ndaitwah, made the call during a pre-SADC summit briefing in Windhoek yesterday, following the conclusion of the meeting of the council of ministers. Nandi-Ndaitwah said member states which have not yet implemented the visa exemptions have until August 2019 to “expedite the negotiations and report on progress” at next year’s meeting. Nandi-Ndaitwah further urged member states to operationalise the regional gas committee to develop the regional gas master plan and commit to the regional priority power projects aimed at enhancing the security of energy supply, and to “take the necessary measures to enhance the packaging of projects and creating an enabling environment for energy sector reforms to attract investors”.
East Africa states seek to unlock stalemate over ATM link (Business Daily)
East Africa’s banking customers could soon gain access to cheaper ATM withdrawal charges after regional governments moved to review financial laws to enable an integrated regional banking switch. The switch connecting Kenya, Uganda, Rwanda and Tanzania banking systems, which was expected to go live in 2015, has been held back due to failure by the regional finance ministers to agree on how to review and align banking legislations in their respective countries. On Tuesday, however representatives of EAC regional member states kicked off a meeting in Mombasa to unlock the stalemate that will see the implementation of study recommendations for interoperability of card switches and cross-border payments. [CGAP presentation: Interoperability in East Africa (pdf)]
Tanzania: Kigoma traders seek govt aid to ease cross-border business (The East African)
Kigoma’s regional business community has called for the waiving of visa requirements for businesspeople from neighbouring countries that are not members of the EAC, so as to boost small-scale trade with those countries. Speaking in a meeting with deputy minister for finance and planning Dr Ashatu Kijaji yesterday, members of the business community described the visa requirement as a major hindrance to cross-border trade with countries such as the Democratic Republic of Congo. The current visa fee alone stands at $50, plus a $10 vaccination fee for businesspeople from non-EAC member countries. The secretary of the Tanzania Chamber of Commerce, Industry and Agriculture branch in Kigoma, Prosper Guga, cited the lack of international banks in countries like both the DRC and Kigali as another obstacle since it forces people to travel with bulks of cash for business transactions.
Featured tweet by @fitsumaregaa (chief of staff to Ethiopia’s Prime Minister): Addressing the poor export performance and weak trade balance is an urgent priority for Ethiopia. PM Abiy today met with key industry actors and regulators of the coffee sector to address the binding constraints in order to improve productivity, value addition and export earnings.
Ghana and the Global Alliance for Trade Facilitation: update (GhanaWeb)
Mr Anthony Nyame-Baafi, Director of Multilateral, Regional and Bilateral Trade at the Ministry of Trade and Industry has disclosed that government has developed a roadmap for implementation of the WTO Trade Facilitation Agreement to ease the cost of doing business. Ghana became the 104th country to ratify the WTO Trade Facilitation Agreement in January, 2017. Announcing the details of the roadmap in Accra, at a business forum of the Global Alliance for Trade Facilitation, Nyame-Baafi said cross border trade will be increased by 40%. He said the country will also witness a 40% reduction in clearance cost for imports, exports and transit goods. Nyame-Baafi, added, the number of documents required for imports and exports will also be reduced by 2022. “As much as possible, only five or less documents will be needed to clear exports and five to clear imports and these will be paperless.” Vice President, Dr Mahamudu Bawumia, in July this year, announced reforms to reduce the number of agencies undertaking joint inspections to three from a current 16.
Rwanda: Construction works of inland cargo handling facility near completion (New Times)
Rwanda’s efforts of becoming a regional trade logistics hub have gained impetus after Dubai Ports World group said it is set to operationalise the country’s largest inland cargo handling facility following completion of the first phase of construction works. The United Arab Emirates firm signed a 25-year concession agreement with government in 2016 to construct and manage the facility dubbed ‘Kigali Logistics Platform’. Construction works on the Masaka based facility are currently on the verge of completion and installation of machinery and equipment is underway. Built on 969,000 sq. ft, the cargo handling facility has features such as container yard and bonded warehouse, among others. The facility is supposed to have 50,000 twenty-foot equivalent units and 640,000 tonnes of warehousing space. [Investors taking notice of Africa’s unexploited transport and logistics opportunities]
Kenya: KRA cracks down on bulk imports by small traders (Business Daily)
Julius Musyoki, Commissioner for Customs and Border Control, told Parliament that traders who have been importing goods in groups using one container under one person’s name will be required to file the certificate of conformity separately. “We will require consolidators importing goods under one container to submit individual pin numbers, identity card numbers and mobile phone numbers. Even if they declare the cargo under one name, each of the consolidators will file individual records to claim their goods. This will see them included into the tax base,” Mr Musyoki told the Senate Committee on Tourism and Trade chaired by Charles Kibiru. The traders had petitioned Parliament against the taxman’s decision to destroy all goods in a container found with a few contraband items, arguing that only the illicit goods should be have been seized.
Kenyan manufacturers seek COMESA’s support to stop counterfeits (COMESA)
The Kenya Association of Manufacturers has urged COMESA to consider establishing a institution to deal with counterfeits and dumping in the regional market. At a meeting between COMESA Secretary General Chileshe Kapwepwe and the KAM team, led by Acting CEO of KAM Mr Tobias Alando, they expressed concern that counterfeits and dumping constituted up to 40% of manufactured goods in the region. They cited the establishment of COMESA Competition Commission as a successful initiative that could be emulated in the fight against counterfeits and dumping. The resolution of a longstanding non tariff barrier whereby Kenya milk and edible oils are barred from entering the Zambian market was also discussed.
Nigeria: NEPC, UNIDO move to curb rejection of exported dried beans (The Guardian)
The Nigerian Export Promotion Council has partnered with UNIDO to end the high level of rejection of Nigerian produce in the global market. The Executive Director and Chief Executive Officer, Olusegun Awolowo, explained that the partnership had become imperative to address European Union’s suspension on the export of Nigerian dried beans due to high level of pesticide residue which he said was far above the Maximum Residual Level.
Nigeria: NIRSAL projects $4.4bn revenue from agricultural exports in 2018 (The Guardian)
Nigeria Incentive-Based Risk Sharing System for Agricultural Lending has projected the country’s agricultural exports revenue to reach $4.4bn by the end of this year. Managing Director, NIRSAL, Aliyu Abdulhameed, who disclosed this to Bloomberg, said that NIRSAL has disbursed $373m to farmers in the past year to help increase production of export crops.
South Africa: SA close to tax deal to lure VW, Ford, BMW investment (Bloomberg/Fin24)
The government is close to agreeing to new tax breaks for international carmakers including Toyota, Ford and BMW in return for initiatives to boost jobs and exports, according to Trade and Industry Minister Rob Davies. A deal on a 15-year incentive programme to replace one that expires in 2020 should be reached this year, Davies said in an interview on Tuesday. While work is still to be done, failing to reach a compromise could lead to companies closing plants and building vehicles elsewhere, he said. “We will be spending probably R2bn or R3bn a year on support for the auto programme,” the minister said at Bloomberg’s Johannesburg office. “This is it. You either do it or you don’t have a motor industry.”
Visa-free travel for Angola, Zambia citizens begins (The East African)
Angolan and Zambian citizens no longer need visas to travel between the two countries after the visa waiver came to effect on Thursday. “We have abolished visa requirements for diplomatic, official and ordinary passport holders in the two countries,” Angola’s ambassador to Zambia, Balbina da Silva, told journalists in Lusaka. Citizens of the two neighbouring countries can travel without a visa restrictions for a period of 30 days. However, to reside, work, study or seek medical care in any of the countries, the citizens will need to apply for a permit.
Thursday’s Quick Links: The State of African Cities 2018: the geography of African investment Bank of Namibia governor Ipumbu Shiimi: Import productive goods only Zambia seeks $22m in tax on internet calls Nigeria-Benin Seme border post is commissioned CGAP Blog: Super platforms in Africa – not if, but when Australia and Morocco: opportunity for trade and dialogue India’s investment in Nigeria hits $10bn |
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SADC moves towards multi-currency regional payment settlement system
Southern Africa is making progress towards creation of a multi-currency regional payment system, with the United States dollar expected to become the second currency of settlement after the South African rand.
The Southern African Development Community (SADC) Executive Secretary, Dr Stergomena Lawrence Tax, said the SADC Integrated Regional Electronic Settlement System (SIRESS) is expected to move from being a single currency settlement system that uses only the South African Rand as the currency of settlement into a multi-currency settlement system.
“Settlement in US Dollars on the current platform is expected to go live in October 2018, while the whole multi-currency platform is expected to be fully operational by December 2019,” Dr Tax said during the official opening of SADC Council of Ministers Meeting in Windhoek, Namibia.
She noted that the addition of the US dollar to the regional payment system is expected to facilitate faster transactions as the bulk of intra-SADC trade is done in the American currency.
“Noting that the facilitation of payments remains a key challenge to intra-SADC trade, the addition of the US dollar that account for about 60 percent of intra-SADC cross-border transactions is expected to facilitate greater cross-border trade and investment in the region,” she said.
The adoption of a multi-currency settlement system is an important milestone that builds on other progressive developments in SADC over the past few years, Dr Tax said.
“This milestone is important in consolidating progress and catalyzing developments in some of the milestones already attained by SADC, in particular, the SADC Free Trade Area.”
SIRESS is a regional electronic payment system developed by SADC member states to settle cross-border transactions faster without having to rely on intermediary banks from outside the region.
The SIRESS was established in July 2013 and piloted in four countries – Lesotho, Namibia, South Africa and Swaziland.
The system is now operational in 14 SADC member states except Madagascar and the regional organisation’s newest member, Union of Comoros.
Madagascar has indicated its intention to join SIRESS soon, while admission of the Union of Comoros as a SADC member state is expected to increase the number of participating banks on the platform.
According to the South African Reserve Bank, around 60 percent of cross-border transactions in SADC are denominated in US dollars, 35 percent in ZAR and the rest in other currencies.
The US dollar transactions are currently settled through correspondent banking arrangements using US correspondent banks.
Since the launch of SIRESS in 2013, a cumulative total of 1,063,306 transactions had been settled by the end of April 2018, representing ZAR 4.46 trillion or US$377.14 billion.
The main benefits of the system are its efficiency and reduction in costs because previously the transactions would go through a correspondent bank.
For example, where transactions previously took two to three days to clear, now they are cleared within 24 hours and fees paid to non-SADC clearing banks are removed.
The elimination of an intermediary – often a United States or European correspondent bank – means money stays in the region and payments are processed faster.
The development of SIRESS is in line with the SADC Protocol on Finance and Investment which aims to improve the regional investment climate through enhanced cooperation among member states on payment, clearing and settlement systems in order to facilitate trade integration.
The Council of Ministers preceded the 38th Summit of SADC Heads of State and Government to be held on 17-18 August.
The summit is being held under the theme “Promoting Infrastructure Development and Youth Empowerment for Sustainable Development.”
The summit is expected to, among other things, review progress towards regional integration and socio-economic development.
At the summit, Namibian President Hage Geingob will assume the rotating SADC chair from his South African counterpart Cyril Ramaphosa.
East Africa states seek to unlock stalemate over ATM link
East Africa’s banking customers could soon gain access to cheaper ATM withdrawal charges after regional governments moved to review financial laws to enable an integrated regional banking switch.
The switch connecting Kenya, Uganda, Rwanda and Tanzania banking systems, which was expected to go live in 2015, has been held back due to failure by the regional finance ministers to agree on how to review and align banking legislations in their respective countries.
On Tuesday, however, representatives of East Africa Community (EAC) regional member states kicked off a meeting in Mombasa to unlock the stalemate that will see the implementation of study recommendations for interoperability of card switches and cross-border payments.
The Kenya Bankers Association (KBA) chief executive Habil Olaka said the initiative between the four switches would enhance financial inclusion in the EAC.
Mr Olaka added the initiative would bring financial benefits and impact the financial sector across the region by promoting cross-border payments using debit/credit cards within the EAC banking sector.
“Because of the shared infrastructure it brings the cost of transacting down,” said Mr Olaka.
“The cost of transacting through the network will go down and that will be felt through a consumer who uses the platform.”
Its implementation is based on recommendations of a 2014 study by Ernst &Young (Uganda) which was financed by the World Bank to the tune of $14 million.
The project was launched in May 2014 by the governors of the region’s central banks, to ensure real time gross settlement of transactions with payments carried out using any currency of the EAC.
It had earlier emerged that while all logistical and technical aspects to enable the implementation had been concluded, lack of regional laws and policies to operationalise the system had hampered the move.
It is said the fee charged on ATM withdrawals from different banks across the region will drop from $2.5 to about $0.8 per transaction when the interoperability of card switches project goes live in Kenya, Uganda, Rwanda and Tanzania.
The countries have already linked their card switches to their RTGS systems.
Under this arrangement, regional Central Banks will take over the responsibility of determining and setting foreign exchange conversion rates, thus ensuring that customers face minimum foreign exchange losses associated with cross-border payments.
For instance, a Ugandan with a DFCU bank ATM card travelling to Kenya will be able to withdraw money from Equity Bank of Kenya at $0.8 per transaction and at an exchange rate set by the CBK.
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Kenyan manufacturers seek COMESA’s support to stop counterfeits
The Kenya Association of Manufacturers (KAM) has urged COMESA to consider establishing a institution to deal with counterfeits and dumping in the regional market.
At a meeting between COMESA Secretary General Chileshe Kapwepwe and the KAM team led by Acting CEO of KAM Mr Tobias Alando, they expressed concern that counterfeits and dumping constituted a large segment of goods traded in the region
“About 40% of manufactured goods in the market in Kenya are counterfeits,” Mr Job Wanjohi, Head of Policy. Research and Advocacy at KAM, said.
The KAM team requested COMESA to consider coming up with an institution to deal with counterfeits and dumping as these were likely to distort the regional market if not addressed. They cited the establishment of the COMESA Competition Commission as a successful initiative that could be emulated in the fight against counterfeits and dumping.
The resolution of a longstanding non tariff barrier whereby Kenya milk and edible oils are barred from entering the Zambian market was also discussed. They agreed that in addition to the ongoing initiatives to address the matter at technical level, there was need to bring on a around table, the private sector players from both countries to discuss the matter as well.
Other issues of concern raise by the KAM was the need for a solution on double taxation and gaps in the COMESA Rules of Origin. KAM observed that the rules of origin left room for misuse, especially on what constitutes value addition for products not originating from the region to meet the criteria of a locally produced product.
Meanwhile, the COMESA team paid a courtesy call on the Executive Director, Kenya Institute of Public Policy Research and Analysis (KIPPRA), Dr Rose Ngugi. The two agreed to explore how COMESA and KIPPRA could collaborate, at institutional level, in capacity building and advocating for local think-tanks.
Dr. Ngugi noted that regional economic communities were not adequately utilizing local policy think-tanks in addressing some of the pertinent issues in regional integration.
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Diarise: High Level Conference on the Lake Chad Region (3-4 September, Berlin)
Featured tweet from @ChilesheKCOMESA (COMESA’s new SG): COMESA will set up stakeholder outreach to enhance the visibility of our programs in Member States. We will also set up monitoring and evaluation to understand why Member States are not domesticating decisions that they have agreed on.
IDEV 2017 Annual Report (AfDB)
The Independent Development Evaluation has presented its 2017 Annual Report to the AfDB Group Committee on Operations and Development Effectiveness. The report highlights key findings, lessons learned and recommendations drawn from eight evaluations, one comparative study and two knowledge events on private sector development completed by IDEV in 2017. It also describes some of the key challenges faced by IDEV and its strategic priorities and plans for 2018, notably in the area of learning and partnerships. “Overall, IDEV’s 2017 evaluations found that the effectiveness of Bank-funded operations is satisfactory. Frequently observed weaknesses were in the areas of sustainability, efficiency and inclusiveness,” said Rakesh Nangia, Evaluator General at the Bank. Extract (pdf):
Central Africa is the least integrated region of the continent. It is also a region struggling with multiple development challenges that have to be addressed through a combination of efforts at national and regional levels. In 2017 IDEV undertook an evaluation of the Bank’s regional integration strategy and operations in Central Africa for the period 2011-2016. In general, the evaluation found that the Bank Regional Integration Strategy in Central Africa was relevant but unrealistic and not well known by development partners. Furthermore, it found no visible influence of the strategy on the design, the portfolio, the implementation and the effectiveness of multinational operations in Central Africa, compared to the period when the strategy did not exist. [IDEV’s Ongoing evaluations; Recent evaluations]
Rwanda: Investor Perceptions Survey 2018 (World Bank)
The current Rwanda Investment Climate Reform Program focuses on addressing macro level constraints in the business environment in Rwanda, including improving the effectiveness and efficiency of government to business services, and developing selected priority competitive sectors. As part of this collaboration, the WBG and RDB agreed to collaborate in undertaking an in-depth study of investment perceptions and specific investment constraints faced by exporting firms in eight priority economic sectors - tea, horticulture, agro-processing, minerals, manufacturing, tourism and ICT and healthcare. Key findings for Rwanda-based investors include:
Key location drivers: Rwanda-based investors emphasise stability and regulatory environment when deciding locations on their investment. This is an indication of Rwanda’s sustained performance in these areas in the eyes of investors; 56% of existing investing cited “Political/Economic stability” among their top three drivers for investment, followed by 52% having “Security” among top three drivers for investment. Comparative location rankings: Existing investors have quite similar perceptions about Africa in general, but considerably better perceptions about Rwanda as 91% find Rwanda “Attractive” or “Very attractive” which is significantly more than for Kenya, Tanzania or Uganda. Rwanda challenges: 79% of investors with operations in Rwanda mentioned that Rwanda’s market poses a big challenge mainly because of its small size followed by the fact that it is hard to access quality labour in Rwanda. 52% of investors based in Rwanda noted that high production costs resulting from high airfreight, financing and electric costs are the next big challenge especially in the manufacturing oriented sectors.
Creating markets in Ghana: pdf Country private sector diagnostic (835 KB) (World Bank)
The objective of the Ghana Country Private Sector Diagnostic is to identify the main opportunities for the private sector that will have a strong development impact in Ghana and to highlight the key constraints (both cross-cutting and sector-specific) hampering private sector growth. The CPSD consists of a systematic assessment of all of Ghana’s economic sectors along two dimensions: (i) desirability: how private investments in these sectors could help Ghana to address its development challenges; (ii) expected feasibility: how the constraints standing in the way could be removed. This sector scan led to identification seven priority sectors, of which, three were selected to conduct deep dive studies: namely agribusiness, ICT and education. Four main opportunities exist for the private sector to make a major contribution by creating markets in Ghana. [Ghana’s Industrial Park and Free Trade Zone: update]
South Africa asks US to ‘back away’ from punitive tariffs (Bloomberg)
Agriculture-related updates
Ghana: Banana exports surge to 70,000 tonnes (GhanaWeb)
Banana exports from Ghana have grown from about 3,000 tonnes per year in 2007 to over 70,000 tonnes in 2017, positioning the commodity as second to cocoa and oil palm in agricultural produce exports. Deputy Minister of Food and Agriculture in Charge of Horticulture, George Oduro: “I am reliably informed that 20% of the country’s banana exports go to fellow West African countries of Senegal, Burkina Faso, Niger and Benin. This is significant, given that the achievements give great impetus to the efforts and objective of promoting regional trade in line with the goals of ECOWAS.” Production and exports of bananas from Ghana wwas started by Volta River Estates in 1994. The industry was faced with huge challenges under the EU country-specific quota agreement – the tariff regime for banana exports from ACP countries into the EU – making it unattractive for newcomers to venture into the industry - until some significant changes took place in the EU Banana Tariff Regime in 2005. [African banana farms fear being wiped out by Brexit if UK favours Latin American trade]
Opportunities for digital financial services in the cocoa value chain in Côte d’Ivoire: insights from new data (World Bank)
Côte d’Ivoire has the world’s largest cocoa sector, producing over 1.4 million metric tons of raw cocoa per year, accounting for 32% of world production. Harvest payments often arrive late due to the complex logistics of cash-based payments and, it is not uncommon for the amount farmers receive to be somewhat below market value due to high commissions taken by chains of intermediary middlemen. Cognizant of these costs and inefficiencies, many actors in the cocoa value chain are exploring alternatives. This research focuses specifically on mobile money accounts and discusses (i) how these have already expanded financial inclusion in Côte d’Ivoire and (ii) how mobile money could help deliver products to cocoa farmers that meet their needs. The study is a knowledge product of the Partnership for Financial Inclusion, a joint initiative of IFC and The MasterCard Foundation to expand microfinance and advance digital financial services in Sub-Saharan Africa.
South Africa: Minister Davies endorses ITAC recommendation for an increase of import duties for sugar (DTI)
Extract from lengthy DTI statement: The Minister of Trade & Industry, Dr Rob Davies has endorsed the ITAC recommendation for an increase of import duties on sugar to $680/ton. This follows an application launched by SASA to ITAC in February 2018 for an increase of dollar based duty from $566/ton to $856/ton and intensive investigation by ITAC. While the level is not at the maximum bound rate as initially requested by the industry in the application, the $680/ton will provide the immediate relief urgently required by the industry and sufficient trade protection against the surge of imports. The tariff forms part of a set of measures considered by government, in collaboration with the industry in order to improve the sustainability of the industry and future growth prospects.
Kenya overtakes South Africa, becomes biggest exporter of avocados in Africa (Selina Wamucii)
Kenya avocados’ impressive volumetric growth rate per year and access to new markets has helped it overtake South Africa as the number one exporter of avocados from Africa. According to trade statistics from the International Trade Centre, Kenya became the 11th largest exporter avocados in the world in 2017, exporting a record volume of 51, 507 tons. South Africa, traditionally the lead exporter of avocados from the continent, relinquished the position and trailed Kenya for the first time in five years with 43, 492 tons. Even though these two countries’ figures are a far cry from the 48.4% market share of Mexico, they are nonetheless impressive for each country. While Kenya boasts new markets like the Russian Federation and South-East Asia, South Africa has over 90% of its exports going to EU countries.
Evan Girvetz: De-risking agricultural investment in Africa (Financial Times)
Agricultural lending interest rates in Africa are frequently in double digits, reaching as high as 47% in some countries. According to the AfDB, less than 3% of total bank lending in Africa goes to a sector that accounts for about 70% of all employment and more than 40% of gross domestic product. Originally designed to inform a $250m World Bank Climate-Smart Agriculture Project, so-called CSA profiles have been produced for 14 African countries: Benin, Ethiopia, Ivory Coast, Kenya, Lesotho, Mali, Mozambique, Niger, Rwanda, Senegal, Uganda, Tanzania, Zambia and Zimbabwe. For the first time, we have a detailed snapshot of the diverse climate risks each of these countries is facing, and an analysis of the factors that are driving or hindering the adoption of climate-smart practices. Take Kenya, for example, where agriculture generates 28% of GDP and annual exports worth more than $2.5bn: [The author is a senior scientist at the International Center for Tropical Agriculture]
Crucial agreement with China could save Mozambique’s forests (IIED)
Mozambique exports 93% of its timber to China, so the country has a pivotal role in ensuring that Mozambique’s forests have a future. In June, the two countries signed a MOU in which they agreed to work together to stop forest destruction and enable Mozambicans to share the benefits from forest production with Chinese investors. This move is a crucial opportunity to help save these forests. Through it, Mozambique can become an influential example to other countries in how to develop practical systems for processing forest products based on sustainable sourcing. [Download: China in Mozambique’s forests: a review of issues and progress for livelihoods and sustainability]
Zim aquaculture export volumes down 12% (The Herald)
Zimbabwe’s fish exports volumes declined 12% between February and April 2018 from the prior comparable period due to high business costs, official figures from the Livestock and Meat Advisory Council show. “The persistent increases in the cost of doing business have decreased the country’s competitiveness in export markets with cost of fish feed often cited as a major cost driver in farmed fish,” said the Council. [Egypt: Fishing for opportunities]
Wednesday’s Quick Links: New postings from ECOWAS: ECOWAS-ECCAS peace and stability summit (28 July, Lomé); ECOWAS Council of Ministers: final report of the 80th ordinary session (7-8 July, Lomé) Degol Hailu, Tsegaye Lemma: Can the diaspora resolve the foreign exchange crunch in Ethiopia? Lesotho: AfDB posts EOI for individual consultant for a value chain analysis for potato sector IFC: What we learned about corporate governance and code development in Sub-Saharan Africa NEPAD-JICA annual dialogue: update Reuters: China says US solar tariffs violate trade rules, lodges WTO complaint Chinese oil importers shun US crude despite tariff reversal Report of the UN Secretary-General on the work of the organization for 2018 |
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Assessing development effectiveness: 2017 Annual Report highlights IDEV’s contribution to the Bank’s delivery on the High 5s
Independent Development Evaluation (IDEV) presented its 2017 Annual Report to the African Development Bank Group Committee on Operations and Development Effectiveness on 16 July 2018.
The report is an important indicator of how well the Bank has met its operational priorities like the High 5s, improved its programmes, policies and institutional effectiveness.
The report highlights key findings, lessons learned and recommendations drawn from eight evaluations, one comparative study and two knowledge events on private sector development completed by IDEV in 2017. It also describes some of the key challenges faced by IDEV and its strategic priorities and plans for 2018, notably in the area of learning and partnerships.
“Overall, IDEV’s 2017 evaluations found that the effectiveness of Bank-funded operations is satisfactory. Frequently observed weaknesses were in the areas of sustainability, efficiency and inclusiveness,” said Rakesh Nangia, Evaluator General at the Bank.
“Continuous investment and promoting learning at institutional level will be key to generating knowledge that can further boost development impact and improve corporate performance,” he added.
IDEV is an independent unit tasked with enhancing the development effectiveness of the Bank’s operations. By conducting independent evaluations and proactively sharing best practice, IDEV ensure that the Bank and its stakeholders learn from experience and plan and deliver development activities to the highest possible standards.
All its evaluations are publicly available on the IDEV website at idev.afdb.org.
Introduction
In pursuit of economic and social progress, African countries are implementing multiple agendas including the 2030 Agenda for Sustainable Development and the African Union Agenda 2063. They are prioritizing structural transformation in their national, regional and continental development programs to promote employment through agriculture and industrialization; to enable access to clean and affordable energy and water; to diversify sources of food; and to promote inclusive growth and equality for a better life for all Africans. To contribute to this transformation, the African Development Bank (AfDB or the Bank) embarked on a new development strategy featuring five priority areas referred to as the High 5s: Light Up and Power Africa; Feed Africa; Integrate Africa; Industrialize Africa; and Improve the quality of life of the people of Africa.
This ambitious African transformation agenda cannot be achieved without effective monitoring and evaluation. To get to its expected development results, the AfDB needs to improve its understanding of how its investments create economic, social and environmental value for the African continent. IDEV’s independent evaluations can help with this, by examining what has worked, what has not, and why. Assessing the development impact of an institution such as the AfDB, however, is complex, multi-layered and difficult to measure. This is because the development results of the Bank cannot simply be measured by return on investment or profit. They must include the much harder-to-measure development outcomes (results) of the programs, projects, policy dialogue, knowledge work, capacity building and trainings implemented by the Bank.
To improve learning and enhance the development results of the Bank, IDEV undertakes different types of evaluations, both in the areas of the High 5s and beyond, covering all aspects of the Bank’s work as well as its functioning as an institution. It disseminates the knowledge from these evaluations in various ways, and helps to strengthen evaluation capacity both in the Bank and on the continent.
This IDEV Annual Report focuses on its work in 2017, particularly the key messages and recommendations from IDEV 2017 evaluations, and how this work helps the Bank to improve its operational and institutional effectiveness. The theme, “Getting to Results,” reflects IDEV’s commitment to strengthen the institution’s evaluative learning through knowledge that is timely, useful, and adapted to the Bank’s development agenda.
Evidence for better strategies, programs and processes at the African Development Bank
In 2017, IDEV evaluation products and knowledge work provided evidence to help inform various Bank strategies, programs and processes. Notably, IDEV evaluations of the Bank’s country strategy and program in Côte d’Ivoire (2006-2016) and in Nigeria (2004-2016) as well as the evaluation of the Bank’s Human Resources Management System and the comparative study of Board Processes, Procedures and Practices across International Financial Institutions.
Developing Evaluation Capacity and building partnerships for improved performance
Stronger capacity leads to stronger results. IDEV supported capacity development in the area of evaluation, both within the Bank and in its RMCs. Under its Evaluation Capacity Development program, IDEV provided a number of trainings for its staff. It also launched a webinar series on evaluation topics for the evaluation community within and outside the Bank.
To strengthen capacity in RMCs, IDEV supported the following initiatives:
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the African Parliamentarians’ Network on Development Evaluation, of which IDEV hosts the Secretariat, aims to promote the use of evaluation in policy- and decision-making;
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the Strengthening National Evaluation Systems initiative, under which IDEV works with the governments of Ethiopia and Tanzania to enhance monitoring and evaluation in those countries;
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the Evaluation Platform for Regional African Development Institutions, which brings together the evaluation departments of sub-regional development banks on the continent;
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the Twende Mbele initiative, a South-South peer-learning partnership to build monitoring and evaluation systems for stronger government performance and accountability to African citizens.
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Rwanda Investor Perceptions Survey 2018
The World Bank Group* with support from the UK’s Department for International Development (DFID) has undertaken an in-depth study of investment perceptions and specific investment constraints faced by exporting firms and potential future investors in eight priority economic sectors – tea, horticulture, agro-processing, minerals, manufacturing, tourism, ICT/BPO and healthcare.
The objective of the survey is to research the perspectives of existing and potential investors in the priority sectors. With the study and approach differentiated for the internal “exsiting” Rwanda companies and external international “potential” investors.
For the international survey, a database of over 600 international companies in the target sectors based on a range of sources was built to allow for identification and profiling of the most relevant international potential investors. Companies were then qualified by phone and those qualifying were mailed the agreed questionnaire. A follow-up phone interview was then organised and the questionnaire completed. The survey received 59 responses, or approximately 10% of those contacted.
For the Rwanda survey, face to face interviews were conducted among existing investors across all sectors. This resulted in the production of quantitative and qualitative data. A total of 66 responses were generated by the fieldwork team representing a mixed group of Rwandan and international shareholding structures.
* In collaboration with the Rwanda Development Board (RDB), the lead agency of the Government of Rwanda (GoR) for private sector development.
Context: the Rwandan Economy and Private Sector
Development Performance
Rwanda is gradually transforming its economy from a low-income to a middle-income country. Since the turn of the century, Rwanda has seen its economy grow by 7.9% per year, such that it is currently more than 3.5 times larger than it was in 2000. Meanwhile, there is an on-going structural shift in the economy from subsistence agriculture towards commercial sectors: Industry has grown by 9.8% per year on average, Services by 9.4%, and Agriculture, Livestock, Forestry, and Fishery by 5.3%.
In the same period, GDP per capita has increased from $242 to $729 and poverty has reduced from 60.3% of the population to 39.1%. Life expectancy at birth has increased from 48.2 years in 2000 to 64.5 years in 2015, while the child mortality rate dropped from 183/1000 to 42/1000. The youth literacy rate increased from 7% in 2010 to 85% in 2015. Financial inclusion increased from 48% in 2008 to 89% by 2016, while mobile phone owners increased from 6% to 65% between 2006 and 2014.
Several factors point toward expanded business opportunities in the future. Rwanda is located in one of the fastest growing regions in the world, and the growing domestic and regional markets present new market opportunities for both new and existing investors. A domestic and regional middle class is emerging, creating a market for an expanding array of goods and services.
Opportunities also exist for growing the export base, specifically for high value agricultural products such as horticulture and agro-processing and for light-manufacturing, tourism, minerals, and traditional export crops.
Furthermore, about half of Rwanda’s population is younger than 19 years old, which opens the possibility for a demographic dividend from a growing working-age population and a lower dependency ratio. Rwanda’s young population is likely to generate new businesses and take advantage of new technologies. The use of ICT can facilitate the entry of youth in SMEs and stimulate entrepreneurship and skills development.
The External Balance: Trade and FDI
The country is becoming increasingly “land-linked” rather than landlocked, thus increasing the likelihood of attracting investment, stimulating competitiveness and supporting Rwanda’s transition from a subsistence-economy to a commercial-based, export-oriented economy. While maritime trade through the transport corridors have become cheaper and faster, new flight connections to high-end consumer markets have been established. For example, agricultural products are likely to fetch higher prices in resource-rich West-African countries or in European and Asian markets, to which more flight routes are currently being established.
Furthermore, Rwanda has expanded its foreign market access by negotiating trade agreements such as EPA, AGOA and the Tripartite Agreement. As a result, imports and exports have increased their combined share of the economy from 36% in 2005 to 48% by 2016. Since 2011, imports grew on average by 4.8% per annum and exports by 8.4%.
However, Rwanda has a significant trade deficit which affects the current account; the current trade deficit stands at 18% of GDP for 2016. This is a common feature for high-growth developing economies as there are high investments and little production and savings to supply inputs and finance. Net foreign transfers (ODA, remittances, grants, interest payment, etc.) mitigate this deficit with 4% of GDP such that the current account deficit is 14% of GDP, i.e. Rwandan households, firms, and institutions borrowed 14% of the national GDP in 2016.
The trend in the trade balance has been downward trending since 2013, which puts downward pressure on the current account. Equally significant, net foreign transfers have declined as share of GDP, hence narrowing the gap between the trade deficit and the current account. While these deficits are not necessarily problematic if countered by future growth, short and medium term macro-economic stability may be at risk if the imbalances grow large. Consequently, there is a need to increase foreign investment and exports.
Identified general challenges to private sector companies
Rwanda is characterised by an active ongoing dialogue between the private sector and the government, with investors having direct and frequent access to high-level government officials. The private sector is growing, but it remains possible for government officials to have an overview of what problems companies in key sectors are facing. Consequently, the GoR’s perception of private sector problems may be relevant. The Private Sector Development Strategy, which is currently being drafted, aims to summarise the current knowledge of relevant private sector problems. The list below summarises key GoR perceptions of the problems faced by the private sector in Rwanda:
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Access to finance: The prime interest rate is at 16-18%, making securing finance for all but the most lucrative ventures untenable. The savings rate is at 7.1%;
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Access to skills: Wages in non-primary sectors appear competitive at face value around $40/month (31,300 RWF). However, almost 20% of firms report access to skills being a constraint to their business;
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Enforcing small business contracts: A September 2016 MINICOM consultation found that a major constraint to especially small businesses is the inability to enforce business contracts.
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High cost of trade: At an average $3,633 per container from Mombasa to Kigali, Rwanda remains one of the most expensive places for a container to reach. This is despite the figure having declined from around $5000 per container in 2015;
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Regulatory compliance: At an estimated 3.1% of GDP, the cost of complying with regulatory requirements also remains high;
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Insufficient access to and quality of infrastructure: Rwanda faces an infrastructure gap, hindering its economic transformation. Access to serviced land is a major constraint, often raised as the biggest challenge by foreign investors looking to set up operations in Rwanda;
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Internal market inefficiencies, both for raw materials and for final products: Inefficient value chains and consumer markets lead to sub-optimal outcome for farmers, processors, traders, and consumers;
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Access to and cost of standards and technology: While relatively little data is available about the average productivity of Rwandan firms, 32% of firms report that access to tools and machinery is a challenge (IBES, 2015). Furthermore, accessing export markets is challenging for smaller firms who lack the necessary standards.
Comparison of findings from the two surveys
Future FDI Plans for Africa
International Potential Investors: A very high percentage of companies (over 70%) are considering FDI in Africa over the next 12-24 months. In terms of the types of FDI being considered, companies are considering all modes of market entry for Africa. Over half of companies are considering Greenfield FDI, while over 40% are considering Strategic Partnerships with local firms; over one-third of companies are considering JVs with a local firm; and nearly one-third of companies are considering M&As.
Companies are planning to invest in Africa for export-oriented FDI to serve the African and US/European markets. In fact, nearly 60% of companies are planning export-oriented FDI. Companies are primarily driven by market access and market size as location determinants for FDI. They are also attracted to countries that have economic stability, low political risk and a pro-business regulatory environment. Low costs and incentives are also important location drivers cited by companies.
Existing Domestic Investors: No less than 92.4% of existing investors have plans for further investment in Rwanda. The total amount mentioned among the 66 respondents is $320 million, with the largest amounts in the agro-processing, mining, tea, and manufacturing sectors. This indicates the importance of existing investors for increasing investment overall. Apart from being more inclined to invest, existing investors may be faster and more efficient in the implementation of an investment project given their prior knowledge of the country.
On the other hand, finance may be a limiting factor, which raises the possibility of FDI into the company. Among the respondents, 66% percent were interested in additional foreign investment – mainly through JVs and Strategic Partnerships. This opens the opportunity to match domestic investors with foreign investors, letting each party use their comparative advantage in the investment process.
Location Determinants
Potential international investors primarily look for markets and stability when choosing a location in Sub-Saharan Africa, followed by regulatory environment and low operating costs. Investors that have invested in Rwanda have a similar profile with the exception that they put less emphasis on the size of the market and relatively more on stability and security.
Rwanda’s Strengths
Potential and existing investors agree that stability is Rwanda’s key strength. Existing investors are relatively more in agreement: 81% of domestic respondents cite stability among the top three strengths, whereas the figure among potential investors is 38%.
The second most cited strength among domestic investors is the market opportunity. In these cases, reference was made to Rwanda being a landlocked, the proximity to regional markets as well as investors seeing Rwanda’s limited market size as a good testing ground/foothold for entering regional markets. In contrast, international potential investors do not cite the market opportunity among the top strengths, but they do refer to stable economic growth, which generates a growing market. About a quarter of respondents in both surveys also cite the ease of doing business and infrastructure.
On the other hand, existing investors do not see the quality of labour among Rwanda’s strengths, whereas 21% of international investors perceive it as such. The two surveys also contrast on the perception of government incentives: 37% of domestic investors see it as a strength, while international investors do not.
Rwanda’s Weaknesses
Both surveys agree that the main weakness is the limited size of the market. While some investors are attracted to the relatively small size, which offers a good testing ground for expanding in the region, the majority of investors are deterred by the limited size of the national market. Economies of scale are limited and other countries in the region offer a larger consumer base.
The two surveys also agree that the geography and landlocked position are major constraints. Whilst the cost of transporting a container to and from the regional ports have come down in recent years, it remains higher than Rwanda’s regional peers.
Furthermore, the domestic investors cite the cost of production as a weakness. This is, among other factors, a result of the landlocked location. International investors cite lack of skilled labour.
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Dti endorses recommendation to increase sugar import duties
Trade and Industry Minister Rob Davies has endorsed the International Trade Administration Commission’s recommendation to increase import duties for sugar.
In a statement on Tuesday, the Minister agreed to the raising of import duties to US$680/ton.
This follows an application launched by the South African Sugar Association (SASA) to ITAC in February 2018 for an increase of the dollar based duty from US$566/ton to US$856/ton and an intensive investigation by ITAC.
ITAC, in its determination of an appropriate level of protection, considers, among others, the domestic cost of production. Fertiliser and chemicals, electricity, transport and labour are among the major cost drivers.
As per ITAC regulations, the Trade Minister is empowered legally to only support or not to support the recommendations submitted by ITAC.
Inputs by role players
The investigation to arrive at the recommendations is an independent process by ITAC, which included consultation and submission of inputs by all affected stakeholders.
The Department of Trade and Industry (dti) said while the level is not at the maximum bound rate as initially requested by the industry in the application, the US$680/ton will provide the immediate relief urgently required by the industry and sufficient trade protection against the surge of imports.
“The tariff forms part of a set of measures considered by government, in collaboration with the industry in order to improve the sustainability of the industry and future growth prospects,” said the dti, adding that the sugar industry is a significant contributor to the South African economy.
The industry is also a major employer in sugar-growing provinces like KwaZulu-Natal and Mpumalanga.
Contribution of the sugar industry
Sugar production contributes about R14 billion to gross domestic product (GDP) and the industry employs 85 000 people directly, and a further 350 000 indirectly through food processing and other sectors.
The sugar industry, through the SASA, has outlined and advanced the industry-specific challenges that motivated its application to increase the dollar-based reference price to mitigate some of the challenges.
According to the submission made by SASA, the challenges facing South Africa’s sugar industry are largely affected and influenced by three factors, namely:
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The influx of duty paid imports;
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The current level of DBRP (US$566/ton), which is claimed to be inadequate and below cost of production (inadequate margins); and
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Implementation of Health Promotion Levy (HPL) also referred to as Sugar Sweetened Beverage Tax.
A sugar value chain task team comprising representatives from the beverage industry, retailers, SASA officials, small-scale farmers and manufacturers and officials from the Industrial Development Corporation was formed in May 2018.
The task team was formed in order to identify ways of supporting the industry whilst keeping prices paid by consumers affordable. The team was mandated to seek rapid solutions to the challenges facing the sugar industry focusing on short-, medium- to long-term plans.
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The short-term interventions include a brief analysis of the global market of sugar; monitoring import trends; and commitments by the upstream and downstream users.
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Medium- to long-term interventions include a competitiveness improvement programme; diversification; deepening transformation; and amendments to the Sugar Act of 1979 and Agreement, 2000.
Several commitments were made between SASA and the South African Farmers Development Association (SAFDA). The commitments include meaningful improvements of the price paid to small-scale growers for cane delivered, as well as an industry resolution to deal with challenges associated with current daily rateable deliveries for small-scale growers among others.
Agricultural Development Fund
Meanwhile, Coca Cola Beverages South Africa (CCBSA) has announced that it has an agricultural development fund that could be accessed for specific projects by members of SAFDA.
The fund is managed by the Mintirho Foundation that was formed to promote the development of historically disadvantaged farmers and small suppliers of inputs in the CCBSA value chain through the funding of sustainable businesses.
The foundation was formed as a result of the Competition Commission conditions agreed upon as part of the large merger between Coca-Cola Bottlers in South Africa.
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tralac’s Daily News Selection
African freight volumes, passenger demand: IATA’s June analysis
Freight trends: All regions except Africa reported a year-on-year increase in freight volumes in June 2018, but the slow growth in Asia-Pacific, which accounts for nearly 37% of the entire air cargo market, dragged the global growth rate down. African carriers saw freight demand contract 8.5% in June 2018 compared to the same month last year. Capacity also fell, by 1.4%. It is difficult to be positive about the current picture in Africa.
Passenger trends: June international passenger demand rose 7.7% compared to June 2017. All regions recorded growth, led by airlines in the Middle East and Africa. African airlines’ traffic soared 10.9% in June, up substantially from just 2.1% growth in May, although this partly also reflect volatility in the monthly data. Capacity rose 5.5%, and load factor jumped 3.3 percentage points to 68.0%. Higher oil and commodity prices are buoying the economies in a number of countries, including Nigeria.
Mauritius-China FTA: Third round of negotiations underway ahead of signing at FOCAC (GoM)
The three-day third round of negotiations on the Mauritius-China Free Trade Agreement opened yesterday at the Hilton Hotel in Flic en Flac. The Mauritian delegation is led by Dr Sunil Boodhoo, Director, International Trade Division, Ministry of Foreign Affairs, Regional Integration and International Trade. The twelve-member Chinese delegation is headed by the Deputy Director General, Ministry of Commerce, Mr Hu Yingzhi. Mr Lutchmeenaraidoo highlighted that it is necessary to find a solution which is related to the finalisation of two agreements namely: the first FTA which China is currently negotiating with an African country that is Mauritius; and, the Road and Belt initiative. The latter initiative implies that China wants to play more and more a positive and substantial role when it comes to the development of the whole planet, he stated. The Minister also spoke how Mauritius although small in land size can act as a transmission belt and connecting link between the philosophy of China and the vision of Africa.
Mr Hu Yingzhi, observed that the negotiations on the FTA have already reached an advanced stage within a short span of time. The FTA is expected to be finalised by the end of August this year. It will be signed in Beijing in September 2018 during the Forum on China Africa Cooperation Beijing Summit in the presence of Prime Minister Jugnauth and Chinese President Xi. The first round of negotiations on the Mauritius-China Free Trade Agreement kicked off in April 2018 while the second round was held in June.
COMESA: Customs experts’ meeting underway in Nairobi
On the agenda of the meeting: Draft regulations on the electronic certificate of origin; Draft COMESA Regional Authorised Economic Operator Programme implementation guidelines as well as updates on the COMESA Digital Free Trade Area implementation and other related matters. The Secretary General of COMESA, Chileshe Kapwepwe, said the meeting will advance the implementation of the adopted Customs and Trade Facilitation Work Programme covering 2018 – 2020. The outputs from the discussions will be presented to the Trade and Customs Committee meeting scheduled for Friday and Saturday this week.
African ICT policymakers seek consensus to drive growth of ICT sector (Xinhua)
Senior African policymakers on Monday resolved to adopt a common position aimed at propelling growth of ICT sector and embed it in the continent’s transformation agenda. The policymakers and experts who met in Nairobi for a preparatory meeting ahead of the International Telecommunications Union summit to be held in Dubai in October, said that a consensus is required to hasten the fourth industrial revolution in Africa that is based on technology and innovations. Joe Mucheru, Kenya’s Cabinet Secretary for ICT, stressed that harmonization of policy and regulatory frameworks is key to ensure the benefits of digital revolution in Africa are spread evenly. “Africa should safeguard its interests in the global ICT arena by speaking in one voice. Our collective obligation going forward is to ensure there is uniformity in policies and regulations to reap from the benefits that the digital era has ushered.”
Kenya: June 2018 trade data (KNBS)
Volume of trade dropped from KSh 226.90 billion in May 2018 to KSh 213.51 billion in June 2018. The value of total exports decreased to KSh 52.92 billion in June 2018 while the value of imports dropped from KSh 171.59 billion in May 2018 to KSh 160.59 billion in June 2018. [Note: Table 12: External trade; Table 13(a): Major destinations of domestic exports; Table 13(b): Domestic exports by Broad Economic Category; Table 14 (a) Major origins of imports; Table 14(b): Imports by Broad Economic Category] [Related news items: Coffee earnings drop by Sh700 million in seven months to July; Government plans special zones for export livestock production; How counties can help bridge export deficit gap; Protect us from Tanzania, traders cry out]
Kenya: Banks see increased adoption of yuan as Kenya-China deals rise (Business Daily)
The Kenya Bankers Association is tipping its members to increase the stock of Chinese currency for its transactions as Kenya-China trade ties intensify. The chief executive of the lenders’ lobby, Habil Olaka, says the yuan is becoming important in settling financial transactions with many Kenyan banks reacting to this by setting up China-dedicated desks and increasing the stock of Chinese currency. [Quartz: China’s payments giant is ready to boost financial inclusion in Africa]
India remains an onlooker, as Chinese institutional equity floods Africa (ORF)
While such traditional funding continues to prevail, there has been some broadening of Chinese assistance in the Africa, as it makes equity investments in financial institutions in the continent. This mechanism of what I would call ‘institutionalising Chinese equity into Africa’ is very potent, to the extent where it gets access to the latent opportunities in the region. These initiatives further acts as instruments to implement Chinese policies in trade and diplomacy, and concurrently provide support for promoting the exports of Chinese products and services to Africa.
While China is having stakes in various pan-African and Regional Development Banks in Africa, India has remained a second fiddle. India currently has just a 0.269% share in the African Development Bank, the region’s multilateral institution, while China’s ownership is four times higher at 1.200%. This is a significant anomaly given India’s aspirations in the region. In Afreximbank, India and China are represented as Class C shareholders by their respective export credit agencies — Exim Bank of India has 0.24%, and China Exim Bank has 5.48% shareholding in Afreximbank. China, in fact, has augmented its share recently, and is today the sixth largest shareholder in Afreximbank, and the largest amongst the Class C shareholder. [The author, Rahul Mazumdar, has been associated with Export-Import Bank of India since 2007]
Algeria’s state oil firm gets new management, targets brain drain (Reuters)
The head of Algerian state oil firm Sonatrach has assembled a new leadership team, a senior company source said, aiming to reverse a flow of talent from an unwieldy state enterprise that keeps the country afloat. President Abdelaziz Bouteflika put US-trained Abdelmoumen Ould Kaddour in charge of overhauling Sonatrach in March, 2017, after years of short-lived CEOs, fraud scandals and red tape had put foreign investors off the North African OPEC producer. Kaddour, who spent much of his career in the US, as well as energy firms in the Gulf and Africa, plans education and training via a ‘Sonatrach Management Academy’ and will bring back retired workers to coach new recruits. He is also seeking to introduce special rewards to retain bright people, working around a rigid salary structure which pays a bureaucrat like a deep-water drilling engineer. [Ghana: 27 defunct SOEs to be deleted from government book; 7 more to be traced]
Mozambique’s ruby mining goes from ‘wild west’ to big business (Bloomberg Africa)
Though it’s difficult to know the value of the global rough-ruby trade because it’s so fragmented, the New York-based Natural Resource Governance Institute estimates the ruby, emerald and sapphire business is worth as much as $2.5bn annually. From nothing 10 years ago, Mozambique now accounts for as much as 80% of global ruby output, according to Richard Hughes, an expert on the stones at Lotus Gemology Co. Ltd. in Bangkok. Many of Montepuez’s rubies are the colors consumers covet -- “like a red traffic light,” he said.
World Tariff Profiles 2018 (WTO, ITC, UNCTAD)
This publication (pdf) is presented in five main parts. The first part shows summary tariff statistics for all countries and territories for all products, as well as a breakdown into agricultural and non-agricultural products. The second part shows for each of these countries and territories one full page with disaggregation by sectors and duty ranges. It also contains a section on the market access conditions faced in their respective major export markets. A new third part has been added to this edition to cover information on non-tariff measures which are of increasing importance in international trade. The fourth part contains the special topic which presents a new subject in each edition. The annexes are in part five and include the data sources and the compilation of “Frequently Asked Questions”.
The summary tariff tables in the first part are designed to allow cross-country comparison as well as comparison of the levels of bound and applied duties. Apart from the standard indicators like tariff averages, maxima, percentage of duty-free tariff lines, peaks and non-ad valorem duties, it also contains indicators of tariff dispersion such as the number of distinct duties and the coefficient of variation. The calculation of these indicators is based, where applicable, on a pre-aggregation to HS six-digit subheadings, which leads to a standardization across countries and thus makes the comparisons more compatible. The tariff profiles tables are divided into two blocks covering (i) the domestic market access protection and (ii) the protection faced in the major export markets.
Criticised for protectionism, India set to review e-commerce policy draft (The Print)
India is reworking proposed e-commerce rules after a draft, which had signaled a shift toward boosting domestic startups, sparked criticism, according to people familiar with the matter, who asked not to be identified as the discussions are private. Commerce Minister Suresh Prabhu tweeted 11 August that his ministry had received a “few concerns,” and will reach out to stakeholders to address them. The initial document received pushback, including a proposal on foreign investment in some areas and one requiring Indian consumer data to be held locally, one of the people familiar said. The discussions may lead to an overhaul and a fresh draft will be posted in a few weeks on the ministry’s website, the person said.
The 19-page draft, a copy of which has been seen by Bloomberg, underscored India’s intent to examine every aspect of e-commerce regulation from data localization to antitrust rules. The changes would tighten restrictions on global giants like Amazon.com Inc. and Google and may bolster local startups such as digital payments provider Paytm.
Digital trade and market openness (pdf, OECD)
This paper has three parts. The first discusses what we know about how digitalisation is changing international trade and the rules that govern it. The second part focuses on a more in-depth look at the evidence on trade in the digital era, drawing on available data and the illustrative findings from a tailored business questionnaire. Based on this, the third part provides an initial mapping of the types of measures that need to be considered when thinking about market openness and digital trade. The concluding section draws on these three parts to offer a perspective on what market openness means in the digital era.
Tuesday’s Quick Links: 4th meeting of the strategic task force for the implementation of the 2050 Africa’s Integrated Maritime Strategy: outcomes UNSC Presidential Statements: Central Africa, West Africa African Cotton, Textiles & Apparel Monitor: Issue 22 is posted Nigeria scales up assistance to ACP countries Wilson Center: 5 reasons fish could be the next resource to drive geopolitical competition |
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Mauritius-China FTA: Third round of negotiations underway
The three-day third round of negotiations on the Mauritius-China Free Trade Agreement (FTA) opened on Monday, 13 August 2018 at the Hilton Hotel in Flic en Flac. The FTA aims at further expanding bilateral trade and investment exchanges between Mauritius and the People’s Republic of China.
The Mauritian delegation is being led by Dr Sunil Boodhoo, Director, International Trade Division, Ministry of Foreign Affairs, Regional Integration and International Trade. The twelve-member Chinese delegation is headed by the Deputy Director General, Ministry of Commerce, Mr Hu Yingzhi.
In his opening statement, the Minister of Foreign Affairs, Regional Integration and International Trade, Mr Seetanah Lutchmeenaraidoo, pointed out that the substance of the FTA should be that of a framework agreement which shows the way forward and conveys that both countries mean business. It should add the block and structure to make Mauritius and China an example of friendship, common interest and win-win situations to the rest world, he emphasised.
The FTA, the Minister pointed out, will in fact materialise and give substance to a strong friendship which has existed for so long between our two countries. China-Mauritius represent a beautiful story of friendship based on the principle of working together in the interest of each other, he said.
Speaking about Africa-China cooperation, Mr Lutchmeenaraidoo highlighted that it is necessary to find a solution which is related to the finalisation of two agreements namely: the first FTA which China is currently negotiating with an African country that is Mauritius; and, the Road and Belt initiative. The latter initiative implies that China wants to play more and more a positive and substantial role when it comes to the development of the whole planet, he stated.
The Minister also spoke how Mauritius although small in land size can act as a transmission belt and connecting link between the philosophy of China and the vision of Africa. This is where we are today, a new world and planet which is developing and where we are moving away from the West to the East and where the East wants to be present in world affairs, he said. It is on this basis that we are working collaboratively on these two initiatives, he remarked.
For his part, the Head of the Chinese delegation, Mr Hu Yingzhi, observed that the negotiations on the FTA have already reached an advanced stage within a short span of time. In addition, he expressed hope that the establishment at an earlier date of a Free Trade Area between both countries will help in further strengthening our long-lasting friendship. The FTA is also of great significance in ensuring the promotion of Africa’s economic, trade and investment cooperation with China, he stated.
Mr Hu recalled the recent friendship visit effected by Chinese President Xi Jinping two weeks earlier to Mauritius. This visit has not only brought new impetus to Mauritius-China friendly ties but has further triggered Chinese people’s interest towards Mauritius, he added.
Moreover, Mr Hu observed that President Xi and the Mauritian Prime Minister, Mr Jugnauth, acknowledged the progress made so far with regards to the FTA’s negotiations and the two leaders expressed hope that both the Chinese and Mauritian delegations will work closely with accelerated efforts to advance the negotiations with the aim to achieving a comprehensive high level and mutually beneficial FTA in the near future.
The FTA is expected to be finalised by the end of August this year. It will be signed in Beijing in September 2018 during the Forum on China Africa Cooperation Beijing Summit in the presence of Prime Minister Jugnauth and Chinese President Xi.
The first round of negotiations on the Mauritius-China Free Trade Agreement kicked off in April 2018 while the second round was held in June.
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African policymakers seek consensus to drive growth of ICT sector
Senior African policymakers on Monday resolved to adopt a common position aimed at propelling growth of ICT sector and embed it in the Continent’s transformation agenda.
The policymakers and experts who met in Nairobi for a preparatory meeting ahead of the International Telecommunications Union (ITU) summit to be held in Dubai in October, said that a consensus is required to hasten the fourth industrial revolution in Africa that is based on technology and innovations.
Joe Mucheru, Kenya’s Cabinet Secretary for ICT, stressed that harmonization of policy and regulatory frameworks is key to ensure the benefits of digital revolution in Africa are spread evenly.
“Africa should safeguard its interests in the global ICT arena by speaking in one voice. Our collective obligation going forward is to ensure there is uniformity in policies and regulations to reap from the benefits that the digital era has ushered,” Mucheru said.
Kenya hosted the 4th African preparatory meeting to craft the continent’s common position that will be submitted at this year’s meeting of top decision making organ, the International Tele-communications Union.
It is hoped that by speaking with one voice, African countries will be able to gain leverage required to harness benefits linked to global ICT development.
“We should not lose on the fourth industrial revolution which is driven by ICT and our collective efforts to harness emerging technologies like artificial intelligence, internet of things and block chain will boost out socioeconomic development,” said Mucheru.
He noted that ICT and innovations sub-sector across Africa is on a growth trajectory thanks to enactment of friendly policies, macro-economic stability and the youth bulge.
African countries are united in their quest for rapid growth of the ICT sector that will help address the continent’s endemic socioeconomic challenges like poverty, disease, environmental depletion and illiteracy.
Abdoulkarim Soumaila, the Secretary General of Nairobi based African Telecommunications Union, said reactivating growth of the Continent’s ICT sector has gained traction amid rapid transition to knowledge-based economy that promise shared prosperity.
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COMESA Customs experts’ meeting underway in Kenya
Heads of Customs from COMESA Member States began a two-day meeting in Kenya to deliberate on the prepared reports on customs and trade facilitation matters.
On the agenda of the Customs experts is discuss Draft Regulations on the electronic certificate of origin; Draft COMESA Regional Authorised Economic Operator Programme implementation Guideline as well as receiving updates on the COMESA Digital Free Trade Area implementation and other customs related matters.
The outcome of the deliberations will provide impetus towards promoting deeper regional integration and enhanced economic well-being of its citizens.
The COMESA Heads of Customs Sub-committee provides institutional guidance on common customs activities linking the regional with national levels in coordinating the regional and national customs procedures and activities.
Addressing the delegates, Secretary General of COMESA Chileshe Kapwepwe said the meeting will advance the implementation of the adopted Customs and Trade Facilitation Work Programme covering the period 2018-2020.
“Our expectation is that issues that will discuss as customs experts should be relatively straightforward to implement as the challenges will be factored your deliberations,” she said.
COMESA launched the Customs Union on 7 June 2009 requiring Member States to align their national customs laws and tariffs with the regionally agreed customs union instruments. These are; the Common Market Customs Management Regulations, the Common Tariff Nomenclature the Common External Tariff and to provide their list of sensitive products.
“The progress so far made on the implementation of the required alignment to the Customs Union Instruments and the pronouncements by the Member States, reveal that continuous progress in the domestication of the Customs Union instruments,” the Secretary General observed.
Specifically, the Member States registered an overall alignment of 98.33% on Customs Management Regulations, which is remarkable success for implementation of common trade facilitation instruments in the region.
She urged Member States to take advantage of the availability of policy space such as the lists of sensitive and excluded products to address some of the concerns that have been raised while updating their progress of implementation through periodic reporting.
Principal Secretary, State Department of Trade in Kenya, Dr Chris Kiptoo, urged the customs experts to ensure successful implementation of its work program to improve the Customs cooperation and trade facilitation across the region.
Doing so, he said will help Member States to enhance intra-regional trade and attract investments into the region and accelerating the economic growth and development of the region.
The outputs of the Customs experts will be presented to the Trade and Customs Committee meeting scheduled for Friday and Saturday this week.
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tralac’s Daily News Selection
New from tralac
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tralacBlog: Trudi Hartzenberg and Gerhard Erasmus reflect on select trade-related matters currently on the SADC agenda
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tralacBlog: John Stuart asks, Does Rand depreciation help South Africa’s exports?
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Wesgro, tralac and the Department of Trade and Industry recently hosted a seminar on the AfCFTA and its practical implications for intra-African business: read the workshop report
end
In today’s news
Andrew Mold: The case for an integrated African market – the costs of ‘non-AfCFTA’ (The East African)
In the late 1980s, the European Commission was confronted with an uphill struggle to persuade citizens and member states to support the implementation of their Single Market Programme. In an effort to allay those fears, European researchers published a series of in-depth research papers on the costs of “Non-Europe,” to make clear what was at stake. The resulting “Checcini Report,” published in 1988, made a strong case for the Single Market, paving the way for its eventual implementation on 1 January, 1993. African researchers, think tanks and policymakers need to make a similar, vigorous and clear case for the costs of a “non-AfCFTA.” What are those arguments?
Lagos Chamber of Commerce & Industry: How to make ECOWAS trade liberalisation work (The Nation)
Some of them, who spoke with The Nation, lamented that bureaucratic bottlenecks have made product registration extremely difficult for exporters. They insisted that to mitigate exporters’ sufferings, ETLS’s administration should be moved from the Ministry of Foreign Affairs to the Ministry of Industry, Trade and Investment, specifically the Nigeria Investment Promotion Commission to serve exporters better. LCCI President, Mr Babatunde Paul Ruwase, who pushed that the scheme’s administration be excised from of the Foreign Affairs Ministry, however, identified other grey areas that needed to be smoothened if Nigerian exporters must benefit fully from the scheme:
A study on the global governance architecture for combating illicit financial flows (UNECA)
Recommendations at the continental level include: (a) piloting of “follow the money” partnerships to curtail trade mispricing globally; (b) setting up of a continental-level data standard for the exchange of tax information; (c) extending the provisions of the African Union Convention on Preventing and Combating Corruption, especially, with regard to the functions of the Advisory Board on Corruption; (d) amending the African Peer Review Mechanism questionnaire to include illicit financial flows; and (e) introducing systems for automatic exchange of tax information among African countries.
Recommendations at the national level include: (a) requiring multinational corporations to provide comprehensive reporting on their operations, indicating disaggregated financial reporting on by-country or by-subsidiary bases; (b) require companies to prepare cost-benefit analyses before allowing them to invest in a country; (c) African countries should join voluntary initiatives, such as the Extractive Industries Transparency Initiative; (d) African Governments should provide training to and empower investigators responsible for combating illicit financial flows; (e) greater coordination should be instituted between revenue authorities and ministries of finance in developing transfer pricing rules and build capacity in this area; (f) ensure transparent procurement procedures and government tenders and build capacity in this area; (g) introduce effective incentives for civil servants with clear documentation; and (h) place politicians’ companies into trusts for the duration of their political term and prohibit them from engaging in any government businesses.
Southern African STEPS, Country Profiles launched (ECA)
The ECA Southern Africa Office has launched the Zambia STEPS Profile and the Country Profiles for Botswana, Lesotho, Namibia, and Zimbabwe in Lusaka. The five profiles provide detailed analyses of the socio-economic developments in the respective countries, level of regional integration, and performance in terms of gender equality and empowerment, amongst others. In addition, they address a specific theme of economic relevance and proffer key policy options and recommendations to be considered by the member States. The STEPs Profile for Zambia focuses more on the issue of structural transformation with key elements of production, employment, and society. [Ethiopia STEPS Profile, pdf]
China Railways takes on rail project connecting Mozambique to Zimbabwe (Macauhub)
China Railways has proposed the construction of a rail link connecting Mozambique to Zimbabwe via Zambia, a project costing an estimated $2.5bn that will give companies in the latter two countries easy access to Mozambique’s ports. The Trans-Zambezi line project led a delegation from China Railways, headed by Vice President Shao Gang, to contact with the local government in late July along with local partner Global Power Bridge International, according to a report in the Harare press. The China Railways project also involves the construction of a 1,700-kilometre line directly connecting Binga, on Zimbabwean border with Zambia, to the port of Nacala. China Railways stated its interest in the project in March this year in a letter to the Zimbabwean government signed by Gang Shao, according to the Financial Gazette. The project also involves China’s New Century Energy International, which has a $500m large-scale soybean production project in Zimbabwe. [Zimbabwe decries US renewal of sanctions]
Tanzania: How porous ports, airstrips hinder revenue collection (IPPMedia)
Tanzania has uncovered 134 illegal ports and 58 unregistered airstrips through which illegal goods enter and leave the country, causing a huge loss to the government in revenue. Minister for Works, Transport and Communication Isack Kamwele revealed the shocking number of illegal ports and airstrips on Friday when he was on a familiarisation tour of TPA and Dar es Salaam port where he held a meeting with the port’s management. He said a survey conducted by TPA identified 134 illegal entry ports on lake shores and the shores of the Indian Ocean while 58 airstrips were found to be operating while unregistered. He said Kibirizi port, which was operating illegally in Kigoma municipality, was said to have collected revenues totaling Sh40m a month when TPA decided to post its staff to oversee it.
Ghana, Cote d’Ivoire agree on delimiting maritime boundary (GhanaWeb)
Ghana and Cote d’Ivoire have agreed on plotting all seven coordinates to determine the maritime boundary as per the International Tribunal for the Law of the Searuling in October, 2017. In its initial ruling in 2015, the Chamber placed a halt on new projects, compelling Tullow Oil to put on hold operations including new drilling in the disputed area. However, on 23 September, 2017 the Chamber ruled in favour of Ghana in a unanimous decision, stating that there has not been any violation, on the part of Ghana, of Côte d’Ivoire’s maritime boundary. Senior Minister, Yaw Osafo-Marfo, reading the agreement in Accra last Friday said “in pursuance of the implementation of the decision of the Special Chamber of the ITLOS, concerning the delimitation of the maritime boundary between Ghana and Côte d’Ivoire’, the second meeting of Ghana-Côte d’Ivoire’ joint committee was held 9-10 August in Accra at the International Conference Centre.
Regional coffee players target domestic market (New Times)
Regional coffee growers, exporters and sector policy makers are turning their focus to domestic consumption, a move they say is intended to cushion them against fluctuations on the international market, which sometimes adversely affects their incomes. They were speaking Friday at the official launch of the 17th African Fine Coffee Conference and Exhibition in Kigali. About 2,000 people are taking part in the event, including coffee producers, exporters, roasters, policymakers and buyers from around Africa, the Americas, Europe, among other parts of the world. Amb. George William Kayonga, the chief executive of NAEB, stated that Rwandan coffee is consumed more in foreign markets than back home. He said there was need to emulate the consumption habits of countries like Ethiopia, which consumes about half of the coffee it produces. Kamau said Africa produces about 15 million bags of coffee annually – mainly for export – of which five million bags are specialty coffee produced mainly by Ethiopia, Kenya and Rwanda.
The World Bank has posted two more background notes prepared for its recent South Africa Systematic Country Diagnostic: (i) Does employing workers or accepting work pay? Analyzing labour costs in South Africa; (ii) Systemic, sectoral risk and the myth of a corporate savings glut
Trade dependence, liberalization and exports diversification in developing countries (UNCTAD)
This study is important in at least two respects. The first is that although the role of trade and trade policy in the development process is well documented, there is less research on their roles in fostering export diversification or structural transformation, particularly in Africa and the Least Developed Countries. Unlike existing studies, this paper employs both non-parametric and parametric techniques to examine the nexus between trade and diversification. Export diversification and upgrading is particularly crucial for developing countries in Africa and LDCs in general: the prevalent high concentration of resources in a few sectors based on commodities involves dealing with cycles of volatile prices and exports earnings, with potentially adverse consequences for overall economic performance. The second reason why this study is important is that over the past three decades, African countries and LDCs have increased their dependence on trade and have also adopted more liberal trade regimes than in the past. Yet, they have not made any significant progress in terms of diversifying their export structure, suggesting that the realization of any potential benefits of trade for diversification is not necessarily automatic and may depend on domestic policies and the macroeconomic environment facing a country. In this context, there is the need to provide empirical evidence on the role of trade in the diversification process. [The authors: Patrick Osakwe, Amelia Santos-Paulino, Berna Dogan]
Trade in developing East Asia: how it has changed and why it matters (World Bank)
East Asia, for long the epitome of successful engagement in trade, faces serious challenges: technological change that may threaten the very model of labor intensive industrialization and a backlash against globalization that may reduce access to important markets. A detailed analysis of the evolution of East Asia’s trade and trade policy in goods and services leads to the conclusion that how East Asia copes with these global challenges will depend on how it addresses three more proximate national and regional challenges:
Monday’s Quick Links: South Africa: Trade commission to hold hearings on impact of screw imports Bobby Kamani: Time for a global flower auction in Kenya How Ghana became one of Africa’s top mobile money markets Morocco now major aircraft spare parts hub as Nigeria lags Sell Ethiopian Airlines minority stake to African governments, CEO urges Lagos, French multinational Alstom SA sign MoU to complete light rail project David Pilling: African economy – the limits of ‘leapfrogging’ NBER: The impact of exports on innovation – theory and evidence Ghana won’t return to IMF after current programme – Akufo-Addo Youth employment in agriculture: next week’s Kigali conference Transforming microfinance institutions in the Arab world: opportunities, challenges and alignment of interest |
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A study on the global governance architecture for combating illicit financial flows
Executive Summary
The most up-to-date estimates by the Economic Commission for Africa indicate that during the period 2000-2015, net illicit financial flows between Africa and the rest of the world averaged US$73 billion (at 2016 prices) per year from trade misinvoicing alone. Recent exposure of illicit financial flow scandals shows that those involved in such activities have used a range of practices to perpetrate the flows. Furthermore, there are a number of fundamental enablers of illicit financial flows that cut across institutions, sectors and stakeholders, such as: the benefits to the perpetuators, the facilitating infrastructure, the absorptive jurisdictions and the constraints of public authorities.
Since the release of the African Union-Economic Commission for Africa pdf High-Level Panel on Illicit Financial Flows report (2.16 MB) in 2015, some headway has been made at the global level, but this continues to be in silos of sectors, groups of nations or stakeholders. Moreover, evidence reviewed for this study suggests that illicit financial flows continue to present a serious challenge to development in Africa. Given that illicit financial flows from Africa involve actors from across the globe, and that the laws and policies of non-African jurisdictions have a serious impact on illicit flows from Africa, it has become a priority to review the adequacy of global frameworks in tackling illicit financial flows.
In the present study, the global framework or architecture for combating illicit financial flows and its effectiveness in tackling the illicit financial flow problem are examined. Another objective of the study is to identify the gaps in the existing architecture for preventing illicit financial flows, and how Africa should feed into this process to improve its efficiency, effectiveness and inclusiveness. The literature available on the issue was examined, while delving into the framework for tackling illicit financial flows, and analysing actions and their impacts on: (a) the world as a whole; (b) the subregions of Africa; and (c) individual African countries, with a focus on Cameroon, Côte d’Ivoire, Morocco and South Africa, from which primary data were collected to support the study.
The results of the study indicate that a range of different institutions and agreements exist with the aim of tackling the various aspects of illicit financial flows. However, the institutions have different mandates, which often overlap. In addition, there is currently no mechanism covering all relevant organizations and all aspects of illicit financial flow problems at the global level, indicating substantial gaps in the global fight against illicit financial flows from Africa.
Accordingly, as the perpetrators of illicit financial flows have the ability to exploit the different methods of transfer available, a weakness in any part of the global regulatory architecture on such flows could substantially compromise the overall efforts to tackle illicit financial flows. This is because the perpetrators may conduct “regulatory arbitrage” and divert the flows through channels with weak controls. In addition, aside from creating opportunities for regulatory arbitrage, the lack of a comprehensive coordination mechanism for anti-illicit financial flow efforts also risks duplication in the activities of the different organizations trying to tackle those flows. Consequently, in a context characterized by a complex web of actors and issues, the application of the principles of effective governance becomes critical to influence the commitment, coordination, and cooperation of all stakeholders involved in combating illicit financial flows. Accordingly, the study highlights, the urgent need for Africa to play a more active role in addressing the imbalance in global power structures. This requires a concerted continental approach, which includes actions at both the regional and domestic levels.
Source: Financial Transparency Coalition, 2017. Who Makes the Rules on Illicit Financial Flows? FTC Policy Brief.
Recommendations
Based on the analysis above and the gaps identified, some recommendations to improve the performance of the global governance architecture in combating illicit financial flows at the global, regional and national levels are provided in the study.
The main global recommendations include: (a) the development of a global governance framework to mitigate illicit financial flows; (b) publication by the Bank for International Settlements of the data it holds on international banking assets by country of origin and destination for all jurisdictions; (c) support be given for the setting up of and capacitating of transfer pricing units; (d) promotion of global minimum standards for the publication of ownership information; (e) consideration of countermeasures for noncompliant jurisdictions; (f) immediate reciprocity not be considered as to entry requirement to tax information exchange; (g) establishment of global standards in conducting reviews of accounts held by senior government officials, leaders of political parties, executives of State-owned enterprises and others with access to substantial State assets and power to direct them.
Recommendations at the continental level include: (a) piloting of “follow the money” partnerships to curtail trade mispricing globally; (b) setting up of a continental-level data standard for the exchange of tax information; (c) extending the provisions of the African Union Convention on Preventing and Combating Corruption, especially, with regard to the functions of the Advisory Board on Corruption; (d) amending the African Peer Review Mechanism questionnaire to include illicit financial flows; and (e) introducing systems for automatic exchange of tax information among African countries.
Recommendations at the national level include: (a) requiring multinational corporations to provide comprehensive reporting on their operations, indicating disaggregated financial reporting on by-country or by-subsidiary bases; (b) require companies to prepare cost-benefit analyses before allowing them to invest in a country; (c) African countries should join voluntary initiatives, such as the Extractive Industries Transparency Initiative; (d) African Governments should provide training to and empower investigators responsible for combating illicit financial flows; (e) greater coordination should be instituted between revenue authorities and ministries of finance in developing transfer pricing rules and build capacity in this area; (f) ensure transparent procurement procedures and government tenders and build capacity in this area; (g) introduce effective incentives for civil servants with clear documentation; and (h) place politicians’ companies into trusts for the duration of their political term and prohibit them from engaging in any government businesses.
The present paper was prepared under the overall guidance of Adam Elhiraika, Director of the Macroeconomic Policy Division, Economic Commission for Africa (ECA).