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Korea is a model for Africa’s industrialization, says President Adesina
Young Africans should be trusted and supported to drive the continent’s industrialization
The 53rd Annual Meetings of the African Development Bank opened in Busan, Korea, on Monday with a call on African Governments to create the right environment for the private sector to lead the continent’s industrial revolution. Participants also advocated for a balance between the role of the State and the private sector.
Korea was presented as a good model for industrialization which African countries can learn from.
“Korea’s example is incredible. Korea was as poor as any African country in the 1960s with a low per capital income. Today, thanks to the determination of its people and its commitment to industrialization, Korea is the 11th biggest economy in the world, an example Africa should learn from,” said African Development Bank President Akinwumi Adesina at a media breakfast.
Discussions around the media breakfast table focused on the theme of the 2018 Annual Meetings, “Accelerating Africa’s Industrialization,” and the need to tell the great stories of Africa – the story of a resurgent continent ready to take its rightful place in the industrial world.
“If you look at countries that have industrialized – China, South Korea, Singapore and many others – the role of the State was clear. One of the things that I think we need to take out of this conversation is that the State has a great role to play in Africa’s industrial revolution, particularly in terms of industrial policy, providing direction, support for infrastructure, and directing capital to particular industries,” he stressed. “Ethiopia is a very good example.”
Adesina explained that industrialization was selected as the theme of the 2018 Annual Meetings to further showcase what Africa can learn from a country like Korea.
“There is nowhere better than Korea to address this theme. Korea’s incredible success over the last 60 years provides a perfect model to the African Development Bank to redouble its efforts towards Africa’s economic development. Africa is a tremendously blessed continent, but it needs to industrialize, create lots of jobs, and be more competitive in the global market.”
For Africa to witness true agricultural transformation, technologies need to reach farmers to enhance productivity. This was the message of the Leadership4Agriculture Forum, held on Day 1 of the meetings.
“We cannot say we have leadership when we still have 65 percent of the land in Africa uncultivated. We must develop solutions to agriculture and ensure that the sector can grow to a US $1-trillion business,” Adesina said.
Participants in Monday’s Leadership4Agriculture session included Ministers and key partners involved in the development of agricultural industrialization of the continent. They emphasized the need to enhance the competitiveness of Africa’s agriculture sector and to develop industrial value chains required to power the growth of the sector to a world-class industry.
Mima Nedelcovych, President and Chief Executive, Initiative for Global Development, said the African agriculture sector required efforts to improve its competitiveness and called for reforms to ensure that low-interest rate lending is available to the agriculture sector.
“We have to take action as well as talk. Talk is important, but we also want to take people to task,” said Jennifer Blanke, the Bank’s Vice-President for Agriculture, Human and Social Development, on moving past discussing agricultural challenges to executing solutions for them.
How to leverage the continent’s youth to accelerate economic prosperity through industrialization was the focus of a session on “Bridging innovation and industry: African youth solving continental challenges.”
Badr Idrissi, a young Moroccan industrialist, co-founded ATLAN Space, a start-up that uses artificial intelligence and drone technology to solve some socio-economic problems. The innovation has helped Morocco to effectively fight illegal fishing.
“They say that artificial intelligence is not meant for Africa. We are here to prove that wrong,” Idrissi said.
Idrissi used his 12-year international work experience at Microsoft and Nokia to develop and provide tech solutions, which have created employment for several young Moroccans.
In Kenya, a young banker, Lorna Rutto, quit her job to co-found EcoPost, a social enterprise that has created thousands of sustainable jobs for people in marginalized communities, in addition to conserving the environment.
“I was inspired by what I thought was going wrong in my community. Trees were being cut down and plastic waste was all over the place,” Rutto told the session. “It was very scary for me to resign a good bank job, but I had to fulfil my ambition as an entrepreneur. That was when I developed the idea that waste was a resource and not a thing to throw away.”
EcoPost has so far transformed over 3 million kilograms of plastic waste into plastic lumber, saved over 500 acres of forest and helped mitigate climate change in Kenya.
Adesina commended the young entrepreneurs for converting challenges into opportunities and urged them to continue representing the industrialization of Africa.
“Young people are not just the future of Africa, they are the present,” said Adesina. “They represent entrepreneurship and energy. This must be nurtured, harnessed and scaled up to propel Africa’s industrial revolution and the Bank is here to harness that.”
Innovative technologies need to reach African farmers for agricultural transformation to happen
For Africa to witness true agricultural transformation, technologies need to reach farmers to enhance productivity. This was part of the outcomes of the Leadership4Agriculture Forum held at the 53rd Annual Meetings of the African Development Bank taking place in Busan, Korea from May 21-25.
Participants included Ministers and key partners involved in the development of agriculture industrialization infrastructure for the continent.
Speaking at the session, the President of the African Development Bank, Akinwumi Adesina, said the transformation of the agriculture sector into a US $1-trillion sector remains a key priority of the Bank.
“The leadership of agriculture is crucial. We cannot say we have leadership when we still have 65 percent of the land in Africa uncultivated. We must develop solutions to agriculture and ensure that the sector can grow,” he said.
The Leadership4Agriculture Forum emphasized the need to enhance the competitiveness of Africa’s agriculture sector and to develop industrial chains required to power the growth of the sector to a world-class industry.
Mima Nedelcovych, President and Chief Executive, Initiative for Global Development, said the African agriculture sector required efforts to improve its competitiveness and called for reforms to ensure that low interest rate lending the agriculture sector.
The right agriculture-sector policies, he said, would impact on the processing of raw materials from the agriculture sector.
We also need to ensure that agricultural extension services are linked to researchers to increase productivity, Nedelcovych said.
The Bank’s Vice-President for Agriculture, Human and Social Development, Jennifer Blanke, and the Africa Director of the Rockefeller Foundation, Mamadou Biteye, announced the signing of an agreement to establish a permanent secretariat to coordinate groups, organizations and government agencies involved in improving agriculture in Africa.
“We have to take action as well as talk. Talk is important, but we also want to take people to task,” Blanke said.
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Ministers from landlocked developing countries call for improved trade, transport and economic opportunities
Achieving the SDGs in Landlocked Developing Countries through Connectivity and Trade Facilitation
Ministers and senior government officials from landlocked developing countries (LLDCs) and development partners, gathered in Astana, Kazakhstan on 16 and 17 May 2018 to identify ways in which trade, economic transformation and the development of transport infrastructure can benefit LLDCs.
Hosted by the Government of Kazakhstan, the two-day Ministerial Meeting of Landlocked Developing Countries on Trade and Transport brought together more than 80 participants, including senior representatives from the UN, international and regional organizations, financial institutions and the private sector.
“I hope that over these next two days recommendations and opportunities can be identified to enhance trade transport and economic opportunities which can help to transform the lives of communities living in LLDCs,” said Ms. Fekita ‘Utoikamanu, High-Representative and Under-Secretary-General for Least Developed Countries, LLDCs and Small Island Developing States (SIDS).
“We understand that sustainable transport is a key factor for the progress and future of the developing countries. The recommendations of this meeting will allow us to broaden the forms of the cooperation in the field of transport, infrastructure and overcome the barriers of remoteness and costs”, acknowledged Mr. Kassymbek, Minister of Investments and Development of the Republic of Kazakhstan, highlighting the success that his country has achieved in creating the transit LAND corridors through its favourable geographical position.
The event highlighted the importance of implementing the 2030 Agenda for Sustainable Development and marks the start of a preparatory process for the comprehensive high-level midterm review of the VPoA to be held in 2019. The midterm review will provide an opportunity to review the progress that has been made in the implementation of the VPoA, a programme recognized as an integral part of the 2030 Agenda.
The meeting concluded on 17 May by adopting the Astana Ministerial Declaration to pave the way forward on Trade and Transport.
Background
Landlocked developing countries are often long distances from seaports. They have poorly developed transit and transport systems and rely on neighbouring countries for transit access, which translates to high trade costs for landlocked developing countries. These high trade costs impact landlocked developing countries’ trade competitiveness.
LLDCs continue to be marginalized in international trade, accounting for less than 1 per cent of global merchandize exports. Landlocked developing countries also rely heavily on primary commodities, which have little or no value added to them and they face lack of diversification of their exports and imports, and increased vulnerability to volatile prices of commodities and external shocks.
To address those challenges, the Government of Kazakhstan in August 2003, hosted the First International Ministerial Conference of Landlocked and Transit Developing Countries and Development Partners during which the Almaty Programme of Action (APoA) was adopted to address special needs and challenges faced by the landlocked developing countries in achieving their development goals.
In November 2014, a new programme was adopted, the Vienna Programme of Action (VPoA) for Landlocked Developing Countries for the Decade 2014-2024. This programme of action identifies fundamental transit policy issues, infrastructure development, international trade and trade facilitation, regional integration, structural economic transformation and means of implementation as its key priority areas.
Promoting International Trade in the LLDCs and enhancing the implementation of the WTO Trade Facilitation Agreement
Background note
International trade drives inclusive growth and poverty reduction. The 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda (AAAA) underscore the importance of international trade as an engine for inclusive economic growth and poverty reduction, and an important means to achieve the Sustainable Development Goals (SDGs). By connecting developing-country producers and consumers to global markets trade provides a critical channel for the flow of finance, technology and services needed to further improve productive capacity in agriculture, industry and services. However, the progress of integration in the global trade has been uneven.
LLDCs remain marginalized largely due to long distances from the nearest seaports which translate into unsustainably high transit transport costs and delays. The participation of LLDCs in international trade depends on transiting through other countries. Additional border crossings and long distances from major markets, coupled with cumbersome transit procedures and inadequate infrastructure increases the total expenses for transport and other transaction costs. The high trade costs affect the competitiveness of the LLDCs in international trade as well as their ability to produce at low costs and they reduce the rate of return on capital required by investors to finance projects in the LLDCs.
To address the trade related challenges of the LLDCs, the Vienna Programme of Action (VPoA), which is an integral part of the 2030 Agenda, identifies international trade and trade facilitation as one of its priority areas. The VPoA recognizes the importance of addressing high trade costs incurred by the LLDCs, and the need to integrate the LLDCs into the global value chains. The VPoA sets several objectives aimed at integrating the LLDCs into the global trade and improving the trade performance of the LLDCs. These objectives include: to significantly increase the participation of LLDCs in global trade, with a focus on substantially increasing exports; to significantly increase the value added and manufactured component, as appropriate, of the exports of landlocked developing countries, with the objective of substantially diversifying their markets and products.
LLDCs’ Participation in International Trade
The thirty-two (32) LLDCs account for less than 1% of global merchandise trade. The LLDCs’ participation in international trade, measured as the share of their merchandise exports in global exports reached a peak of 1.22 per cent (2013), before suffering a decline to 1.19 per cent in 2014 and 0.86 per cent in 2016. The decline in the LLDCs’ share of their merchandise exports is attributed mainly to declining commodity prices. In 2017 the estimated share of the LLDCs merchandise trade slightly increased to 0.91 per cent. In all, transit countries share of merchandise trade was around 23% in 2016 and when China is excluded, the share of these countries stood at 9.5% in 2016.
A closer look at the disaggregated data at country level shows that only four LLDCs accounted for about 49% of the group merchandise exports. The majority of the LLDCs accounted for no more than 2%. The LLDCs’ share of merchandise exports is not only meagre compared to the developing countries but their export remains highly concentrated in a few products, in particular, primary commodities with very little value added. The volume and product composition of a country’s commodity trade determines its vulnerability to commodity price volatility. The LLDCs are therefore greatly affected by the volatility in the global demand and prices. Price movements of internationally traded goods, as well as changes in the volume and product composition of trade, affect the gains an individual country can reap from international trade. The high export concentration of the LLDCs’ exports also demonstrates that the LLDCs are not integrated into the regional and global value chains. Integration into the value chains is very important as it serves as a conduit for industrial transformation and economic diversification.
While the LLDCs are marginal players in trade at global level, international trade is of critical importance to their economies. In 2016, the exports and imports of goods and services constituted approximately 62 per cent of the countries’ GDP compare to the world average of about 56 per cent. In a number of the LLDCs, the trade-to-GDP ratio is higher than 100 per cent.
Regional integration and cooperation is important for the development of landlocked developing countries through improved connectivity, enhanced competitiveness and trading capacity, market expansion and upgrading of value chains. The deeper integration of regional markets can reduce trade and operating costs as it reduces the distance to markets. According to the OHRLLS’ Global Report on Improving transit cooperation, trade and trade facilitation in the LLDCs (2017), the LLDCs overall participation in the intra-regional trade, was less than 5% in 2015 having declined from 7.3% in 1995. It remains important that the LLDCs are integrated into the regional markets and regional value chains to address the high trade costs they face as well as to diversify their markets. Addressing the infrastructure challenges including the missing links in the transport infrastructure connecting the LLDCs needs to be addressed to facilitate the integration of the LLDCs in regional trade.
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EAC to roll out new export regime in June
Regional exporters of coffee, tea, fish, hides and skins are set to enjoy faster transit times from next month, when the commodities start being cleared under the Single Customs Territory.
The new regime seeks to minimise delays and costs for goods moving across borders to export markets by having them cleared at the point of origin.
This will help avoid further customs checks at border points and when being loaded for shipping overseas.
East Africa Community member states agreed to begin with the five commodities and a pilot was started on May 10.
A statement from the East African Community Customs Committee said they started piloting the single customs regime for exports on May 10, with a full rollout of all exports set for June 1.
The customs committee said it is implementing a directive of the 19th East African Community Summit in February, which requires the Single Customs Territory regime to cover all products.
Therefore, in December, the region fully rolled out the regime for all maritime and intra-trade imports, according to a statement by the committee.
East Africa’s exports are not raking in as much as what countries spend on imports, which has created a vicious circle of seeking debt to finance expenditures.
Mounting debt
For instance, Kenya recently raised $2 billion, including a 30-year debt from international markets, while Rwanda is financing a 10-year $400 million Eurobond and is considering a new one.
Tanzania is also expected to float a $700 million Eurobond this year though the government has yet to confirm the details.
Member countries are also accumulating debt from China, though this is mainly tied to infrastructure projects.
The 2018 World Bank Doing Business Report shows Uganda, Kenya, Tanzania, and Burundi scored poorly in the cross-border trade indicator.
Rwanda was in 87th position in the ease of facilitating cross-border trade, Kenya followed closely at number 106, Uganda at 127, Burundi at 164 while Tanzania was at position 182.
Trade experts say removing non-tariff barriers can reduce the cost of moving goods across borders by between 12.5 per cent and 17 per cent.
Progress has been made in the region with goods taking about three to five days to get from the ports of Mombasa or Dar es Salaam to Kampala, Kigali or Bujumbura.
This has also reduced the additional costs transporters used to incur when a truck is stationary for a full day. The typical charge for a stationary truck is $200 to $400.
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tralac’s Daily News Selection
Australia’s trade and investment relationships with Africa: update, submissions. The reporting date for the Senate inquiry has been extended to 21 June 2018. Download the submissions and transcript from the 2 and 11 May hearings (Perth and Canberra, respectively) here.
DFAT submission (pdf, Number 30, 11 May): Australia’s trade and investment relationships with the countries of Africa. Australian companies’ commercial interests in Africa are mainly in the extractives sector but are increasingly in services, education and agriculture. Australia’s trade (goods and services) with Africa has fluctuated over the past decade from $6.1bn in 2004 to a high of $10.3bn in 2014. Total trade (goods and services) with Africa was valued at $7.6bn in 2016, comprising two-way merchandise trade of $5.3bn and two-way services trade valued at $2.3bn. Aluminium ore, wheat, vegetables, coal, machinery and parts dominate Australian exports to Africa. Petroleum and, to a lesser extent, motor vehicles are Australia’s largest imports from Africa. Services trade was dominated for both exports and imports by personal travel services, with education-related travel making up almost 50% of the value of services exports. By comparison, total goods and services trade with ASEAN in 2016 was $38bn, representing 13.8% of Australia’s total trade that year. In the same period trade with Africa was approximately 1% of all trade flows.
Investing in global prospects: new Netherlands policy document on foreign trade and development cooperation (GoN)
Key changes in BHOS policy: The focus of development cooperation will shift to unstable regions (the Sahel, the Horn of Africa, the Middle East and North Africa) in order to tackle root causes of poverty, migration, terrorism and climate change; Improving the position of women and girls is a key objective in all areas of BHOS policy; Emphasis in economic diplomacy on SMEs and startups, on new growth markets including those in the field of innovation and the SDGs, on international cooperation for innovation and on knowledge diplomacy; The provision of top-level services to the Dutch business community, via the establishment of Trade & Innovate NL, NL International Business and Invest NL; Establishment of the International Strategy Board to flesh out a strategy to help expand international presence in promising markets and public-private cooperation through NL Works to help implement this strategy.
Olu Fasan: Nigeria, soft target for Trump’s bullying on trade (BusinessDay)
Second, the trajectory of US-Nigeria trade over the past decades shows a drastic reduction in Nigeria’s trade surplus with the US. In 2016, Nigeria exported goods worth $4.2bn to the US and imported goods worth $1.9bn; so, the US had a trade deficit of $2.5bn. But it’s different with trade in services. Nigeria exported services worth only $411m in 2016, but imported services worth $2.5bn, putting the US services trade surplus with Nigeria at $2.1bn. Thus, in 2016, the US goods and services trade deficit with Nigeria was a paltry $216m. When the US talks about its trade deficits, it focuses only on goods trade not on services trade where it has huge surpluses with many countries. Yet, even with trade in goods, Nigeria’s $4.2bn exports to the US in 2016 marked a drastic drop from the £38bn worth of goods it exported in 2008 or even the $33bn in 2011. The main reason for the huge fall in Nigeria’s goods exports to the US is, of course, because of the US’s near-total refusal to buy Nigeria’s oil. The second reason is Nigeria’s failure to benefit from the opportunities provided by the African Growth and Opportunity Act to export goods into the US. Under AGOA, Nigeria could export 6,500 products duty-free into the US market. Yet, Nigeria is Africa’s least beneficiary of AGOA. For instance, Nigeria exported only $9m worth of agricultural products into the US in 2017.
Anzetse Were: Much ado about China debt (Business Daily)
The focus on Kenya’s and indeed Africa’s rising debt needs to be approached in an intellectually honest manner that demonstrates, firstly, that the appetite for debt is coming from Kenya. China is not saddling us with debt, the government wants the debt. Kenya has prioritised infrastructure and gone through expansionary fiscal policy to finance this priority. Thus, it is hard to conceive that given the financing demands of infrastructure development, the government would turn down credit lines that can finance this priority. Secondly, if you look at the portfolio of the Chinese debt, it is focused on infrastructure indicating the government feels it has found a partner willing to invest in its focus on building railways, roads, electricity transmission lines, dams etc. It is important Kenya has a sober conversation about debt, because no matter where it comes from, if mismanaged we will be in hot water regardless. [Bloomberg: Trump takes aim at Chinese loans to poor nations; Chinese projects firing up Namibia’s logistics hub ambition]
Malawi: 2018/19 budget statement, draft financial statement (GoM)
It is the expectation of the Government that the stable exchange rate coupled with the low levels of inflation will help the private sector to invest more to boost its productivity for exports, import substitution and job creation. It is in view of this, Mr. Speaker, that the Government through the Ministry of Industry, Trade and Tourism is also developing the Trade Remedies Bill which will address technical barriers to trade and ensure anti-dumping in order to bring sanity in importation of goods and trade practices. In addition, the Government, through the same Ministry, is in the process of establishing Special Economic Zones in the country, as a tool for attracting both Foreign Direct Investment and Domestic Investment into the industrial sector. [Delivered on Friday, by Minister of Finance Goodall Gondwe] [Downloads: pdf 2018-2019 Budget Statement (786 KB) , pdf 2018-19 Draft Financial Statement (1.96 MB) , pdf 2017-18 Mid-Year Budget Review (1.54 MB) ]
South Africa: Agricultural trade surplus increased in March 2018 (Agbiz)
Africa and Europe were the biggest destination markets, absorbing 43 and 32% of South Africa’s agricultural exports at the end of March 2018. Exports to Europe were up by 5.6% while to Africa were down by 5.8% as compared to the same time in 2017. In the same period, exports to Asia and Americas increased by 1 and 5.5% respectively. [Kenya: Agriculture ministry projects 44% rise in maize output; Tanzania’s huge cattle herds: boon or bane]
South Africa woos Chinese investors for special economic zones (SAnews.gov.za)
South Africa’s Ministry Trade and Industry will this week hold investment shows in China to woo investors for the country’s special economic zones. The delegation, led by the Deputy Minister of Trade and Industry Bulelani Magwanishe, will hold road shows in Shanghai on 26-31 May. They will hold workshops where the South Africans will present opportunities in the SEZs and incentives. The delegation will also conduct a benchmarking exercise for the country’s SEZ by visiting thriving SEZs in Shanghai for knowledge sharing. Magwanishe said the South African government want to use the SEZs to industrialize the country. [Bushbuckridge: Row over land set aside for Chinese]
Nigeria: Lekki Free Trade Zone is Africa’s next investment destination (ThisDay)
Lagos State Governor, Mr. Akinwunmi Ambode, yesterday noted that the sustained flow of investments to the Lekki Free Trade Zone showed that the state’s free economic zone “is the next investment in Africa.” Africa’s richest man, Alhaji Aliko Dangote, buttressed Ambode’s claim, noting that the combined projects under different stages of completion at the Lekki Free Trade Zone was the largest anywhere in the world. They made the remarks yesterday during the inspection of the ongoing industrial jetty project the Dangote Group is currently constructing at the zone to facilitate the movement of the heavy duty machinery.
The local business community in Rwanda: prospects for an expanded role in economic transformation (ODI)
This paper, drawn from 80 in-depth qualitative interviews with members of the local business community in Kigali and up-country towns in five districts, focuses on a notable gap in current knowledge – what the community currently consists of, why it has prospered in particular sectors and not others, and how it might be harnessed in the future to supporting manufacturing.
Kenya: Plan to help businesswomen plug into international trade (Business Daily)
The International Trade Centre has launched the Kenya chapter of SheTrades in the Commonwealth, in a drive to connect more Kenyan women entrepreneurs to global markets. SheTrades aims to drive increased trade, productivity and competitiveness for women entrepreneurs and women-owned firms to ensure they play an active role in international trade. Through training and mentoring, it seeks to strengthen the capacities of 3,000 women-owned businesses with a view to generate sales worth Sh3.8 billion ($38 million) by 2020.
Sudan, Chad agree to establish second border free-trade area (Sudan Tribune)
The government of West Darfur State said Sudan and Chad have agreed to establish a free-trade zone inside the Chadian territory in parallel to the free zone in El-Geniena. The Minister of Urban Planning in West Darfur, Faisal Hassan Haroun said an agreement was reached during the recent border conference to establish a free-trade zone in Chad.
AU Peace and Security Council communique on the African migrants crisis: the imperative for expediting free movement policy in Africa
Also commends ECOWAS and the EAC for the significant progress recorded to date in the promotion of free movement of persons, goods and services and urges other Regional Economic Communities and Regional Mechanisms to emulate the good examples; Further commends Member States which have signed the Protocol to the Treaty Establishing the African Economic Community Relating to Free Movement of Persons, Right of Residence and Right of Establishment in Africa and the Agreement establishing the AfCFTA and emphases that the two instruments go hand-in-hand and are crucial in addressing the challenge of irregular migration in Africa. Council acknowledges that the implementation of these continental instruments will ensure dignified and legitimate movement of Africans without hindrance. Furthermore, Council emphasizes that the free movement of persons will promote regular migration and prevent migrant traffickers from exploiting migrants. Council further notes that necessary steps are being taken to address security concerns, in particular through sharing of bio-data as regular migrants travel legitimately using official border crossings;
@AU_KwesiQuartey: An entire generation in South Sudan is at risk of being illiterate and we need to look at the spill-over effects in terms of hampering growth and development and the burden it places at the national, regional and continental levels.
Today’s Quick Links: Digitalisation and sustainable tourism: Mauritius workshop (23-24 May) Mozambique, Uganda identify multiple sectors for cooperation Stears: Welcome to Computer Village, Lagos The Guardian: Should Africa let Silicon Valley in? Forthcoming book: Taxing Africa – coercion, reform and development (by Mick Moore, Wilson Prichard, Odd-Helge Fjeldstad) Uganda Debt Network’s Priscilla Naisanga: Rising public debts choke EA countries Global Compact on Migration: overview (by Dilip Ratha) and background papers (pdf) prepared for an experts meeting are posted. Dilip Ratha Blog Reuters: US commodity exports to China to rise amid trade talks, but volumes are capped |
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Inquiry into Australia’s trade and investment relationships with the countries of Africa
On 13 June 2017, the Australian Foreign Affairs, Defence and Trade References Committee launched an inquiry into Australia’s trade and investment relationships with the countries of Africa, with a report expected by 14 February 2018. The reporting period has since been extended by the Senate to 21 June 2018.
The inquiry is directed in particular at the following: a) existing trade and investment relationships; b) emerging and possible future trends; c) barriers and impediments to trade and investment; d) opportunities to expand trade and investment; e) the role of government in identifying opportunities and assisting Australian companies to access existing and new markets; f) the role of Australian based companies in sustainable development outcomes, and lessons that can be applied to other developing nations; g) the role of Australian based companies in promoting the achievement of Sustainable Development Goals; and h) any related matters.
Two Public Hearings have been held to date: on 2 May 2018 in Perth and on 11 May 2018 in Canberra. In a statement delivered at the first hearing, Business for Development highlighted that “[T]rade keeps goods, services, and capital flowing. Whether it be ending hunger and poverty, providing decent work and economic growth, innovation and infrastructure, trade is a common thread woven throughout the SDGs’ targets.
“It is through understanding the value chain and developing strong partnerships, trade is developed. By fostering the development of inclusive agribusiness opportunities, mining companies supported by African & Australian governments and civil society can work together to drive inclusive growth.”
Joint submission from the Department of Foreign Affairs and Trade (DFAT) and the Australian Trade and Investment Commission (Austrade)
Africa is a large continent comprising many nations at very different stages of economic development and stability. Assessments of the opportunities for Australian companies need to balance growth projections against the reality of conflict, commercial risk and weak political and economic governance in many African countries.
The overall assessment is positive for increasing engagement by Australian companies in Africa in the coming decades, however for significant increases to occur, sustained improvements in the business-operating environment will be required.
A number of the findings of the 2011 Joint Standing Committee on the Foreign Affairs, Defence and Trade Inquiry into Australia’s relationship with countries of Africa remain relevant today: “Africa is a diverse continent of increasing importance to the world. In geopolitical terms, African countries have increasing influence on international organisations; in resource terms, Africa has vast reserves; in trading terms, Africa’s underutilised arable lands represent great opportunities to feed the world. Africa also continues to face significant challenges, particularly in health, governance and economic development”.
Trade and Investment Flows
Australian companies’ commercial interests in Africa are mainly in the extractives sector but are increasingly in services, education and agriculture. Australia’s trade (goods and services) with Africa has fluctuated over the past decade from $6.1 billion in 2004 to a high of $10.3 billion in 2014.
Total trade (goods and services) with Africa was valued at $7.6 billion in 2016, comprising two-way merchandise trade of $5.3 billion and two-way services trade valued at $2.3 billion. Aluminium ore, wheat, vegetables, coal, machinery and parts dominate Australian exports to Africa. Petroleum and, to a lesser extent, motor vehicles are Australia’s largest imports from Africa. Services trade was dominated for both exports and imports by personal travel services, with education-related travel making up almost 50 per cent of the value of services exports.
By comparison, total goods and services trade with ASEAN in 2016 was $38 billion representing 13.8 per cent of Australia’s total trade that year. In the same period trade with Africa was approximately 1 per cent of all trade flows.
For North Africa, the reduction in stability, growth and trade post-Arab spring has significantly affected the region. In 2016, two-way trade between Australia and North Africa totalled $909 million. Australian exports to the region mostly comprised beef, dairy, machinery parts, fruit and vegetables and wool. Imports to Australia from North Africa mostly comprised petroleum, fertilizers and textiles.
With the exception of South Africa, investment flows outside of the resources sector are still limited. A DFAT stock-take in 2015 estimated that investment flows in the extractives sector by Australian companies were significant and geographically diverse with projects underway in 35 countries. Australian companies are most active in the resources sector in South Africa, Namibia, Tanzania, Zambia and Burkina Faso.
Opportunities for Australian Companies
Africa currently has a population of 1.1 billion which is forecast to reach 2.5 billion by 2050 bringing with it a tripling of the workforce to 1.5 billion. The twin drivers of population increases coupled with a growing urban middle-class are expected to result not only in higher economic growth but also in increases in consumer demand over the coming decades. These changes could lead to new opportunities for Australian companies with an appetite to increase their engagement in specific markets.
However, population growth and associated demographic changes alone will not be sufficient to increase significantly Australian trade and investment flows with Africa. Improvements in the overall business-operating environment in Africa are critical to reducing commercial risk and uncertainty, and will be a key factor in generating increased Australian business interest and engagement in the continent.
Recent DFAT and Austrade analysis is that the most realistic and immediate commercial opportunities for Australian companies in Africa are in mining and related equipment, technology and services; education; agribusiness and food and infrastructure
Recommendations
The submission makes four recommendations to enhance trade and investment with the countries of Africa:
- Strengthening government-to-government engagement
- Expanding economic diplomacy
- Fostering stronger private sector linkages
- Addressing business risk factors in Africa
In order to advance and protect our economic interests in Africa and our ability to influence and shape outcomes for Australian business, the submission recommends strengthening Ministerial and parliamentary contact and links with African counterparts. We should expand economic diplomacy to raise awareness of commercial opportunities and promote Australian capabilities. There is also scope to develop greater business and private sector linkages. Finally, the submission recommends enhanced use of Australia Awards to influence policy thinking in Africa and targeting aid programs to support good governance and an improved regulatory environment.
Submission from the Trade Law Centre (tralac)
Since this inquiry is about “Australia’s trade and investment relationships with the countries of Africa” the essential focus would presumably be on specific countries, investment locations and export destinations. And the benchmarks for how this relationship should look like, should be stated. What is the aim behind the present exercise? Will trade in goods, trade in services, and investment matters be targeted as separate objectives or in an integrated fashion? Is the aim to shape a new trade and investment governance regime (negotiate preferential agreements with specific African countries, or customs territories), or is the aim to enhance trade and investment facilitation within current governance parameters (e.g. World Trade Organisation (WTO) agreements and the current unilateral preferential arrangement, operating under a WTO waiver)?
There is however value in noting some bigger picture aspects, and what African governments are doing in order to boost African trade and regional integration. Information, and informed perspectives, on these developments can contribute to the development of an Australian strategy for Africa.
Beyond Mining and Commodities?
In April 2016, The Economist published an article on African developments under the heading: Making Africa work – The continent’s future depends on people, not commodities. It made the following points:
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For decades, sentiment about Africa has followed commodity prices. Miners sank billions into African soil to feed China’s appetite for minerals. Now investors are glum.
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Pessimists should remember two things about commodity busts. They don’t last for ever. And they don’t hurt everyone: 17 African countries with a quarter of the region’s population will show a net benefit from the current one, thanks to cheaper energy. More important, by focusing on the minerals markets it is easy to miss some big trends that are happening above ground.
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In the long run, the potential rewards from a market of 1.2 billion people are too attractive to ignore, despite the risks. Africa has also become more peaceful and democratic than it was even a decade ago.
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Africa’s past has long been defined by commodities, but its future rests on the productivity of its people. By 2050 the UN predicts that there will be 2.5 billion Africans – a quarter of the world’s population.
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Given good governance, Africa can prosper, sustainably.
Some Implications
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In some ways, the continent’s future is in the balance. Whether it bounces back from the commodity slump or slips back into stagnation, war and autocracy will depend on whether enough of the continent’s leaders keep moving forward. These leaders need to be supported.
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A future relationship with Africa should include involvement in projects and programmes which will assist those leaders that pursue inclusive growth policies, infrastructural development, and very importantly, better governance.
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Good governance is vital for a rules-based, transparent and predictable trade and investment environment. Foreign investors should think about ways and means to promote better governance in the countries where they do business. It is also in their best interest.
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If the opportunities in Africa are only viewed as of the quick profits and run kind, then it does not really matter how the governance environment looks. This is not in the interest of Africa’s inclusive growth and sustainable development.
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Trade facilitation issues remain a major challenge in Africa. (It costs more to move one container from Windhoek, Namibia to Lusaka in Zambia, than to move the same container to Perth from Windhoek via Walvis Bay.) Bad roads, corruption, red tape and non-tariff barriers still hobble trade between African countries, which still only accounts for about 17% of total African trade. Improving this situation requires not only investment in infrastructure, but domestic regulatory reform and regional harmonisation of regulations in these infrastructure services sectors, fighting corruption and liberalising trade, especially in terms of reducing non-tariff barriers. But trade facilitation also has to be anchored in support infrastructure (physical, policy and legal) that enhances the capacity to produce tradeables competitively. For example, the development of quality infrastructure (eg laboratories and other testing facilities) has to enjoy priority, supported by the adoption and implementation of appropriate sanitary and phyto-sanitary (SPS) measures, and technical regulations at national and regional levels. These are essential to ensure effective access to export market opportunities.
What are African Governments doing re: Trade and Integration?
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Regional integration is actively pursued; most African markets are too small to attract sufficient investment in industrialization. The Regional Economic Communities (RECs) have been formed since post-colonial times to make this possible.
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Some are formally committed to the formation of customs unions and common markets but progress has been slow. Many member states battle with weak governance structures and technical constraints – which make it difficult to comply with SPS standards for agricultural exports, for example.
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Africa’s own continental integration agenda aims to boost intra-regional trade from the current low level, to 25 percent or more by 2022. How will this happen?
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The Tripartite Free Trade Area (TFTA), consisting of the members of COMESA, SADC and the EAC, was launched in June 2015 but only covers trade in goods; with modest levels of tariff liberalization to start with. The original intention was to conclude a trade in services agreement too, but it is uncertain whether this will happen.
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Services and trade facilitation may now be prioritized in the other continental initiative, the Continental Free Trade Area (CFTA), under the auspices of the African Union. The negotiations started at the beginning of 2017 and all 55 African Union Members are involved. An important lesson from the TFTA experience, that is borne out by the lack of implementation of most intra-African trade agreements, is that African governments are more comfortable with best endeavour provisions, than with binding commitments.
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Investment governance matters have an important feature of the broader governance and development agenda; reflection and appraisal instruments such as bilateral investment treaties have prompted new thinking about fundamental aspects of rules based governance such as dispute resolution. It is not common to find provisions in regional dispute resolution arrangements that provide access for private parties; and African governments do not have a track record of litigating against each other.
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Preferential non-reciprocal trade arrangements are still in place for most African countries. The African Growth Opportunity Act (AGOA) with the United States (US), the European Union’s (EU) Everything but Arms and Generalised System of Preferences (GSP) programmes (including the Australian System of Tariff Preferences (ASTP) are examples). The poor uptake of these preferences demonstrates that there may well be more fundamental challenges, including the weak industrial capacity of African countries, and the more general lack of competitiveness, or that there are substantive provisions in these arrangements (eg rules of origin) that make it very difficult to access these potential market opportunities. These issues motivate very strongly for a broader approach to forging new partnerships with Africa, including support that will assist to address, what have been historically called, supply-side issues, but perhaps can be broadly referred to as competitiveness challenges.
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The experience of the Economic Partnership Agreement negotiations between groupings of African countries and the EU offers important lessons for third parties, including the Australia and the US, should they be interested to negotiate reciprocal, WTO-compatible trade and investment agreements with African countries. Limited success has been achieved after more than a decade of complex negotiations. Only one such agreement really got off the ground; the Southern African Development Community (SADC) EPA, which entered into force in October 2016. The African members are South Africa, Namibia, Lesotho, Botswana, Swaziland (these 5 are the member states of the oldest Customs Union in the world) and Mozambique. An important contributory factor to the complexity of negotiations with external parties, is the fact that Arica’s own integration process is still under construction.
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AU Peace and Security Council on the African Migrants Crisis: Imperative for Expediting Free Movement Policy in Africa
The Peace and Security Council (PSC) of the African Union (AU), at its 771st meeting held on 11 May 2018, adopted the following decision on the African Migrants Crisis: Imperative for Expediting Free Movement Policy in Africa
Council:
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Takes note of the statements made by the Commissioner for Social Affairs, H.E. Amira Elfadif, as well as the representatives of the Common Market for Eastern and Southern Africa (COMESA) and Economic Community of West African States (ECOWAS). Council also takes note of the presentations made by Lt. General Jalal Eldin Elsheikl Eltayeb, of the Republic of Sudan, in his capacity as the Chairperson of the Committee of Intelligence and Security Services of Africa (CISSA) and by the Director for Political Affairs;
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Recalls its previous communiqués and press statements on free movement of people and good, particularly communiqué [PSC/PR/COMM(DCLXI)] adopted at its 661st ministerial meeting held on 23 February 2017. Acknowledges that the AU Heads of State and Government have adopted important policy decisions on free movement of persons and goods, including Agenda 2063. In this context, Council further recalls pdf Decision on the Free Movement of Persons and the African Passport (293 KB) adopted by the AU Assembly of Heads of State and Government at its 27th ordinary session held in Kigali, Rwanda, in July 2016 in which the Assembly urged all Member States to adopt the African Passport and to work closely with the AU Commission to facilitate the process towards the issuance at national level based on international, continental and national policy provisions and continental design and specifications;
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Commends the efforts deployed by CISSA to reduce security impediments related to the free movement of person in Africa, as well as the efforts by AU Commission to speed up the implementation of the Protocol to the Treaty Establishing the African Economic Community Relating to Free Movement of Persons, Right of Residence and Right of Establishment in Africa adopted by the AU Summit in January 2018 in Addis Ababa and subsequently signed by a significant number of countries during the 10th Extra-Ordinary Summit of the AU held in Kigali in March 2018;
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Also commends the Economic Community of West African States (ECOWAS) and the East African Community (EAC) for the significant progress recorded to date in the promotion of free movement of persons, goods and services and urges other Regional Economic Communities and Regional Mechanisms (RECs/RMs) to emulate the good examples;
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Further commends Member States which have signed the Protocol to the Treaty Establishing the African Economic Community Relating to Free Movement of Persons, Right of Residence and Right of Establishment in Africa and the Agreement establishing the African Continental Free Trade Area (AfCFTA) and emphases that the two instruments go hand-in-hand and are crucial in addressing the challenge of irregular migration in Africa. Council acknowledges that the implementation of these continental instruments will ensure dignified and legitimate movement of Africans without hindrance. Furthermore, Council emphasizes that the free movement of persons will promote regular migration and prevent migrant traffickers from exploiting migrants. Council further notes that necessary steps are being taken to address security concerns, in particular through sharing of bio-data as regular migrants travel legitimately using official border crossings;
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Expresses deep concern on the migrant situation in Libya, as it is unacceptable and constitutes a security threat not only to the region, but also on peace and stability of the entire continent. In this regard, Council stresses the urgent need to search for a lasting solution to the deplorable situation of African migrants in Libya, which is a shared responsibility of all Member States. In this regard, Council takes note of the steps taken by the Tripartite Task Force of the AU-EU-UN, under the leadership of the AU Commission;
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Notes with concern that organized criminal and terrorist networks have turned the otherwise historically safe migration routes into a criminal industry with devastating consequences for the migrants and dire security implications for source, transit and destination countries alike. In this regard, Council emphases the need for Member States to develop a coordinated sharing of information strategy, as well as deployment of latest technologies that would ensure dismantling of the organized criminal and terrorist networks controlling and promoting irregular migration in the continent. Council underscores the important role of the RECs / RMs in combating organized crimes, terrorism and human trafficking, in close coordination with Member States;
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Urges African countries to make use of their respective security services to undertake joint border tactical and operational measures with their respective neighbouring countries, to curb illegal migration and transnational organized criminal activities, as well as conduct joint operations to identify human traffickers within their areas of jurisdiction. Council requests CISSA to work with the relevant stakeholders in destination countries to identify migrant trafficking criminal networks in order to bring them to justice;
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Endorses the establishment of the African Migration Observatory, as proposed by His Majesty Mohammed VI, King of Morocco, AU Champion for Migration, which aims mainly at collecting data, ensuring information exchange and coordination between African countries. The Observatory, which would be based on the triad Understand, Anticipate and Act, will create synergies with continental initiatives on migration, and support them, through data and knowledge sharing, to address efficiently challenges related to Migration flows from and within Africa. Council emphasizes the importance for the Observatory to collaborate with the existing initiatives such as the Regional Operation Center (ROC) in Khartoum, the Horn of Africa (HoA) Initiative to enhance collaboration and intelligence sharing and to address continental crimes related to migration;
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Calls on Member States which have not done so, to sign and ratify the Protocol to the Treaty Establishing the African Economic Community Relating to Free Movement of Persons, Right of Residence and Right of Establishment in Africa and the Agreement Establishing the AfCFTA, in order to realize the full benefits of free movement of persons, good and service in Africa, including promoting of regular migration;
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Reiterate the need for CISSA to continue providing necessary support to member states and RECs / RMs in order to ensure that AU police decisions relating to free movement of persons and goods are realized. In this regard, Council encourages CISSA to continue providing quarterly briefings to Council on its activities to address security impediments to free movement of persons in Africa;
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Decides to remain actively seized of the matter.
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China mission to attract investors to Special Economic Zones
The Department of Trade and Industry will this month embark on an investment roadshow to Shanghai, China, aimed at wooing investors to the South African Special Economic Zones (SEZs).
Led by Deputy Minister Bulelani Magwanishe, the roadshow scheduled for 26-31 May will give representatives of the South African government, implementers of the SEZ Programme and SEZs to present the value-proposition of South African SEZs to potential investors and financial institutions.
According to Magwanishe, the investment roadshow will take place in the form of workshops, where the South African SEZ delegation – led by the Department of Trade and Industry (the dti) – will make a presentation on South Africa’s SEZ opportunities and incentives offered.
The SA delegation will also conduct a benchmarking exercise for the South African SEZs by visiting thriving SEZs in Shanghai for knowledge-sharing.
“The roadshow seeks to attract potential investors in different sectors to invest in our SEZs. The targeted audience will include investors, Chinese financial institutions and government representatives.
“In order to have vibrant SEZs and competitive regional economies, it is necessary to continuously implement a systematic marketing and investment approach for various SEZs in South Africa and to also state their value-proposition to potential investors,” said Magwanishe.
South Africa has eight designated SEZs located in six of the country’s provinces. The SEZs are supported by state-of-the-art infrastructure and competitive tax incentive package. The SEZs are Coega, Richards Bay, East London, Saldanha Bay, Dube TradePort, Maliti-A-Phofung, OR Tambo and Musina/Makhado.
The Deputy Minister said one of the strategic initiatives that government, through the dti, has earmarked for accelerating the country’s industrial development agenda is the SEZs Programme.
“According to the pdf Industrial Policy Action Plan (IPAP) (4.84 MB) , SEZs are used to stimulate foreign and domestic investment, increase production output leading to increased exports of value-added manufacturing goods and employment creation, amongst others,” he said.
In this light, Magwanishe said the fact that the current focus on the SEZ implementation programme is on attracting investments to the SEZs, the ultimate objective of the roadshow is to bring together high-level local and international investors together, with a view to entice their appetite to invest in South Africa.
Meanwhile, the South African business delegation has arrived in Nairobi, Kenya, for the three-day Trade and Investment Mission (TIM), which kicks off today.
The objective of the TIM is to deliver on the dti’s investment-led trade approach towards the African continent and to deepen bilateral trade and investment relations between South Africa and Kenya, and between South Africa and Tanzania as important economies within their respective regions.
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tralac’s Daily News Selection
Diarise: NILDS workshop on ECOWAS common currency (23 June, Abuja)
Former South African president, Thabo Mbeki, has been elected as the new Chairperson of the Board of the South Centre (pdf)
IMF-SARB high-level workshop on the withdrawal of correspondent banking relationships
The workshop, held on the margins of a meeting of the SADC Committee of Central Bank Governors, provided a forum for the public and private sectors to discuss trends in and drivers of CBR withdrawal, and, in the light of their experiences, to identify workable solutions for the future. Participants welcomed the opportunity to have a frank dialogue on challenges facing SSA and recognized the need for coordinated efforts to address them. While stressing the need to prioritize among many measures that could mitigate problems, they consider that building trust is critical and called for: strengthening communication channels with global banks, communicating expectations including by providing policy statements; and respondent banks providing requested information in a timely manner. The IMF and SADC will continue to follow up on the implementation of these measures and plan to reconvene in order to assess progress in around a year’s time. [FinMark Trust blog: When the bus driver is the only option...]
State of bank recovery and resolution laws in Africa (Norton Rose Fulbright)
Global law firm Norton Rose Fulbright has launched a comparative guide on the state of recovery and resolution laws for banks in Africa. Banks require specific resolution arrangements as a result of their interconnectedness with each other, the rest of the financial system, and the real economy. A credible recovery and resolution regime not only impacts depositors, it can also have potential impacts on international debt markets, rating agencies and correspondent banking. The firm’s interactive guide provides an overview of the requirements applicable to over 20 jurisdictions across Africa. Working with colleagues and correspondent law firms from across Africa, Norton Rose Fulbright’s global banks team undertook a review, examining:
Pan African Parliament to encourage free trade on the continent (PAP)
During its sixth ordinary session held in Midrand PAP adopted a report on the AFCFTA, which is the result of an agreement among all 55 members of the African Union. The report was presented by Hon. Alex Chersia Grant from Liberia who serves as vice chairperson of the Permanent Committee on Trade, Customs, and Immigration matters.
The PAP legislators are now required by the continental legislature to ensure that their respective national governments ratify the AFCFTA. The MPs agreed to ensure timely ratification of AFCFTA legal instruments once the executive branches had availed them to national parliaments. As elected representatives in their constituencies, the legislators agreed to encourage African private sector in their countries to invest and trade in the AFCFTA in order to generate jobs and decent standards of living. As members of the oversight institutions over the executive branch of their respective governments, the MPs agreed to demand (from their national governments) regular updates on their respective countries’ actions and progress concerning the AFCFTA.
African Union seeks aid for states affected by free trade zone (Financial Times)
“We’re trying to get some funds, an adjustment mechanism, to alleviate the impact [of cutting tariffs] and then move towards expanding the production base,” Mr Muchanga, from Zambia, said on the sidelines of a meeting of African finance ministers in Addis Ababa. He added that development partners such as the EU and World Bank had agreed “in principle” to provide the funds, which he estimated at billions of dollars.
Structural transformation and export diversification in Southern Africa (UNCTAD)
This paper analyses the structural transformation and export structures of five Southern African economies: Mauritius, Mozambique, South Africa, Tanzania and Zambia. The economic transformation is assessed in terms of both domestic output and international export composition. The focus on export structures is motivated by three factors. First, recent literature on structural transformation has shown export structure to be a good predictor of economic growth and therefore one of the possible explanations of cross-country income disparities. Second, countries generally export those goods where they have a comparative advantage, hence examining the export structure can help to understand the underlying knowledge or institutional advantages that make a country competitive. Finally, in the absence of disaggregated, cross-country production data, export data provide a useful approximation of the productive structures in an economy. An experiment of regional integration (Section 5, pdf): As a final exercise, this section attempts the following thought experiment: what would the export diversification opportunities look like if the five countries were to act as a single economy?
World Economic Situation and Prospects: update as of mid-2018 (UN)
Growth in the world economy is surpassing expectations and global GDP is now expected to expand by more than three per cent this year and in 2019, reflecting strong growth in developed countries and broadly favourable investment conditions, a new UN report finds. But rising trade tensions, heightened uncertainty over monetary policy, increasing debt levels and greater geopolitical tensions can potentially thwart progress, according to the United Nations World Economic Situation and Prospects (WESP) as of mid-2018, launched today in New York. In Africa (pdf):
The region is forecast to grow by 3.6% in 2018 and 3.9% in 2019, marking an upward revision since December. The improvement largely reflects stronger prospects in some of the region’s largest economies, such as Nigeria and Egypt. Per capita income growth, however, remains very weak, estimated at 1.1-1.3 per cent in 2018-2019, and insufficient to significantly alleviate poverty in the absence of dramatic declines in income inequality. Growth in Nigeria remains subdued, but recent improvement reflects terms of-trade gains, recovering oil production, greater foreign exchange availability and more solid non-oil growth, driving the upward revision to the forecast for West Africa. North Africa is benefitting from lower inflation in countries such as Egypt and Libya. However, ongoing political instability and security issues continue to hinder prospects for the Libyan economy. Growth prospects have improved for 2018 in East Africa, as continued recovery from droughts and new manufacturing infrastructure spur growth in Ethiopia. In Central Africa, fiscal consolidation and lower oil production are projected to constrain growth in 2018. The outlook for Southern Africa remains challenging. However, growth in South Africa is expected to accelerate modestly this year, as a result of stronger household consumption and improving investor confidence.
Fitch affirms Nigeria at ‘B+’; outlook negative (Proshare)
The ‘B+’ rating reflects Nigeria’s position as Africa’s largest economy and most populous country, its net external creditor position, and its well-developed domestic debt markets, balanced against a high level of hydrocarbon dependence, low levels of domestic revenue mobilisation and GDP per capita, and low rankings on governance and business environment indicators. The Negative Outlook reflects uncertainty about the sustainability of the economic growth momentum as the impact of earlier shocks eases and progress on addressing high interest service ratios. [Nigeria and remittances: a smoothening agent]
What manufacturers need to drive Kenya’s Big Four growth agenda (Business Daily)
Kenya Association of Manufacturers vice-chairperson, Sachen Gudka, spoke to Business Daily on the industry’s view of its role in Kenya’s economic advancement and what must be done to meet the ambitious targets. Excerpts: [Uhuru deal set to raise cost of imported goods]
Egyptian authorities, IMF staff reach staff-level agreement on Third Review for Egypt’s Extended Fund Facility (IMF)
Egypt is on track to achieve a primary budget surplus excluding interest payments in 2017/18, with general government debt as a share of GDP expected to decline for the first time in a decade. The budget for 2018/19 targets a primary surplus of two percent of GDP, which would keep public debt on a firmly downward path. The government also remains committed to continuing energy subsidy reforms to achieve cost-recovery prices for most fuel products by 2019. Together with raising revenues through tax policy reforms, this will help create fiscal space for important infrastructure projects, targeted social protection measures and essential spending on health and education.
Harmonisation of regulatory framework for the electricity market in Africa: pdf First progress report of the Chairperson of the Commission (119 KB) (AU)
The third phase of the implementation of the Programme Energy Regulatory Frameworks is scheduled to commence in May 2018. The activities will focus on piloting the application of the transmission tariff methodology, as well as the guidelines and monitoring plan developed in phase 2. A meeting of all power pools and relevant institutions is planned for the second week of May 2018. It is planned to select two power pools and one transmission line for the pilot project. The pilot phase will be undertaken simultaneously with intensive training of relevant national and regional institutions involved in regional power trade, namely power pools, power utilities, transmission system operators, power market system operators, national regulators and Ministry of Energy Departments in Member States. The expected outcomes of the pilot phase are as follows:
Today’s Quick Links: Reuters: Zimbabwe mines need $11bn investment to modernise Tanzanite One Mining Company bows to government pressure on taxes Tanzania: Bunge committee alleges gross neglect of livestock, fisheries sectors Bloomberg: China casts doubt on report of $200bn trade deficit offer USTR Lighthizer: NAFTA nations ‘nowhere near’ a deal Russian diplomat explains why free trade zone not yet BRICS priority Choking on our harvest: threats loom over global food trade |
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Structural transformation and export diversification in Southern Africa
What determines economic disparities among countries and how can we move forward to reduce these income gaps?
The development economics literature has studied how countries get rich since the time of Lewis (1954). This literature primarily attributes economic development to the process of structural transformation – economies grow as resources shift towards progressively more productive sectors. The speed at which this transformation occurs, in turn, determines why some countries get rich faster than others.
The forces of structural transformation operate at two levels. At the aggregate level, the transformation occurs as resources are reallocated from low-productivity agriculture to high-productivity industry, and eventually from industry to services after a certain income threshold is achieved (Kuznets, 1973).1 In the early phase of development, manufacturing plays a particularly important role in fostering those linkages through which the nexus between growth and structural transformation is sustained.
At the microeconomic level, significant productivity differences exist within each of the three broad sectors. Whether the economy transitions to producing more dynamic activities within a sector is conditional on the institutional environment and the know-how that is accumulated through comparative advantage in the production of similar goods. This suggests that development is a path-dependent process that requires deliberate policy choices to usher in economic transformation.
Recently, the role of structural transformation in promoting sustainable growth has gained renewed interest, as reflected in the promotion of sustainable and inclusive industrialization under Sustainable Development Goal 9 of the 2030 Agenda for Sustainable Development. This is attributed to many developing countries either having failed to diversify and deepen their production structure, as in the case of African nations, or experienced premature deindustrialization, as has been the case of Latin American countries.
This paper analyses the structural transformation and export structures of five Southern African economies – Mauritius, Mozambique, South Africa, the United Republic of Tanzania and Zambia. The economic transformation is assessed in terms of both domestic output and international export composition.
This paper was prepared by the Unit on Economic Cooperation and Integration among Developing Countries, Division on Globalization and Development Strategies, UNCTAD. The paper was authored by Piergiuseppe Fortunato, Francesca Guadagno and Rohit Ticku.
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PAP to ensure trade within Africa becomes a reality
The Pan African Parliament (PAP) has resolved to encourage African countries to allow free trade to happen within African countries.
PAP adopted a report on the African Continental Free Trade Area (AfCFTA). The report was presented by Hon. Alex Chersia Grant from Liberia who serves as vice chairperson of the Permanent Committee on Trade, Customs, and Immigration matters.
The AfCFTA is the result of the African Continental Free Trade Agreement among all 55 members of the African Union. If ratified, the agreement would result in the largest free-trade area in terms of participating countries since the formation of the World Trade Organization.
African heads of state and government gathered in Kigali, Rwanda in March 2018 to sign the proposed agreement. Forty-four of the 55 members of the African Union signed it on 21 March 2018.
The African Continental Free Trade Area is a continent-wide free-trade agreement brokered by the African Union (AU) and initially signed on by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018. The agreement initially required members to remove tariffs from 90 percent of goods, allowing free access to commodities, goods, and services across the continent.
The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022. The proposal will come into force after ratification by 22 of the signatory states.
The PAP legislators are now required by the continental legislature to ensure that their respective national governments ratify the AfCFTA. The MPs agreed to ensure timely ratification of AfCFTA legal instruments once the executive branches had availed them to national parliaments.
As elected representatives in their constituencies, the legislators agreed to encourage African private sector in their countries to invest and trade in the AFCFTA in order to generate jobs and decent standards of living.
As members of the oversight institutions over the executive branch of their respective governments, the MPs agreed to demand (from their national governments) regular updates on their respective countries’ actions and progress concerning the AfCFTA.
The AfCFTA was seen by the legislators as an initiative that offered policy credibility and enhanced market access to investors from both Africa and the rest of the world. AfCFTAis seen as a good exercise for Africans because it is going to improve living standards of African people.
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Economic growth ‘exceeds expectations’ but trade tensions are rising: UN report
Global economic growth in 2018 is exceeding expectations but heightened geopolitical tension and uncertainty over international trade could thwart progress, according to a new United Nations report.
The global Gross Domestic Product (GDP) is due to expand by more than 3 per cent this year and next, according to the UN’s World Economic Situation and Prospects (WESP) – an improved outlook compared with the 3 percent and 3.1 percent growth for 2018 and 2019, forecast six months ago.
The revision reflects strong growth in developed countries due to accelerating wage increases, broadly favourable investment conditions and the short-term impact of a fiscal stimulus package in the United States.
At the same time, widespread increase in global demand has accelerated the overall growth in trade, while many commodity-exporting countries will also benefit from the higher energy and metal prices.
Speaking at the launch, Elliott Harris, UN Assistant Secretary-General for Economic Development and Chief Economist, said the accelerated growth forecast was positive news for the international effort to reach the 2030 Sustainable Development Goals (SDGs), which include eradicating extreme poverty and hunger.
However, Mr. Harris cautioned that “there is a strong need not to become complacent in response to upward trending headline figures”. He added that the report “underscores that the risks have increased as well”, adding that rising risk “highlights the need to urgently address a number of policy challenges, including threats to the multilateral trading system, high inequality and the renewed rise in carbon emissions”.
Trade barriers and retaliatory measures mark a shift away from unambiguous support for the norms of the international trading system, the report notes, which threatens the pace of global growth with potentially large repercussions, especially for developing economies.
The report also finds that income inequality remains alarmingly high in numerous countries but there is evidence of noticeable improvements in some developing countries over the last decade.
It cites some countries in Latin America and the Caribbean region where specific policy measures related to minimum wage levels, education and government transfer payments have significantly reduced inequality over the last 20 years.
The report also finds that global energy-related carbon dioxide emissions increased by 1.4 per cent in 2017 due to faster global economic growth; the relatively low cost of fossil fuels and weaker energy efficiency measures, among other factors.
Economic outlook: Africa
In Africa, the region is forecast to grow by 3.6 per cent in 2018 and 3.9 per cent in 2019, marking an upward revision since December. The improvement largely reflects stronger prospects in some of the region’s largest economies, such as Nigeria and Egypt. Per capita income growth, however, remains very weak, estimated at 1.1-1.3 per cent in 2018-2019, and insufficient to significantly alleviate poverty in the absence of dramatic declines in income inequality.
Growth in Nigeria remains subdued, but recent improvement reflects terms-of-trade gains, recovering oil production, greater foreign exchange availability and more solid non-oil growth, driving the upward revision to the forecast for West Africa. North Africa is benefitting from lower inflation in countries such as Egypt and Libya. However, ongoing political instability and security issues continue to hinder prospects for the Libyan economy.
Growth prospects have improved for 2018 in East Africa, as continued recovery from droughts and new manufacturing infrastructure spur growth in Ethiopia. In Central Africa, fiscal consolidation and lower oil production are projected to constrain growth in 2018. The outlook for Southern Africa remains challenging. However, growth in South Africa is expected to accelerate modestly this year, as a result of stronger household consumption and improving investor confidence.
Average inflation in Africa remains on a downward trend, reflecting more stable exchange rates and lower food price inflation. This will allow monetary authorities in the region to cut interest rates to support economic activity, especially in East and Southern Africa. However, among the fuel exporters, monetary policy is likely to remain tight.
Fiscal deficits should narrow slightly in aggregate, driven by spending cuts and concerns over rising levels of public debt. African sovereigns are attracting record demand, as they tap international markets to take advantage of relatively low rates and strong demand from investors, before policy-tightening by the Fed drives up borrowing costs.
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Member States urged to honour their funding obligations to COMESA
The 37th Meeting of the Common Market for Eastern and Southern Africa (COMESA) Administrative and Budgetary matters came to an end on Friday, May 11, 2018 at the COMESA Secretariat in Lusaka. The meeting discussed financing of the Common Market programmes and human resources matters.
Specifically, the Committee assessed the status of member States contributions to the organization’s, budget adequacy of effectiveness of management’s internal controls and management risks covering operations; financial reporting; and ensuring compliance with the Treaty and other Rules.
Among the reports considered were from the COMESA Court of Justice, Africa Leather and Leather Products Institute; Regional Investment Agency; Competition Commission; and Federation of National Associations of Women in Business in Eastern and Southern Africa.
Addressing the member States delegates at the opening ceremony, Secretary General Sindiso Ngwenya expressed concern at the status on contributions to the Common Market budget from Member States. He noted that COMESA will not be able to provide the required institutional administrative and support if the member States failed to honour their financial obligations.
“As Secretary General, I have concluded that it is necessary for COMESA Member States to consider revisiting the current level of their annual contributions, at a minimum to take over the additional burden arising from withdrawal of Cooperating Partners funding towards staffing and institutional requirements.”
Currently, over 85% of annual Member States contributions are allocated towards staffing and institutional administrative and support requirements.
Mr Ngwenya indicated that the Committee meeting comes a time when the President of Rwanda is providing leadership to AU reforms, which will trickle down to RECs, including COMESA.
“At the core of the reforms at the AU is a question of how to finance AU/REC programmes in a sustainable manner,” he said. “I request this Committee on to reflect on matters such as the current levels of contribution and remittance.”
The recommendation of the Committee will be presented to the Inter-Governmental Committee and later to the Council of Ministers for decision making during their scheduled meetings in June 2018.
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tralac’s Daily News Selection
Diarise: Moving forward with the implementation of the Africa Continental Free Trade Area – opportunities and challenges (24 May, Wilson Center, Washington). The speakers: Dr Arikana Chihombori Quao (Permanent Representative of the AU to the US); Donald Kaberuka (AU High Representative for Financing of the Union and Peace Fund); Ambassador Stephanie Sanders Sullivan (Bureau of African Affairs, US Department of State); Ambassador Étoundi Essomba (Ambassador of Cameroon; Co-Chair of the African Ambassadors’ Group). The discussion will be webcast.
US opposed to 0.2% import tax to fund AU (KT Press)
In REC updates:
ECOWAS Trade Information System: update. Trade experts from ECOWAS member states began a two-day meeting in Abuja yesterday to enhance their knowledge on the ECOWAS Trade Information System project and deliberate on the expected content for national trade portals to be linked to ECOTIS. The Commissioner for Trade, Customs and Free Movement, Mr Tèi Konzi, emphasized the importance of reliable and timely access to trade information in the West African region for developing export competitiveness in the global market place. Mr Konzi stressed the need for ECOTIS and its potentials to create transparency in trade policy development in Member States as well as country involvement in the process to ensure that the system will be beneficial to all users and stakeholders in view of the establishment of the AfCFTA. Mr Julien Bornon, UNCTAD Program Manager, will present a case study report of the Benin, Mali and Nigeria Trade Portals to generate discussions on the expected content for national trade portals. The web-based ECOTIS project will also serve as a monitoring platform for the implementation of ECOWAS regional trade framework.
ECOWAS Parliament: ECOWAS predicts 2.1% growth rate for Nigeria in 2018. President of the ECOWAS commission, Jean Kassi Brou, stated this on Tuesday, while presenting the report on the implementation of the community work programme at the 2018 First Ordinary Session of the ECOWAS Parliament in Abuja. Brou, said in terms of economic performance, the region is expected to grow economically by 3.2% in 2018, compared to 2.3% 0.2% in 2017 and 2016 respectively. “Nigeria, the largest economy in the region, is expected to record a growth rate of 2.1% in 2018 as against 1.6% in 2017 and 0.8% in 2016”, he said. He stated also that in 2018, six member states compared to five in 2017 are expected to record a growth rate equal or above 6%. The countries are Côte d’Ivoire (7.9%), Burkina Faso (7.0%), Senegal (7.0%), Ghana (6.3%), Benin (6.1%) and Sierra Leone (6.0%).
Morocco’s ECOWAS membership undecided – Brou. The President of the Commission, Jean Claude Brou, disclosed this while fielding questions at by members of the ECOWAS Parliament after presenting the status of the community to the legislative arm during its 2018 First Ordinary Session in Abuja. Jean Claude Brou stated that upon the submission of the report in 2017 at the 52nd meeting of the Conference, the heads of state asked for more work to be done and appointed Nigeria, Ghana, Guinea and Côte d’Ivoire to conduct more in-depth analysis on the implication of Morocco’s membership. The report is billed to be submitted to the Heads of State at their next meeting, in June.
Kenya: Import cargo set for 100% inspection in fake goods war (Business Daily)
All consolidated import cargo will be fully inspected to weed out counterfeit, contraband and substandard goods, the government has announced. In a statement on Thursday, Industrialisation and Trade Cabinet Secretary Adan Mohamed said an incinerator will be installed at Mombasa port to hasten destruction of counterfeit, substandard or contraband goods. Kenya Bureau of Standards managing director James Ongwae said a multi-sectoral team operating in all entry points will be inspecting consolidated cargo. “This is effective from today. If we find substandard goods it is going to be destroyed. We have also commenced a 100% inspection of all containers carrying used shoes and clothes.”
Tanzanian president directs enforcement of heavy taxes on imported crude edible oil (Xinhua)
Tanzanian President John Magufuli on Tuesday directed relevant authorities to amend taxes on imported crude edible oil with a view to imposing heavy taxes on the commodity. The president made the directive when he made an impromptu visit to the Dar es Salaam port where the Tanzania Revenue Authority has detained 90,000 tonnes of imported edible oil over unresolved tax issues. Magufuli directed the Minister for Trade, Industries and Investment, Charles Mwijage, to table a schedule of amendment of the taxes in the ongoing parliamentary budget sessions with a view to imposing higher taxes on imported crude cooking oil. The president made the directive after a committee which was formed to investigate the 90,000 tonnes of consignment of edible oil revealed that some importers of the consignment had lied to TRA that the shipment contained crude edible oil while in fact the cargo contained refined and semi-refined edible oil.
Rwanda: Private sector lobbies for more funding for Export Guarantee Fund to boost exports (New Times)
Callixte Kanamugire, Chief Advocacy Officer at PSF, told members of the parliamentary Standing Committee on National Budget and Patrimony last week that there is need to increase the amount of funds allocated to the fund in order to serve more export-oriented businesses, especially bigger enterprises. At the core of the worries held by PSF officials is the shrinking budget for the fund and they brought to the attention of MPs that it’s a concern that while in the 2016/2017 financial year the government allocated Rwf8 billion to the fund, it has since reduced the money to Rwf1.2 billion in the current financial year 2017/2018 as well as the next fiscal year 2018/2019. The Minister for Trade and Industry, Vincent Munyeshyaka, said the reduced budget for the export facility fund should not be understood as a policy shift but a temporary lack of funds that can be addressed any time. “MINECOFIN is talking to different donors so we can get more funds for the facility. The Government will continue to look for means to support this Fund.”
GHEITI: Ghana received significant oil revenue in 2015 (Ghanaweb)
The government received a total of $396.17m as petroleum revenue for the year 2015, and exported crude oil that contributed to 18.7% of the total merchandise export. The petroleum sector also contributed 4.1% to Ghana’s GDP in 2015, which is a significant achievement, the Ghana Extractive Industries Transparency Initiative Report on the Oil and Gas Sector 2015, has revealed. The 2015 GHEITI Report, lunched together with that of the 2015 Mining Sector Report in Accra on Wednesday, has, however, revealed that a net negative discrepancy of 289,381 dollars was obtained between company payments and government receipts.
Devaluation takes toll as Nigerian banks absent from S&P top 30 (BusinessDay)
In global economy news:
How preferential is preferential trade? (World Bank)
World trade is increasingly ruled by preferential trade agreements, but their precise nature remains relatively opaque. This paper assesses a central dimension of these agreements, the significance of tariff preferences, using a new data set on preferential and non-preferential or Most Favored Nation applied tariffs, constructed by the International Trade Center and the World Bank. The data set covers 5,203 products, 199 reporters, and 239 partners, representing approximately 97% of world imports in 2016. There are three main findings:
2018 Revision of World Urbanization Prospects (UN DESA)
Owing to both demographic shifts and overall population growth, that means that around 2.5 billion people could be added to urban areas by the middle of the century, predicts the UN Department of Economic and Social Affairs. Most of the increase is expected to be highly-concentrated in just a handful of countries. “Together, India, China and Nigeria will account for 35% of the projected growth of the world’s urban population between 2018 and 2050. It is projected that India will have added 416 million urban dwellers, China 255 million and Nigeria 189 million,” said DESA, announcing the findings on Wednesday. The report also estimates that by 2030, the world could have 43 so-called megacities (up from 31 today, according to reports) – those with more than 10 million inhabitants – most of them in developing countries. By 2028, the Indian capital, New Delhi, is projected to become the most populous city on the planet.
W. Gyude Moore: Rethinking the infrastructure gap in the poorest countries (CGD)
A recent blog post by Ricardo Hausmann caught my eye because it addresses issues that I’ll be focusing on during my visiting fellowship here at the Center for Global Development. Hausmann—a former Venezuelan minister of planning—discusses the difficulty of closing the infrastructure gap in developing countries, and highlights the dilemma of whether governments should finance infrastructure projects through public-private partnerships or through their national budgets. He’s right about the dilemma, but his solution isn’t workable for fragile and low-income countries where infrastructure needs are greatest. [Devex: Meet MIGA, the World Bank agency coming of age]
Corporate rent-seeking, market power and inequality: time for a multilateral trust buster? (UNCTAD)
Growing public concern over the significant rise of large technology companies, the continued excesses of financial rentierism and the proliferation of abusive tax-related practices by large corporations has led to a renewed interest in how private corporate interests prevail over public interests of inclusiveness, higher income equality and sustainability. Based on a new firm-level database on developed and developing countries, this policy brief (pdf) discusses recent trends in the evolution of non-financial corporate rents and their core policy implications. Key points:
Today’s Quick Links: Botswana wants to shrink civil service so privatisation can grow the economy Botswana president eyes jobs in new ‘marriage’ with De Beers Angola to privatise 74 state companies and reduce state interference Mauritius, Madagascar discuss investment opportunities Ghana: Textile companies appeal for tax exemptions to help save dying industry Ghana: Parliamentary Select Committee on Trade, Industry and Tourism review paperless process at Tema port Nigeria FG, Chinese firm sign $6.68bn Ibadan-Kaduna rail line contract |
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U.S. opposed to 0.2% import tax to fund AU
The United States does not want a tax on imports proposed by African leaders to raise at least $1.2 billion annually to fund the African Union, a security symposium in Rwanda heard Wednesday.
Dr. Donald Kaberuka, who worked on team that proposed the levy, told the symposium that he did not understand why the US was against the idea yet it would make Africa stop asking for funding from Washington.
“It is 0.2% not 2%… the US government says this is a violation of World Trade Organisation (WTO) rules,” said Kaberuka, speaking at the 6th National Security Symposium in Musanze district, northern Rwanda.
He added: “I looked through the text of the WTO rules and its true the clause is there which is called ‘Treat everybody equally’… we are still talking to our American friends hope they come to a point where they realise that if there is peace, stability, progress in Africa – it will be a global public good.”
As Kaberuka spoke, the new US Ambassador Peter H. Vrooman was in the audience. But the former Rwanda Finance Minister, also former President of the African Development Bank, said he hoped the US envoy would “invite me for tea” even after the spat of the levy.
Financing of the Africa Union was a historic decision adopted by Heads of State and Government (HOSG) in a “Retreat on Financing of the Union” during the 27th African Union Summit held in Kigali, Rwanda in July 2016.
The Decision directed all African Union Member States to implement a 0.2% levy on eligible imports for to finance the African Union. The decision came into operations for each Member States from January 2017.
The annual budget of the African Union Commission is about $700 million – meaning the $1.2 billion that will be collected as a result of the tax levy will cover double what is needed today, explained Kaberuka.
The security symposium took place from 14-16 May 2018 and was attended by student officers from different countries at the Rwanda Defense Force Command and Staff College.
The students attending the college come from Rwanda, Czech Republic, Ghana, Malawi, Kenya, Uganda, Tanzania, Senegal and Zambia.
Dr Kaberuka was speaking on a panel shared with Rwanda’s Foreign Minister Louise Mushikiwabo and Ambassador Ron Prosor, former Israeli UN envoy and currently with the Hudson Institute.
They were discussing the theme: “Contribution of African home grown solutions to African problems – the AU perspective”.
It is not the United States alone that is not happy with the new tax. Very few countries have put the levy onto their books, months after it came into force.
Kaberuka told the audience that he was going to hold consultative talks with African Envoys in Washington this week to map the way forward.
“We have already found a solution with the AfCFTA,” said Kaberuka referring to the continental free trade pact adopted in Kigali in March, adding that Africa will be a single market so the levy will be on imports coming from outside the continent.
Kaberuka said the auto-funding formula being proposed for AU is the same used by EU to emerge from the devastation of World War 2. “So don’t tell me it can’t work,” he added.
Foreign Minister Mushikiwabo for her part narrated the story of Rwanda – how it has been able to come up with its own ‘home grown solutions’ to deal with the aftermath of the 1994 Genocide against Tutsi in Rwanda.
When asked what Somalia can do to get out of the mess it finds itself decades on, she said: “Just as Rwanda emerged 20 years after, Somalia will too. Somalia has incredible diaspora, coastline and many other assets… However, it all depends on whether Somalians are willing to change mindset and take the opportunity.”
Meanwhile, earlier, on another panel discussing deficiencies of UN peacekeeping operations, Rwanda army Chief of Defense Staff Gen Patrick Nyamvumba repeated Rwanda’s cry for review of mandating of peacekeeping missions.
Referring to the so called Kigali Principles, a set of global benchmarks adopted to protect civilians in conflicts zones, Nyamvumba said national governments should deploy their troops with mission to use force to defend themselves and the communities they are deployed.
Gen Nyamvumba, himself a former UN force commander in the troubled Sudanese region of Darfur, narrated how an Ambassador of a troop-contributing country confronted him after some of their soldiers were killed. The Ambassador apparently demanded that Gen Nyamvumba gives him assurance that no more of their troops would be killed. Nyamvumba told the audience that he firmly declined to give that “assurance”.
“This is serious business,” is how Nyamvumva put it in his explanation to the symposium, adding: “I would rather have 5,000 troops that are willing to do their job right, than have 20,000 that are [ineffective]….”
Former Netherlands foreign minister Arbert Koenders, contributing to the discussion also said for UN peacekeeping to work the UN and member states had to understand it needs ‘cost, risk and mandate’, otherwise the UN will be “bogged down for many, many years.”
National Security Symposium 2018
The three-day National Security Symposium 2018 jointly organized by Rwanda Defence Force Command and Staff College (RDFCSC) and the University of Rwanda (UR) was officially closed on 16 May 2018 in Musanze District. The NSS was held under the theme: "Contemporary Security Challenges: The African Perspective”.
While officiating at the closing ceremony, the Rwandan Minister of Defence Hon Gen James Kabarebe thanked all participants and particularly speakers and moderators for the invaluable contribution and fruitful discussions.
“We have spent 3 useful days having inspiring and informative discussions all made to mentor and empower our students. The students you spoke to are drawn from many countries… so you spoke to almost the whole of Africa. Together with these students, we have all gained and learnt so much that will help us to confront the many security challenges ahead,” Minister Kabarebe noted.
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ECOWAS experts meet on Trade Information System
Trade experts from Members States of the Economic Community of West African States (ECOWAS) on Wednesday, 16th May, 2018 began a two-day meeting in Abuja, Nigeria, to enhance their knowledge on the ECOWAS Trade Information System (ECOTIS) project and deliberate on the expected content for national trade portals to be linked to the ECOTIS.
In his welcome address, the Commissioner for Trade, Customs and Free Movement of the ECOWAS Commission, Mr. Tèi Konzi emphasized the importance of reliable and timely access to trade information in the West African region for developing export competitiveness in the global market place.
Mr. Konzi stressed the need for ECOTIS and its potentials to create transparency in trade policy development in Member States as well as country involvement in the process to ensure that the system will be beneficial to all users and stakeholders in view of the establishment of the African Continental Free Trade Agreement (AfCFTA).
In his remarks, the GIZ Advisor Trade and Customs, Mr. Kelechi Okoro, reaffirmed GIZ’s commitment to ECOWAS on the project which was launched by Dr. Gbenga Obideyi led Directorate of Trade of the ECOWAS Commission in Abuja, on 21st, June, 2017.
Mr. Okoro called on participants to find ways of integrating the efforts of the United Nations Conference on Trade and Development (UNCTAD) into the system to provide for easy access to reliable information on trade and related issues.
Mr. Julien Bornon, Program Manager in UNCTAD is representing his organization at the meeting and will present a case study report of Benin, Mali and Nigeria Trade Portals to generate discussions on the expected content for national trade portals.
The Web based ECOTIS project will also serve as a monitoring platform for the implementation of ECOWAS Regional trade framework.
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Final round of negotiations for Somalia’s return to COMESA
Somalia Government delegation meets the COMESA Bureau of Council
The final negotiations towards the admission of the State of Somalia to COMESA concluded Wednesday, May 16, 2018 at the COMESA Secretariat in Lusaka with the review of a draft Agreement on the country’s accession to the COMESA Treaty.
Representatives of the COMESA Bureau of the Council of Ministers led by the Secretary General at the Ministry of Trade and Consumption of Madagascar, Mrs. Rafidy Josielle, led the negotiations. Somalia delegation was led by Mr. Ahmed Elmi Muhumud, Adviser to the Minister of Commerce and Industry.
The negotiations came ahead of the forthcoming 20th COMESA Summit whereby Somalia and Tunisia are set to join the regional bloc, having fulfilled the terms and conditions of accession to the COMESA Treaty.
Assistant Secretary General Dr Kipyego Cheluget and the Director of Legal Affairs Mr. Brian Chigawa as well as other COMESA senior officials assisted the two parties in the negotiations.
With the entry of Somalia and Tunisia, membership to the regional bloc will rise from 19 to 21 thus making COMESA, which is the largest regional economic community in Africa, even larger.
Somalia was formerly a full member of the Preferential Trade Area for Eastern and Southern Africa (PTA), the predecessor of COMESA, but failed to make the transition due to lack of government following a long civil war.
Upon admission, the new member States will be bound by the provisions of the Treaty. Within six months of admission, they shall deposit the instrument of acceptance with the Secretary General of COMESA together with an instrument of accession. This will mark the full admission to membership.
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Kenya: Import cargo set for 100% inspection in fake goods war
All consolidated import cargo will be fully inspected to weed out counterfeit, contraband and substandard goods, the government has announced.
In a statement on Thursday, Industrialisation and Trade Cabinet Secretary Adan Mohamed said an incinerator will be installed at the Port of Mombasa to hasten destruction of counterfeit, substandard or contraband goods.
Kenya Bureau of Standards (Kebs) Managing Director James Ongwae said a multisectoral team operating in all the entry points will be inspecting consolidated cargo.
“This is effective from today. If we find substandard goods it is going to be destroyed. We have also commenced a 100 per cent inspection of all containers carrying used shoes and clothes.
“We have already condemned two containers carrying used clothes and shoes at the port of Mombasa. All imports through Eldoret airport will undergo a 100 per cent inspection,” warned Mr Ongwae.
Owners
He said the team has a list of owners of some of the 163 condemned containers with goods valued at Sh250 million.
Ten of the containers were on Wednesday destroyed. Kebs boss led ministry officials in destroying the substandard imported goods worth more than Sh15 million.
The remaining containers are earmarked for destruction in the coming weeks.
The destruction at Bamburi Cement plant is part of the government’s efforts to end importation of fake goods.
“Some of the owners went underground after their containers were discovered to be substandard. But in cases where the owners are known they will be prosecuted. Most of the items were imported through a bank.
"Mombasa port, Eldoret and Jomo Kenyatta international airports are among entry points where contraband goods are sneaked into the country. But we are scanning all containers,” he warned.
He said all imports through the Eldoret airport would be subjected to a 100 per cent inspection to ensure they meet the required standards and specifications.
Local market
Mr Ongwae warned traders against importing counterfeits that are killing the local market.
Trade Principal Secretary Chris Kiptoo said the goods were liable to seizure, forfeiture and destruction as per the standards Act CAP 496 and the pdf East African Community Custom Management Act (18 KB) .
“President Uhuru Kenyatta has declared total fight against illicit trade. It is a number one enemy to the development of Kenya.
"These 10 containers are part of 163 earmarked for destruction in the coming weeks,” Dr Kiptoo said.
The incinerated goods were expired rice imported from Pakistan, used tyres that are condemned and prohibited in Kenya, and spaghetti that did not meet standards specification after laboratory analysis.
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tralac’s Daily News Selection
AUC holding workshop series to develop next phase of PIDA
The Arab and the Maghreb Union and IGAD were the first of the eight RECs to kick-start a continental consultative process (8-10 May, Tunis) to work together on a 60-question face-to-face consultation in a bid to assess the progress achieved so far in PIDA and highlight the strengths and success stories as well as the weaknesses of the processes and instruments put in place for achieving the 2020 targets set in the PIDA-PAP. The consultation in Tunis is expected to be followed by consultations in Nairobi, South Africa, Tanzania and Ghana, ahead of a continental presentation on the results in October 2018.
Related postings on forthcoming African infrastructure policy discussions: Joint EU-Africa Strategy Reference Group on Infrastructure (17-18 May, Addis): draft agenda (pdf); Ministerial Working Group on the operationalisation of the Single African Air Transport Market (25-28 May, Lomé): the concept note (pdf)
Global Trade Review interview: Afreximbank president unveils new initiatives and thoughts on Africa’s trade finance gap
AUC Deputy Chairperson, Ambassador Kwesi Quartey: For Africa to trade, it has to produce first (AU)
Perhaps the most illustrative of examples of this underperformance lies in the trade liberalization, the lack of implementation of policies, the poor infrastructure, the restrictive movement of persons, insecurity and governance challenges and the literacy and skills crisis in the continent. We must scale up infrastructure investment to improve connections between and within African countries. Though over the years we have seen great progress in infrastructure development of trans-border roads, rails, ports modernization and power sharing pools, more must be done to complete these projects and reap the full benefits. Railway lines must not only be from the gold mine to the harbour.
At the same time, there is a need to make trade more conducive through the elimination of trade non-tariff barriers such as the restrictive travel policies and visa regimes. Just try getting a visa to Ethiopia, our diplomatic capital! The latest visa openness index report shows slight improvement by states to open up their borders but more commitment must go into it to a point where you do not need a visa to travel to 45% of our countries. We must encourage managed migration and mobility. We must also seek to harmonize our trade policies. We must address the issues of the prohibitive transaction fees and seek to harmonize the rules of origin which greatly informs the imposed duties, and in accordance to the source of imports. This will greatly encourage competitiveness in trade. I am glad to note in this regard that the dialogue has been enhanced in the harmonization of the rules of origin as our states implement the decision on financing of the Union by imposing the 0.2% levy on eligible imported goods. That therefore, is a good start.
Conference of Ministers praised for tackling ‘real’ African issues: summary of ministerial statement (UNECA)
Country updates
South Africa Systematic Country Diagnostic: An incomplete transition – overcoming the legacy of exclusion (World Bank)
This SCD identifies five key constraints. These are (i) insufficient skills; (ii) the skewed distribution of land and productive assets, and weak property rights; (iii) low competition and low integration in global and regional value chains; (iv) limited or expensive spatial connectivity and under-serviced historically disadvantaged settlements; and (v) climate shocks: the transition to a low-carbon economy and water insecurity. Extracts (pdf):
The shift in strategic emphasis of South Africa’s trade policy from developed markets to African markets can also be understood in the context of levels of competitiveness, which are low by global standards but sufficiently high by regional standards. This is further supported by relatively low barriers to entry in African markets, given relatively short distances and membership of regional trade agreements, such as SADC and SACU. Regional integration holds significant potential, as South African investment in Africa has been supporting development across the continent, especially in services (including finance, retail, and communications). A challenge will be to ensure that South African firms do not simply crowd out domestic firms, but help build value chains, and that South Africa remains an outlet for products produced across African value chains into the rest of the world. This will support growth in the region and benefit both South Africans and other Africans, such as the large number of migrants sending home remittances or those finding jobs in other African countries, through higher growth from regional integration. Further to this point and the previously discussed dynamism of South African services as inputs into other sectors’ exports, South African services firms have much to gain from greater services liberalization in the region through the implementation of the 2012 SADC Services Protocol. Industries in other southern African countries would benefit from greater access to these highly competitive inputs.
The manufacturing sector’s lack of competitiveness also helps explain the weak export response to real depreciations, further supporting persistent current account deficits. South African exports have barely been responding to real depreciations of the rand because the divergence in productivity – and the associated loss in competitiveness – is the reason for the depreciation in the first place. Except for commodity booms, South African exports tend to lag behind global trade growth. South Africa is thus losing global market share. Real depreciations tend to improve the trade balance and the current account, by compressing imports without necessarily a matching export response. In this sense, South Africa’s limited diversification is a consequence of low productivity, constituting an external vulnerability, as it limits the adjustment of external balance. Chapter 3 explains that bottlenecks in reliably and cost-effectively delivering critical network and infrastructure services, such as logistics, internet, and electricity, further erodes this competitiveness.
South Africa: dti Budget Vote address by Minister Rob Davies (dti)
South Africa is inextricably linked with the continent and in light of this the country’s engagement in promoting developmental regional integration continues unabated. In the short time available, I will mention just two issues. First, we have agreed with a number of our partners in the EAC to target the completion of the tariff schedule negotiations between SACU and the EAC by July. This will be an important, commercially meaningful step, towards the implementation of the Tripartite SADC-Comesa-EAC Free Trade Area and a significant step towards our eventual goal of a Continental FTA. Second, SADC has developed its road map towards its regional Industrial Development Action Plan. In August this year, South Africa will assume the chair of the SADC and I want to indicate that we will spare no effort to ensure that our REC is actually implementing its regional industrial programme before we hand over the chair next year.
Mozambique: National AGOA Utilization Strategy, 2018-2025 (SPEED+)
In spite of the low volume of export to the US and low utilization of AGOA, Mozambique does have a viable export sector with at least 20 product lines that would be eligible for AGOA if exported to the US. Of these goods, several are highly demanded in the US suggesting ample opportunity for Mozambique to export to the US. Through a rigorous 4-level analysis of Mozambique’s exports, measured against US demand and AGOA eligibility, 5 sectors and at least 13 goods were identified for high AGOA potential and for focus in this strategy. This strategy includes 21 recommendations (pdf) on improving awareness of AGOA, competitiveness of specific sectors, and exploiting the benefits granted to goods made in Mozambique for the US market.
Ethiopia Economic Update: The inescapable manufacturing-services nexus – exploring the potential of distribution services (World Bank)
Part one of this Economic Update, on recent economic developments and outlook, discusses Ethiopia’s growth strategy, emphasizing the sustainability of the country’s investment-focused and export-led growth model. Part two looks at the interlinkages between manufacturing and services, with a special focus on the role of distribution services in promoting Ethiopia’s export competitiveness and eventually its structural transformation. Extracts (pdf): The case studies on the role of distribution services in the dairy, teff, sesame, and textiles value chains show that although distribution services are critical in the performance of each value chain, they are only one part of the story. Eliminating the obstacles to distribution services could help link rural producers to markets for inputs, facilitate the sale of raw milk, or reduce post-harvest and storage losses. But other binding constraints, such as limited access to finance or lack of skills, would need to be addressed in parallel for distribution services reforms to benefit consumers and facilitate value chains climbing into higher value-added activities (such as cheese or sesame oil) and increase exports.
“Notes from a small island”: reflections on Mauritius and Seychelles (World Bank)
For the past few years, I have been fortunate enough to be the World Bank’s resident economist for Mauritius and Seychelles. With this now coming to an end, here are some especially striking impressions of these countries’ successes and challenges that I hope can provide food for thought more widely.
UNCTAD Technology and Innovation Report 2018: harnessing frontier technologies for sustainable development
The report calls for a concerted international effort to build technological capabilities and to support all forms of innovation in developing countries. Least developed countries, in particular, should receive international support to build their domestic capabilities and create the enabling environment necessary for frontier technologies to deliver on their promise. The report also notes (pdf) that the spread of new technologies threatens to outpace the ability of societies and policymakers to adapt to the sweeping changes that they generate and calls for an international dialogue to develop policy responses to the serious ethical, environmental, economic and social questions raised by frontier technologies. Similarly, massive open online courses (MOOCs) may enable better-off, more educated and more digitally-connected students and professionals to supplement their education with world-class content, leaving further behind those without digital access, economic opportunities or accessible education – especially in the world’s poorest countries.
Tracking SDG7: The Energy Progress Report (IRENA)
Prepared by the Custodian Agencies for Sustainable Development Goal (SDG7), the report gives the international community a global dashboard to register progress on three key targets: ensuring universal energy access; doubling progress on energy efficiency; substantially increasing the share of renewable energy by 2030. It assesses the progress made by each country on these targets and provides a snapshot of how far we are from achieving SDG7. Extract (pdf): The regions of sub-Saharan Africa and South Asia continue to have the largest access-deficit. The number of people without access in sub-Saharan Africa has recently begun to fall in absolute terms for the first time, driven by strong performers in East Africa. Electrification also outpaced population growth in South Asia. About 80% of those without electricity live in top 20 largest access deficit countries whose progress has a major influence on global outcomes. While this group made progress overall, access gains were uneven. Some of the strongest gains were Bangladesh, Ethiopia, Kenya and Tanzania, which expanded access by at least 3% of their population annually between 2010 and 2016. [Vienna Energy Forum 2018: update]
Today’s Quick Links: Rwanda’s flower exports double as more investment comes in Zimbabwe proposes new gold policy Zimra net revenue collections improve Raila Odinga’s Cambridge lecture: Africa in a changing world South Africa’s foreign policy: speech by Minister Lindiwe Sisulu during International Relations and Cooperation Dept Budget Vote 2018/19 Nigeria’s 2018 budget: Senate inflates 2018 budget by 6% to N9.1 trillion; National Assembly to pass N9.120trn budget Wednesday; 2018 budget is the most delayed in 19 years Going to Africa? The full guide on how easy or difficult it is to visit all African countries from Nigeria! |
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For Africa to trade, it has to produce first, says AU Commission Deputy Chairperson
As African Ministers of Finance gathered in Addis Ababa to seek an integrated approach to the implementation of the African Continental Free Trade Area Agreement, the African Union Commission Deputy Chairperson Amb. Kwesi Quartey lauded the progress on the implementation process of the historic decision.
“The ratification process has begun in earnest, with two countries, Kenya and Ghana, having already deposited their Instruments of Ratification. Rwanda and Niger have also signed the agreement. Africa’s ability to trade with itself, as well as with the rest of the world, will be an absolute game changer,” he stated.
At the same time he underlined the need for Africa to scale up their production capacity inorder to realize the full potential for intra-African trade.
Statement by AUC Deputy Chairperson Amb. Kwesi Quartey
I am both honoured and delighted to be part of this engagement at developing an integrated approach to addressing our continent’s challenges.
The recent signing of the Continental Free Trade Area Agreement was a truly historic development. We have learnt that the ratification process has begun in earnest, with two countries, that is, Kenya and Ghana, having already deposited their Instruments of Ratification. Africa’s ability to trade with itself, as well as with the rest of the world, will be an absolute game changer. The potential for intra-African trade to drive value creation and development is both palpable and real. But in order to trade, Africa first has to produce. And not just primary commodities. We must begin to apply science and technology to production. Statistical evidence has demonstrated that intra-African trade has tended to be mainly in processed foods, that is, goods and commodities to which value has been added.
Africa’s ability to trade and do business with itself is what will drive the African Continental Free Trade Area. The potential of Africa’s integration and intra-Africa trade are enormous if we are able to take advantage of the economies of scale, creation of job opportunities and generation of income, mobility of investment capital and exploring our consumer market of nearly one billion people. Whilst the benefits are clear and widely acknowledged, there is also the underlying need is to review the strategies to drive Intra-Africa trade and integration agenda and whose successes, would reinforce Africa’s place in the global economy and strengthen our bargaining power in international negotiations.
As the rest of the world becomes increasingly fractured, we must advance our integration agenda and advance from 55 fragmented markets into a larger market with the prospects of a combined GDP of over three trillion dollars annually. If you look at the forecast from the intra-Africa trade simulations, CFTA will increase the consumer spending to about $1.4 trillion in 2020 and similarly increase intra-African trade by as much as $35 billion per year, or 52 percent above the baseline by 2022.
There are a number of points I would like to make today.
First, we must begin to interrogate why with a potential to run into trillions of dollars, intra-African trade stands so low. The answer lies in our history. It goes to the origin of the African State – the Berlin Conference of 1884/85. But that is a story for another day.
Perhaps the most illustrative of examples of this underperformance lies in the trade liberalization, the lack of implementation of policies, the poor infrastructure, the restrictive movement of persons, insecurity and governance challenges and the literacy and skills crisis in the continent.
We must scale up infrastructure investment to improve connections between and within African countries. Though over the years we have seen great progress in infrastructure development of trans-border roads, rails, ports modernization and power sharing pools, more must be done to complete these projects and reap the full benefits. Railway lines must not only be from the gold mine to the harbour.
At the same time, there is need to make trade more conducive through the elimination of trade non-tariff barriers such as the restrictive travel policies and visa regimes. Just try getting a visa to Ethiopia, our diplomatic capital! The latest visa openness index report shows slight improvement by states to open up their borders but more commitment must go into it to a point where you do not need a visa to travel to 45 percent of our countries. We must encourage managed migration and mobility.
We must also seek to harmonize our trade policies. We must address the issues of the prohibitive transaction fees and seek to harmonize the rules of origin which greatly informs the imposed duties, and in accordance to the source of imports. This will greatly encourage competitiveness in trade. I am glad to note in this regard that the dialogue has been enhanced in the harmonization of the rules of origin as our states implement the decision on financing of the Union by imposing the 0.2% levy on eligible imported goods. That therefore, is a good start.
The second point I would like to raise is on the manufacturing and processing capacity as a key aspect in the African intra-trade vision. The situation now is that most of our primary natural resources are exported as raw materials and imported as processed goods. With a bulging youth population, our demography presents us vulnerabilities if not well harnessed. We are denying them job opportunities and meaningful engagement if we do not enable prospects of value addition and value chains, provision of markets and the ability to utilize science and technology for innovation. The key is education, all-inclusive education. Every child in school.
With urbanization, there are opportunities in markets for surplus production. We must enhance the linkages for the rural communities to the urban markets and vice versa, link the rural community with technology, infrastructure and resources to expand their production and trade. Africa has the potential to feed itself but we have to stop being net importers of food, which continues to hamper the growth of our farmers and SMEs. We must create conducive environment for the growth of the cross-border trade which is mostly undertaken by women. We must allow them to expand and eventually we will find that we are able to integrate informal trade, (which counts for over 50% of GDP remains mainly untaxed) into the formal economy, and swiftly alleviate poverty.
Cross-border trade must not only be looked at from the perspective of goods. We must also consider services especially in the SMEs and which would thrive with states coming together to harmonize standards to a generally accepted level of qualification for professionals. Many of graduate doctors are jobless yet many of our people are dying due to lack of caregivers. Imagine the prospects of allowing skills migration across the continent. Therefore, we must begin to look at intra-African trade in its holistic nature.
My third observation would be on capacity building in a two-pronged approach. We need capacity development to be able to participate in the knowledge economy, and be ready for the digital economy. We cannot afford to be illiterate or innumerate.
The African Union theme of the year is “Winning the Fight against Corruption: a Sustainable Path to Africa’s Transformation”. This was adopted by our African leaders in appreciation of how much Africa was losing to corrupt activities. Africa is losing over 148 billion dollars annually, which is about 25% of Africa’s GDP growth, through corruption. Similarly, we are losing huge sums of money in billions of dollars, through illicit financial flows. We are yet to factor the bribe the woman pays to do business across the border or the money that goes to clear the container at the port to beat the unnecessary red tape. It is therefore important for nations to address the governance, democracy and impunity deficits by empowering our institutions to perform better. The answer is an economy undergirded by transparency and the rule of law. In short, we must govern better within our countries, and to govern better together as a continent – in the words of my illustrious compatriot, Kofi Annan.
We must focus like a laser on human capacity development. The level of social exclusion by way of lack of education and skills continues to make our youth despair. It is in that desperation that forces our youth to take perilous journeys through the desert and risk drowning in the Mediterranean Sea in search of a non-existent Eldorado in Europe. Let us make deliberate efforts to educate and develop the skills and talents of our youth and children. Without a numerate and literate youth, we shall continue to bear the brunt of our demographic vulnerabilities. With education and training, our youth will develop human capital, that is, value which creates more value.
Boosting intra-African trade is inevitable to deliver development on the African continent. To realize the goals we have set, we must seek to improve our domestic resource mobilization. I am pleased to report that 22 of our member states are at various stages of actualizing the decision on financing the Union, while 12 states are collecting the funds levied from imposing the 0.2% levy on eligible imported goods. We encourage more states to implement the decision for the Union to be self-reliant and to ensure predictable funding of AU activities and projects. Imposing the levy will fund 75% of the program budget for the realization of our flagship projects such as the single air transport, the development of our infrastructure, energy projects, food security, education and skills improvement for our people. 25% of the funds will go into peace support operations which is critical as we seek a peaceful and secure Africa.
To conclude, Distinguished Guests, let me reiterate the need for maximizing on the prospects of a multilateral trading structure. Africa must demonstrate its own commitment if the rest of the world is to own our story of Africa rising, and support our long-term socio-economic successes.
The thesis – Africa Must Unite, conceived and argued by Kwame Nkrumah – remains unassailable.
Thank you for your kind attention.
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Conference of Ministers praised for tackling ‘real’ African issues
The ECA Conference of Ministers was praised for discussing ‘real’ issues affecting the continent. At the heart of the debates was the AfCFTA. Its success would depend on a concerted and common approach to advance trade facilitation. Ministers also recognised the central role of private sector to help push forward the AfCFTA project.
Finance ministers and policy makers from across the continent have reaffirmed their commitment to the African Continental Free Trade Area (AfCFTA) at the close of a high-level meeting widely praised for discussing ‘real’ issues affecting the continent.
The event, hosted by the UN Economic Commission for Africa (ECA) in Addis Ababa, Ethiopia, called for governments to ensure they make the policies and investments necessary to capture the economic benefits of the proposed trading bloc.
A ministerial statement from the 51st session of the Council of Ministers recognised the potential of the AfCFTA to advance industrialisation, economic diversification and development to foster prosperity for all on the continent.
It also, however, recognised the challenges including concerns over the impact upon the tax base arising from a single continental market for goods and services, reporting: ‘The short-term impact is likely to be minimal and will be outweighed in the medium and long term by the positive impacts of revenue from other sources of taxes.’ These new sources would arise from economic growth and diversification from trading in a bloc of 1.2bn consumers.
The summary also acknowledged the need for the bloc to advance trade facilitation measures. These include simplified trade regimes for informal cross-border traders and upgrading trans-boundary infrastructure to assist firms keen to penetrate the new markets opened up by the agreement.
The private sector was recognised as playing the central role in achieving this project to create a more empowered, inclusive and transformed continent. It would also be essential for businesses to partner with governments to develop innovative financing solutions to tackle health, education, infrastructure and environmental challenges that could hold back Africa from effectively operating and benefitting from the bold economic plan.
The statement came after four days of dialogue and robust exchange on the theme ‘African Continental Free Trade Area: Creating fiscal space for jobs and economic diversification’ that addressed key issues for the continent including agriculture’s role in economic growth; financing infrastructure; tackling illicit financial flows; and an integrated strategy for the Sahel.
The theme of the meeting was considered highly relevant by the participants who commended the organisers for focusing on ‘real’ African issues. Robert Nantchouang, Senior Knowledge Management Expert from the African Capacity Building Foundation, said the meeting successfully highlighted pressing issues related to the economic integration agenda.
He remarked: ‘It was a timely and opportune moment for African countries to gather around a common issue that was embraced by all participants. Nobody was left behind in this discussion.’
Vera Songwe, Executive Secretary of the ECA, reaffirmed the commitment of her organisation to support governments moving towards economic integration through its convening, thought process and operational functions. The meeting recognised the preeminent role of human and institutional capacity building that would enable the AfCFTA to meet many of the continent’s development needs. She commented: ‘Africa is waiting. Our challenges are huge but we are on the way to solving them through the AfCFTA.’
The meeting forms part of wider consultations on the historic deal that was signed by 44 presidents and government leaders in Kigali, Rwanda in March 2018. Countries will now be required to ratify and implement the legal instruments of the agreement that would create a trade bloc with a combined gross domestic product of more than $3 trillion together with an additional 300,000 direct and 2 million indirect jobs according to the African Union.