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A new vision for the cocoa sector: Berlin Declaration of the 4th World Cocoa Conference
The 4th World Cocoa Conference was held on 22-25 April 2018 in Berlin, Germany. The four-day event saw intense but engaging and exciting conversation, dialogue, debate, bridge-building, networking and collective solution-finding discussions around the challenges that face the cocoa sector.
On the final day, the focus was on looking forward and taking necessary steps to finding those solutions. Panels and Plenary sessions were held for delegates, speakers and moderators to engage in dialogue to find common ground, unity and a plan forward for sustainable solutions.
Panel Topics covered were: progress toward a sustainable world cocoa economy, new products and new potentials in fine and flavour cocoa, the science in support of cocoa farming, gender equality and women empowerment and cocoa farmers working with consumer groups to change the perception of cocoa as an unhealthy/safe crop/food.
The day ended with the presentation of the Berlin Declaration and its adoption by the Conference, and the Official Closing Remarks and announcement of the host city for the Fifth World Cocoa Conference in 2020.
Berlin Declaration of the 4th World Cocoa Conference
“Business as usual in the cocoa sector is no longer an option. We have to break the mould.” Dr. Jean-Marc Anga, Executive Director of the International Cocoa Organization (ICCO), in the keynote speech opening the fourth World Cocoa Conference in Berlin, April 2018.
We, the delegates of the fourth World Cocoa Conference, held in Berlin in April of 2018, constituting almost 1,500 participants, from more than 65 countries, representing members of all relevant stakeholder groups, including producing governments, consuming governments, farmers, traders, grinders, processors, manufacturers, research institutions, civil society organisations, trade unions, consumer organisations, and many others.
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Since the first World Cocoa Conference and the drafting of the Global Cocoa Agenda in November 2012, sector-wide efforts have proliferated to improve the lives of farmers, communities and the environment. However, these have not been enough to achieve significant impact at scale.
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Too many cocoa farmers are still living in poverty. Deforestation, child labour, gender inequality, human rights violations and many other challenges are a daily reality in many cocoa regions.
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We affirm that the cocoa sector will not be sustainable if farmers are not able to earn a living income.
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A sustainable cocoa sector is a collective responsibility of all stakeholders, and we should work together to achieve this ambitious goal. Areas should be identified for increased non-competitive collaboration, at local, national and global level, avoiding a proliferation of efforts that lack coordination.
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We recognise the urgency and scale of the challenges facing all of us. Our solutions will need to be equal to the size of the problem.
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While acknowledging the commitments of the cocoa sector to achieve sustainability, it is time to review the means by which these have been measured and enforced, recognising that voluntary compliance has not led to sufficient impact.
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Many of our challenges are not specifically cocoa-based, but are part of broader issues affecting rural communities. As such, holistic approaches, including effective governance, must be envisaged and implemented, where cocoa can operate as a driver for rural development.
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Global price volatility and low farm gate prices have had a strong negative impact on the sector.
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Without farmers, there is no cocoa. All actors should work together to create an enabling environment to professionalise cocoa farming.
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Recognising cocoa farming as a business sector, farmer organization(s) should be stronger, and farmers should be encouraged to self-organise. This should include appropriate policies at national level.
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Acknowledging the role of agricultural commodity development, including the cocoa sector, logging and bush fires, as drivers of deforestation and forest degradation, and recognising the strong contribution the cocoa sector can make in the restoration of forests and resilient landscapes, we commit to work together as a whole cocoa supply chain – in collaboration with the international community – to end deforestation and promote forest protection and restoration. We should improve yields on less land.
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A new vision is needed in order to achieve true sector-wide sustainability.
Recommendations
Sustainable Production
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All stakeholders should develop and implement policies that enable cocoa farmers to make a living income.
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All stakeholders should foster policies and activities to strengthen the position and the rights of women.
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Relevant stakeholders should contribute to creating an enabling environment that improves access to savings, credit, finance, and insurance, also for small-scale farmers.
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Producing governments and sector-wide initiatives should implement and enforce policies and practices that ensure environmental protection, including anti-deforestation and reforestation measures, soil protection, and agroforestry systems.
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Governments should give due consideration to the needs of farmers in international trade, including options for robust international competition laws that promote fair trade for both farmers and consumers.
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Child labour does not have a place in a sustainable cocoa value chain. All sectors should increase efforts, efficiency and cooperation to eradicate child labour and its root causes.
Sustainable Industry
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Supply chain traceability should be recognised as a necessity for a sustainable value chain. A sector wide consensus on traceability should be developed. Efforts must be undertaken to ensure that this does not lead to additional costs and other burdens being transferred to the farmers without sufficient remuneration.
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Sector sustainability efforts should be transparent and publicly accountable in both efforts and impacts, including through appropriate monitoring and evaluation frameworks.
Sustainable Consumption
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Engage the sector in dynamic activities to stimulate processing in origin countries and healthy cocoa consumption in origin countries and emerging cocoa markets.
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Complying with SPS requirements is in the interest of consumers and producers alike. It is essential to ensure that the necessary assistance (technical, financial, or otherwise) is provided to enable producers to comply with these requirements.
Sustainable Management
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Producing country governments to coordinate national and regional cocoa policies, specifically being mindful of the impact this can have on cocoa prices.
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Producing country governments should strengthen National Cocoa Development Plans (NCDPs); including a strengthening of infrastructure, extension services, farm diversification, tenure security, etc, making efforts to ensure a transparent, inclusive and participatory approach in the development and implementation of the NCDPs.
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Producing country governments are called upon to carry out a reliable inventory of cocoa tree stocks.
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All stakeholders are called upon to strengthen human rights due diligence across the supply chain, including through potential regulatory measures by governments.
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Public and private sector are encouraged to stimulate scientific research & development into sustainable production, consumption and innovative processing.
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Governments of producing and consuming nations are called upon to re-evaluate the effectiveness and transparency of their investments in the cocoa sector.
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The entire cocoa sector, including industry, governments of consuming nations, producing nations, international donors, cocoa farmers, and other relevant institutions, are called upon urgently to increase their investments in the improvement of the cocoa sector.
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The time to act is now.
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Aubrey Hruby: African blue chips need to start corporate venture arms to invigorate startup funding (Quartz)
An increasing number of African companies are competing in the global arena. Riding on the wave of growth that has buoyed African markets over the past two decades, companies such as MTN, SABMiller and Dangote Group have all expanded outside of Africa making flagship acquisitions from China to Poland. The Dangote Group has grown rapidly in recent years across more than a dozen African markets and entered the Nepali market in 2015 and has plans for a larger footprint in Asia. But in order for African corporates like Dangote Group to modernize and gain a competitive edge in the global marketplace, they should follow the tried and true path of corporate venture and invest in the next wave of disruptive startups.
Most of the money currently being raised for African startups originates from outside the continent. Cars45, Nigeria’s first online car resale platform, raised capital from TPG Growth and New Enterprise Associates. Flutterwave received Silicon Valley investment including Greycroft Partners while Paystack secured US corporate venture investment from the US media giant, Comcast. As dynamic startups continue to proliferate across the continent, African corporates would be wise to take advantage through their proximity to gain earlier access to the capital tables of future unicorns. [Five charts explaining PE Funding in Africa]
Rwanda becomes first country to ratify all the AfCFTA instruments (New Times)
A month after 44 African states signed the African Continental Free Trade Area (AfCFTA) agreement, members of the Lower House have given the green light to the deal that is aimed at making Africa the largest trade bloc in the world. The MPs also passed the protocol on trade in services, free movement of persons, protocol on trade in goods, and the protocol on dispute settlement mechanism.
COMESA partner states upbeat about digital free trade area: an interview with COMESA’s Dr Francis Mangeni (The East African)
Q: So far, who are the early adopters of the digital free trade area? A: All member states. In fact, some countries such as Uganda, Rwanda, Kenya, Mauritius and Zambia are already issuing electronic certificates of origin; many are using the self-certification system which is more advanced, when trading with partners such as the European Union. The self-certification system can be used in Comesa trade as well, because the Approved Economic Operators schemes [a certified standard authorisation issued by Customs office in the EU] already provide a basis for an important crop of users – companies that have met the criteria set by regulatory authorities such as revenue authorities, and can be considered credible and trustworthy.
President Magufuli addresses EALA (EAC)
In his remarks, President John Pombe Joseph Magufuli rallied for the industrialization and infrastructural development of the region – saying it held the key for the transformation of the United Republic of Tanzania and the entire region. The President said the time had come for the region to “think big and beyond parochial issues” and urged the regional Assembly to take a central role in ensuring the full integration and development of the EAC was realized. President Magufuli, who addressed the House in flawless Kiswahili, reiterated his remarks by saying the region was resource rich but that the citizens were yet to benefit from the same and called for removal of barriers, injustices, imminent suspicions and fears of the region. The President further reiterated his country’s commitment to the EAC.
In other REC updates:
SADC Double Troika Summit of Heads of State and Government: communiqué
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IGAD inaugurates Centre of excellence for preventing and countering violent extremism
IGAD about to wrap-up national consultations on free movement of persons
ECOWAS parliamentarians discuss climate change effects on agriculture
Nigeria set to adopt African standard on sugar products, sugar (SON)
Nigeria is set to adopt African standards on Sugar and sugar products as well as develop Nigeria Industrial standards for Glucose and Sucrose. Towards this end, a technical committee meeting on sugar and sugar products held recently at the Standards Organisation of Nigeria headquarters to consider the adoption of some African Standards under the auspices of African Organization for Standardization and the development of other Nigeria Industrial Standards. [Nigerian Export Promotion Council: Repositioning Nigeria’s cocoa export for global competitiveness]
Namibia: Beef for China must come from animals from disease-free areas (New Era)
To qualify for export to China, Namibian beef must be from animals born and raised in disease-free zones and have been at least 60 days on the farm of origin prior to transportation to the approved abattoir. The Ministry of Agriculture, Water and Forestry has informed all Namibian beef producers about the new requirements to participate in the export of beef to China through approved export abattoirs. This comes after China finally agreed to lift the inhibitive clause on lumpy skin disease, which has prevented Namibia from exporting beef to that country. China approved the export of Namibian beef to that country last month with a few additional conditions.
Kenya: Farmers lose as foreigners tighten grip on coffee trade (The Standard)
Six giant European companies control the multi-billion shilling coffee business in Kenya, raising concerns about possible price manipulation. With coffee prices at the auction only a fraction of the market prices - which hurts farmers - the Government has recommended the formation of a coffee pricing committee. However, the proposal is being fought by what the government has termed forces that have long benefited from the over-regulated market. Through various subsidiaries, the six companies have seized control of the value chain of the prized bean from the farm to the consumer’s table. The firms collectively bought around 70% of the beans, worth Sh16 billion, sold through the Nairobi Coffee Exchange for the financial year ended September 30.
South Africa: Cherry-pick high-value exports by supporting fresh fruit farmers (Business Day)
Smart industrial policy design that identifies and supports high-value agricultural sectors, such as fresh fruit, is an easy win for the government to truly transform agriculture, drive economic growth and create jobs. As then finance minister Malusi Gigaba noted in the 2018 budget, agriculture led the economic recovery following 2017’s recession. Echoing what President Cyril Ramaphosa had said in his state of the nation address, Gigaba added that agriculture is among the sectors in which the country has a competitive advantage and has the potential to become world class. Since 2002, the fruit industry has become the largest export contributor within the agriculture sector. Linkages across the value chain multiply this figure in the form of service industry jobs in packaging, logistics and cold-chain facilities.
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Rwandan Parliament ratifies AfCFTA protocol
A month after 44 African states signed the African Continental Free Trade Area (AfCFTA) agreement, members of the Lower House have given the green light to the deal that is aimed at making Africa the largest trade bloc in the world.
The MPs also passed the protocol on trade in services, free movement of persons, protocol on trade in goods, and the protocol on dispute settlement mechanism.
Rwanda becomes the first country to ratify all the instruments.
The AfCFTA protocol, signed in Kigali by 44 of the 54 African Union member states, paves the way for an expanded market and economic growth and development across the continent.
Presenting the concept paper on the agreements on Tuesday, the State Minister for Constitutional and Legal Affairs, Evode Uwizeyimana, said that as a country that hosted the AU Summit that endorsed the deals and was fully involved in the historical signing just a month ago, it was imperative that Rwanda ratifies the agreements and set precedence for the rest of Africa.
“This is a source of pride for a country which at this time is also chairing the African Union and it makes more sense for us to be among the first to ratify the agreement and we feel that this will expedite the setting up of the African Customs Authority. This is aimed at encouraging doing business with partners.
AfCFTA will open doors to more business and investment opportunities,” he said.
Addressing fellow lawmakers, MP Henriette Sebera Mukamurangwa expressed her support for the ratification saying that there was no need to wait any longer.
“I would like to support the ratification of these instruments. It is a moment of pride for our country and for Africans at large. It’s a historical moment that as Rwandans we should be happy about,” she said.
MP Julianna Kantengwa said that the ratification of the agreement places the MPs in books of history.
“Being part of such a political moment is a blessing because it is an opportunity to contribute to the nation. To be on the list of those who ratified such an important agreement is the epitome of my political contribution in this country,” she said.
MP Ignatienne Nyirarukundo suggested that the contents of the agreements are translated for easier comprehension by all Rwandans.
“Article 16 requests signatories to publicise the detailed contents of the agreements and the process is expedited but also, let it be translated to other languages so that by the time it gets in the official gazette, it is something that all Rwandans can read and understand”.
“This agreement took up to forty years to come to fruition, so it’s imperative that whoever is interested in it can access it in a language that is easier for them,” she said.
She said that the next focus should be put on strategising better to maximise the expanded market.
If all member states of the AU ratify the agreement, this will create a market of 1.2 billion people with a combined gross domestic product (GDP) of more than 2 trillion US Dollars.
During the summit last month, the heads of state agreed that the AfCFTA agreement can go into force once at least 22 members ratify it.
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Comesa partner states upbeat about digital free trade area
COMESA director of Trade, Customs and Monetary Affairs Dr Francis Mangeni spoke to Julius Barigaba about Africa’s first blockchain technology for clearing imports
COMESA is looking to roll out a digital free trade area – the first in Africa – modelled along the Malaysian Free Trade Zone, where parties to a transaction are connected in real time through a web of ledgers that are secure.
The application also supports generation of an electronic certificate of origin whose authenticity can be verified using national information technology systems.
This will be a marked break from the current practice which involves manual applications and physical presentation of documents to tax bodies and other government agencies that cause businesses delays.
Q: How far is the rollout of the digital economic integration?
A: The ministers have approved the initiative.
The Secretariat completed the preparatory stage, from design to production of the key instruments especially the digital certificate of origin, presented them at several formal government meetings ranging from expert to ministerial level over the course of last year and early this year.
The Common Market for Eastern and Southern Africa will formally adopt the instruments at its upcoming summit in Bujumbura from June 1-10, then begin the digital free trade area.
Q: What type of feedback did you receive while promoting the digital FTA?
A: The feedback from technical workshops and meetings is positive. Last year at the Digital FTA workshop in Seychelles, every Comesa member state said that it was ready to start using the digital certificate of origin.
Customs authorities will have their work simplified once digitised, and users will face less complex procedures once the regulatory authorities begin to process clearances and approvals online.
Q: So far, who are the early adopters of the digital free trade area?
A: All member states. In fact, some countries such as Uganda, Rwanda, Kenya, Mauritius and Zambia are already issuing electronic certificates of origin; many are using the self-certification system which is more advanced, when trading with partners such as the European Union.
Q: Still there must be fears, risks and challenges for businesses embracing the Digital FTA.
A: The challenges include the learning curve – regulators and businesses need to know the rules and the documents in order to use them correctly and beneficially.
There shouldn’t be much of a problem though as there is already some experience and familiarity among a good number of regulators and operators with digitised procedures and documents.
However, the capacity building will need to be a priority to assist new entrants in government and the private sector, as well as re-tooling or skills conversion given the nature of rapid advancement in technology as well as new regulatory instruments that could come up.
Risks are normal and are expected in all cases even with paper-based systems. This is why there is always reasonable power given to regulatory authorities to prevent crime and fraud, through risk profiling and management, investigations and cooperation with counterparts across the region and the world at large.
Q: What are the targets for Comesa’s digital FTA?
A: The attribution or causation link between programmes and initiatives such as the digital FTA on the one hand and poverty eradication and wealth and job creation on the other, need to be carefully thought through.
A realistic way to do this would be to sit down with economic operators and work out together their actual job and market projections over the short, medium to long term.
What we know well, though, from our analytical work based on actual figures and actual problems we have solved, is how time-based costs can be reduced through specific interventions, how exports and trade can grow through elimination of non-tariff barriers, and how businesses can thrive using regional markets.
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President Magufuli rallies for industrialization and home-grown solutions as key to region’s development
The President of the United Republic of Tanzania, H.E. Dr John Pombe Joseph Magufuli, on 24 April 2018 addressed the 4th Meeting of the 1st Session of EALA.
In his remarks, President Magufuli rallied for the industrialization and infrastructural development of the region – saying it held the key for the transformation of the United Republic of Tanzania and the entire region.
The President said time had come for the region to “think big and beyond parochial issues” and urged the regional Assembly to take a central role in ensuring the full integration and development of the EAC was realized.
President Magufuli who addressed the House in flawless Kiswahili, reiterated his remarks by saying the region was resource rich but that the citizens were yet to benefit from the same and called for removal of barriers, injustices, imminent suspicions and fears of the region. “Let me take the opportunity to make the clarion call to EALA today to rise up to the occasion and be a people’s Assembly that is truly-centred on addressing their problems,” President Magufuli said.
The President further reiterated his country’s commitment to the EAC. “We are totally and fully behind the integration process and we shall fast-track decisions we take for the benefit of the regions,” he remarked.
The President said the EAC must add value to its raw materials. ”Look at the Republic of South Sudan, it has loads of Oil. United Republic of Tanzania on its part, has various natural resources, including livestock, forests and minerals among others. We as a region are rich – but we do not feel the trickle-down effect. Why? he pondered! The region should add value by processing raw materials to the end in order to create employment and build stronger, efficient and better economies,” he said.
“Let us seek self-introspection so as to transform the region. Mr Speaker, the EALA is capable of taking the lead here for a win-win situation that will benefit the region. My Government is committed to enhancing industrialization in order to encourage regional investors to invest right here in Tanzania. We need to protect our home industries and tap in to the same for the benefit of the region which has over 170 million citizens,” he added.
The President further cited infrastructural developments and the revitalization of the energy sector as key ingredients to speeding transformation. “The cost of transport and energy is too high,” lamented President Magufuli, resulting in situations where the costs of travel had scaled up almost four times in comparison to other regions.
According to findings by Power Africa in 2015 results show the region only has 6500MW which cannot entirely support the region’s development. In that regard, the President called for other alternatives to be sought. “We must reverse the trend and assist the region. I challenge you Mr Speaker and Members to see what you can do.”
He remarked that natural gas and the rare helium gas were available in Tanzania and said such benefits should for example be spread across the entire region. The President said the alternative energy initiatives would assist boost the national grid adding an additional 2100 MW which would be sold in the region. “As Tanzania, we shall do our part,” he said.
The President hailed and acknowledged the Speaker and Members for making it possible for him to deliver his inaugural speech to the House. “I thank the Speaker for the decision to bring the meeting to Dodoma for the very first time and noted the idea of the rotational principle by EALA would go a long way in creating awareness of the citizens. I welcome you to Dodoma and wish you well, the citizens here are very hospitable,” he remarked.
The President pledged support to the Speaker and the EALA Members and assured them of his unreserved support. The President however remarked that the Assembly was the voice of the citizens of the region at a time when the region was facing progress and surmountable challenges.
The President remarked the region was on the verge of removing all Non-Tariff Barriers to further boost volume of trade. He said the progress in the region included the expansion of Membership (EAC) and called for strengthening of the integration process further.
In that regard, President Magufuli appreciated the decision of the House to debate on the East African Monetary Institute Bill, 2017 acknowledging its contribution to the quest for the single currency. The President also acknowledged the decision by the Assembly to visit the Northern and Central corridors, for which the House had already debated.
President Magufuli remarked the region should resolve the conflicts stalling the integration process and implored EALA to contribute to the solutions. “I urge you to critically look into the existing challenges and address the same.”
The President rallied for commonalities and unity as exhibited by the Summit and the top echelons of the region. “We need to get to a point where there is unity and oneness. I am impressed by the sitting arrangements in the Assembly today which is devoid of groupings in nationalities” he said. “But this must transcend to the rest of the citizenry,” he added. The Head of State rallied for unity and remarked that Kiswahili must be appreciated at all times in addition to the local dialects which cut across the region.
The President said Tanzania was equal to the task of completing the expansion of Dar Port and the Standard Gauge Railway (SGR) which he stated, would link Tanzania to Burundi and Rwanda as well as to the DRC and Uganda. The country is also looking at the renovation of its maritime and especially the boat infrastructure in the Lake Zone. Let us be project-oriented and seek home grown solutions for the same.
The conditionalities for development partners may not always be suitable. We can do this ourselves,” he said in reference to the 700.2 Km link of Dodoma to Dar at the cost of 700 Trillion without any development support. ”Neither did we receive loans for the purchase of the new airlines. It is thus possible,” President Magufuli stated. The President further cited his country’s uptake of the e-international passport and the ratification of the Peace and Security protocol as true reflection of Tanzania’s commitment to decisions by the bloc
In attendance were key government officials led by the Prime Minister of the United Republic of Tanzania, Rt Hon Majaliwa Kassim Majaliwa, senior officials of Government, Legislators of the Parliament of Tanzania, Dodoma elders, religious leaders and Members of the Diplomatic corps among others.
In his welcome remarks, the Speaker of the EALA, Rt. Hon Ngoga Karoli Martin, noted that the Sitting was taking place at an irreversible time in the regional integration process.
The Speaker remarked that EALA was fully supportive of the call to expedite the establishment of the EAC Monetary Institute and other related institutions as a precursor to the harmonisation of the fiscal and monetary policies revolving around the establishment of the eventual single currency.
“We shall keep forward on our role, of providing the legal framework through legislation and representation to enable operationalization of areas of co-operation agreed upon by our Partner States,” Rt Hon Ngoga added.
The Speaker further called for the speedy amendment of the Treaty for the Establishment of the EAC saying a number of areas needed to be refined or re-defined, to strengthen the incremental approach towards deeper integration.
He reiterated the need to fully incorporate Kiswahili as one of the official languages of the EAC resulting from amendment of the said Treaty.
The Speaker hailed the progress made by the United Republic of Tanzania since H.E Dr Magufuli assumed leadership saying the commissioning of the 1445 km long East African Crude Pipeline from Hoima District in Uganda to the Tanga port in Dar, simply defines the business of the EAC.
“True to your leadership philosophy that prioritizes hard-work and getting things done with emphasis on value for money, in just a few months since its launch, construction of the first phase from Dar Es Salaam to Morogoro is already completed with the second phase of Morogoro-Dodoma section underway.”
Rt Hon Ngoga lauded H.E. the President for his steadfast commitment in the fight against corruption. “Yours is a fight for transformation. It is a fight that requires tenacity and resilience. You are the leader with these qualities, determination and ability to lead through challenges and the region is proud of you,” the Speaker said.
Youthful legislator, Hon Dennis Namara, passed the vote of thanks on behalf of the Assembly.
EALA, which commenced two weeks ago, has since undertaken the following notable business:
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Passed the EAC Oaths Bill, 2018
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Passed the report of the EAC Central and Northern corridors, institutions Projects and programmes
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Various Committees were convened and pertinent matters of the region discussed before they are deliberated in the House.
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Undertook an outreach activity at the University of Dodoma, reaching out to students and communities. The Assembly further engaged in an environmental conservation planting close to 1000 trees within Dodoma vicinity.
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Undertook representation activities meeting with various stakeholders.
The formal Parliamentary Session is expected to conclude on 25 April 2018. On 26 April, EALA Members will join the Government and citizens of the United Republic of Tanzania in commemorating the 54th Union Day celebrations at the Jamhuri Stadium.
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African bluechips need to start corporate venture arms to invigorate startup funding
An increasing number of African companies are competing in the global arena. Riding on the wave of growth that has buoyed African markets over the past two decades, companies such as MTN, SABMiller and Dangote Group have all expanded outside of Africa making flagship acquisitions from China to Poland.
The Dangote Group has grown rapidly in recent years across more than a dozen African markets and entered the Nepali market in 2015 and has plans for a larger footprint in Asia. But in order for African corporates like Dangote Group to modernize and gain a competitive edge in the global marketplace, they should follow the tried and true path of corporate venture and invest in the next wave of disruptive startups.
In Nigeria, for example, Barter was created by Flutterwave to provide widespread access to foreign exchange, previously centralized in large banks. Barter creates virtual cards for foreign transactions outside of Nigeria for Nigerian startups and corporates, providing them with secure access to foreign currency. Paystack and Amplify are also decentralizing players, providing seamless payment solutions for businesses. In order to compete successfully on a global stage, African conglomerates must harness these startups’ innovation, technology, and country knowledge through investment.
The number of sophisticated African startups is rising and venture capital invested is growing rapidly from a small base. VC investments in 2017 marked a 51% increase from 2016, but penetration is low in African markets relative to other emerging economies. Last year, venture capital funding raised by African startups in 2017 reached $560 million while China and India attracted $65 billion and $17.6 billion, respectively.
Most of the money currently being raised for African startups originates from outside the continent. Cars45, Nigeria’s first online car resale platform, raised capital from TPG Growth and New Enterprise Associates (NEA). Flutterwave received Silicon Valley investment including Greycroft Partners while Paystack secured US corporate venture investment from the US media giant, Comcast. As dynamic startups continue to proliferate across the continent, African corporates would be wise to take advantage through their proximity to gain earlier access to the capital tables of future unicorns.
Local corporates – including those in African markets – should be first to recognize and benefit from the market opportunities of local startups. Already in the US, more than 75% of the Fortune 100 companies make venture investments with about 42 companies creating their own dedicated venture teams. Corporates participated in rounds that amounted to 44 % of all venture deal value in 2017. Over the past two years, Lyft raised over $1 billion from both General Motors and CapitalG (Google’s investment in arm).
The trend is now global. In Asia for example, Softbank’s $100 billion fund and Alibaba’s $450 million Hong Kong and Taiwan-focused fund have gained traction since their launch with targeted fintech investments. Such capital inflow via corporate venture funds is found in 40% of all venture deals in Asia and has helped to drive a whole ecosystem of emerging startups, and African corporates need to take advantage of similar strategies.
Naspers’ big bet
Ironically, despite relatively limited corporate venture funding for startups in Africa, the continent is also home to one of the world’s most successful startup bets by a corporate anywhere in the world. South African media giant, Naspers’ 2001 investment in China’s Tencent is now the stuff of legend. It invested $32 million in the parent company of WeChat for a stake that is now worth a whopping $175 billion. It has made many other startup investments at home in South Africa and abroad since then including SimilarWeb, Swiggy and CodeAcademy, but needless to say none are anywhere as successful as the Tencent investment. Naspers’ corporate venture strategy has helped establish it as Africa’s most valuable company and as a global player.
There is some initial progress being made with corporate venture in the banking space in Nigeria and South Africa. Access bank has partnered with Flutterwave, and FNB manages Vumela Enterprise Development Fund which provides venture capital funding for high-growth SMEs struggling to access capital, with a spotlight on black-owned firms. According to Zachariah George, co-Founder of Startupbootcamp Africa, the leading multi-corporate backed venture accelerator in Africa, “African corporations are starting to establish internal innovation divisions that work with local startups but they need to evolve into more open platforms that allow for collaboration between players across the financial services, insurance, retail and telecoms industries.”
African mobile networks are some of the fastest growing in the world, but they still face many challenges in their local markets. The telcos have been encouraged by their global trade body, GSMA, to collaborate more meaningfully with startups in their countries and beyond. For example, merging the mobile operators’ powerful distribution and payment networks with the startups’ efficiency and high-impact models could pave the way for important and profitable mutual benefits.
“Only a strategic mix of multiple corporate innovation teams, independent industry mentors, digital skills recruiting, and venture capital will galvanize transformative investment into the next wave of African tech companies,” says George. While this space is growing in Africa’s largest banking centers, it must be expanded and deepened throughout the continent.
In an environment of low venture funding penetration, the expansion of corporate venture would be a win-win for African startups and corporates. For relatively small investments, leading regional corporates could solidify their presence both at home and abroad, while modernized and optimizing their operations. Following in the footsteps of other, larger emerging market companies, African firms can fast-track innovation internally and within the African startup ecosystem.
Aubrey Hruby is co-founder of the Africa Expert Network and Senior Fellow at the Africa Center at the Atlantic Council. This article was first published by Quartz Africa.
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Ahead of this weekend’s Ibrahim Governance Weekend, the Mo Ibrahim Foundation has released a major new report, 2018 Public Service in Africa (pdf)
African Financial Governance Outlook: effective public financial management for sustainable development (ACBF)
This African Financial Governance Outlook, Effective Public Financial Management for Sustainable Development (pdf), is a new flagship report to enrich understanding of public financial management and its contribution to good governance, with the ultimate aim of reducing poverty and delivering sustainable and inclusive economic growth. It complements quantitative indicators with qualitative analysis to show trends over time and to explain the drivers of change in financial governance across AFGO pilot countries. Covered in this outlook are 10 African countries that have participated in the African Peer Review Mechanism - Burkina Faso, Ethiopia, Ghana, Kenya, Mali, Mozambique, Rwanda, Senegal, Tanzania, and Uganda. The countries were drawn from the different regions and represent different political and administrative traditions (Anglophone, Francophone, and Lusophone) to ensure a wide range of countries.
Ethiopia: Country brief (pdf, Afreximbank)
Ethiopia is the 91st largest export economy in the world and the 23rd largest export economy in Africa. In 2017, Ethiopia exported $2.86bn and imported $14.7bn, resulting in a trade deficit of $11.84bn. This large trade deficit is on account of bulky infrastructure expansion projects, most notably the Ethiopia-Djibouti railway project that was launched in 2016, as part of the government’s Growth and Transformation Plan. Ethiopia’s total intra-African trade amounted to approximately $1.27bn in 2017, accounting for around 7.2% of its total trade, significantly below the regional average of 15%. Although Ethiopia’s share of intra-regional trade is relatively low, the country has a thriving trade relationship with its neighbours including Somalia, Djibouti, Sudan, and Kenya which account for the bulk of its destination markets in Africa. Ethiopia’s largest African import trade partners are Morocco, South Africa, Egypt, Nigeria and Kenya which together accounts for over 95% of Ethiopia’s total intra-African imports.
Mozambique: Survey of manufacturing firms 2017 (UNU-WIDER)
The main objective of the IIM 2017 is to trace the companies interviewed in the previous survey round, thereby documenting how the economic situation has developed for firms in the manufacturing sector in Mozambique. Out of 831 firms interviewed in 2012, 523 firms were found to be still in operation, 216 were found to have closed in the period between the two survey rounds, and 92 were either not traceable or refused to partake in the survey. The survey covers the main urban areas of seven provinces in Mozambique: Maputo City, Maputo Province, Gaza, Sofala, Manica, Tete, and Nampula. While this report provides a descriptive overview, more in-depth studies are being elaborated in 2018. An important improvement over previous rounds of the IIM survey is the completeness and level of detail in economic accounts data - even for companies with no formal accounts. This was possible due to an emphasis on understanding of such accounts during the hiring and training of enumerators.
Algeria completes bulk of trans-Saharan highway project (Xinhua)
Algeria announced that it has completed the construction of 1,600 kilometers of Trans-Saharan Highway with another 200 kilometers under working progress, the official APS news agency reported. APS quoted Mohamed Ayadi Secretary General of the Trans-Saharan Liaison Committee as saying Monday in Algiers at the 68th session of the committee that the north African country has completed the construction of 1,600 km of the road and the remaining 200 km in south Algeria will be finished in short time. The meeting focused on the review of the progress of the highway and the consultation on future steps to be taken with the countries concerned in order to carry out its realization and delivery as soon as possible.
IGAD Regional Forestry Policy and Strategy: inception workshop update
Identification of issues at national level will therefore form the basis for harmonisation of the member states’ strategies and policies for sound management of forest/range resources. These issues identified to be implemented at regional level will form the basis for the IGAD Regional Forestry Policy and Strategy. The document will be endorsed by the Ministers of Forestry/and Environment from across IGAD for potential implementation. It will also be integrated into national policies and strategies, and inform future working in the area of cross border/trans-boundary forest resources.
Climate policies, economic diversification and trade (pdf, UNCTAD)
This paper explores two broad areas of policy that may hold some promise. Both are trade-related. Section 2 asks whether the rise of global value chains as a mode of production offers any opportunities to foster economic diversity that leads to reduced response measure vulnerability. Section 3 then asks whether green industrial policy might similarly bring new light to the discussion. In exploring these two policy areas we are consciously bridging the policy spheres of trade policy and climate policy. While that nexus is not novel (see Tamiotti et al., 2009; Cosbey, 2007), there has been very little in the way of assessing the connections between trade-related policies and the impacts of the implementation of response measures. The hope is that this analysis provides concrete examples of the ways in which trade policy might help to address this aspect of the climate change challenge, in the process playing its part in the implementation of the Paris Agreement.
Structural change for inclusive and sustainable industrial development (UNIDO)
LI Yong, UNIDO DG: UNIDO’s research shows that the types of industries that emerge in the middle-income stage are likely to be more emissions- and material use-intensive and thus often increase the pressure on the environment, unless proper mitigation measures are introduced. The successful shift of the industrial structure from labour-intensive to capital-intensive industries increases productivity and generates higher wage jobs, which could help sustain industrial growth and lead to the creation of shared prosperity. Entering a high-income stage of development often slows down the growth of manufacturing relative to services, with the exception of technology intensive industries. While the growth of manufacturing moderates, manufacturing activities gradually shift away from resource-intensive industries to high valued-added activities, and to a manufacturing sector that is less emissions-intensive. Extract: Deindustrialization can mean developing countries grow more slowly (pdf):
Deindustrialization measured in terms of a fall in the share of manufacturing in total employment has become a key policy issue in both member countries of the OECD and developing economies. In the former, in particular, the decline in the rates of employment in manufacturing post-1970 has been quite rapid and a similar problem ensued in some middle-income countries, particularly in Latin America, from the 1990s. Deindustrialization can be positive if it means that resources are being transferred from industry to dynamic high productivity activities, like modern services. It is negative if the transfer is to low productivity, low wage activities, whether informal services or traditional agriculture. Current evidence suggests it is the negative aspect that has dominated in many countries, and where this is the case, measures are needed to reverse the trend towards deindustrialization.
Empirical analysis identifies an inverted U-shaped relationship with the share of manufacturing employment first rising and then falling with income per capita. However, this relationship has not been stable over time with a clear tendency for the estimated relationship between manufacturing employment share and income per capita to fall over time. Hence, the discussion of ‘premature deindustrialization’ in the sense that the share of employment in manufacturing in many of today’s middle- and lower-middle-income economies has declined at levels of real income per capita at which it was still rising in earlier periods in today’s developed economies.
Where economies are major primary exporters or have a large tradable service sector (for example, in finance or tourism), so that they do not need an export surplus in the trade in manufactured goods, their deindustrialization pattern as incomes rise is more pronounced, but also potentially less serious. [Note: See Appendix C for a complete list of countries and economies by region, industrialization level and income level, as well as detailed information on the classifications of sectors used throughout the report.]
Today’s Quick Links: 14th Comprehensive Africa Agriculture Development Partnership Platform (25-27 April, Libreville, Gabon) Ministerial Conference on Maritime Security in Western Indian Ocean (26-29 April, Mauritius) Nigeria, ECOWAS conference on herder-farmer conflicts (26 April, Abuja, Nigeria) Seychelles hosts first African Shipowners Association Summit: speech by President Danny Faure Pakistan keen to enhance trade ties with C-4 countries Devex: 5 takeaways from the World Bank Spring Meetings Scott Morris: Trump’s Treasury delivers at the World Bank - more capital for climate, solid policy framework Head of EBRD hopes to expand into sub-Saharan Africa Christine Lagarde: Shining a bright light into the dark corners of weak governance and corruption The trade facilitation agenda of the WTO and India’s commitments: where does India stand? |
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African Financial Governance Outlook: Effective public financial management for sustainable development
The AfDB and ACBF have published the first African Financial Governance Outlook (AFGO), a new flagship report to enrich understanding of public financial management (PFM) and its contribution to good governance, with the ultimate aim of reducing poverty and delivering sustainable and inclusive economic growth.
It complements quantitative indicators with qualitative analysis to show trends over time and to explain the drivers of change in financial governance across AFGO pilot countries.
Covered in this outlook are 10 African countries that have participated in the African Peer Review Mechanism – Burkina Faso, Ethiopia, Ghana, Kenya, Mali, Mozambique, Rwanda, Senegal, Tanzania, and Uganda. The countries were drawn from the different regions and represent different political and administrative traditions (Anglophone, Francophone, and Lusophone) to ensure a wide range of countries.
They were analyzed using a financial governance matrix that combined five financial governance arenas of Budget Governance, Revenue Governance, Internal Controls, Public Procurement, and External Audit as well as five political governance variables of Inclusiveness, Openness, Rule Compliance, Oversight, and Capability. The quantitative results in chapter 3 show a wide variety of performances for different countries in different arenas and indicators.
To explain this performance and to go beyond surface explanations, a comprehensive political economy analysis using stakeholder mapping to determine the influential actors and their role in the financial architecture was applied in chapter 1. This was supplemented by a further level of analysis that categorized stakeholders as change Facilitators or Dissenters according to their financial governance arena. The stakeholder mapping gave insights into who the major relevant stakeholders are and the reasons for their influence and interest. And categorizing them into change Facilitators and Dissenters enabled understanding where in the financial architecture they operated and whether their influence was positive or negative for good financial governance.
Also to be considered is the future direction of research for the Outlook and its expansion. A pilot exercise tested and applied the new Outlook methodology to country case studies and evaluated the results. The basic structure of the methodology has been found to be robust and to yield key insights about PFM for African countries. But it is possible to build on this model and improve its scope and depth. More detailed and more recent data will greatly improve the quantitative analysis, which already is very strong and pools almost all the primary survey data on PFM in the region. Further refining and improving the model will sharpen the quantitative analysis and provide more detailed results.
To provide a really holistic picture of financial governance and PFM issues facing African states, it will be necessary to expand AFGO coverage to include more African countries, including the larger economies, which have a significant impact on the continent's growth and development prospects. Periodic updates of the reports for countries already covered will keep the picture current.
Overview
Good governance is important for Africa's equitable and sustainable development. It is critical for sustainable economic growth (high per capita income), and for high foreign direct investment. The evidence also confirms the causal link between good governance and the decline in absolute poverty, infant mortality, and illiteracy; the move toward gender equality; and the increased access to clean water and other Sustainable Development Goals.
The Policy on Good Governance of the African Development Bank (AfDB) defines governance as “a process referring to the manner in which power is exercised in the management of the affairs of a nation, and its relations with other nations.” It identifies the key elements of good governance as: ensuring accountability, transparency, and participation; combating corruption; and promoting an enabling legal and judicial framework.
The Outlook treats financial governance as a fiduciary relationship between states and citizens in how public resources are managed. This relationship is critical in Africa as countries try to transform from discretionary to rule-based and transparent public financial systems. This transition depends heavily on the quality of public institutions, the capabilities of the state, and the fiscal foundations of state-society relations.
Public financial management (PFM) is defined here as “the effective management of public resources to meet the long-term goals of sustainable economic growth and poverty reduction (within the African context). It carries out this objective in a transparent, accountable, and participatory manner within a clearly defined legal and procedural framework that minimizes corruption and maximizes impact.”
Some conflicts in Africa are grounded in mismanaged public resources, undermining service delivery, with some citizens failing to access their benefits, fueling discontent. This is all the more reason why the future use of revenues from natural resources, and the use of local content have attracted the attention of Africa's natural resource countries. These are intrinsically PFM strategies.
Even in peaceful countries, Africa lacks local and national capacity in PFM, despite capacity interventions by bilateral and multilateral organizations, and this lack has retarded effective PFM.
The main findings
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Progress in African financial governance. Over the last 20 years, interventions by national governments and external institutions have boosted country performance, whether at a single point in time (snapshot) or over multiple points (trends). Areas of gain include building regulatory institutions, creating greater transparency for budgetary and revenue expenditure, recognizing the need for greater accessibility of information and public participation, and using modernized accounting and record-keeping systems. Much room for improvement remains, however.
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More public participation needed. Where the budgetary and revenue processes include civil society organizations, ordinary citizens, and other key actors in the private sector, these external agents help formulate policy, provide feedback, and take part in the general process of governance, with a positive impact. Not only does this engagement strengthen the fiduciary relationship between citizens and the state – the heart of good financial governance – but it also improves the effectiveness of state policy, increases compliance, and enables the government to reach its PFM targets. Exclusion leads to resentment, less understanding of governmental aims and priorities, and a reluctance by citizens to fully engage in financial governance. In turn, this affects compliance and the state's ability to collect revenue and carry out its expenditure programs.
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Need for internal accountability mechanisms in PFM systems. Internal as well as external oversight and regulatory institutions are vital. PFM systems and ministries, departments, and other government spending and collection bodies need such internal mechanisms and procedures to ensure accountability, transparency, and the monitoring of financial activities to check misuse of funds or administrative procedures leading to rent-seeking. These mechanisms and procedures are the first line of defense protecting PFM systems.
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Independence of key regulatory institutions. Independence of institutions responsible for monitoring, overseeing, and enforcing rules is critical to good financial governance. Where these institutions – including audit authorities, finance inspectorates, tax and revenue authorities, and procurement agencies – are protected from political interference and can carry out their duties unimpeded, the beneficial impact on financial governance is notable. Where their independence is curtailed, overtly or covertly, the regulatory system is weakened and malpractices and rent-seeking proliferate. Ensuring the robust independence and strength of these regulatory institutions is a major work in progress in Africa.
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Preponderance of the executive. The executive is usually dominant in administering and managing PFM systems. This can be positive, when the ruling party or group in power shows a strong commitment to improving financial governance, like Ethiopia and Rwanda. But in the longer term, an overweening executive is damaging, since entropy is a characteristic of all political regimes, and those that remain in power for a long time are vulnerable to such degradation. It also means that the success or failure of PFM reforms depends heavily on the orientation of the leading group in the executive, and this can change with the political wind. Addressing this ultimately dangerous weight of the executive is crucial to ensure long-term success.
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Importance of legislative oversight. It is crucial that the legislature holds the executive to account over the budget and uses bodies such as public accounts committees to monitor government spending and taxation and to bring government malfeasance to light, dealing with it appropriately. The legislature remains a check on the financial power of the executive.
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Greater transparency required in government procedures. PFM is complex and requires specialization and access to information about government administration. Improving public awareness about the procedures, and making public financial information on government spending and taxation easily and widely available, will improve the public's ability to participate in financial decisionmaking and engender transparency. This will help reduce corruption and increase citizen confidence in PFM public institutions.
Download the full report (pdf)
This Report is a joint production of the African Development Bank (AfDB) and the African Capacity Building Foundation (ACBF). The preparation of the report benefited from the tutelage of the ACBF team led by Thomas Munthali, Director for Knowledge and Learning Department (K&L), assisted by Robert Nantchouang, Senior Knowledge Management Expert.
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Structural change for inclusive and sustainable industrial development
This report from the United Nations Industrial Development Organization (UNIDO) highlights the importance of the manufacturing sector in economic development and, with a focus on structural change, discusses how industrial development can be harnessed for faster growth, greater inclusiveness and sustainability.
The concept of industrial structure is often elusive as income level, country-specific conditions, technological change and policies all play a role in structural change. Insights into the ebb and flow of different sectors and industries within the manufacturing sector along a country’s development path are crucial, as they give rise to new opportunities and challenges for the country in question.
The manufacturing sector has always been a key driver of economic growth for developing countries. At an early stage of development, manufacturing development can open a window for countries to pursue strong and inclusive growth. The competitive wage levels of low-income countries give them a distinct advantage in developing labour-intensive industries, which can generate a large number of formal jobs for both women and men. Successful development of labour-intensive industries sets the foundation for industrialization, as increased exports, revenues and consumption boost investments in education, infrastructure, and research and development. This can foster the development of higher valued and more technologically sophisticated industries. Such structural change ensures sustained and rapid industrial development, even after the loss of labour-cost advantage.
UNIDO’s research shows that the types of industries that emerge in the middle-income stage are likely to be more emissions- and material use-intensive and thus often increase the pressure on the environment, unless proper mitigation measures are introduced. The successful shift of the industrial structure from labour-intensive to capital-intensive industries increases productivity and generates higher wage jobs, which could help sustain industrial growth and lead to the creation of shared prosperity. Entering a high-income stage of development often slows down the growth of manufacturing relative to services, with the exception of technology-intensive industries. While the growth of manufacturing moderates, manufacturing activities gradually shift away from resource-intensive industries to high valued-added activities, and to a manufacturing sector that is less emissions-intensive.
Executive summary
Structural change is a central feature of economic development and as economies evolve, the manufacturing industry plays a key role. However, development is increasingly not only about raising income because the form growth takes also matters. Issues of inclusion (with as many as possible benefiting from the proceeds of growth) and sustainability (with growth minimizing the environmental impact) have become crucial. This report explores the role of the manufacturing industry in the twenty-first century in this context. Manufacturing offers the possibility of both job and income creation, but also poses challenges in terms of the effects this process has on natural resources and climate change.
Recent history demonstrates that experience with industrialization has been very uneven, both in terms of the spread of benefits between countries and their distribution within countries. The report highlights successful and unsuccessful experiences and considers their policy implications. The challenges discussed here are of central importance for most countries, especially for developing countries wishing to expand their industrial base and embark on a path of sustainable industrialization.
Manufacturing matters for the growth of developing countries
There is ample empirical evidence to show that the manufacturing sector plays an important role in growth, particularly when countries are at a relatively low-income level. Manufacturing offers the possibility of higher levels of productivity, more rapid productivity growth and greater technical change than agriculture, or below a certain income, many parts of services. In addition, it can create jobs that offer higher wages due to this higher level of productivity. Hence, there is usually an association between the growth of an economy and the size and growth of its manufacturing sector.
This relationship is typically stronger in low- and lower-middle-income economies than in middle- and high-income economies, since the productivity and employment effects of manufacturing relative to other sectors are expected to be higher at lower income levels. In addition, there is some evidence that this relationship may have weakened post-1990 in the more globalized world economy, where positive growth effects from manufacturing only operate in economies with relatively high levels of human capital.
In policy terms this means that governments of developing countries need to consider ways to encourage and support manufacturing activities and prevent a shift of resources from manufacturing to activities such as traditional agriculture or informal services, which offer less economic returns and have less potential for growth.
No unique path to development but understanding general patterns may inform policy
Cross-country analyses of the patterns of manufacturing development reveal both empirical regularities in these patterns and significant variations in country experiences due to country-specific factors. As per capita incomes rise, the share of the manufacturing sector in gross domestic product (GDP) typically follows an inverted U-shaped path peaking at a threshold level of income and declining as income rises further. This relationship has changed over time and the maximum share of manufacturing in GDP in today’s economies is at much lower levels of income per capita compared to the point at which the now industrialized countries reach their peak level of manufacturing activity.
Once the peak has been reached, the share of manufacturing tends to gradually decrease and the share of the services sector rises. There is no predetermined or unique path to development, and individual countries have specific features that influence the extent to which they may deviate from the general or average pattern. Nonetheless, establishing this general pattern can inform policy since it indicates how far the structure of an economy is from the ‘expected’ structure, given its income level, size and other characteristics.
In terms of trends over the period 1970-2013 in different regions, a significant relocation of manufacturing value added has been observed from wealthier countries (the United States and Western Europe) to Asia, in particular China. The share of manufacturing in GDP (at constant prices) over this period dropped in Western Europe, Latin America and sub-Saharan Africa, and has been constant in the United States (at 13 percent). On the other hand, its share in Asia (excluding China) has increased from 16 percent to 20 percent while in China it has risen four-fold from 9 percent to 36 percent. Within the developing country group, the share of manufacturing in total economic activity rose from around 15 percent to over 20 percent over this period. In 2014, China contributed over 18 percent of world manufacturing value added, and was the second largest manufacturing producer behind the United States.
Patterns can also be established for change within manufacturing as the sector expands at different levels of income. Industries within manufacturing can be classified as ‘early’, ‘middle’ or ‘late’ depending on the level of income (at constant prices) at which an industry’s share in GDP reaches its peak. Early industries are mostly those that are relatively labour-intensive and/or domestic-oriented (typically food and beverages, tobacco, textiles, wearing apparel, wood products, publishing, furniture, and non-metallic minerals). Middle industries include those that process natural resources (typically coke and refined petroleum, paper, basic metals and fabricated metals). Late industries tend to be more knowledge- and capital-intensive (typically rubber and plastics, motor vehicles, chemicals, machinery and equipment, electrical machinery and apparatus and precision instruments).
There are country differences from this general pattern, and at low income levels in particular, there can be considerable variation between countries as evidenced by differing experiences in the development of textiles and wearing apparel. Once the manufacturing sector has accumulated experience and incomes have risen, the differences in performance between countries at the same income level decrease. However, as countries approach the end of the upper-middle-income stage (at around $15,000 GDP per capita in terms of PPP in 2005 constant prices), they again exhibit bigger differences in performance, as they face the challenge of competing in more sophisticated and technology-intensive goods.
Overall, the aggregate share of world manufacturing employment in total world employment (including both developed and developing countries) has barely changed since 1970. Rather, a major reallocation of the share of manufacturing in total employment has occurred, rising from below 10 percent to around 14 percent in the developing country group, whilst it has fallen significantly in developed countries.
Although there are sufficient regularities in the data to identify a ‘normal’ development pattern and path of structural change as income grows, countries may deviate from this path because of their specific characteristics. Small countries (defined here by a population size below 12.5 million) tend to develop labour-intensive industries earlier than large countries, although they decline fairly rapidly once these industries reach their peak levels of output relative to other industries. At high income levels, the growth of industries between small and large countries tends to vary far more, as small countries must specialize more than larger ones. Due to agglomeration effects, high levels of population density tend to be associated with relatively high levels of manufacturing.
On the other hand, countries with large levels of natural resources have lower than expected levels of manufacturing for their income level. Similarly, countries with high labour costs and poor governance have lower levels of manufacturing than expected. Whilst there may be a few developing countries that have significant potential in high productivity activities, such as tourism services or mineral processing, a need for most countries will eventually arise to develop some form of manufacturing. The policy challenge is to ensure that given the country’s size and natural resource endowment, its actual level of manufacturing activity is not significantly below what might be expected. This requires ensuring that adequate support for manufacturing and key aspects of the investment climate, like high quality infrastructure, training activities and a stable macro-economic environment, are in place.
There is a need for industrial policy
There are different ways to support industry, and the precise choice of instruments matters less than the way in which they are applied. Current thinking highlights the need to focus on the key constraints to new investments. These constraints are to be identified by a dialogue between government (through the agency that implements industrial policy) and the productive sector (private or public enterprises). Instruments are to be used flexibly so that where one is ineffective, it should be replaced by another or terminated. Support for a given instrument should be linked to performance and the achievement of targets, and be of a temporary nature. In practice, governments are ‘doomed to choose’ in the sense that as resources are limited priorities for support need to be set if interventions are to be effective.
Manufacturing offers the potential for higher wages and stable employment. The links between employment growth and output growth have weakened in recent decades in part because of the skills bias inherent in new technologies created in higher income economies. Overall, the expectation is that innovation increases employment since even if innovation in processes results in labour-shedding, innovation in products creates new markets and expands output. Whilst the spread of industrial robots may create a labour-displacing effect in the long run, this has not as yet emerged as a major problem in middle- and lower-income economies.
Interventions to support sustainable green growth will be increasingly important in the future to offset the negative effects of a growing rate of production on the environment. Governments can play a key role in getting prices to incorporate the negative consequences of resource use on the environment and in funding research and development (R&D) in environmentally supportive technology and its dissemination, so that increasingly, environmental considerations will need to be an important aspect of industrial policy.
This report has been prepared by Nobuya Haraguchi, UNIDO staff member, and John Weiss, Emeritus Professor at University of Bradford.
Download: Structural Change for Inclusive and Sustainable Industrial Development (PDF)
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Africa’s energy transition: Opportunities and challenges for decent work
Africa’s energy landscape is changing, but not in a uniform direction. New discoveries of oil and gas are accompanying the expansion of renewable energy generation. What does the continent’s energy transition hold for jobs and sustainable development?
Because of its vulnerability to climate change, Africa as a whole is facing the double challenge of tackling climate change and coping with its consequences on production, growth, and employment in all economic sectors. While adaptation efforts are already, and will continue to be needed, preventing the worst possible impacts of climate change from materialising is also critical. Otherwise, the achievement of the 2030 Agenda for Sustainable Development may be compromised. Indeed, over the past decade, climate change and extreme weather events have caused unprecedented damage in African countries, ruining infrastructure, threatening economic activity, and destroying jobs. The most visible manifestations are the droughts in southern Africa, floods in West Africa, and desertification of entire areas in the Maghreb region.
To be sure, African countries focus most of their attention on adaptation to climate change. At the same time, however, an increasing number of governments across Africa consider a sustainable energy transition as a central aspect of their climate strategies. In this regard, several questions remain to be answered. How to achieve a sustainable energy transition that delivers inclusive growth and jobs? How to reduce the gap in skills in order to unleash the potential for vibrant enterprises and green jobs? And finally, how to develop public policy frameworks that are conducive to a just transition for workers, enterprises, and communities? This article touches upon these issues.
Context and issues in Africa’s energy transition
Compared to the majority of fossil fuel-dependent industrial countries, the energy transition in Africa presents a distinct feature. With the exception of a few countries such as South Africa, most African countries are not in a situation of pressure where they need to phase out of coal to meet their energy needs through alternative energy sources. Africa’s energy transition rather faces two important challenges: modernisation and expansion.
Modernisation is about exploiting the continent’s vast endowment of renewable energy resources, including biomass, wind, solar, and hydro-power potential. It also implies moving away from the use of inefficient and hazardous forms of energy by over 700 million people and towards the deployment of modern fuels and sources of energy for cooking, heating, and lighting. In the fossil fuel sector (especially oil and gas), both resource and labour productivity need to be improved. Expansion is about bringing to scale adapted technologies to meet the energy needs of a growing population of 1.2 billion people, of which only 30 percent have access to reliable electricity.
Globally, we are witnessing a shift in the energy landscape, away from fossil fuels and towards less-polluting sources of energy. In Africa, however, a closer look reveals a different picture. On the one hand, there is an expansion in energy generation from renewables. For example, the recently launched Taiba Ndiaye Wind Project in Senegal will generate 158-megawatt of additional capacity. In Ghana, the planned Nzema Solar Power Station will be the largest installation of its kind in Africa, and it is expected to increase Ghana’s electricity generating capacity by 6 percent and allow nearly 100,000 homes to benefit from clean energy. Morocco, a pioneer in this area, seeks to deploy about 1.5 gigawatts of solar and wind capacity across the country to meet its goal of increasing the share of renewables in its energy mix to 42 percent by 2020. In April 2018, South Africa signed contracts with 27 independent renewable energy power producers, worth US$4.6 billion, to produce 2,300 megawatts of electricity over the next five years.
One the other hand, since 2004, there has been a wave of oil and gas discoveries in countries such as Chad, Ghana, Guinea, Guinea-Bissau, Kenya, Liberia, Mali, Mauritania, Mozambique, Sao Tome Principe, Senegal, Sierra Leone, Tanzania, Togo, and Uganda. According to the Africa Energy Outlook 2014, 30 percent of global oil and gas discoveries made between 2010 and 2014 have been in sub-Saharan Africa. A number of countries that were previously net energy importers will become energy exporters in the next five years due to increasing oil exports. And based on certain estimates, sub-Sahara Africa is expected to outpace Russia as a global gas supplier by 2040.
Therefore, while the African energy landscape is changing, it is not in a single direction. The energy transition is complex and has important ramifications for the structure of economies and future development prospects. Climate change is an essential aspect to it, but so are many other key aspects of the sustainable development goals, such as reducing the health impact on women and children of the use of inefficient cooking fuels; powering productive industries in rural areas and modernising agriculture; and the overall improvement of living conditions.
What are prospects for new job creation?
Studies by the International Labour Office and other institutions have pointed to four types of possible impacts of climate change and greening policies on labour markets.[1] Firstly, the expansion of greener products, services, and infrastructure will translate into higher labour demand across many sectors of the economy, thereby leading to the creation of new jobs. Examples include jobs in renewable energy, energy efficiency, manufacturing, transportation, and building and construction. In addition to direct jobs, indirect employment is created along the supply chains, including in the building of necessary infrastructure.[2] And as new income is generated and spent across the economy, further employment is created.
Secondly, some of the existing jobs will be substituted as a result of transformations in the economy from less to more efficient, from high-carbon to low-carbon, and from more to less polluting technologies, processes, and products. Examples include the shift from the manufacturing of internal combustion engines to the production electric vehicles, as well as the energy transition itself, as clean energy replaces fossil fuels.
Thirdly, certain jobs may be eliminated, either phased out completely or massively reduced in numbers, without direct replacement. This may happen where polluting and energy- and materials-intensive economic activities are reduced or phased out entirely, such as in the closing of inefficient coal mines.
Finally, many, and perhaps most, existing jobs (such as plumbers, electricians, metal workers, and construction workers) will simply be transformed and redefined as day-to-day workplace practices, skill sets, work methods, and job profiles are greened. For instance, plumbers and electricians can be reoriented to carry out similar work with solar water heating or solar photovoltaic systems.
On the energy transition more specifically, two common questions are whether clean energies generate more employment than fossil fuels, and whether this applies in the context of Africa. Several studies indicate that renewable energy technologies create more jobs than fossil fuel technologies. One study concludes that per dollar of expenditure, spending on renewable energy can produce nearly 70 percent more jobs than spending on fossil fuels. The International Renewable Energy Agency (IRENA) estimated that the renewable energy sector employed nearly 10 million people worldwide in 2016, with 62,000 jobs in Africa. Nearly half of these jobs are in South Africa and a quarter in North Africa.[3]
In relation to the notion of modernisation mentioned above, replacing the millions of kerosene lamps, candles, and flashlights used in many African countries with modern solar lighting can provide a cheaper alternative and stimulate green jobs. A study found that replacing these lighting systems with modern solar lighting technologies for people living outside the grid could create 500,000 new jobs related to lighting in countries of the ECOWAS region.
Bridging skills and capacity gaps to reap the employment dividend
More than 10 million young African men and women are expected to enter the labour market each year over the coming years. Most analysts tend to agree that the traditional public sector will not be able to absorb this new work force. Entrepreneurship and self-employment are indispensable to create quality jobs in large numbers, and the energy transition can play a central role in this regard. For that to happen, skills development and upgrading, entrepreneurship promotion, and enabling policy and governance frameworks are required.
A global review of skills for green jobs including four countries in Africa (Egypt, Mali, South Africa, and Uganda) revealed the existence of a gap between the goals and targets set in environmental policies and the human resources available for their implementation.[4] The same applies in the energy sector. Some skills gaps already exist for technical and engineering positions and could grow as the renewable energy sector continues to expand. Skills gaps could lead to project delays or even cancellations, cost overruns, and faulty installations. Efforts are needed in education and training systems to develop renewable energy curricula, integrate modules into vocational training courses, support apprenticeships, and establish common quality standards.[5] Nonetheless, there are promising experiences. For example, Cape Verde launched a Renewable Energy and Industrial Maintenance Center (Cermi), whose main activity is the training of professionals in the areas of design, assembly, and maintenance of photovoltaic installations.
Various intervention models and programs to promote job creation in clean energies have shown a clear advantage of combining technical and vocational training with entrepreneurship training. Particularly for African countries, entrepreneurship and self-employment are becoming priorities in youth employment strategies and policies. In view of Africa’s specific business environment, micro-enterprises have an important role here. In general, micro-enterprises are defined as businesses with up to 10 employees, small businesses as those with 10 to 100 employees, and medium-sized enterprises as those with 100 to 250 employees. In Africa, the majority of job creation is coming from the smallest businesses (less than 19 employees). In the East Asia and Pacific region, job growth is mostly concentrated in enterprises with 20-99 employees, while in Latin America and Eastern Europe/Central Asia, more than 40 percent of job creation is by businesses with more than 100 employees.
Typically, young entrepreneurs in the energy space face challenges related to (1) access to finance, (2) lack of technical knowledge, and (3) lack of experience in business management. It should also be noted that because of the prevalence of unemployment and underemployment, there are some entrepreneurs by vocation, but also a large number of entrepreneurs by necessity. As a result, in the absence of strategies and tools to support entrepreneurship, a large proportion of young entrepreneurs remain in the informal economy.
Nevertheless, many young African women and men see the potential associated with the development of micro and small enterprises in the renewable energy sector. Remarkable initiatives are underway throughout Africa, with dynamic companies such as M-Kopa Solar, which operates in East Africa in the distribution and installation of solar kits. Many such small and micro enterprises active in the distribution of energy systems, maintenance and operation, and sometimes in assembly would benefit from policies to support their integration in value chains and the development of local supply chains. Government policies favouring local content and after-sales services can be helpful. Through the use of such policies, for example, the Tunisia Solar Plan enabled the development of joint ventures and local manufacturing of solar water heaters.
Conclusion
Africa’s energy transition is well underway, structured by national and regional contexts and priorities, as well as global policy frameworks and commitments that countries have made. Critical to its success is the fine combination of new fossil fuel discoveries and the expansion of renewables across the continent. A critical dimension of the energy transition for Africa also has to do with cost of technologies. As Collier and Venables have put it, Africa cannot afford cost-increasing mitigation: any measures that it takes to green its energy usage must also be cost-reducing.
Although most studies indicate net job gains in the energy transition, in Africa as in other parts of the world, issues of temporal and geographical disconnect exist. These refer to the fact that new jobs are not necessarily created in the same locations and regions, and at the same pace as other jobs may be displaced or eliminated in the energy transition.
The notion of a just transition for all implies that policies are in place to manage social and employment impacts carefully, in order to avoid social and economic disruptions.[6] The fear of job losses can act as a powerful social and political force to maintain the status quo and slow progress. Effective social dialogue, planning for a just transition, and social protection policies are all elements of a just transition framework that can help African countries manage their energy transition well.
Moustapha Kamal Gueye is Coordinator, Green Jobs Programme, International Labour Office. The views and opinions in this article are those of the author and do not represent views or opinions of the International Labour Office.
This article is published under Bridges Africa, Volume 7 - Number 3, by the ICTSD.
[1] International Labour Organization (ILO). A just transition to climate-resilient economies and societies: Issues and perspectives for the world of work. Geneva: ILO, 2016.
[2] International Labour Organization (ILO). “Rural Renewable Energy Investments and their Impact on Employment.” STRENGTHEN Publication Series, Working Paper No. 1, 2017.
[3] International Renewable Energy Agency (IRENA). Renewable Energy & Jobs – Annual Review 2017. Abu Dhabi: IRENA, 2017.
[4] ILO. Skills for Green Jobs: A Global View. Geneva: ILO, 2011.
[5] High-Level Political Forum on Sustainable Development. “Interlinkages between energy and jobs.” Policy Brief No. 13, forthcoming.
[6] ILO. Guidelines for a just transition towards environmentally sustainable economies and societies for all. Geneva: ILO, 2015.
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tralac’s Daily News Selection
Conference of African Ministers of Finance, Planning and Economic Development: 51st Session of the Commission (11-15 May, Addis Ababa)
(i) Assessment of progress on regional integration in Africa (pdf). The present paper aims to provide an assessment of regional integration in Africa, beginning with an overview of the state of regional integration in Africa, as evaluated by the African Regional Integration Index. Central dimensions of regional integration in Africa are also discussed herein. Finally, the paper sheds light on several key issues related to the African Continental Free Trade Area. Extracts:
Overall, it is expected that the tariff revenue losses will not be considerable. However, countries with high initial tariffs on intra-African trade and with larger volumes of intra-African imports will experience the highest revenue impact. Exclusion lists within the African Continental Free Trade Area can provide an avenue for decreasing tariff revenue losses. It has been estimated that, even with a 1 per cent exclusion list, the average African country could reduce tariff revenue losses under the Free Trade Area from 8 to 1 per cent of total tariff revenue. Overly liberal exclusion lists should be avoided, however, as they could erode the value and benefits of trade liberalization.
Within countries, in order to alleviate the impact of structural adjustment costs, a gradual and measured approach to implementation should be considered. Exclusion lists and safeguard measures can be used for that purpose, but can result in distorted consumption and are, therefore, not optimal. Another approach would be to apply adjustment assistance to vulnerable groups facing adverse effects from the African Continental Free Trade Area. For example, smallholder farmers are likely to need assistance to connect to value chains and to take advantage of new opportunities. Similarly, informal cross-border traders, many of whom are women, should be supported in joining the formal sector so as to benefit from the Free Trade Area.
Trade facilitation measures are of particular relevance to efforts to ensure that gains are inclusive. The chapter on trade facilitation under the Agreement and the global momentum around the topic as a consequence of the entry into force of the Trade Facilitation Agreement under the World Trade Organization both highlight the fact that trade facilitation can be an area of quick wins. At the continental level, landlocked countries, which have economies that are more sensitive to issues surrounding ease of access to ports and value chains, can gain from the effective implementation of the provisions on trade facilitation, transit and customs cooperation. At the national level, trade facilitation measures can be used to support small-scale businesses and female entrepreneurs, who face greater barriers to trade.
The effective implementation of the Agreement will further depend on a strong institutional structure. At the continental level, the responsibility for coordinating the implementation of the Agreement will rest with the secretariat of the African Continental Free Trade Area, which will form an autonomous institutional body within the African Union system and have an independent legal personality, akin to an agency of the African Union. It will work closely with the African Union Commission and its departments. The Commission will provide the necessary transitional support until the secretariat is fully operational. Funding for the secretariat will come from the overall budget of the African Union.
The regional economic communities will remain important implementing partners and be represented in a committee of senior trade officials of the African Continental Free Trade Area. Their role will include the coordination of implementation and of measures to address non-tariff barriers, harmonize standards and monitor implementation.
(ii) Overview of recent economic and social conditions in Africa (pdf). Relatively high fiscal deficits coupled with exchange rate depreciations have put pressure on rising public debt levels in some countries as Africa’s total debt share in gross domestic product hovers around 32% (see figure IV). It is elevated to levels above 40% in Southern Africa and among oil importing countries. Significant non-concessional borrowing for infrastructure development has led to high debt-servicing costs in several countries, such as Botswana and Mozambique. This aggregate picture, however, masks the significant debt levels in 13 countries, three of which, all small island developing States, have debt shares above 100% of their GDP (Cabo Verde: 111%; Mauritius: 117.5%; and Seychelles: 165%); four with debt shares between 76 and 100% (Djibouti: 80%; Mauritania: 75.4%; Sao Tome and Principe: 84%; and Tunisia: 79%); and the remaining six with debt shares between 50 and 75% (Gambia: 69%; Ghana: 52%; Liberia: 51%; Namibia: 60%; Senegal: 53%; and Zimbabwe: 69%) [Conference downloads]
African Consultative Group: joint statement by Chairman of the African Caucus, IMF’s Managing Director
“Against this backdrop, we agreed that reducing macroeconomic vulnerabilities and boosting private investment is necessary to lay the groundwork for transforming the current recovery into a sustainable growth spell and accelerating progress towards the SDGs. In particular, with public debt levels rising rapidly in many countries, containing debt vulnerabilities while creating room for much needed development spending requires continued efforts to boost revenue mobilization. In addition, sustainable growth and job creation requires reinvigorating private investment. We concurred that deepening financial systems and boosting FDI would help expand financing to the private sector. Advancing regional integration holds immense potential. Finally, other initiatives, such as public-private partnerships and special economic zones, can play a catalytic role in promoting structural transformation, but care is needed to contain contingent fiscal risks.”
IMF’s Africa Department: transcript of press briefing by Abebe Aemro Selassie
This recovery is fairly broad-based with two thirds of the countries in the region seeing growth accelerating in 2018. But this headline figures also mask diversity and growth outcomes and prospects across countries in the region. Several economies such as Cote d’Ivoire, Ethiopia, Senegal, Ghana, are growing robustly with growth of 6% or more. At the other end of the spectrum, countries that are home to one third of the region’s population have seen their per capita income fall in 2017 and most of these countries are expected to witness a further decline in per capita income this year.
Central to the goal of addressing debt vulnerabilities is stronger tax revenue mobilization. Stepping up revenue collections would allow sub-Saharan African countries to make progress towards sustainable development goals while preserving fiscal sustainability. Most countries in the region are seen as having considerable potential to collect higher revenue despite substantial progress of revenue mobilization over the last couple of decades. Sub-Saharan African continues to have the lowest revenue to GDP ratio. According to some work we have done, countries in the region could mobilize between there to five percentage points of GDP and additional tax revenues in the next four or five years. Achieving this ambition would require strengthening VAT systems, streamlining exemptions and broadening tax base.
Just to step back a little bit, you know, in recent years, we have seen a significant improvement in inter Africa trade. It has gone up from below 10% to now almost 20% of the region’s trade. And what is interesting about the trade is that much of what Africa trades with each other tends to be more processed, more manufacturing type goods. Exactly the kind of more diversified exports that our countries are seeking. So, we think that the CFTA when fully implemented and if coupled with reforms through non-tariff barriers, facilitating infrastructure to allow goods to move with each other should facilitate and allow connecting markets and, you know, deepen and expand the markets in which African firms can trade. So we strongly welcome it. [International Monetary and Financial Committee: communiqué, statements; Development Committee: communiqué]
Migration and Development Brief: record high remittances to low- and middle-income countries in 2017 (World Bank)
The World Bank’s latest Migration and Development Brief (pdf) shows that officially recorded remittances to developing countries touched a new record – $466bn in 2017, up 8.5% over 2016. The countries that saw the highest inflow in remittances were India with $69bn, followed by China ($64bn), the Philippines ($33bn), Mexico ($31bn), Nigeria ($22bn), and Egypt ($20bn). Remittance flows to developing countries are expected to grow 4.1% to reach $485bn in 2018. The global average cost of sending $200 was 7.1% in the first quarter of 2018. The cost ranges from the most expensive average cost of 9.4% in Sub-Saharan Africa, to the lowest average cost of 5.2% in South Asia. [Global Knowledge Partnership on Migration and Development]
Tanzania, Uganda restrict Kenya’s sweets, ice cream (Business Daily)
A fresh round of trade wars is simmering in East Africa after Tanzania and Uganda imposed taxes on Kenya made confectionery products like chocolate, ice cream, biscuits and sweets citing use of imported industrial sugar in the goods. The two states have rejected certificates of origin issued by the Kenya Revenue Authority (KRA) and opted to levy 25 per cent import duty on Kenyan confectioneries. “This is an EAC-wide remission scheme that is available to all manufacturers in the region,” said Kenya Association of Manufacturers chief executive Phyllis Wakiaga. “We are not supposed to pay duty when we sell in the region because our competitors in the region also rely on industrial sugar imported under the same remission scheme.”
South Africa: SARS introduces electronic system to track cargo (SANews)
The South African Revenue Service at the weekend introduced a new electronic cargo system that tracks the movement of cargo coming into and leaving the country. The paperless cargo reporting system brings to an end one of the last remaining paper-based processes in the revenue service. Chief Officer of Customs and Excise, Teboho Mokoena, said the electronic reporting system will expedite the processing of legitimate trade and improve the management of risk for goods coming in and leaving the country. “The implementation of the electronic reporting requirements falls under Customs’ Reporting of Conveyances and Goods project, which is one of three main pillars of SARS’s New Customs Acts Programme,” SARS said. The first phase of NCAP to go live is RCG, albeit under the current 1964 Act.
Structural transformation in South Africa: moving towards a smart, open economy for all (pdf, IDTT)
Trade minister Rob Davies, in his introduction to the report: “The findings make for hard reading. The industrial structure of South Africa has changed remarkably little, especially in the context of major global change. Indeed, there has been a hollowing out of industrial capabilities, which can be characterised as premature deindustrialisation.” UJ’s Simon Roberts: “We are saying the policy choices of the 2000s were wrong in many ways; problematic in many ways. There was a hollowing out of capabilities. The ownership of companies has changed, but the companies have not changed. You have a financial sector growing, but not investing.”
Extract from the report: The fragmentation of government is problematic for realising a coherent industrial policy. Industrial development requires co-ordination between policies on mining, energy, trade, development finance, competition, technology, sector industrial development and procurement. In fact, the fragmentation of the state, with its accompanying proliferation of departments, opened-up more space for successful lobbying by large international businesses and aided rent-seeking. Inconsistent stances have been taken across government. The impact on industrial policy has been profound as it has made effective interventions across departments and the combination of policy instruments near impossible.
Global Commodities Forum: Building skills for sustainable development (23-24 April, Geneva)
Participants will examine and discuss the roles that skill development plays in the commodities sector in moving up the value chain, contributing to industrial development (Sustainable Development Goal 9) and providing decent work (Goal 8) and professional education (Goal 4). Particular emphasis will be placed on how human capital development strategies should adapt to the increasing automation of the mining sector, and how these strategies help prepare for the transition to a lower-carbon energy mix in pursuit of universal access to affordable, clean energy (Goal 7) and contribute to increasing the participation of women in skilled vocations in value added activities (Goal 5).
Today’s Quick Links: The Great Lakes Trade Facilitation Project has launched its website Meeting of the EAC Sectoral Committee on Customs and SCT Monitoring and Evaluation Committee (23-27 April, Arusha) Meeting of the East African Standards Committee and Subcommittees (23-27 April, Arusha) ILO’s Con Gregg: Why anticipating the need for skills helps spread benefits of trade and growth IGF’s Isabelle Ramdoo: Skills development in the mining sector – making more strategic use of local content |
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2018 Conference of Ministers: AfCFTA and fiscal space for jobs and economic diversification
The 51st session of the Economic Commission for Africa and the Conference of African Ministers of Finance, Planning and Economic Development will be held at the United Nations Conference Centre in Addis Ababa from 11 to 15 May 2018.
The ministerial segment will be preceded by a preparatory meeting of the Committee of Experts, which will open on Friday, 11 May 2018. The ministerial segment will open on Monday, 14 May 2018. Further inspiring discussions and findings are anticipated from a number of parallel side events scheduled to be held on 13 May 2018.
The plenary sessions of the Conference will commence with a high-level policy dialogue on the theme, “African Continental Free Trade Area and fiscal space for jobs and economic diversification”, followed by plenary sessions on a series of subthemes.
The discussions will benefit from the contributions of seasoned and high-level panellists from within and outside Africa and will build on the issues paper and technical background materials, which synthesize the results of recent research on the matters under consideration, with a view to achieving an agreed outcome that will have important implications for the continent’s future.
Overview of recent economic and social conditions in Africa
Africa’s growth rebounds in 2017
Africa’s economic growth performance modestly recovered in 2017, rising to 3 per cent, after experiencing its lowest level (1.7 per cent) in 2016 since the beginning of this century. Africa is the second fastest-growing region after East and South Asia (6 per cent), followed by South-Eastern Europe (2.5 per cent), and the Latin American and Caribbean region (1 per cent)
Africa’s economy expanded due to the slight increase in commodity prices and improved domestic conditions supported by improved macroeconomic management. Growth in private consumption and increase in investments led the recovery in Africa’s growth, despite relatively low commodity prices, adverse weather conditions and fragile global economic conditions, which affected some countries. The recovery in some major economies (such as Angola, Morocco and Nigeria) and the continued robust growth in other economies (such as Côte d’Ivoire, Ethiopia, Ghana, and the United Republic of Tanzania) underpinned the continent’s growth. Nevertheless, low growth performance in large economies muted the continent’s growth, including in Nigeria (0.9 per cent) and South Africa (0.6 per cent).
However, the recent growth rates registered in both 2016 and 2017 are below the 7 per cent Sustainable Development Goals target and could not significantly reduce poverty in the continent where 41 per cent of the population lives below the poverty line. The continent should therefore ramp up efforts to boost growth by underscoring the importance of measures to promote shared growth, through structural transformation and job creation. In order to enhance Africa’s economic performance and move towards the 7 per cent target mentioned previously, domestic demand needs to be strengthened. Government spending on infrastructure needs to be aggressively increased to fill the infrastructure gap in Africa. The rise in public investment should not cause any further deterioration in fiscal balances and African Governments need to continue their efforts to consolidate their fiscal position. Enhancing tax administration, fighting illicit capital outflows, and tapping excess liquidity in the banking sector are potential sources to finance public investment, particularly in infrastructure.
Africa’s fiscal deficit is narrowing albeit high
The overall fiscal deficit share in gross domestic product (GDP) declined due to fiscal consolidation through the reduction in fiscal expenditures and raising or introducing new taxes. Fiscal deficits declined by 0.7 percentage points from 5.9 per cent in 2016 to 5.2 per cent in 2017 and are projected to decline further to 4.9 per cent in 2018. While underlying factors behind the fiscal shortage vary across countries, this trend demonstrates continued commitment to sound macroeconomic management practices through fiscal consolidation boosted by the slight recovery in commodity prices since early 2016. All the subregions and economic groups registered an improvement in their fiscal positions in 2017, a trend projected to continue in 2018. However, in some countries, fiscal deficit widened as a result of increased public expenditure, especially on infrastructure development.
Relatively high fiscal deficits coupled with exchange rate depreciations have put pressure on rising public debt levels in some countries as Africa’s total debt share in gross domestic product hovers around 32 per cent. It is elevated to levels above 40 per cent in Southern Africa and among oil importing countries. Significant non-concessional borrowing for infrastructure development has led to high debt-servicing costs in several countries, such as Botswana and Mozambique.
This aggregate picture, however, masks the significant debt levels in 13 countries, three of which, all small island developing States, have debt shares above 100 per cent of their GDP (Cabo Verde: 111 per cent; Mauritius: 117.5 per cent; and Seychelles: 165 per cent); four with debt shares between 76 and 100 per cent (Djibouti: 80 per cent; Mauritania: 75.4 per cent; Sao Tome and Principe: 84 per cent; and Tunisia: 79 per cent); and the remaining six with debt shares between 50 and 75 per cent (Gambia: 69 per cent; Ghana: 52 per cent; Liberia: 51 per cent; Namibia: 60 per cent; Senegal: 53 per cent; and Zimbabwe: 69 per cent). 3 The rising public debt levels, currency depreciations and growing recourse to non-concessional borrowing for infrastructure development are fast raising debt-servicing costs, thereby diminishing fiscal space for the affected countries.
Assessment of progress on regional integration in Africa
Amid rising protectionism in some parts of the world, regional integration in Africa is critical to meeting the continent’s development ambitions. There is a consensus that the inclusive development goals of Africa cannot be achieved without dynamic industrial sectors and an increase in formal intra-African trade. The fragmentation of African economies, however, limits the ability of African businesses to build their competitiveness. Further integration is, therefore, required to achieve economies of scale and to boost African production and trade.
The Economic Commission for Africa (ECA) estimates that the African Continental Free Trade Area has the potential to boost intra-African trade by more than 52 per cent through the elimination of import duties alone. It is estimated that the benefits would double if combined with trade facilitation measures to further reduce non-tariff barriers. The majority of the benefit is focused on industrial goods, providing fertile ground for the development of regional value chains. Trade facilitation measures will also be important to ensure that the benefits are felt more widely, given the challenges often faced in accessing even regional markets. In particular, there is scope for improving conditions for informal cross-border traders, the majority of whom are women.
The present paper aims to provide an assessment of regional integration in Africa, beginning with an overview of the state of regional integration in Africa, as evaluated by the African Regional Integration Index. Central dimensions of regional integration in Africa are also discussed herein. Finally, the paper sheds light on several key issues related to the African Continental Free Trade Area.
Regional integration in Africa: key dimensions
Trade integration
Africa currently counts four functioning free trade areas among the regional economic communities that are recognized by the African Union: COMESA, EAC, ECOWAS and SADC. Intra-African trade has also been liberalized through mechanisms outside the African Union-recognized regional economic communities, including the Pan-Arab Free Trade Area, the Central African Economic and Monetary Community (CEMAC) and the Southern African Customs Union (SACU).
Except for a few regions, trade between African countries has slightly increased or remained stable over the years, but has been generally low in value. Intra-African exports of goods reached 18 per cent of total exports of goods in 2016, up from 9 per cent in 2000, while the corresponding shares for imports were 13 and 14 per cent, respectively. In comparison, in 2016, the shares of intraregional trade in Asia and the European Union were, respectively, 59 and 64 per cent for exports and 61 and 60 per cent for imports.
At the subregional level, among the African Union-recognized regional economic communities, EAC and SADC remained the best performers in terms of exports of goods within their respective subregion in 2016, while SADC performed relatively well in respect of imports within its subregion. These notwithstanding, none of the subregions recorded a share of trade within their respective subregion of more than 25 per cent.
Progress is being made in liberalizing trade through lower tariffs between African countries. Looking at the tariffs applied to imports within economic communities in 2017, EAC had no tariffs on intra-EAC trade; that was also the case for 80 per cent of ECOWAS countries. The average tariff applied by UMA was 5 per cent, with the figures varying from 0 per cent for Libya to as high as 13 per cent for Mauritania. The corresponding figures for the other African Union-recognized regional economic communities were as follows: 0.33 per cent for SADC; 5.07 per cent for IGAD; 3.75 per cent for ECCAS; 0.94 per cent for COMESA; and 14.16 per cent for CEN-SAD.
With trade trends within regional economic communities looking promising, it will also be important to tackle the barriers between the regional economic groupings. The African Continental Free Trade Area is designed to address exactly this, by bringing the whole continent under one free trade agreement. The African Continental Free Trade Area builds on the progress made by the regional economic communities and the Tripartite Free Trade Area Agreement among COMESA, EAC and SADC.
Productive integration
The integration of Africa into regional and continental value chains is limited by over-reliance on trade in primary commodities, with a limited share in manufactured goods. During the period 2000-2016, intraAfrican exports accounted, on average, for 57 per cent of primary commodity exports. The corresponding share for manufactured goods was only 16 per cent. These figures reflect the limited capacity of African countries to develop regional value chains by adding and retaining value locally or regionally. The situation has been underpinned by several factors, including gaps in infrastructure facilities that are key to boosting industrial activities; lack of capacity (financial and human) to support industrial projects; barriers to trade; and the fragmentation of African economies, which makes it difficult for manufacturers to benefit from economies of scale.
Boosting productive integration among African economies requires scaling up industrial activities across the continent. Examples of sectors with the potential for value chain development include the cotton-to-textile sector in West, East and Southern Africa; cocoa-to-chocolate products in West and Central Africa; coffee and its by-products in East and Southern Africa; and olives and their by-products in North Africa. Such development would require addressing the constraints faced by the manufacturing sector while removing barriers to trade and promoting investment. Doing so calls for the effective implementation of continental initiatives, including the African Continental Free Trade Area, the Action Plan for Accelerated Industrial Development in Africa and other regional or national industrial strategies in an integrated and coordinated manner.
African Continental Free Trade Area and the African development agenda
Progress made in respect of the African Continental Free Trade Area
The economic integration of Africa reached a new milestone on 21 March 2018 in Kigali, when 44 States members of the African Union signed the Agreement Establishing the African Continental Free Trade Area. In total, 50 countries signed either the Agreement itself or the Kigali Declaration, which was indicative of the commitment of the signatories to join the African Continental Free Trade Area upon the finalization of national legal requirements. The signing of the Agreement marks significant progress towards realizing the vision for African regional integration, as set out in the Abuja Treaty, which envisages the eventual establishment of a pan-African economic community.
The signing of the Agreement was the culmination of the negotiations launched in June 2015 in Johannesburg, South Africa. In early March 2018, the negotiations forum was convened for a tenth time to finalize outstanding matters and conclude legal vetting in preparation for the signature of the Agreement. During negotiations forum, participants also agreed on a transition and implementation work programme to finalize offers for goods and services and to prepare product-specific rules of origin, as part of the built-in agenda.
Following the recommendation of the Executive Council at its eighteenth extraordinary session, held on 19 March 2018, the Assembly of the African Union, at its tenth extraordinary session, held on 21 March 2018, adopted the Agreement Establishing the African Continental Free Trade Area, the Protocol on Trade in Goods, the Protocol on Trade in Services and the Protocol on Rules and Procedures on the Settlement of Disputes. The Agreement will enter into force upon ratification by 22 States members of the African Union.
The outstanding issues in the first phase of negotiations include the annexes to the adopted protocols and the schedules on goods and services. The annexes to the Protocol on Trade in Goods, the annexes to the Protocol on the Rules and Procedures on the Settlement of Disputes, and the List of Priority Sectors on Trade in Services are expected to be adopted by the Assembly in July 2018. The Schedules of Tariff Concessions and the Schedules of Specific Commitments on Trade in Services are expected to be concluded and adopted during the Assembly session to be held in January 2019.
The second phase of the negotiations is expected to begin in late 2018. That phase will focus on provisions for investment, competition and intellectual property rights. A facilitative environment for e -commerce is also being mooted as a possible additional topic for the second phase. The negotiations are expected to be completed by January 2020.
Towards an effective African Continental Free Trade Area
The benefits of the African Continental Free Trade Area will depend on both the effective implementation of the Agreement itself and a range of supporting policies to address other barriers to trade, investment and industrialization. Such policies need to include measures to overcome the short-term costs to particular countries and to economic groups within countries.
Overall, it is expected that the tariff revenue losses will not be considerable. However, countries with high initial tariffs on intra-African trade and with larger volumes of intra-African imports will experience the highest revenue impact. Exclusion lists within the African Continental Free Trade Area can provide an avenue for decreasing tariff revenue losses. It has been estimated that, even with a 1 per cent exclusion list, the average African country could reduce tariff revenue losses under the Free Trade Area from 8 to 1 per cent of total tariff revenue. Overly liberal exclusion lists should be avoided, however, as they could erode the value and benefits of trade liberalization.
A critical step for ensuring that less industrialized countries within the continent benefit from the African Continental Free Trade Area is the effective implementation of the Action Plan for Boosting Intra-African Trade, which identifies seven priority clusters for boosting intra-African trade, namely, trade policy, trade facilitation, productive capacity, trade-related infrastructure, trade finance, trade information and factor market integration. Trade liberalization alone cannot deliver transformative results; other barriers to intra-African trade and investment must also be addressed. So far, the implementation of the Action Plan has been hindered by a lack of dedicated institutions, a shortage of funding and an absence of monitoring mechanisms. As the African Continental Free Trade Area initiative moves forward, it will be important to link the implementation and monitoring of the Agreement to effective implementation and adequate resources, including those linked to the Aid for Trade initiative, for activities under the Action Plan.
Within countries, in order to alleviate the impact of structural adjustment costs, a gradual and measured approach to implementation should be considered. Exclusion lists and safeguard measures can be used for that purpose, but can result in distorted consumption and are, therefore, not optimal. Another approach would be to apply adjustment assistance to vulnerable groups facing adverse effects from the African Continental Free Trade Area. For example, smallholder farmers are likely to need assistance to connect to value chains and to take advantage of new opportunities. Similarly, informal cross-border traders, many of whom are women, should be supported in joining the formal sector so as to benefit from the Free Trade Area.
Trade facilitation measures are of particular relevance to efforts to ensure that gains are inclusive. The chapter on trade facilitation under the Agreement and the global momentum around the topic as a consequence of the entry into force of the Trade Facilitation Agreement under the World Trade Organization both highlight the fact that trade facilitation can be an area of quick wins. At the continental level, landlocked countries, which have economies that are more sensitive to issues surrounding ease of access to ports and value chains, can gain from the effective implementation of the provisions on trade facilitation, transit and customs cooperation.
At the national level, trade facilitation measures can be used to support small-scale businesses and female entrepreneurs, who face greater barriers to trade. The perishable nature of agricultural goods also means that agricultural producers could benefit from related processes becoming smoother and faster across the continent. Support will need to be provided to small and mediumsized enterprises in the form of market information, trade facilitation and trade finance.
The effective implementation of the Agreement will further depend on a strong institutional structure. At the continental level, the responsibility for coordinating the implementation of the Agreement will rest with the secretariat of the African Continental Free Trade Area, which will form an autonomous institutional body within the African Union system and have an independent legal personality, akin to an agency of the African Union. It will work closely with the African Union Commission and its departments. The Commission will provide the necessary transitional support until the secretariat is fully operational. Funding for the secretariat will come from the overall budget of the African Union.
The regional economic communities will remain important implementing partners and be represented in a committee of senior trade officials of the African Continental Free Trade Area. Their role will include the coordination of implementation and of measures to address non-tariff barriers, harmonize standards and monitor implementation. At the national level, it will be critical to have a strategy for the Free Trade Area and dedicated institutional arrangements in place to carry out implementation and to fully utilize the opportunities arising from the Free Trade Area. Among the structures that complement the Free Trade Area, the African Business Council will aggregate and articulate the views of the private sector.
Given the high ambitions for the Agreement, the monitoring and evaluation framework for the African Continental Free Trade Area should not be limited to compliance. Instead, it should also consider to what extent the Agreement is delivering on its development aims and supporting inclusive transformation. Systematic evaluations and reviews should be carried out to assess the impact of the Free Trade Area at the economy and sector level, in addition to its impact on vulnerable groups. Special consideration should be given to the impact of the Free Trade Area on gender equality. An observatory on trade is foreseen as part of the institutional set-up under the Agreement, with a view to ensuring its effective monitoring and evaluation.
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African Consultative Group Meeting: Statement by the Chairman of the African Caucus and Managing Director of the IMF
Governor Tarek Amer, Chairman of the African Caucus, and Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), co-chaired the African Consultative Group meeting on 22 April 2018 at the IMF Headquarters. They issued the following statement after the conclusion of the Group’s meeting in Washington:
“We had very productive discussions on Africa’s economic developments and prospects. Growth began to recover in 2017 and is expected to continue to strengthen in 2018. But, growth remains too low on a per-capita basis, and there are significant downside risks to the outlook. These risks include a sharp tightening of global financial conditions, weaker than expected growth in key advanced and emerging economies, escalating trade tensions and ongoing security concerns.
“Against this backdrop, we agreed that reducing macroeconomic vulnerabilities and boosting private investment is necessary to lay the groundwork for transforming the current recovery into a sustainable growth spell and accelerating progress towards the SDGs. In particular, with public debt levels rising rapidly in many countries, containing debt vulnerabilities while creating room for much needed development spending requires continued efforts to boost revenue mobilization.
“In addition, sustainable growth and job creation requires reinvigorating private investment. We concurred that deepening financial systems and boosting FDI would help expand financing to the private sector. Advancing regional integration holds immense potential. Finally, other initiatives, such as public-private partnerships and special economic zones, can play a catalytic role in promoting structural transformation, but care is needed to contain contingent fiscal risks.”
Governor Tarek Amer noted that “we agreed on the need to accelerate structural reforms and access to finance in order to raise overall investment and medium-term growth rates to support job creation. The Fund, through its policy advice, can assist countries to design and implement growth-friendly fiscal adjustment, when needed, that responds to the country-specific sources of debt vulnerabilities while preserving needed investments in infrastructure, human capital, and other priority expenditures.
“In this context, countries need space to provide an appropriate social safety net and address security threats in order to maintain social cohesion. The Fund can support efforts to prioritize structural reforms, drawing on lessons from successful experiences of diversification, improved competitiveness, and fighting corruption, including by limiting illicit flows.
“We call on the Fund to continue to support, through policy advice and capacity building, the regional and international initiatives aimed at reinvigorating private investment, trade, debt management, and to assist countries to take advantage of the opportunities provided by digitalization.”
Ms. Lagarde stated that “the IMF will remain closely engaged with its African members. The Fund will continue to support the authorities’ efforts to address the current macroeconomic and structural challenges and achieve a stronger and durable and inclusive growth.”
Transcript of African Department Press Briefing
Washington D.C., 21 April 2018
Mr Abebe Aemro Selassie, African Department Director, IMF: I want to briefly set out our assessment of the macroeconomic situation in sub-Saharan African and the policies and reforms that are needed to facilitate stronger and durable economic recovery. So sub-Saharan Africa is seeing a modest pickup in economic growth. In particular, growth this year is projected to pick up modestly from 2.8 percent in 2017 to 3.4 percent this year.
This recovery is fairly broad-based with two thirds of the countries in the region seeing growth accelerating in 2018. But this headline figures also mask diversity and growth outcomes and prospects across countries in the region. Several economies such as Cote d'Ivoire, Ethiopia, Senegal, Ghana, are growing robustly with growth of six percent or more.
At the other end of the spectrum, countries that are home to one third of the region's population have seen their per capita income fall in 2017 and most of these countries are expected to witness a further decline in per capita income this year.
The growth pickup we are seeing has largely been driven by a more supportive external environment including stronger global growth, higher commodity prices and favorable financing conditions. On this later point, the record amount of Euro bond issuances in the first quarter gives an indication of the significant improvement in access to international capital markets that the regions frontier markets in particular are having.
External positions have as a result strengthened somewhat, reflecting both these global developments and also improved policy frameworks. Against this backdrop, however, macroeconomic vulnerabilities have risen as we have flagged in previous reports for some time now public debt ratios are on the rise in the region.
About 40 percent of low income countries are now in debt distress or assessed to be at high risk of debt distress. While the causes of this increase are country specific, in part it represents the much- needed investment in infrastructure and development spending which is delivering of course in growth and social outcomes.
It is also worth noting that about half of the increase, about half of the countries in debt distress or at high risk of debt distress are resource-based economies which have had to contend with the largest real oil price decline since 1970. That’s reduced economic growth and hit government revenues significantly.
Looking ahead, the medium-term growth outlook for the region remains subdued. Average medium-term growth is expected to plateau below four percent falling short of the levels envisaged five years ago and below what is needed to ensure progress consistent with the sustainable development goals.
There are significant risks to this outlook as the favorable external environment could fade over time and borrowing terms for the regions frontier markets in particular could tighten.
Elevated security risks are also imposing an immense economic and human toll particularly in fragile states which already are grappling with high rates of poverty and political instability.
In view of these challenges, how can the current recovery be turned into stronger, durable and more inclusive growth? As elsewhere, there is a need to seize the opportunity afforded by the current favorable external conditions by taking domestic policy steps to reduce macroeconomic vulnerabilities and raise medium term growth potential.
In particular, we see three priority areas in the coming months. First, sustained and inclusive growth requires a stable macroeconomic environment but in a number of cases, macroeconomic imbalances are elevated. In this context, fiscal policy needs to strike a balance between debt sustainability and ensuring adequate space for key infrastructure and priority social spending.
Our macroeconomic policy advice and supportive reforms are of course tailored to each country’s structural characteristics and cyclical positions but in the broadest of terms, this can be summarized as in the oil exporting countries there is a need to continue to forcefully implement their fiscal consolidation plans and advanced economic diversification taking advantage of the respite provided by the recent pickup in commodity prices.
For oil importing companies which in some cases have been sustaining growth on the back of large public investment outlays often resulting in some debt accumulation, there is a need to reduce fiscal imbalances and accelerate reforms and facilitates the private sector taking over as the engine of growth.
Central to the goal of addressing debt vulnerabilities is stronger tax revenue mobilization. Stepping up revenue collections would allow sub-Saharan African countries to make progress towards sustainable development goals while preserving fiscal sustainability.
Most countries in the region are seen as having considerable potential to collect higher revenue despite substantial progress of revenue mobilization over the last couple of decades. Sub-Saharan African continues to have the lowest revenue to GDP ratio.
According to some work we have done, countries in the region could mobilize between there to five percentage points of GDP and additional tax revenues in the next four or five years. Achieving this ambition would require strengthening VAT systems, streamlining exemptions and broadening tax base.
Structural policies to raise private investment and nurture a dynamic private sector are also needed in many cases. While public investment levels relative to GDP have been similar to other regions, private investment has been below every region in the world. Raising private investments would require a concerted policy effort to create a sound business environment including strengthening regulatory and insolvency frameworks and deepening access to credits.
Further, trade integration would also help. The recently signed African Continental Free Trade Area. The CFTA is a potential game changing initiative that could boost inter African trade and income if fully implemented.
Before I end, I would like to underscore that sub-Saharan Africa remains a region of tremendous potential. The current upswing in growth provides a more supportive environment to implement much needed policies and reforms to reduce vulnerabilities and raise growth over the medium term. Let me stop here and mention that our regional semi-annual economic outlook will be published on May 8, with launch events taking place in Libreville and Accra. Thank you very much for your patience.
Read the full transcript on the IMF website.
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Record high remittances to low- and middle-income countries in 2017
Remittances to low- and middle-income countries rebounded to a record level in 2017 after two consecutive years of decline, says the World Bank’s latest Migration and Development Brief.
The Bank estimates that officially recorded remittances to low- and middle-income countries reached $466 billion in 2017, an increase of 8.5 percent over $429 billion in 2016. Global remittances, which include flows to high-income countries, grew 7 percent to $613 billion in 2017, from $573 billion in 2016.
The stronger than expected recovery in remittances is driven by growth in Europe, the Russian Federation, and the United States. The rebound in remittances, when valued in U.S. dollars, was helped by higher oil prices and a strengthening of the euro and ruble.
Remittance inflows improved in all regions and the top remittance recipients were India with $69 billion, followed by China ($64 billion), the Philippines ($33 billion), Mexico ($31 billion), Nigeria ($22 billion), and Egypt ($20 billion).
Remittances are expected to continue to increase in 2018, by 4.1 percent to reach $485 billion. Global remittances are expected to grow 4.6 percent to $642 billion in 2018.
Longer-term risks to growth of remittances include stricter immigration policies in many remittance-source countries. Also, de-risking by banks and increased regulation of money transfer operators, both aimed at reducing financial crime, continue to constrain the growth of formal remittances.
The global average cost of sending $200 was 7.1 percent in the first quarter of 2018, more than twice as high as the Sustainable Development Goal target of 3 percent. Sub-Saharan Africa remains the most expensive place to send money to, where the average cost is 9.4 percent. Major barriers to reducing remittance costs are de-risking by banks and exclusive partnerships between national post office systems and money transfer operators. These factors constrain the introduction of more efficient technologies – such as internet and smartphone apps and the use of cryptocurrency and blockchain – in remittance services.
“While remittances are growing, countries, institutions, and development agencies must continue to chip away at high costs of remitting so that families receive more of the money. Eliminating exclusivity contracts to improve market competition and introducing more efficient technology are high-priority issues,” said Dilip Ratha, lead author of the Brief and head of KNOMAD.
In a special feature, the Brief notes that transit migrants – who only stay temporarily in a transit country – are usually not able to send money home. Migration may help them escape poverty or persecution, but many also become vulnerable to exploitation by human smugglers during the transit. Host communities in the transit countries may find their own poor population competing with the new-comers for low-skill jobs.
“The World Bank Group is mobilizing financial resources and knowledge on migration to support migrants and countries with the aim of reducing poverty and sharing prosperity. Our focus is on addressing the fundamental drivers of migration and supporting the migration-related Sustainable Development Goals and the Global Compact on Migration,” said Michal Rutkowski, Senior Director of the Social Protection and Jobs Global Practice at the World Bank.
Multilateral agencies can help by providing data and technical assistance to address adverse drivers of transit migration, while development institutions can provide financing solutions to transit countries. Origin countries need to empower embassies in transit countries to assist transit migrants.
The Global Compact on Migration, prepared under the auspices of the United Nations, sets out objectives for safe, orderly and regular migration. Currently under negotiation for final adoption in December 2018, the global compact proposes three International Migration Review Forums in 2022, 2026 and 2030. The World Bank Group and KNOMAD stand ready to contribute to the implementation of the global compact.
Regional Remittance Trends
Remittances to Sub-Saharan Africa accelerated 11.4 percent to $38 billion in 2017, supported by improving economic growth in advanced economies and higher oil prices benefiting regional economies. The largest remittance recipients were Nigeria ($21.9 billion), Senegal ($2.2 billion), and Ghana ($2.2 billion). The region is host to several countries where remittances are a significant share of gross domestic product, including Liberia (27 percent), The Gambia (21 percent), and Comoros (21 percent). In 2018, remittances to the region are expected to grow 7 percent to $41 billion.
Remittances to the East Asia and Pacific region rebounded 5.8 percent to $130 billion in 2017, reversing a decline of 2.6 percent in 2016. Remittance to the Philippines grew 5.3 percent in 2017 to $32.6 billion. Flows to Indonesia are expected to grow 1.2 percent to $9 billion in 2017, reversing the previous year’s sharp decline. Stronger growth in transfers from countries in Southeast Asia helped offset lower remittance flows from other regions, particularly the Middle East and the United States. Remittances to the region are expected to grow 3.8 percent to $135 billion in 2018.
Remittances to countries in Europe and Central Asia grew a rapid 21 percent to $48 billion in 2017, after three consecutive years of decline. Main reasons for the growth are stronger growth and employment prospects in the euro area, Russia, and Kazakhstan; the appreciation of the euro and ruble against the U.S. dollar; and the low comparison base after a nearly 22 percent decline in 2015. Remittances in 2018 will moderate as the region’s growth stabilizes, with remittances expected to grow 6 percent to $51 billion.
Remittances flows into Latin America and the Caribbean grew 8.7 percent in 2017, reaching another record high of nearly $80 billion. Main factors for the growth are stronger growth in the United States and tighter enforcement of U.S. immigration rules which may have impacted remittances as migrants remitted savings in anticipation of shorter stays in the United States. Remittance growth was robust in Mexico (6.6 percent), El Salvador (9.7 percent), Colombia (15 percent), Guatemala (14.3), Honduras (12 percent), and Nicaragua (10 percent). In 2018, remittances to the region are expected to grow 4.3 percent to $83 billion, backed by improvement in the U.S. labor market and higher growth prospects for Italy and Spain.
Remittances to the Middle East and North Africa grew 9.3 percent to $53 billion in 2017, driven by strong flows to Egypt, in response to more stable exchange rate expectations. However, the growth outlook is dampened by tighter foreign-worker policies in Saudi Arabia in 2018. Cuts in subsidies, increase in various fees and the introduction of a value added tax in Saudi Arabia and the United Arab Emirates have increased the cost of living for expatriate workers. In 2018, growth in remittances to the region is expected to moderate to 4.4 percent to $56 billion.
Remittances to South Asia grew a moderate 5.8 percent to $117 billion in 2017. Remittances to many countries appear to be picking up after the slowdown in 2016. Remittances to India picked up sharply by 9.9 percent to $69 billion in 2017, reversing the previous year’s sharp decline. Flows to Pakistan and Bangladesh were both largely flat in 2017, while Sri Lanka saw a small decline (-0.9 percent). In 2018, remittances to the region will likely grow modestly by 2.5 percent to $120 billion.
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CHOGM 2018 updates
Commonwealth Heads of Government Meeting Communiqué: “Towards a Common Future”
On Intra-Commonwealth Trade and Investment: “With the goal of expanding investment and boosting intra-Commonwealth trade to US$2 Trillion by 2030, Heads adopted a Declaration on the Commonwealth Connectivity Agenda for Trade and Investment and mandated the Secretariat to develop an accompanying action plan that considers capacity building and hard and soft connectivity. They further agreed to share best practices and experiences, and undertake voluntary mutual support to enable member countries to realise their full economic potential and deliver prosperity for all their people. Recognising the importance of a long-term vision on trade and investment, member countries agreed to work together towards an appropriate framework and to facilitate business-to-business contacts.” [Commonwealth leaders discuss success and challenges ahead]
Commonwealth adopts forward-looking Connectivity Agenda for Trade and Investment
In response to the risks to growth presented by rising protectionism, leaders at the CHOGM on Friday expressed their strong support for the multilateral trading system and adopted a six-point connectivity agenda to boost trade and investment links across the Commonwealth. Extract from the Declaration on the Commonwealth Connectivity Agenda for Trade and Investment (pdf):
“This Agenda will be guided by the principles that: co-operation should be pragmatic and practical, leading to credible results; take into account regional integration initiatives; take into account the needs of small and vulnerable economies and least developed countries; avoid duplication with initiatives where other organisations are already working; add value in areas of engagement; and adopt a progressive approach towards a long term vision for closer trade and investment ties. In pursuing the Agenda, member countries will structure dialogue around the following clusters:
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Physical Connectivity, engaging on trade facilitation, identifying and facilitating implementation issues, infrastructure development including multisectoral connectivity and the sharing of trade information, in order to reduce the physical barriers to trade;
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Digital Connectivity, assisting member countries in expanding ICT capabilities, identifying areas for developing their national digital economies, improving their regulatory framework and building digital infrastructure;
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Regulatory Connectivity, improving understanding of various regulatory regimes, increasing the ease of doing business, promoting good regulatory practice including regulatory cooperation among member countries to reduce non-tariff barriers;
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Business-to-Business Connectivity, supporting dialogue between the public and private sectors and between businesses, assisting member countries to attract investment through capacity building, facilitating the needs of the micro, small and medium enterprises to access finance;
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Supply Side Connectivity, fostering global value chains (GVC) linkages and sharing knowledge among members and harnessing them for economic growth, as well as the creation of export diversification opportunities for MSMEs, and exploring possibilities to collaborate on national trade portals, and
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In engaging in these areas, member countries will mainstream inclusive and sustainable trade as a cross-cutting issue. We affirm our commitment to making trade and investment truly inclusive by encouraging the participation of women and youth in business activities, by taking a gender responsive approach to the development of trade policy.”
Review process underway for book on AfCFTA
A workshop to review draft chapters of a book that will document the evolution of the AfCFTA was held this week in Addis Ababa. The book is expected to be published later this year. The workshop was organized by the African Trade Policy Centre, in collaboration with the Centre for Trade Policy and Law (Carleton University).
Towards an East African pharmaceutical industry: resolutions from the East African Vaccine Symposium
Recognizing the aspiration expressed by EAC Partner States to develop their pharmaceutical industry including vaccine manufacturing, as part of the regions’, social, economic and political integration agenda; Motivated by the growing pharmaceutical spending in Africa at a compound annual growth rate of 10.6%, in particular, the growth in the East African Community (EAC which has the highest pharmaceutical sales growth in Africa estimated at 12.4% in the next five years, and further spurred by a convergence of demographic changes, increasing wealth and healthcare investment, and challenges around increasing cases of chronic diseases. Resolve as follows (extracts):
EAC to promote the establishment of a regional bio-technology and vaccine manufacturing hub, to facilitate technology transfer, promote local production and improving access to vaccines with the intent of enabling the technological or manufacturing capacity of the region in a mutually beneficial manner, while promoting public health objectives. EAC to consider establishing a regional vaccine manufacturing facility either through public-private partnership or purely public agency to meet the regional demand for vaccine supplies within the framework of regional industries. EAC to put in place fiscal and non fiscal incentive frameworks that will promote local production of vaccines and drive investments in the pharmaceutical sector local production in general. In addition the EAC Partner States to put in place a conducive investment climate that will lower the cost of doing business and promote foreign direct investment that is market driven.
ERERA, WAPP to create framework for electricity trading in West Africa: ECOBANK analysis (pdf)
The market framework seeks to replace the existing fragmented bilateral agreements and establish a long-term mechanism on which development of cross border power projects can be built. The project is expected to commence in June, however, electricity trading among member states will be limited in the interim largely due to low domestic capacity among members, insufficient interconnecting transmission networks and variation in transmission voltage among some members. The OMVG power project being jointly developed by Gambia and its neighbours is an example of cross border projects that WAPP and ERERA hope to facilitate in the long run.
Electricity shortages and unemployment in Africa (World Bank)
This paper presents evidence on how the provision of unreliable electricity constrains expansion in the productive sectors of the economy, consequently leading to a reduction in the number of employment opportunities in Africa. Using geodata on electricity transmission networks on the continent, the paper computes an index that explores spatial and time variations in technical losses in the electricity network as an instrument for electricity shortages. The instrument is combined with geo-referenced data from the Afrobarometer and Enterprise Surveys from more than 20 African countries to estimate the causal impact of electricity shortages on employment, and the mechanisms driving the impact.
Country reports:
(i) Zambia: Systematic Country Diagnostic. Three factors are argued by this diagnostic to have conditioned progress with poverty reduction and the wider development process in Zambia. First is extractives-based growth, characterized by a large copper mining sector. Second is uneven territorial development, illustrated by a large rural-urban divide and very high spatial and sectoral inequalities between Lusaka and Copperbelt and the rest of the country. Third is stability but weak governance, characterized by periodic elections, but with a competitive and personalized settlement, along with weak institutions and limited accountability. This results in policies and public resource allocations that often entrench rather than alleviate distortions to address poverty and promote diversification. Each of these defining characteristics has deep historical roots.
Until recently, the government received little fiscal revenue from mining, but it has grown rapidly since 2010 and reached 28% of total revenue in 2015 (figures 5 and 6). World Bank highlights, using data from the Extractives Industries Transparency Initiative, that the mining sector (which includes quarrying and cement production) contributed ZMW 8.8 billion in 2014, equivalent to 28% of total domestic revenue, up from ZMW 7.7 billion in 2013 and ZMW 7.6 billion in 2012.1 Despite the increase in revenues, from much lower levels in the 2000s, concerns about transfer pricing or illicit transfers and lost revenues from the sector persist, although there is disagreement about their magnitude. The volatility of copper prices has posed a serious challenge for fiscal and macroeconomic management. A lack of instruments for policy efforts to smooth the economic cycle leads to swings in the real exchange rate and volatile flows of public and private investment. Further, the lack of a stabilization fund or adequate fiscal buffers makes fiscal management very challenging. Not only did Zambia not build fiscal buffers, but the government has amplified the impact of the resource boom by running up sizeable budget deficits and borrowing from international debt markets at the top of the cycle. Rather than help calm the volatility, it frequently exacerbates it, because the government finds it easier to borrow and scale up public expenditure when global commodity markets are performing well (discussed further in chapter 7).
Regional integration has been slow. Zambia is landlocked but has an open economy; sharing a border with eight countries, which serve as an expanded market for its traded goods, and as routes for international and regional trade. However, trade with SADC and COMESA and bilateral trade with Angola and the DRC, have been limited, despite being identified by the government as key in transforming Zambia into a regional trade hub. Barriers to trade reduce the competitiveness of Zambian exports in the region, including for small-scale trade. At the same time, Zambia’s domestic producers are often not able to compete with imports. While some relative higher costs may be inevitable due to Zambia’s landlocked nature, there is consensus among public and private stakeholders that more efficient logistics can help reduce costs and maximize the impact of public investment in infrastructure and of government regulations and policy on logistics, thereby allowing better access to domestic and possibly import markets.
(ii) Sierra Leone: Systematic Country Diagnostic. The SCD argues that, without taking into account the two main foundational constraints - governance and fiscal space - it is unlikely that the proposed technical solutions will make a substantial impact on the twin goals. Many of the technical solutions that are proposed in this document have been tried in multiple variations over the last 60 years by government, donor partners, and other stakeholders, but the results have been meagre. Despite favourable geography and abundant resources, and after hundreds of millions of dollars in soft loans and grants, smart consultants, sound technical approaches, Sierra Leone continues to have development outcomes that rate among the worst in the world. This SCD argues that unless governance constraints are understood and mitigated this situation is unlikely to change very much.
(iii) South Africa: Performance of the primary and secondary sectors of the South African economy (pdf, IDC)
Agriculture: The recovery in maize production is clearly evident in the overall trade performance of the broad agricultural sector in 2017. Cereal imports declined by R7.5bn, taking overall agricultural imports downward by 29% for the year. Cereals exports, in turn, increased by R1.5bn, while those of fruits and nuts rose by R2.7bn in 2017. Agricultural exports totalled R66.2bn, of which R45bn were fruit exports.
Mining: The trade surplus recorded by the mining sector widened to just under R317bn in 2017. Exports increased by 23.5%, driven mainly by higher export earnings from non-ferrous metal ores, gold, petroleum products, coal and iron ore. South Africa’s mining exports, which totalled R427bn in 2017, were dominated by platinum group metals, non-ferrous metal ores (chrome, manganese and titanium ore), coal, gold and iron ore. Imports of mining products amounted to R110bn in 2017, representing a 5% decline compared to 2016. These consisted mainly of crude oil, which accounted for 80% of the import basket, diamonds, coal, gold and natural gas. The drop in overall imports was mainly due to the large decline in the value of imported crude oil, reflecting subdued levels of economic activity in South Africa.
Manufacturing: The export-oriented motor vehicles, parts and accessories sub-sector recorded only a marginal 0.4% increase in production in 2017. During the year, General Motors divested from South Africa and VW retooled its plant for the production of the new Polo model. External demand remained weak, as indicated by the fact that the overall value of this sub-sector’s exports declined by 4.2% in nominal value terms, despite a weakening exchange rate of the rand over a major part of the year. Nevertheless, the motor vehicles, parts and accessories sub-sector remains the largest contributor to South Africa’s manufactured exports, accounting for R130bn out of the R676bn in foreign earnings generated by manufactured exports in 2017. It has in fact been the top-ranked manufacturing export sector since 2012. Its share of the of the overall manufactured export basket stood at 17.5% in 2017, compared to the 12.3% share claimed by basic iron and steel, which claimed second spot. Overall manufacturing exports increased by a mere 0.3% in nominal value terms to R676.2 billion in 2017. At the individual country level, Germany and the United states are the principal destinations for South Africa’s manufactured exports. In the African continent, the leading markets in 2017 were Namibia, Botswana and Zambia. The increase in the value of manufactured imports to R970bn widened South Africa’s trade deficit in manufactured goods to R294bn in 2017. Substantially higher imports were recorded for refined petroleum products, which increased by R22.7bn (or by 51%), to R67.3bn in 2017. Weak private sector investment in new productive capacity was reflected in lower imports of electrical and non-electrical machinery and equipment. [Note: Selected trade trends (trade balance, major traded products, composition of trade, regional trade); Trade trends with major regions or regional blocs (pages 10, 11)]; Related IDC analysis (pdf): Key trends in the South African economy. Trade performance per sector - change in export and import values, 2017 vs 2016 (p18)]
(iv) Congo: IMF concludes programme negotiation mission. The authorities will need to take bold and immediate governance reforms to put into effect the government’s proclaimed intention to mark a break with past policies and practices. In that regard, the mission welcomes the government’s plan to publish a governance study that will guide future reforms, in the area of governance, transparency and public finances management. The mission commended the authorities for their plan to establish an independent anti-corruption body with full investigation powers and an asset declaration system for high-level officials, and reinforce oversight over large investment projects and state-owned enterprises, notably the public oil company. The team welcomes the authorities’ decisions to report fully to Parliament and the population on the management of natural resources and large infrastructure investment projects over the recent past. A strong participation of civil society will be critical for the success of the governance reforms.
IMF’s April 2018 Fiscal Monitor
The April 2018 edition of the Fiscal Monitor is focused on two broad themes: the burden of high global debt and the opportunities and challenges of digital government. Global debt hit a new record high of $164 trillion in 2016, the equivalent of 225% of global GDP. Both private and public debt have surged over the past decade. Of the $164 trillion, 63% is non-financial private sector debt, and 37% is public sector debt. Advanced economies are responsible for most global debt. Nevertheless, in the last ten years, emerging market economies have been responsible for most of the increase. China alone contributed 43% to the increase in global debt since 2007. In contrast, the contribution from low income developing countries is barely noticeable.
Global Findex Database 2017: Measuring financial inclusion and the Fintech Revolution (World Bank)
This third edition of the database was compiled in 2017 using nationally representative surveys in more than 140 developing and high-income countries. The database includes updated indicators on access to and use of formal and informal financial services. It features additional data on Fintech and digital financial services, including the use of mobile phones and internet technology to conduct financial transactions. [The Little Data Book on Financial Inclusion 2018 (pdf)]
Today’s Quick Links: Concluding today: EAC scoping mission to South Sudan In Washington: G-20 finance meeting focuses on free trade amid protectionism fears UNCTAD: Egypt offers example of how developing countries can plan for e-commerce Commission on the Global Consequences of Renewable Energy Transformation: “This Commission represents a truly formidable body of global leaders who will bring rigour, critical thinking, and a broad range of perspectives to the table as we analyse the potential effects of a renewables-based energy system on national and global politics.” ICTSD: UN shipping agency endorses first-ever target for slashing emissions |
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Commonwealth adopts forward-looking Connectivity Agenda for Trade and Investment
In response to the risks to growth presented by rising protectionism, leaders at the CHOGM today expressed their strong support for the multilateral trading system and adopted a six-point connectivity agenda to boost trade and investment links across the Commonwealth.
Leaders attending the Commonwealth Heads of Government Meeting (CHOGM 2018) committed themselves to the vision of increasing intra-Commonwealth trade to US$2 Trillion by 2030, and expanding intra-Commonwealth investment. This is to be achieved through the Commonwealth Connectivity Agenda for Trade and Investment.
The Commonwealth Connectivity Agenda will leverage the Commonwealth Advantage by creating a forum for Commonwealth countries to exchange best practices, approaches and experiences to trade and investment. This cross-fertilization will contribute to further reducing trade frictions among members.
Commonwealth Secretary-General Patricia Scotland said: “The Declaration on the Commonwealth Connectivity Agenda for Trade and Investment underpins our commitment to ensuring that we leverage the Commonwealth Advantage for the benefit of all of our 53 member states.
“It recognises the importance of the multilateral trading system in ensuring the integration of small, vulnerable and least developed countries and countries in sub-Saharan Africa, the Caribbean and the Pacific into the world economy, and welcome initiatives which will support greater and more effective participation of these countries in international trade.”
“Critically, it provides our membership, who despite representing a broad spectrum of constituents in world trade nevertheless have similar regulatory backbones, with a space away from the give and take of trade negotiations to share experiences, and learn new approaches to addressing existing and emerging trade and investment challenges.”
The six points of the declaration are:
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Physical Connectivity focusing on trade facilitation, best practice on infrastructure development and trade information;
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Digital Connectivity focusing on supporting the development of national digital economies, improving regulatory frameworks and best practice on digital infrastructure;
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Regulatory Connectivity focusing on improving understanding of regulatory regimes across the Commonwealth, promoting good regulatory practice and mutual recognition;
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Business to Business Connectivity supporting greater interface between the public and private sectors, as well as between Commonwealth businesses, in particular micro, small and medium enterprises, and assisting member states to attract investment, particularly with the aim of enhancing the private sector’s role in promoting the blue and green economy;
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Supply Side Connectivity to encourage the participation of all members in global value chains; and
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Inclusive and Sustainable trade ensuring that women’s and youth’s economic empowerment are mainstreamed in all pillars.
Senior trade officials from across the Commonwealth will meet in June to begin operationalizing the Commonwealth Connectivity Agenda.
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Commonwealth Heads of Government Meeting Communiqué: “Towards a Common Future”
Introduction
- Commonwealth Heads of Government met in the United Kingdom from 19 to 20 April 2018 and discussed how the Commonwealth can contribute to a future which is fairer, more sustainable, more secure and more prosperous. Given that 60 percent of the Commonwealth’s population are under the age of 30, Heads of Government affirmed that youth empowerment, as well as gender equality, are critical in realising the 2030 Agenda for Sustainable Development (2030 Agenda) and the aspirations of the Commonwealth Charter. Considering that small states constitute over 60 percent of the Commonwealth’s membership, Heads recognised that the Commonwealth has always been a strong advocate for the causes of small states, and has consistently raised international awareness of their inherent vulnerabilities. Heads recognised that the strength of the Commonwealth lay in the collaboration among its member countries, people-to-people organisations and the Commonwealth Secretariat. In this context, Heads made the following political commitments and agreed to these practical actions.
A Fairer Future
Fundamental Political Values
- Heads affirmed their unwavering commitment to the Commonwealth’s Fundamental Political Values, reflected in the Commonwealth Charter. They recalled the Commonwealth’s proud history of acting to strengthen good governance and the rule of law, to protect and promote democratic principles and human rights, to promote peace and security and to strengthen democratic institutions. They emphasised that the full social, economic and political participation of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status, is essential for democracy and sustainable development to thrive. Heads also acknowledged the role of civil society organisations, including women’s rights’ organisations, in this context.
Gender Equality and Inclusion
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Heads committed to ratifying and implementing the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), through legislation, policies and programmes that mainstream and promote gender equality and the empowerment of all women and girls in social, economic and political life.
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Heads are encouraged by continuing action by member countries and Commonwealth bodies to prevent and eliminate sexual and gender-based violence; child, early and forced marriage; and female genital mutilation as barriers to the development and the full realisation of girls’ and women’s human rights and to sustainable growth and development. Heads also encouraged support for already married girls, adolescents and women who have been affected by such practices.
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Heads agreed to mainstream youth priorities into national development policies and plans, and to promote the participation of young people at all levels of decision making as underscored by Commonwealth Youth Ministers at their Ninth Meeting in Uganda in 2017.
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Heads agreed to address the stigma around disability in all its forms and manifestations, as well as around mental health, ensuring that no one is left behind, and to encourage all member countries to ratify and implement the United Nations Convention on the Rights of Persons with Disabilities.
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Heads highlighted the seminal role of Information and Communication Technology (ICT), and Science, Technology and Innovation in supporting good governance, promoting inclusion and sustainable development, and reducing the digital divide. They encouraged member countries to prioritise access to ICT for all in their national development plans, including through a gender and equity lens and agreed to share innovations in this area, including through the recently launched Commonwealth Innovation Hub.
Strengthening Democratic Institutions and Promoting Peace
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Heads acknowledged that as globally agreed under Goal 16 of the 2030 Agenda, promoting peace, providing access to justice for all, and building effective, accountable, and inclusive national institutions, at all levels, are essential for development to flourish. Heads welcomed the recent establishment of the Commonwealth Office of Civil and Criminal Justice Reform (OCCJR) and its role in providing support to member countries in the creation of effective national laws.
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Heads further agreed to adopt the Report of the Commonwealth Ministerial Action Group (CMAG). They commended CMAG for its constructive role in advancing the Commonwealth’s fundamental political values, and its complementarity to the preventative nature of the Secretary General’s Good Offices. Heads agreed that the following member governments should serve on CMAG for the next two years Australia, Barbados, Belize, Ghana, Kenya, Namibia, Samoa, South Africa, and the United Kingdom.
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Heads agreed the importance of strengthening the Secretary-General’s Good Offices and its capacity to support national requests for peace building to enable sustainable peace and security, through the establishment and strengthening of national peace and dialogue processes.
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Recognising the valuable role of Commonwealth Elections Observation in supporting member countries to improve democratic processes and institutions, as highlighted in recommendations by Commonwealth Observer Groups, Heads agreed a refreshed approach to election observation, by adopting the Revised Commonwealth Guidelines on Election Observation in Member Countries.
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Heads encouraged the strengthening of National Human Rights Institutions in line with the Paris Principles. They reiterated the continued importance of sharing human rights best practice and expertise across the Commonwealth. They agreed to support National Human Rights Institutions and the Universal Periodic Review process, as well as to strengthen the Commonwealth Small States Office in Geneva.
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Heads reaffirmed their commitment to the Commonwealth (Latimer House) Principles on the Accountability of and Relationship between the Three Branches of Government (2003) as an integral part of the Commonwealth’s fundamental political values. Heads requested the Commonwealth Secretariat work in partnership with other Commonwealth organisations in promoting dialogue between the three branches of government, including through the full application of the Latimer House Principles Toolkit, which provides a practical guide to enhancing the separation of powers.
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Heads noted that 2018 marks the centenary of the birth of the former President of the Republic of South Africa, Nelson Mandela, and affirmed that the Commonwealth shares and is inspired by the values and objectives he espoused. They called on the international community to use this centenary year to address the global challenges of poverty, inequality, discrimination and underdevelopment and to promote the peaceful resolution of conflicts globally.
Migration
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Heads recognised that safe, regular, and responsible migration, with full respect for international human rights obligations, can deliver socio-economic benefits and improve the resilience and inclusive growth of member countries and lead to sustainable development. They welcomed the adoption of the New York Declaration for Refugees and Migrants. They called for active involvement in the lead up to the Global Compact for Safe, Orderly and Regular Migration. They also called for active involvement in the lead up to the Global Compact on Refugees to strengthen the international response to the large movement of refugees, including return to their country of origin in safety and dignity.
A More Prosperous Future
Multilateral Trading System
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Heads were particularly concerned about the risks of protectionism to the global economy and underlined the importance of resisting all forms of protectionism. They reaffirmed their commitment to free trade in a transparent, inclusive, fair, and open rules-based multilateral trading system, which takes into account the special requirements of least developed countries and small and vulnerable economies. They reiterated their support for finding solutions to the remaining Doha Development Round issues. All Commonwealth WTO members agreed to ratify and work towards timely implementation of the WTO Trade Facilitation Agreement in their own countries; and agreed to consider providing programmes of capacity building and other targeted interventions in developing countries. They welcomed initiatives to strengthen the Commonwealth Small States Office in Geneva through the provision of additional resources and the sharing of technical expertise that enables small and developing states to participate in the multilateral trading system and benefit from trade-related economic growth.
Intra-Commonwealth Trade and Investment
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With the goal of expanding investment and boosting intra-Commonwealth trade to US$2 Trillion by 2030, Heads adopted a Declaration on the Commonwealth Connectivity Agenda for Trade and Investment and mandated the Secretariat to develop an accompanying action plan that considers capacity building and hard and soft connectivity. They further agreed to share best practices and experiences, and undertake voluntary mutual support to enable member countries to realise their full economic potential and deliver prosperity for all their people. Recognising the importance of a long-term vision on trade and investment, member countries agreed to work together towards an appropriate framework and to facilitate business-to-business contacts.
Inclusive and Sustainable Economic Growth
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To promote inclusive and sustainable economic growth, Heads resolved to address systemic barriers to women’s full and equal participation in the economy by taking a gender-responsive approach to the development of trade policy, and to promote women’s economic empowerment. They encouraged Commonwealth and partner organisations to work towards an increase in the number and enhancement of the success rate of women-owned businesses, break down gender barriers in all sectors, and increase opportunities for women to trade internationally.
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Heads stressed the importance of creating meaningful employment opportunities for the Commonwealth’s growing youth populations. They agreed on the need to invest in a systems approach to support young people, including through skills building, entrepreneurship, apprenticeships, and the need for better data to target interventions effectively. Heads recognised the role of industrialisation as a key driver of economic development, innovation and job creation. Heads emphasised that improved access to reliable and affordable energy will create an enabling investment environment for successful industrialisation. Heads called for large scale public and private investments and better coordinated strategies by international financial institutions in sectors that underpin growth and increase employment, especially for young people.
Small and Vulnerable States
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Heads recognised that concerted action is required to address the unique challenges and vulnerabilities of small and vulnerable states to ensure their full participation in and contribution to a more prosperous future. They recognised that although some small states, especially Small Island Developing States, enjoy medium to high per capita GDP, giving the impression of wealth; they continue to suffer disproportionately from diseconomies of scale, external economic shocks and catastrophic climatic events, which significantly and gravely impact their economies and societies. Heads urged further action in addressing these challenges, including issues of unsustainable debt, limited access to development financing and other threats posed to their socioeconomic development. To this end, they called on the international community to support measures, including effective debt management and transparency, which help to alleviate these vulnerabilities and challenges.
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Heads noted the continued relevance of the Barbados Programme of Action for Small Island Developing States (SIDS), as also articulated in the Mauritius Strategy for the further Implementation of the Programme of Action for the Sustainable Development of SIDS, and the SIDS Accelerated Modalities of Action (SAMOA) Pathway as an important opportunity to continue to advocate for greater international collaboration and enhanced small states cooperation towards the implementation of the SIDS agenda. They also endorsed the work of the Commonwealth Ministerial Meeting on Small States and expressed support for the 2019 Commonwealth Global Biennial Conference on Small States.
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Heads welcomed member countries’ contributions to the operationalisation of the Commonwealth Small States Centre of Excellence and the Commonwealth Small States Trade Financing Facility and encouraged further support to these initiatives.
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Heads further noted with concern that the practice of “de-risking” threatens to exclude small and other vulnerable states from accessing global financial markets and regulated financial services, and may constrain their ability to trade internationally. They called for sustained international, regional and national efforts to identify effective solutions to combat “de-risking”, and to preserve the financial inclusion of small and other vulnerable states in the global economy.
A More Sustainable Future
Vulnerability and Climate Change
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Heads expressed grave concern that without urgent action to mitigate climate change, reduce vulnerability and increase resilience, the impacts of climate change could push an additional 100 million people into poverty by 2030. Heads recognised that temperature and sea level rise and other adverse impacts of climate change are a significant reality and risk to many of the Commonwealth’s most vulnerable member countries. They renewed their commitment under the Paris Agreement to keep the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels, and pursue efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels. Heads welcomed the ratification by all member countries of the Paris Agreement and encouraged member countries that have not yet done so to consider ratifying and implementing the Kigali Amendment to the Montreal Protocol and the Doha Amendment for parties to the Kyoto Protocol. Heads record the commitments made to the Green Climate Fund and encourage member countries to fulfil them.
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Recalling the 2015 Commonwealth Leaders’ Statement on Climate Action, Heads expressed their resolve to build on this work, and collectively agreed to engage with the Fiji and Poland-led Talanoa Dialogue. They expressed their determination that the Paris Agreement work programme be completed at COP24. They expressed their support for the global approach led by the International Civil Aviation Organisation and International Maritime Organisation in addressing greenhouse gas emissions from international aviation and shipping respectively, consistent with the goals of the Paris Agreement. They agreed that mechanisms need to be established to promote enhanced participation, particularly of young people, in climate policy implementation frameworks at all levels, including the Paris Agreement.
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Heads expressed support for a range of innovative financing solutions, both public and private, and including disaster risk insurance, to enhance adaptive capacity and boost resilience, noting the importance of the Commonwealth Climate Finance Access Hub, among others, in supporting member countries. They called for consensus on the use of vulnerability measures to target appropriate support to those member countries most affected by natural disasters, including extreme weather events, dependent on need.
Natural Disasters
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Heads expressed deep concern about the increasingly devastating impact of natural disasters on people and property across the Commonwealth, especially among the most vulnerable and marginalised in society. They recognised the importance of disaster preparedness in reducing the impact of natural disasters and affirmed their commitment to the Sendai Framework for Disaster Risk Reduction. They encouraged the Secretariat to collaborate with international organisations, including disaster response agencies, to better support member countries that suffer severe impacts from natural disasters. They encouraged other international organisations, including the Organisation for Economic Co-operation and Development’s Development Assistance Committee, to consider options for appropriate funding mechanisms to assist small and other vulnerable states, particularly small islands and developing states, to mitigate, reduce and recover from natural disasters.
Sustainable Development of Oceans
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Heads highlighted the close linkages between the ocean, wellbeing and prosperity of the people of the Commonwealth, and recognised the opportunities for sustainable economic development from the ocean and coasts. They expressed alarm at the deteriorating health of the world’s ocean, which impacts every country and poses an existential threat to many Commonwealth communities. Heads identified climate change, including sea level rise and acidification, biodiversity loss, overfishing, and plastic pollution as some of the most significant pressures on the ocean, and called for ambitious, coordinated global action. They affirmed the Commonwealth’s strength in sharing experience and expertise, and recognised its vital role in building capacity in small and other vulnerable states.
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Heads adopted the Commonwealth Blue Charter, setting out the principles by which Commonwealth member countries will lead international efforts by sustainably developing and protecting their ocean. They committed to take action to safeguard the ocean for future generations. Heads agreed to establish Action Groups on ocean issues led by Commonwealth member countries, which will collaborate with partners at national, regional, and international levels, in addressing identified priority ocean issues of member countries. Heads mandated the Secretariat to take forward a Commonwealth Blue Charter plan of action to support this.
Sustainable Use of Energy and Natural Resources
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Heads committed to work together for the prudent and sustainable use of energy and natural resources and recognised the critical importance of sustainable energy to economic development. They agreed to share best practice in effectively developing, governing and managing natural resources on the basis of sustainability, equity, transparency, good governance and wealth creation, including via the Commonwealth Secretariat’s ongoing programme of technical assistance on natural resource management; as well as the Commonwealth’s Blue Charter initiative in relation to marine resources; and the Commonwealth Office of Civil and Criminal Justice Reform, in relation to model regulatory instruments.
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Recognising the imperative to transition to clean forms of energy in view of article 4.1 of the Paris Agreement and the untapped potential of solar, wind, and other renewable energy sources to promote sustainable economic growth, Heads encouraged cooperation among member countries, and partnerships with relevant organisations, including the International Solar Alliance of 121 solar resource rich countries. Heads highlighted the contribution of the Queen’s Commonwealth Canopy to the conservation of forests for future generations, and encouraged member countries who have not already done so to participate in this initiative.
Health
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Heads emphasised their continued support for the work of the World Health Organization and international efforts to tackle the wide range of serious health challenges, the burden of which has a significant socio-economic impact on individuals and families, and to increase national health expenditure throughout the Commonwealth. They noted that these public health challenges include communicable and non-communicable diseases such as HIV and AIDS, tuberculosis, poliomyelitis, diabetes, as well as obesity, malnutrition, and mental health conditions. They reiterated their commitment to achieving the health-related goals of the 2030 Agenda, particularly Goal 3. Heads affirmed the Commonwealth Charter’s values and principles of promoting access to affordable health care, removing wide disparities and unequal living standards. In line with the focus of the upcoming 2018 Commonwealth Health Ministers Meeting, Heads agreed to achieve compliance with International Health Regulations, accelerate Universal Health Coverage, including through sustainable financing, strengthening health systems and integrated services which promote prevention, screening, diagnosis, treatment and palliative care. Heads also recognised the need to tackle antimicrobial resistance and noted with concern the proliferation of substandard and falsified medical products which contribute to antimicrobial resistant and drug resistant infections. Heads therefore called for coordinated global action to address the problem, including through the One Health approach.
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Heads welcomed global, regional and national efforts to combat malaria and other mosquito borne diseases, and committed to halve malaria across the Commonwealth by 2023. They also urged acceleration of efforts to reduce malaria globally by 90 percent by 2030. They further committed to take action towards achieving access to quality eye care for all, including eliminating blinding trachoma by 2020, which disproportionately affects women and children across the Commonwealth. Heads acknowledged the work done by the Queen Elizabeth Diamond Jubilee Trust in that regard. Heads agreed that progress on these commitments should be considered every two years at the Commonwealth Health Ministers’ Meeting and progress should be reported at CHOGM.
Education
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Heads encouraged the implementation of specific actions to provide the opportunity for at least 12 years of quality education and learning for girls and boys by 2030, by investing in skilled motivated and supportive teachers, educational facilities, and focusing on education reforms. Guided by the principle to leave no one behind, they agreed to support marginalised groups, especially disadvantaged girls, children with disabilities, and those who have dropped out of school to progress through secondary education and training through appropriate policies, advocacy and strategic partnerships.
Sport and Sustainable Development
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Heads affirmed the valuable contribution sport can make to the 2030 Agenda. They committed to work with Commonwealth sports bodies to maximise this positive impact and take collective action to promote good governance, address corruption, protect the integrity of sport, and promote human rights through sport. Heads commended the impact of the Commonwealth Games and Commonwealth Youth Games in promoting Commonwealth values. They highlighted the achievement of the Gold Coast 2018 Commonwealth Games as the first multi-sport event to offer an equal number of medals for both men and women, and acknowledged the Games featured the largest integrated sports programme in Commonwealth Games history, comprising 18 sports and seven para-sports. Heads urged sporting institutions at all levels to work towards gender equality across sport.
A More Secure Future
Cyber
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Recognising the need to work in consultation with each other to enhance cyber security to protect critical national infrastructure, and the economic and social value of cyberspace, Heads adopted a Commonwealth Cyber Declaration that reflects Commonwealth values, and sets out a common commitment to an open, democratic peaceful and secure internet, respecting human rights and freedom of expression. They agreed to increase cooperation across the Commonwealth as outlined in the Cyber Declaration and to have voluntarily undertaken national cyber risk assessments by 2020, with a view to developing or strengthening national cyber security strategies and implementing action plans.
Chemical Weapons
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Heads opposed the use of chemical weapons under any circumstances and are committed to strengthening the effective implementation of the Chemical Weapons Convention. They reiterated their commitment to strengthening the disarmament and non-proliferation regime against the spread and use of chemical weapons. They underlined the importance of timely investigations and stressed that the conduct of all investigations of any alleged use of chemical weapons must be in accordance with the provisions of the Convention.
Preventing and Countering Violent Extremism (P/CVE)
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Heads condemned violent extremism in all its forms, expressed their continued support of the United Nation’s Secretary-General’s Plan of Action to Prevent Violent Extremism, and welcomed the commemoration of 2019 as the International Year of Moderation. Reaffirming the continued relevance of Commonwealth solutions, including recommendations in the Commonwealth report, Civil Paths to Peace, they encouraged member countries to actively share expertise and best practice, and to work cooperatively with the Secretariat’s Countering Violent Extremism Unit. They also welcomed the creation of a “Cadre of Preventing and Countering Violent Extremism Experts” that will support the implementation of the Commonwealth’s CVE Strategy and assist member countries interested in the development of PVE National Action Plans. Recognising the role of young people and women in preventing and countering violent extremism, Heads encouraged their active involvement in finding solutions to the challenges associated with the phenomenon of violent extremism.
Human Trafficking and Child Exploitation
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As part of member countries’ objective to achieve SDG 8, Heads called for effective measures to eradicate forced labour, end modern slavery and human trafficking, and secure the prohibition and elimination of the worst forms of child labour in all its forms by 2025, including the unlawful recruitment and use of child soldiers. Member countries were encouraged to endorse the “Call to Action to End Forced Labour, Modern Slavery and Human Trafficking” presented at the 72nd Meeting of the UN General Assembly. They encouraged ratification and implementation of relevant outstanding international agreements, and to develop appropriate national strategies in this regard. They further agreed to take action to end child sexual exploitation online including through joining relevant international bodies and initiatives.
Serious and Transnational Organised Crime
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Heads resolved to tackle the enablers of Serious and Transnational Organised Crime: corruption; illicit financial flows; money laundering; terrorist financing; poaching and illegal wildlife trade; and illegal, unregulated and unreported fishing; by cooperating with international and regional bodies. They further encouraged: enhanced cooperation among member countries’ law enforcement and prosecution bodies; strengthening cooperation with the private sector; supporting the Commonwealth Network of Contact Persons which facilitates cooperation between jurisdictions in criminal justice matters; and adopting and implementing recommendations of the Financial Action Taskforce to strengthen anti-money laundering and counter terrorist financing regulations. Heads noted that the fight against corruption can succeed if countries cooperate effectively to tackle it through implementation of international and regional conventions and standards. Member countries should therefore scale up international cooperation by working progressively towards advancing the exchange of information which will enhance domestic resource mobilisation.
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Heads denounced the illicit trade in small arms and light weapons which has devastating consequences in member countries. They acknowledged that many Commonwealth member countries are parties to the Arms Trade Treaty, the United Nations Firearms Protocol and participate in the Conference of the Parties to the United Nations Convention Against Transnational Organised Crime, and encouraged those countries that wish to become State Parties to these to do so. They agreed to strengthen their cooperation in combating the illicit proliferation of small arms and light weapons, including taking further steps to fully participate in relevant international initiatives and to continue to collaborate and exchange information, where agreed, through INTERPOL and the United Nations Office on Drugs and Crime.
Urban Crime/Violence and Gun Crime
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Heads expressed concern about the serious challenges to peace and security of urban crime, violence and gun crime faced by some member countries, and the involvement of young people, especially boys and young men, in this phenomenon. They agreed to enhance cooperation and share holistic approaches to address the root causes of urban crime.
Youth
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Heads recognised the role of young people in promoting peace and endorsed the principles and actions of UN Security Council Resolution 2250 on Youth, Peace and Security. They urged member countries to consider support for youth-led mechanisms that enable the meaningful participation of young people in peace building and social cohesion processes in their communities.
Commonwealth Renewal
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Heads committed to reforming the Commonwealth for the 21st Century. They recalled their request at Malta to the Secretary-General to establish a High Level Group to review the full governance arrangements of the Commonwealth Secretariat. They noted the delay in the start of the work. They asked the High Level Group to submit a report a month before the Commonwealth Foreign Affairs Ministers’ Meeting in New York in September 2018 and instructed Foreign Ministers as their representatives to decide what action to take in response to the conclusion of the Group.
Membership
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Heads welcomed The Gambia back into the Commonwealth and agreed to work towards a programme of support to reintegrate the country into the family.
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Heads expressed regret at the Government of Maldives’s decision to withdraw from the Commonwealth on 16 October 2016. Heads looked forward to welcoming Maldives back into the family when the conditions were right.
Country Situations
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Heads expressed their support for the efforts of Belize and Guatemala to move deliberately to fully implement the Special Agreement and its Protocol to submit Guatemala’s territorial, insular and maritime claims to the International Court of Justice for a final determination. They urged both countries to work toward the design and development of a cooperation mechanism along the Sarstoon River to prevent tensions and promote peace. Heads recognised the important role of the Organization of American States in the efforts of both countries to maintain peace and stability between them. They reiterated the Commonwealth’s full support for the sovereignty and territorial integrity of Belize.
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Heads expressed their full and enduring support for the sovereignty, independence, territorial integrity and unity of the Republic of Cyprus. They reiterated their support for the resumption of negotiations, under the auspices of the United Nations Secretary General’s Good Offices Mission, for a comprehensive settlement of the Cyprus problem based on the United Nations Charter and United Nations Security Council Resolutions on Cyprus. Heads called for the implementation of relevant United Nations Security Council resolutions (UNSCRs), especially UNSCRs 365(1974), 541(1983), 550(1984), and 1251(1999). Heads reiterated their support for full respect of the human rights of all Cypriots including their right to property, and for the accounting for all missing persons. Heads extended their solidarity in the exercise of the sovereign rights of the Republic of Cyprus in its Exclusive Economic Zone under international law, including the United Nations Convention on the Law of the Sea, and called for the avoidance of actions and statements that threaten stability in the Eastern Mediterranean.
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Heads expressed their full support for the decision by the Secretary General of the United Nations issued on 30 January 2018, within the framework of the Geneva Agreement of 1966, to choose the International Court of Justice as the means that is now to be used for the settlement of the controversy between Guyana and Venezuela. Heads noted that the decision of the Secretary General, which was in accordance with the principles and purposes of the United Nations Charter, was intended to bring a peaceful and definitive settlement to a long standing controversy. Heads reiterated their unequivocal support for the maintenance and safeguarding of Guyana’s sovereignty and territorial integrity.
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Heads expressed full solidarity with the Government and the people of Bangladesh affected by the influx of more than a million Rohingya from Rakhine State in Myanmar, and commended Bangladesh for providing shelter to the distressed community facing an existential threat. Heads called for a halt to all violence, a restoration of normality, and accountability of the perpetrators of gross violations of human rights through an independent process of investigation. They further called for the sustainable return of all such displaced Rohingya sheltered in Bangladesh to their rightful homes in Myanmar under UNHCR oversight and they called for the creation of the necessary conditions for sustainable return in safety, security and dignity. Heads also called for action to address the root causes of the current crisis, including through the immediate implementation of the Rakhine Advisory (Kofi Annan) Commission recommendation. Heads noted the general agreement and arrangements reached between the Governments of Bangladesh and Myanmar as a beginning towards the sustainable return of the Rohingya and their reintegration into Myanmar society as equal members.
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Heads expressed solidarity with the people of the Caribbean islands of Dominica, Antigua and Barbuda, St Kitts and Nevis, The Bahamas, and the British Overseas Territories, who suffered catastrophic damage as a result of the recent hurricanes. They praised their resilience and recovery efforts. Heads conveyed their support for continued international efforts to mobilise assistance in response to the expressed needs of these countries and territories. Heads also expressed solidarity with, and recognised the devastating impact of natural disasters on Bangladesh, Papua New Guinea, Samoa, Sierra Leone, Tonga and Vanuatu. They encouraged urgent and concrete action and global support initiatives that will assist Dominica and similarly vulnerable countries in finding mechanisms for building resilience, adaptation and mitigation. They noted the supportive role of other Commonwealth member countries.
Commonwealth Collaboration
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Heads commended the Secretary-General for the impactful work of the Commonwealth Secretariat as reflected in her biennial report which they received with appreciation. Heads thanked the Commonwealth Foundation, the Commonwealth of Learning and the Accredited Commonwealth Organisations for their reports, and encouraged their continued contribution to Commonwealth objectives. Heads further affirmed the Commonwealth’s convening power as an enabler of experience sharing when they recalled the Commonwealth Ministerial Meetings that had taken place since the last CHOGM including Ministers of Education, Finance, Foreign Affairs, Health, Law, Small States, Sport, Women and Youth, and expressed appreciation for the outcome statements from all Ministerial Meetings as annexed. Heads noted that the successful Commonwealth Forums on Business, People, Women and Youth, whose outcomes statement are annexed, provided valuable platforms for the Commonwealth’s global outreach.
CHOGM
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Heads expressed profound appreciation to the Government and people of the United Kingdom for the warm hospitality extended to them, and congratulated Prime Minister Theresa May for her leadership in chairing the meeting. They expressed their warm appreciation for the attendance at their meeting of Her Majesty Queen Elizabeth II, Head of the Commonwealth.
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Heads welcomed and accepted the offer of the President of Rwanda to host their next meeting in 2020. They also welcomed the offer of Samoa to host the 2022 CHOGM.
20 April 2018
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Towards an East African pharmaceutical industry
Vaccine Production in Africa for Africa
Conference Resolutions from the East African Vaccine Symposium
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Recognizing the aspiration expressed by EAC Partner States to develop their pharmaceutical industry including vaccine manufacturing, as part of the regions’, social, economic and political integration agenda;
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Noting the strategic importance of developing local production of pharmaceutical products in promoting access to affordable quality vaccines as outlined in the EAC Regional Pharmaceutical Manufacturing Plan Of Action for the period 2017-2027;
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Motivated by the growing pharmaceutical spending in Africa at a compound annual growth rate of 10.6%, in particular, the growth in the East African Community (EAC) which has the highest pharmaceutical sales growth in Africa estimated at 12.4% in the next five years, and further spurred by a convergence of demographic changes, increasing wealth and healthcare investment, and challenges around increasing cases of chronic diseases.
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Cognizant of the utmost importance of strengthening regional and national coordination of industrial and health, policies to ensure a coherent policy environment, reliable government procurement, product quality assurance, and market certainty for local production and improving access to vaccines.
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Noting on the one hand that a huge amount of all vaccines supplied by GAVI and other partners go to Africa and that on the other hand a growing number of countries are on a trajectory to graduate out of GAVI support, a huge demand for regional vaccine production can be identified in Africa.
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Aware of the positive socio-economic impact that regional manufacturing of vaccines will have on the EAC economies in addition to their secured availability through reforms in the procurement strategy, and noting that effective implementation of procurement policy and practices would catalyse regional vaccine supply,
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Conscious of the crucial role played by regional businesses to realise the regional vaccine supply, and the prominent role occupied by transfer of technology as a means to promoting local production in developing countries and improving access to vaccines with the intent of enabling the technological or manufacturing capacity in the region;
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Reaffirming the necessity for states and private entities to work together to guarantee a regulatory framework in which businesses focusing on regional vaccine production can flourish;
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Eager to build upon the important momentum the present symposium has triggered a follow-up by all parties present shall be guaranteed whilst inviting others to join these efforts; and
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Acknowledging the aforementioned and guided by the utmost importance of vaccines in mitigating the social and economic impact caused by infectious diseases, the symposium participants drawn from the public and private sector, gathered on the 18th of April 2018 in Arusha, in order to discuss the opportunities and challenges of regional vaccine production in East Africa region, now resolve as follows:
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EAC to develop a harmonized regional policy and regulatory framework for local production of vaccines which will contribute to health security by ensuring uninterrupted supply of essential vaccines and further prevent greater disruptions in rural and poor areas.;
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EAC to promote the establishment of a regional bio-technology and vaccine manufacturing hub, to facilitate technology transfer, promote local production and improving access to vaccines with the intent of enabling the technological or manufacturing capacity of the region in a mutually beneficial manner, while promoting public health objectives.
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EAC to commit to enhance resources to improve Health system infrastructure and human resources with respect to vaccination (vaccine delivery infrastructure). This should be examined comprehensively to identify gaps and opportunities.
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EAC regulatory agencies to share regulatory knowledge and experience and harmonize approaches to inspection and control to greatest extent possible to mitigate health risks associated with large volumes of biological medicinal products crossing national borders,
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EAC to consider establishing a regional vaccine manufacturing facility either through public-private partnership or purely public agency to meet the regional demand for vaccine supplies within the framework of regional industries. In this regards, there is need for quick harmonization of the relevant national and regional procurement and distribution policies and Identify opportunities and incentives to promote local production and sourcing of vaccines and related materials.
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EAC in collaboration with East African Business Council; Federation of East African Pharmaceutical Manufacturers FEAPM to explore the scope for formation of advocacy platform and networks for Vaccine manufacturing comprising governmental organizations, researchers, private sector to provide forum to discuss challenges, opportunities and emerging issues including diseases and partnership;
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AS first step towards vaccine production in the region, EAC to give priority to pool procurement of vaccine as an opportunity to lower the prices for vaccine and ensure stable access and supply. Regional mechanisms with specific agreed term of references should be established to look at the procurement criteria and negotiation with manufacturers. A similar example from ECOWAS should be studied;
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EAC to put in place fiscal and non fiscal incentive frameworks that will promote local production of vaccines and drive investments in the pharmaceutical sector local production in general. In addition the EAC Partner States to put in place a conducive investment climate that will lower the cost of doing business and promote foreign direct investment that is market driven.
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EAC to collaborate with academia, East African Science and Technology Commission (EASTECO), and other partners to promote best practices, science, technology and innovation to enhance competitiveness in local production of vaccines.
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Commonwealth leaders discuss success and challenges ahead
Commonwealth heads met in executive session at Lancaster House in London on 19 April 2018.
They discussed how they could collectively tackle global and Commonwealth challenges.
The Commonwealth Heads of Government Meeting (CHOGM) heard about the work which has been carried out by the Commonwealth Secretariat on behalf of the 53 member states and 2.4 billion citizens.
Leaders heard about the need to collaborate to tackle the existential threat of climate change, encouraged to adopt the Commonwealth Blue Charter on ocean governance and the importance and benefits of trading together.
On Friday, the Commonwealth heads were to meet at the CHOGM retreat to decide the priorities for the next two years.
Officially opening CHOGM, The Queen spoke of the enduring influence of the Commonwealth.
“Put simply, we are one of the world’s great convening powers, a global association of volunteers who believe in the tangible benefits that flow from exchanging ideas and experiences and respecting each other’s point of view.
“And we seem to be growing stronger year by year. The advantages are plain to see. An increasing emphasis on trade between our countries is helping us all to discover exciting new ways of doing business. And imaginative initiatives have shown how together we can bring about change on a global scale. The Commonwealth Canopy has emphasised our interdependence, while the Commonwealth Blue Charter promises to do the same in protecting our shared ocean resources.”
The Queen emphasised the role that young people play in the Commonwealth, 60 per cent of whom are under the age of 30, observing:
“It remains a great pleasure and honour to serve you as Head of the Commonwealth and to observe, with pride and satisfaction, that this is a flourishing network.
“It is my sincere wish that the Commonwealth will continue to offer stability and continuity for future generations, and will decide that one day The Prince of Wales should carry on the important work started by my father in 1949.”
In her remarks, Secretary-General Patricia Scotland stated: “Commonwealth Heads of Government Meetings are distinctive for being both receptive and responsive to the needs of all, especially the young, the marginalised and the vulnerable.”
“Our dialogue is different, because there is a special dynamic in our Commonwealth ecosystem. We can think back to the Langkawi Declaration on the Environment made at the 1989 Commonwealth Heads of Government Meeting in Malaysia.
“A visionary and pioneering statement, that early blossom now bears fruit in initiatives such as The Queen’s Commonwealth Canopy and our current work on the Commonwealth Blue Charter and the blue economy. Such continuing abundance and productivity depend on processes of refreshment and renewal that are essential for the continuing vitality and development of any organism.”
The Commonwealth would embrace fresh opportunities to bring positive change, continued the Secretary-General.
“Numerous examples show Commonwealth synergy accelerating progress. To tackle climate change and plastic pollution, to eliminate child, early and forced marriage and modern slavery, to eradicate polio and malaria, and to reduce prevalence of non-communicable diseases.”
Remarks by Prime Minister Theresa May at the formal opening of the CHOGM
I am extremely proud to be welcoming you all to London – the first full Heads of Government meeting here in almost forty years.
I want to begin by expressing my gratitude to Prime Minister Muscat and his team: thank you for your incredible hard work. You represent a Commonwealth truth, that the size of a country does not limit its ambition and impact.
I hope that over the coming days and months we can build on the work you have begun as we forge a future for our common good.
Over many decades this organisation has brought together nations young and old, large and small, to celebrate our common bonds and to work to our mutual benefit.
There have been difficulties, successes, controversies. But I believe wholeheartedly in the good that the Commonwealth can do.
And this week as young people from our many nations gather and contribute their views, our responsibility as leaders is to ensure their voices are heard, and to build a Commonwealth that we can be proud to hand on to the next generation.
For in the Commonwealth we have an incredible opportunity.
An opportunity to show just what can be achieved through co-ordinated action and co-operation, to seize the possibilities open to us as member countries, and together, to take on some of the 21st century’s biggest questions.
How we support our most vulnerable member states as we tackle climate change and improve the health of our oceans, creating a more sustainable Commonwealth?
How we develop through trade, pushing back against protectionism, for a more prosperous Commonwealth?
How we respond to threats to the rules based international order and from cyber-attacks, creating a more secure Commonwealth?
And how, in all this, we advance those common values which our organisation has always stood for – democracy, human rights, tolerance, and the rule of law – so that we establish a fairer Commonwealth?
These are problems nations cannot solve alone. But by working together, we can make a real difference.
Over the past three days, we have seen the power of the Commonwealth in action at the Forums for business leaders, young people, women, and civil society.
These discussions have demonstrated the vibrancy and creativity of our organisation – focusing on issues such as improving trade, youth unemployment, education and health – all of which have the potential to transform people’s lives.
And I am looking forward to taking these issues further with the heads of government over the next two days.
Finally, on behalf of all of you assembled here in Buckingham Palace, I want to offer my heartfelt thanks to Your Majesty, Head of the Commonwealth.
This week you have opened your homes to us – here in London and in Windsor. Over many years you have been the Commonwealth’s most steadfast and fervent champion.
You have been true to the deepest values of the Commonwealth – that the voice of the smallest member country is worth precisely as much as that of the largest; that the wealthiest and the most vulnerable stand shoulder to shoulder.
You have seen us through some of our most serious challenges.
And we commit to sustaining this Commonwealth, which you have so carefully nurtured.
For your service, for your dedication, for your constancy – we thank you.
Related News
Financial inclusion on the rise, but gaps remain, Global Findex Database shows
515 million adults have opened accounts since 2014
Financial inclusion is on the rise globally, accelerated by mobile phones and the internet, but gains have been uneven across countries. A new World Bank report on the use of financial services also finds that men remain more likely than women to have an account.
Globally, 69 percent of adults – 3.8 billion people – now have an account at a bank or mobile money provider, a crucial step in escaping poverty. This is up from 62 percent in 2014 and just 51 percent in 2011. From 2014 to 2017, 515 million adults obtained an account, and 1.2 billion have done so since 2011, according to the Global Findex database.
While in some economies account ownership has surged, progress has been slower elsewhere, often held back by large disparities between men and women and between the rich and poor. The gap between men and women in developing economies remains unchanged since 2011, at 9 percentage points.
The Global Findex, a wide-ranging data set on how people in 144 economies use financial services, was produced by the World Bank with funding from the Bill & Melinda Gates Foundation and in collaboration with Gallup, Inc.
“In the past few years, we have seen great strides around the world in connecting people to formal financial services,” World Bank Group President Jim Yong Kimsaid. “Financial inclusion allows people to save for family needs, borrow to support a business, or build a cushion against an emergency. Having access to financial services is a critical step towards reducing both poverty and inequality, and new data on mobile phone ownership and internet access show unprecedented opportunities to use technology to achieve universal financial inclusion.”
There has been a significant increase in the use of mobile phones and the internet to conduct financial transactions. Between 2014 and 2017, this has contributed to a rise in the share of account owners sending or receiving payments digitally from 67 percent to 76 percent globally, and in the developing world from 57 percent to 70 percent.
“The Global Findex shows great progress for financial access – and also great opportunities for policymakers and the private sector to increase usage and to expand inclusion among women, farmers and the poor,” H.M. Queen Máxima of the Netherlands, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development, said. “Digital financial services were the key to our recent progress and will continue to be essential as we seek to achieve universal financial inclusion.”
Globally, 1.7 billion adults remain unbanked, yet two-thirds of them own a mobile phone that could help them access financial services. Digital technology could take advantage of existing cash transactions to bring people into the financial system, the report finds. For example, paying government wages, pensions, and social benefits directly into accounts could bring formal financial services to up to 100 million more adults globally, including 95 million in developing economies.
There are other opportunities to increase account ownership and use through digital payments: more than 200 million unbanked adults who work in the private sector are paid in cash only, as are more than 200 million who receive agricultural payments.
“We already know a lot about how to make sure women have equal access to financial services that can change their lives,” Melinda Gates, Co-Chair of the Bill & Melinda Gates Foundation, said. “When the government deposits social welfare payments or other subsidies directly into women’s digital bank accounts, the impact is amazing. Women gain decision-making power in their homes, and with more financial tools at their disposal they invest in their families’ prosperity and help drive broad economic growth.”
This edition of the Global Findex database includes updated indicators on access to and use of formal and informal financial services. It adds data on the use of financial technology, including mobile phones and the internet to conduct financial transactions, and is based on over 150,000 interviews around the world. The database has been published every three years since 2011.
“The Global Findex database has become a mainstay of global efforts to promote financial inclusion,” World Bank Development Research Group Director Asli Demirgüç-Kunt said. “The data offer a wealth of information for development practitioners, policymakers and scholars, and are helping track progress toward the World Bank Group goal of Universal Financial Access by 2020 and the United Nations Sustainable Development Goals.”
Regional Overviews
In Sub-Saharan Africa, mobile money drove financial inclusion. While the share of adults with a financial institution account remained flat, the share with a mobile money account almost doubled, to 21 percent. Since 2014, mobile money accounts have spread from East Africa to West Africa and beyond. The region is home to all eight economies where 20 percent or more of adults use only a mobile money account: Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe. Opportunities abound to increase account ownership: up to 95 million unbanked adults in the region receive cash payments for agricultural products, and roughly 65 million save using semiformal methods.
In East Asia and the Pacific, the use of digital financial transactions grew even as account ownership stagnated. Today, 71 percent of adults have an account, little changed from 2014. An exception is Indonesia, where the share with an account rose by 13 percentage points to 49 percent. Gender inequality is low: men and women are equally likely to have an account in Cambodia, Indonesia, Myanmar, and Vietnam. Digital financial transactions have accelerated especially in China, where the share of account owners using the internet to pay bills or buy things more than doubled – to 57 percent. Digital technology could be leveraged to further increase account use: 405 million account owners in the region pay utility bills in cash, though 95 percent of them have a mobile phone.
In Europe and Central Asia, account ownership rose from 58 percent of adults in 2014 to 65 percent in 2017. Digital government payments of wages, pensions, and social benefits helped drive that increase. Among those with an account, 17 percent opened their first one to receive government payments. The share of adults making or receiving digital payments jumped by 14 percentage points to 60 percent. Digitizing all public pension payments could reduce the number of unbanked adults by up to 20 million.
In Latin America and the Caribbean, wide access to digital technology could enable rapid growth in financial technology use: 55 percent of adults own a mobile phone and have access to the internet, 15 percentage points more than the developing world average. Since 2014, the share of adults making or receiving digital payments has risen by about 8 percentage points or more in such economies as Bolivia, Brazil, Colombia, Haiti, and Peru. About 20 percent adults with an account use mobile or the internet to make a transaction through an account in Argentina, Brazil, and Costa Rica. By digitizing cash wage payments, businesses could expand account ownership to up to 30 million unbanked adults – almost 90 percent of whom have a mobile phone.
In the Middle East and North Africa, opportunities to increase financial inclusion are particularly strong among women. Today 52 percent of men but only 35 percent of women have an account, the largest gender gap of any region. Relatively high mobile phone ownership offers an avenue for expanding financial inclusion: among the unbanked, 86 percent of men and 75 percent of women have a mobile phone. Up to 20 million unbanked adults in the region send or receive domestic remittances using cash or an over-the-counter service, including 7 million in the Arab Republic of Egypt.
In South Asia, the share of adults with an account rose by 23 percentage points, to 70 percent. Progress was driven by India, where a government policy to increase financial inclusion through biometric identification pushed the share with an account up to 80 percent, with big gains among women and poorer adults. Excluding India, regional account ownership still rose by 12 percentage points – but men often benefited more than women. In Bangladesh, the share with an account rose by 10 percentage points among women while nearly doubling among men. Regionwide, digitizing payments for agricultural products could reduce the number of unbanked adults by roughly 40 million.