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Nigeria and the AfCFTA: five updates
(i) Nigeria to bid for location of AfCFTA headquarters. The Federal Executive Council has resolved to bid for the location of the headquarters of the Continental Free Trade Area. Minister of Industry, Trade and investment, Dr. Okechukwu Enelamah, said the decision to bid for the headquarters of CFTA was predicated on the notable leading roles Nigeria had played in the negotiation process, pointing out that it was the belief of FEC that it was better to be a leader by being the host nation than being a mere follower. He further said FEC gave approval for the ministry along with relevant ministries, departments and agencies to proceed to the next stage of the negotiation.
(ii) Key details and benefits of Africa Continental Free Trade Area. Yesterday, the Federal Executive Council approved that Nigeria should sign the framework agreement for the establishment of the AfCFTA during the Extraordinary Meeting of AU Heads of State and Government to be held on 21 March, in Kigali, Rwanda. Here is what you need to know on AfCFTA (extracts):
(a) Eliminate barriers against Nigeria’s products and provide a Dispute Settlement Mechanism for stopping the hostile and discriminatory treatment directed against Nigerian natural and corporate business persons in other African countries; (b) Establish rules-based trade governance in intra-African trade to invoke trade remedies, such as safeguards, anti-dumping, and countervailing duties against unfair trade practices, including dumping, trans-shipment of concealed origin of products; (c) Support the industrial policy of Nigeria through the negotiated and agreed “Exclusion and Sensitive category lists” to provide space for Nigeria’s infant industries; (d) Stimulate, specifically, an estimated 8.18% increase in Nigeria’s total exports, with a small structural shift in Nigeria’s economy towards manufacturing and services. This is expected to lead to a total increase in Nigerian economic welfare by 0.62% – equivalent to around US$2.9 billion in 2018 terms. Changes would result from tariff reduction, ease of doing business and, trade facilitation.
(iii) @snkaringi: These Nigeria gains from #AfCFTA [point d above] are consistent with @ECA_OFFICIAL simulation results which show that up to two-thirds of the more than 52% additional trade due to #AfCFTA will be value added.
(iv) Between leveraging continental platform and strengthening local market. Dr Adeola Omitowoju, an international trade consultant, said that since the Nigerian government cannot control what happens in other African countries, the possibility of goods manufactured in parts of Europe and Asia being taken to some African countries to be repackaged and moved to Nigeria cannot be ruled out. “Should that happen, not only are we going to lose revenue from tariff, the local manufacturing companies are going to be adversely affected. The idea of having an African market is very good but I am not convinced that Nigeria is ready for it. So, we would be short-changed if we go into it now.” Mr Chibuzor Nwachukwu, Chief Executive Officer of Graceway Investment Limited, noted that given the level of infrastructural development in the country, the government should protect the local manufacturing companies from stiff competition so as to preserve them.
(v) Nigeria airline operators caution government against signing proposed Free Trade Treaty for Africa. The airline operators, under the aegis of Airline Operators of Nigeria (AON), are wary of alleged haste by the Federal Government in signing the treaty without first allowing experts, investors, industrialists and operators to review the comparative gains and implications of such treaty. Chairman of AON, Captain Nogie Meggison, who spoke with journalists in Lagos, said without due diligence “that puts Nigeria first”, the free trade initiative would go the way of the Single African Air Transport Market recently signed with 22 African countries “without plans on how it will benefit Nigeria.”
On AfCFTA’s legal scrubbing, this @Rwanda_Justice update: The 2nd Extra-ordinary session of the specialised Technical Committee on Justice and Legal Affairs (Ministerial meeting) aims at legally scrubbing the legal instruments establishing the African Continental Free Trade and Protocols on Trade, Services and Dispute Settlement. [Remarks by Minister Busingye Johnston]
REC updates: IGAD launches the mid-term review of its 2016-20 strategy; Effective financial governance in ECOWAS monetary zone: conference summary; ECOWAS calls for the continued support of the United States of America towards regional integration; ECOWAS signs MOU with China for the construction of new ECOWAS Commission headquarters; The structure of the SADC Secretariat after last year’s reorganisation: see page 9, Inside SADC (pdf)
Ethiopia: National Green Export Review of Ethiopia’s leather, sesame seeds sectors (UNCTAD)
This report (pdf), utilising UNCTAD’s Green Product Space methodology, reviews global trends in the leather and sesame sectors, their role to the national economy, and Ethiopia’s export policy framework, performance, and competitiveness in these sectors. In addition, the report also presents SWOT analysis that indicates remaining challenges and barriers that constrain performance in these sectors.
Nigeria: Boosting rice production through increased mechanisation (PwC)
Nigeria’s mechanisation has remained low at 0.3 hp/ha, relative to 2.6hp/ha in India and 8 hp/ha in China. The number of agricultural tractors is estimated around 22,000, relative to 1 million and 2.5 million in China and India respectively. Low income, limited access to affordable financing and the lack of technical skills have limited the adoption of mechanisation across the rice value chain. We estimate that increasing the mechanisation rate in Nigeria from 0.3hp/ha to 0.8hp/ha in the next 5 years, can double rice production to 7.2 million tonnes. To achieve this, we estimate that Nigeria will need to at least triple its current stock of machinery over the same period. In addition to raising production, adequately increasing mechanisation has the capacity to raise yields, increase labour productivity, reduce post-harvest losses, increase income generated by farmers and deepen import substitution.
What impact will trade agreements have on global food markets? (Devex)
Phil Pardey, the director of the International Science and Technology Practice and Policy Center at the University of Minnesota, spoke about this topic at last month’s 2018 Australasia Agricultural and Resource Economic Society conference in Adelaide. Speaking to Devex after the conference, he explained how the future of food security is likely to be shaped by private business objectives. According to Pardey, the largest challenges for agriculture and food security in regions such as East and sub-Saharan Africa are around research and logistics. “Sixty percent of the crop land in sub-Saharan Africa is seven hours away from a market of just 25,000 people...on the crappiest roads you can think of. You could liberalize all the trade policies that you like, but these people can’t even engage within countries.”
Trade deals must work for rural women say participants at key UN session (UNCTAD)
Concerns about non-transparent trade negotiating processes were shared by Marie Clarke Walker, Secretary-Treasurer of the Canadian Labour Congress. She said that labour unions and civil society organizations were invited to the table when trade negotiations were already advanced, and it is often very difficult for them to make a meaningful contribution. “What could a new, fair trade model look like?” she asked, suggesting that if trade agreements were transparently negotiated, the public would know what was at stake and governments in turn would be accountable to their citizens. Trade agreements have the potential to be empowering if they are structured in a way that complements human and labour rights, she said, highlighting noticeable progress in some recent deals. For example, Canada and Mercosur, the South American trade bloc, were negotiating a trade agreement that is intended to include a trade and gender chapter.
Africa ready for digital, Museveni tells customs experts (WCO / URA)
President Yoweri Museveni has stressed that the African continent that lacked unity in the past, has now woken up after the industrial revolution and will not miss out on the digital revolution. “One of the weaknesses was lack of unity among Africans and as a result, Africa missed out on the industrial revolution except the Iron Age. Now Africa has woken up; we are going to the industrial and digital revolution. I want to assure you that Africa will not miss out again. It is going to be part of the global trade on equal terms,” he stressed. President Museveni made the remarks while opening the 4th WCO Global Authorised Economic Operator conference at the Kampala Serena Hotel on Wednesday. [Conference programme (pdf)]
Adapting industrial policies to a digital world (UNCTAD)
The meeting (19-20 March, Geneva) will focus on adapting industrial policies to a digital world for economic diversification and structural transformation. It will address the issues underscored in subparagraphs 38 (a), 76 (a) and 76 (b) of the Nairobi Maafikiano. The meeting will discuss, in particular, how the diffusion of digital technologies shifts traditional boundaries of individual industries and those between industry and services. Extract from UNCTAD secretariat meeting note (pdf):
South-South digital cooperation is urgently required in order to build the competitiveness of the developing world in manufacturing through digital industrial policies. Each country is responsible for building its information and communications technology infrastructure, yet progress in building digital infrastructure is complex and needs to be supported by regional digital cooperation. This can be an additional element in ongoing regional integration processes, in particular in Africa. The first step towards digital cooperation is to build a data economy within a region, from which countries in the region can benefit with regard to the use of big data and the development of artificial intelligence to manufacture digital and/or digitalized products. To build a regional data economy, countries need to have similar national regulations on the ownership and sharing of data and on protecting personal data. A regional strategy on the ownership of data can provide substantial support for national digital industrialization policies. [Women’s Commission debates gender and ICT issues]
Cross-border remittances and money transfers conference 2018: profiled presentation
Barry Cooper’s presentation (pdf) highlighted the scale of remittance inflows into SSA and especially intra-SSA and the importance of these flows in capital-scarce markets. It looked at the cost drivers keeping SA as the most expensive remittance corridor in the world which include inefficient national payment systems, persistently high demand for over-the-counter (OTC) remittance services despite technological advances, as well as the high level of informality in the sector. It concluded with steps on how to start overcoming these cost drivers to enable low-cost and inclusive formal flows into and within the region.
Making Every Drop Count: High-Level Panel on Water outcome document (UN)
We call on all national leaders to initiate and guide a national water reform process (pdf) and for others in leadership roles to support these efforts. National action will also benefit from international cooperation. Trans-boundary and regional cooperation, as described earlier in this report, is vital for the 40% of the people of the world living in river basins which cross national borders. In addition, we encourage the launch of new cooperative initiatives in areas of critical importance to the new water agenda, such as: a global leadership coalition on valuing water; a water scarcity initiative, and an Africa water investment program. [HLP on Water www]
Kenya marks Tanzania border afresh amid persistent row (Business Daily)
The Kenyan government has kicked off an exercise to re-affirm its territorial border with neighbouring Tanzania by replacing dilapidated and missing beacons and developing a vista along the common border. Kenya shares a 769km border with Tanzania covering Narok, Kajiado, Migori, Taita-Taveta and Kwale regions in the South. It was drawn in 1884 by the colonialists. The Kenya International borders secretary, Juster Nkoroi said the joint exercise between the two countries would start on March 22 and would cover 238km in the first phase along the Narok and Migori borders.
Today’s Quick Links: Namibia strikes N$190m Peugeot assembly plant deal for Walvis Bay Ghana: MTN’s revenue jumps by 23.3%, as daily revenue hits GHC9.3bn India medical firm lists Kenya in Sh1bn Africa expansion plan Understanding the informal economy in African cities: recent evidence from Greater Kampala NANTS workshop: Small-scale farmers’ challenges, priorities JETRO’s FY2017 survey on the international operations of Japanese firms: summary of results |
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Minister Busingye Johnston opens the Second Extra-ordinary Session of the Specialised Technical Committee on Justice and Legal Affairs
Minister of Justice and Attorney General of the Republic of Rwanda, Busingye Johnston, this Wednesday 14th March 2018, opened the second Extra-ordinary Session of the Specialised Technical Committee on Justice and Legal Affairs which will be attended by Ministers in charge of Justice from African countries.
This 2-day session convened by the African Union Commission aims at legally scrubbing the legal instruments establishing the African Continental Free Trade and Protocols on Trade, Services and Dispute Settlement.
Welcome remarks by Minister Busingye Johnston
On behalf of the Government of the Republic of Rwanda, I am pleased and honoured to officially welcome you all to Kigali.
I wish to thank the African Union Commission for convening this important meeting, and for convening it in Kigali. I hope that your stay, so far, is good. Your being here humbles us greatly. We are grateful for the honour and privilege of playing host to you. Because of your presence here we become better hosts. Thank you.
Our legal experts have done tremendous work over the last three days, which involved the legal scrubbing of the Agreement establishing the African Continental Free Trade Area, Protocols on Trade in Goods, Trade in Services and Rules and Procedures on Disputes Settlement. May I take this opportunity to thank and commend them for the expert effort and African unity spirit that characterized their meeting.
As Custodians of and advisors on the Law, the onus is now upon us to provide the legal fitness for purpose to the legal instruments before us and ensure that our respective Heads of State are comfortable in the knowledge that we have done our best. But above all, permit me to assume the liberty to say that we know that we are here today as part of a historical process of making our contribution towards fulfilling the dreams and aspirations of our founding fathers of having an integrated Africa.
The decision to form the African Continental Free Trade Area was adopted in January 2012 during the 18th Ordinary session of Heads of State and Government of the African Union. The plain meaning of this is that since 2012 we have agreed that we all desire to be an indispensable player in the world economy and one political and economic approach of having an integrated Africa in all spheres is the agreed way to go since 2012. The urgency should not be missed.
Legislation in many of our jurisdictions is largely, and understandably so far, protectionist. But it is now known that this hinders intra-Africa trade, innovation and competitiveness. The benefits that accrue from an integrated Africa include among others elimination of discriminatory and protectionist practices, increase in comparative advantage, diversification and economies of scale and, hence, reduced costs of production. Given what we now know there is every reason to think and act differently. As our countries’ legal advisors we are right at the nerve centre of this change.
The decisions we make today on the future of our Continent will have a bearing not only on us, but future generations as well. Let us stand up to be counted as having contributed to a better Africa by embracing a single African Market. As the late Mwalimu Julius Nyerere pointed out, without unity, there is no future for Africa.
Our job in these two days is to ensure that what our distinguished colleagues, the Ministers of Trade, endorsed is legally sound and good for our Heads of State to endorse. I trust we will do what it takes to do a good job of it and pave way for the next level to realize maximum outcomes.
With these few remarks, I declare the Second Extra-Ordinary Session of the Specialized Technical Committee on Justice and Legal Affairs (Ministerial Meeting) opened, and I wish all of us fruitful deliberations.
I thank you for your kind attention.
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First WCO Global AEO Conference in Africa opens in Uganda
The 4th WCO Global AEO Conference opened on the 14 March 2018 in Kampala, Uganda with more than 1500 registrations from over 95 countries to discuss dynamic developments in Authorized Economic Operator (AEO) programmes widely acknowledged as a key driver for solid Customs-Business partnerships.
The first AEO programme within the African continent was materialized in the East African Community (EAC) region, leading to the signature, during this Conference, of a Mutual Recognition Agreement (MRA) – Action Plan between Korea Customs Service (KCS) and the EAC Members. The delegates of this Conference also witnessed the signature of another important MRA between Peru and Uruguay Customs represented by the Directors General of Customs.
The Conference was opened by H.E. Yoweri Kaguta Museveni, President of Uganda, with an inspiring message on the importance of regional collaboration among East African Countries and the need for a coordinated approach for broadening the scope of investment in Africa. He congratulated the WCO for providing a platform for discussing the topical issues of interests to the international community and highlighted the need for renewed trust and commitment for cooperation among African Countries.
In his welcome address, Dr. Kunio Mikuriya, WCO Secretary General, underscored that this AEO Conference is the first of its kind in the African continent, more precisely in the pearl of Africa, Uganda. He echoed the President’s appreciation of the commitment of the EAC towards enhancing trade facilitation in the region.
Secretary General Mikuriya added that the African continent is actually booming with new developments in the field of security and facilitation of the supply chain. He stated that the theme of the Conference, “Promoting Mutual Recognition of AEOs to Strengthen and Secure Global Trade”, is very much in line with the increasing number of AEO programmes being implemented, including the number of Mutual Recognition Arrangements (MRAs) signed globally.
Dr. Mikuriya also commended the Uganda Revenue Authority (URA), through its Commissioner General and Commissioner of Customs, for the strong dedication of the URA and the relentless efforts of their team in the organization of this successful event.
President Museveni opens international customs conference
President Yoweri Museveni has said that the African continent can no longer be a spectator in the global industrial and technological revolutions.
According to him, Africa has since solved many of the bottlenecks that dragged it back as the rest of the world industrialized, and that it is now ready to be an equal player in global trade.
The President made the remarks earlier on Wednesday as he opened the 4th World Customs Organization (WCO) AEO Global Conference at the Kampala Serena Hotel.
The three-day conference, the first to be held in Africa, will discuss the role of AEOs in facilitating global trade and security as prerequisites for economic development.
A brainchild of the WCO, AEO offers complaint institutions preferential treatment like fast clearance at borders or ports. Mutual recognition agreements under AEO, among others, are high on the meeting’s agenda.
Although Africa is bigger in size than most of the developed economies combined, Museveni noted, it had for long been sidelined in the global economy due to challenges like slave trade, poor leadership and disunity among different countries.
However, he stressed, Africa has now woken up and is ready to catch up. “Most of the problems we suffered were partly because of our internal weaknesses. We are trying to solve the issue of unity through regional integration,” Museveni told participants in a speech peppered with jokes that cracked participants.
He argued that the rising population in Africa is a silver lining, adding that the continent ought to position itself as the “next frontier for industrialization”.
“Under population has also been our problem, but we are sorting it out, especially with the discovery of modern medicines to counter killer diseases. By 2050, Africa will have over 2.5 billion people. We shall have caught up with other big economies,” he said.
“We are going into the industrial age and digital revolution, and this time we shall be part of global trade on equal terms with the rest.”
Over 1,000 delegates from over 169 countries across the globe including customs administrators, companies, government officials, academia and policymakers attended the biannual event. Uganda Revenue Authority (URA), which championed the AEO programme in Uganda, hosted the conference.
WCO Secretary General, Kunio Mikuriya, who addressed journalists earlier, noted that Africa possesses a huge economic growth potential.
“Customs authorities and businesses should work jointly to improve the economic competitiveness of the respective countries, regional blocs and Africa,” Mikuriya said.
The conference, he added, was an opportunity for participants to listen to and replicate success stories regarding AEO, customs administration, trade facilitation and other best practices.
URA Commissioner General, Doris Akol said that the conference was a key platform for all players in international trade to share best practices.
Alongside the conference, she disclosed, there would be an exhibition at which initiatives like the Regional Electronic Cargo Tracking System, Single Customs Territory, Electronic Single Window would be showcased. The initiatives are meant to facilitate trade.
Uganda has a total of 51 companies registered as AEOs and these account for 28% of all the tax revenue generated. Of these, 30 are importers and exporters while 21 are clearing agents.
Commissioner Customs, Dicksons Kateshumbwa hailed WCO for choosing Uganda following a pitch to host the conference. Uganda, he pointed out, was committed to facilitating trade locally and regionally and to creating a “safe environment for business”.
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tralac’s Daily News Selection
Diarise: SADC Council of Ministers to meet in Pretoria (26-27 March). Preparatory meetings start 22 March.
AfCFTA commentaries:
(i) ACBF’s Prof Emmanuel Nnadozie: Moving beyond the signing of the AfCFTA agreement to building the capacity for implementation. With the signing of the CFTA set for end of March 2018, the African Capacity Building Foundation is concerned that the agreement may follow several others that have not been effectively implemented, if implementation capacities are not addressed. ACBF has, to date, channelled efforts and conducted regular surveys of the capacity needs of African RECs in which the implementation of the CFTA should be rooted. ACBF’s 2016 Survey of the capacity needs of Africa’s RECs revealed the need for critical capacities in support of good governance, human rights, political stability, and peace and security in Africa; critical capacities for effective socioeconomic policy analysis and management; building and fully utilizing human capacities; and critical capacities for statistics and monitoring and evaluation.
Developing capacity for the CFTA must be seen in its interrelated and interlocking human, institutional, and infrastructural dimensions at national, regional and continental levels. Action must be taken in each of these three areas simultaneously, reflecting the interdependencies and inter-linkages among the critical development issues and priorities facing Africa. ACBF has done it at national and regional levels, and has the requisite expertise. My appeal to Africa and beyond is for more support to scale up the interventions we had on RECs for the continent’s transition into a continental free trade area, an African Economic Community.
(ii) COMESA’s Francis Mangeni: How we can achieve African free trade area with quality content. There is an increasing body of literature suggesting that services will provide new pathways for Africa towards social economic transformation. In their recent book The Unexplored Potential of Trade in Services in Africa, Grover and Dihel graphically and empirically demonstrate how trade in services is providing the much needed employment and incomes to ordinary people, and contributing towards social economic transformation. What will be required soon, however, is to go beyond the framework of rules and disciplines that have been agreed in the Protocol, and identify the services sectors in which to create an African integrated services market and in which to attract investment. This would be followed by sector regulatory frameworks and trade and investment terms and conditions, and creating awareness about these trade and investment opportunities. Some clear considerations can assist the identification of the initial group of services sectors, to target infrastructure services - services that are already liberalised autonomously or in the regional economic communities; services already opened up at the WTO; and high growth sectors for job creation. On these criteria, the following few services could be initially prioritised: [26 Heads of State to attend free trade area summit]
The latest Bridges Africa compilation is posted: How should Africa engage in e-commerce and the digital economy? Profiled contributions: Jamie MacLeod: Using digital trade for development in Africa; Maxime Weigert: How the private sector is shaping African e-commerce; Christopher Foster, Shamel Azmeh: The digital trade agenda and Africa
Madagascar calls on UNCTAD to assess its e-commerce readiness (UNCTAD)
Madagascar has asked UNCTAD to evaluate how well the country can do business online by carrying out a Rapid eTrade Readiness Assessment in the second half of 2018. The official request, received on 7 March from the country’s ministry of trade and consumption, came as the result of a February workshop held by UNCTAD on the legal aspects of e-commerce for more than three dozen Malagasy magistrates and lawyers. In 2014, Madagascar adopted laws on aspects of e-commerce - including electronic transactions, cybercrime, and privacy and data protection - but has yet to put in place the regulations to effectively enforce the legislation.
Malawi: Growth Development Strategy – 2017-2022 (AFIDEP)
The theme of the MGDS III Building a productive, competitive and resilient nation (pdf). According to the government, this strategy is built around this “one theme that aims to improve productivity, turn the country into a competitive nation and develop resilience to shocks and hazards”. The MGDS III is anchored on five key priority areas namely: Agriculture, water development and climate change; Education and skills development; Energy, industry and tourism development; Transport and ICT infrastructure; Health and population. These key priority areas were chosen on the basis of their strong linkages among each other as well as other sectors of the economy.
What’s the world’s fastest-growing economy? Ghana contends for the crown (New York Times)
The boom has some experts worried. “If you suddenly see a resource bonanza coming, there’s a tendency to spend money you don’t have, and that has been the case in the Ghana situation,” said John Page, a senior fellow in the global economy and development program at the Brookings Institution. At the same time, Mr. Page cautioned, if the Ghanaian currency strengthens as a result of oil exports, it could place domestic manufacturers at a disadvantage to imports and lead to a slowdown in manufacturing investment. What happens in Ghana could hold lessons for other West African countries, including Senegal, which recently announced discoveries of oil and gas off shore, and Mauritania, which has signed an exploration deal with Total, the French oil company.
Rwanda posts 6.1% economic growth in 2017 (New Times)
Rwanda’s economic growth exceeded the previously projected 5.2% and grew 6.1% last year, a positive performance that was mostly driven by fourth quarter growth. Figures released by the National Institute of Statistics of Rwanda yesterday indicated that in the year 2017 the country’s GDP was estimated at Rwf7,597 billion up from Rwf6,672 billion in 2016. The economy grew 6.1% in 2017, mostly driven by agriculture, industry, and services which contributed 31%, 16%, and 46%, respectively. Recovering from poor performance in the first and second quarters, the 2017 annual growth was mostly influenced by the fourth quarter GDP growth which was 10.5%.
The price of cobalt is at $80,000 per tonne: will Zambia ever benefit from this price surge? (Lusaka Times)
Today, the prices of copper and cobalt, the minerals in which Zambia has the largest stake, have risen at an unprecedented high rate of $7,000 and $80,000 per tonne respectively. This increase in price of these two minerals is a great opportunity for the economy of Zambia. The big question, therefore, is whether Zambia is prepared to draw maximum benefits from the new boom? [The authors: Claude Kabemba, Edward Lange]
Landry Signé: Capturing Africa’s high returns (Project Syndicate)
Over the next 12 years, Africa’s expanding population and strong economic growth across globally competitive sectors could translate into especially high returns for investors. If Western firms do not step in to meet the consumer demand of Africa’s growing middle class, their Chinese competitors will.
WTO’s Trade Facilitation Agreement and Doing Business reforms: are they related and how? (World Bank)
Which Doing Business reforms are related to TFA? Drawing on the reforms recorded by Doing Business 2018, we find that reforms in line with TFA recommendations were implemented in 30 economies, of which 80% are developing economies. Article 10 of TFA is the most popular area of reform. Specifically, 20 economies streamlined the formalities and documentation requirements (Art. 10.1), 7 economies began accepting paper or electronic copies instead of original documents (Art. 10.2) and 6 economies implemented Single Windows that enable sharing of information between trade actors through a single platform (Art. 10.4) (Table 1). Sub-Saharan Africa carried out the highest number of reforms within the scope of the agreement, with 15 economies reforming under TFA. The case of Mauritius, which has the highest number of TAB reforms related to TFA, shows that the recommendations can be implemented fairly quickly with significant results:
DoingBiz: Nigeria, India updates
(i) Nigeria targets improved growth, ranking by 2020 with focus labs. President Buhari gave the assurance at the launch of the Focus Labs for the nation’s pdf Economic Recovery and Growth Plan (6.59 MB) (pdf), held at the Presidential Villa. The labs which are scheduled to run for the next six weeks, will start with setting the agenda and end with the final syndication and sign offs on projects capable of impacting on the economy and creating jobs for Nigerians. “Focus Labs have been successfully used in other countries. The Labs in Nigeria are designed as closed-door investment platforms to identify and accelerate high-impact projects with significant impact on GDP and job creation. We remain committed to working hard to attain our target of moving up in the World Bank’s Ease of Doing Business rankings by 2020. The Labs will also enable pre-screened private sector investors to have access to senior government officials, regulators, and cabinet ministers. The goal is to efficiently and effectively resolve the most pressing bottlenecks delaying their proposed investments. Accordingly, I have directed the relevant Ministers and heads of government agencies to be available to the participants at the labs to respond to their inquiries and issues”, he added.
(ii) NCCN Sub-National Competitiveness Index: Lagos leads overall ranking. The National Competitiveness Council of Nigeria focused on boosting the competitive advantage of the nation, last Thursday launched the first ever Sub-National Competitiveness Index for Nigeria in Lagos. CEO of the NCCN, Mr Chika Mordi, said the Index served as a potent tool for catalysing business friendly policies, that will spur job-rich growth in Nigeria’s 36 States. Mordi was of the view that the index played a vital role in emphasizing the role of States in driving the socio-economic growth of Nigeria.
(iii) Ease of doing business in India: PMO acts as BMC fails test. The PMO, unhappy with the progress made by BMC in the ease of doing business, has come down heavily on the richest civic body in Asia. Last month, the PMO summoned Maharashtra chief secretary and the BMC commissioner to Delhi to discuss the reforms initiated by the civic body and further simplify some procedures. The meeting comes in the wake of the World Bank’s perception survey which said that some of BMC’s crucial reforms remained only on paper as developers complained that they still needed to pay bribes to get their projects cleared.
(iv) Bretton Woods Project: After 15 years, World Bank’s Doing Business Report still missing the mark. Given the persistent flaws of the DBR and the Bank’s supposed focus on sustainable and equitable growth, it should heed civil society’s calls, echoed by the IEG’s report, to cease country rankings and to ensure that indicators used are robustly linked to poverty eradication and inclusive growth objectives.
India Development Update: India’s growth story (World Bank)
The questions being raised are: Is the deceleration in economic growth structural or cyclical? Is the Indian growth story over? What is the “new normal” for India’s growth potential? What sets of policies, structural or cyclical, might be needed to revive growth? In this report, we take a long-term perspective on India’s growth outlook. Looking back at the last 50 years, we note that India’s average growth has accelerated slowly but steadily across sectors - agriculture, industry and services - and become more stable. This is reflected in increasing labor productivity and total factor productivity. [Why digital protectionism will not work for India]
Impact of US market access on local labor markets in Vietnam (World Bank)
The study finds that following the implementation of the Vietnam–United States bilateral trade agreement in December 2001, manufacturing employment increased in provinces that were more exposed to US tariff cuts. In those provinces, employment also increased in many service sectors, reflecting strong spillovers of job gains. The new job opportunities have attracted labor from agriculture, thus reducing agricultural employment. The paper examines three possible channels of job gain spillovers, namely, demand, production, and real estate. Although there is evidence for all three channels, the demand channel is the most important. [Singapore: Big firms pull further ahead of SMEs]
Today’s Quick Links: ITC’s B2B project update: East African leather suppliers expand sales, business linkages with Indian buyers Nigeria produces 3.93MT of sweet potato: the largest producer in SSA World Bank: Harnessing the Nile’s potential through private finance The World Economic Forum on Latin America 2018 is underway in São Paulo |
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Using digital trade for development in Africa
Digital trade is rising in Africa and throughout the world. How can it be managed to deliver development outcomes? This article appraises the challenges and opportunities related to digital trade for African countries, as well as the scope for national and international solutions.
When it comes to the digital economy in Africa, there has been a polarised debate between its cheerleaders and sceptics. This article takes the middle road, arguing that while the rise of digital trade brings with it many challenges for developing countries, it can clearly be a tool for development. What matters, then, is how the tool of digital trade is used. So the question becomes: How exactly can it be handled such that it delivers development in Africa?
Why worry?
Developing countries, including many in Africa, stand on the precipice of a digital divide from which it can be difficult to contemplate the beneficiaries of digital trade as being any other than the most developed countries.
Firstly, there is fear of the distributional implications between countries. Digital trade is perceived as amounting to skill-biased technological change: that which favours skilled over unskilled labour. Developing countries lack skilled workers relative to developed countries, and based on this, there is concern that digital trade will benefit the latter at the expense of the former.
Secondly, there are concerns that digital trade embodies network effects that can lead to market concentration and in turn lead to anti-competition issues. For instance, large e-commerce platforms such as Amazon – which accounts for half of all online expenditure in the US – collect vast amounts of increasingly valuable data on their customers. This data can then be used to outcompete smaller rivals which lack access to such data.[1] This can lead not only to serious anticompetitive threats, but also to high market concentration in developed countries.
Thirdly, there is concern that digital trade may better allow international companies to distort their taxable income through transfer pricing. For instance, if the intellectual property and operating expertise behind cross-border e-commerce is located abroad, then the cost of this may be deducted from locally generated sales to reduce taxable income in a given country.
Finally, what does the growth of the digital economy imply for the export-oriented industrialisation strategy that has historically fuelled many countries’ development? New technologies, like 3D printing and increased automation, reduce demand for labour-intensive manufacturing. Some worry that these technologies will reduce the incentives for businesses to invest in manufacturing in low-labour cost developing countries – a phenomenon traditionally at the heart of many countries’ industrialisation.
But digital trade also presents clear opportunities
Digital trade is of particular benefit to micro, small, and medium-sized enterprises (MSMEs), and more than 80 percent of enterprises in Africa are MSMEs.[2] It can help them connect with purchasers abroad for cross-border orders and provide the supportive services necessary to facilitate their exports, including simplified payments and logistics.
For instance, firms in developing countries such as Chile, Jordan, Peru, or South Africa can advertise and sell their products to foreign markets through eBay and other e-commerce platforms.[3] Beyond goods, professional service platforms such as Freelancer.com and Upwork.com connect professionals in developing countries to freelance opportunities around the world. Here, digital trade provides an unrivalled service for the MSMEs of African and other developing countries.
Digital trade can also be a tool for boosting intra-regional trade, as demonstrated by MercadoLibre – the largest online marketplace in Latin America –, which helps foster intra-regional trade by connecting buyers and sellers in this region, and providing online payment services for the regional businesses that do not have bank accounts.[4]
On the other side of the equation, digital trade is of considerable benefit to consumer welfare. It provides new possibilities for more effectively searching for, paying for, and receiving delivery of traditional goods and services, as well as access to wholly new digital products.
But perhaps most significantly, digital trade is largely inevitable. There is relatively little that can be done in terms of digital protectionism that does not impose significant economic costs. For example, data localisation requirements, which require data to be stored or processed locally, are estimated to have implied substantial negative effects on the GDP of Brazil (-0.8 percent), the EU (-1.1 percent), India (-0.8 percent), Indonesia (-0.7 percent), and the Republic of Korea (-1.1 percent), with even stronger negative implications for investments and welfare.[5] The solution is to craft a system of governance that addresses the challenges of digital trade while seizing its opportunities.
National governance
Having considered the benefits and challenges of e-commerce, and its inevitability, policymakers must seek to integrate digital trade into their development planning.
Some African countries are actively involved in UNCTAD’s “eTrade for All” initiative. This is a platform through which policymakers can deepen their understanding of the opportunities, challenges, and solutions relating to leveraging digital trade for development. Others, such as Cote d’Ivoire, have utilised the resources of the International Trade Centre to develop e-strategies. Doing so can help ensure that digital trade is, rather than a threat to African industrialisation, used for its breadth of opportunities.
On the particular challenges of market concentration, anti-competition, and taxation of cross-border digital trade enterprises, countries must develop the appropriate measures of regulatory governance. For instance, policies such as mandatory data-sharing can make data available to local competitors such that it does not pose an anti-competitive challenge. One example of such a regulation is the EU’s General Data Protection Regulation, which will apply from May 2018, requiring online service suppliers to make it easy for customers to transfer their information to other providers and even competitors.
Another approach is to devise better competition regulations to treat large e-commerce platforms like the traditional natural monopolies to which they bear resemblance.[6] E-commerce platforms operate similarly to utilities, providing critical marketing, payment, and delivery services to the businesses that operate on them. New approaches to competition policy can account for this. Similarly, new approaches to taxation can address the new business models of the digital trade era.
If the abovementioned threats can be managed, digital trade can be harnessed for its many developmental benefits. However, some of these challenges spread across borders, and will thus require international cooperation to design and implement appropriate solutions.
International governance
Digital trade is global in nature, and so international solutions are also necessary. These can relate to consumer confidence enhancing measures, like frameworks for cross-border consumer protection, data privacy, or cyber security that help consumers feel safe when shopping online, as well as measures, such as those proposed at the WTO, for ensuring cross-border data flows, supporting e-payments, ensuring the validity of e-signatures and e-authorisations, or promoting electronic single windows.
At the WTO’s Eleventh Ministerial Conference (MC11) in December 2017, trade ministers failed to agree to even a ministerial declaration. There was a failure, too, to advance on any of the so-called “new issues”, including e-commerce. The most likely pathway ahead is that of plurilateral deals. Already by the end of MC11, a joint ministerial statement on e-commerce had been issued by 71 members of the WTO, including Nigeria. This group will “initiate exploratory work together toward future WTO negotiations on trade-related aspects of electronic commerce.” Such an approach ostensibly allows willing countries to move ahead on issues in which they find agreement and conclude plurilateral agreements, which other countries could subsequently join when ready. However, it risks establishing as international norms rules that are inappropriate for the countries which are not party to the negotiations. The WTO may, furthermore, not be the ideal platform for negotiations on these issues, which encompass aspects that extend far beyond the traditional trade issues that comprise its mandate.
If progress is impossible at the multilateral level, negotiations on e-commerce can move at the regional level. A regional approach is a reformulation of the plurilateral way forward posited above, but through which countries can build upon their regional similarities and existing regional infrastructure to more easily find agreement.
African countries are aware that their small and fragmented domestic markets will impede the long-term development of their own e-commerce enterprises. They understand that as a regional grouping, they also stand on a more even footing when it comes to e-commerce capability than when they stand by the full spectrum of WTO members. They have more similar appetites for particular digital trade rules. Perhaps most pertinently though, they have already at hand the ideal platform: as negotiations for the first phase of the African Continental Free Trade Area come to a close, negotiators are now looking to phase two issues, including investment, intellectual property, competition, and potentially also e-commerce.
Regional approaches work. The ASEAN region has achieved much success in cooperating over issues of digital trade facilitation, infrastructure gaps, access to payment solutions, and online security through a Coordinating Committee on E-Commerce. The EU has prioritised the creation of a “Digital Single Market” to harmonise policies for a more effective digital marketplace. In Africa, the African Continental Free Trade Area could serve as a basis.
Conclusions
Digital trade presents a number of challenges for African and other developing countries, but these should not dissuade such countries from pursing the clear benefits that it can bring. Instead, the solution is to design a system of governance that would both tackle the challenges associated with digital trade and capitalise on the opportunities it offers. Doing so will require governance measures at the national level, including through development planning that integrates digital trade to e-strategies, as well as regulations appropriate for the new challenges of the digital trade era. Digital trade being fundamentally global, international solutions must also be crafted. While agreement at the multilateral level seems as yet far off, regional approaches offer promising opportunities. For Africa, this includes using the African Continental Free Trade Area as a platform for cooperating over digital trade issues and creating an improved digital market in Africa.
Jamie MacLeod is Trade Policy Fellow, African Trade Policy Centre (ATPC) at the UN Economic Commission for Africa.
This article is published under Bridges Africa, Volume 7 - Number 2, by the ICTSD.
[1] LaVecchia O & S Mitchell. “Amazon’s Stranglehold: How the Company’s Tightening Grip Is Stifling Competition, Eroding Jobs, and Threatening Communities.” Institute for Local Self-Reliance, 2016.
[2] World Finance. “SME growth key to Africa’s future, says African Guarantee Fund.” 18 November 2014.
[3] World Bank. World Development Report 2016: Digital Dividends. Washington, DC: World Bank Group, 2016.
[4] Ibid.
[5] Bauer, Matthias, et al. “The Costs of Data Localisation: Friendly Fire on Economic Recovery.” ECIPE Occasional Paper 3. Brussels: ECIPE, 2014.
[6] Khan, Lina. “Amazon’s antitrust paradox.” The Yale Law Journal 126, no. 3 (2017).
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WTO’s Trade Facilitation Agreement and Doing Business reforms: Are they related and how?
Small differences in the time and cost to trade can determine whether or not a country participates in global value chains.
In this respect, the World Trade Organization’s (WTO) pdf Trade Facilitation Agreement (TFA) (150 KB) , which came into force on February 22, 2017, is a landmark achievement given its comprehensive coverage of the issues around cutting red tape and promoting efficiency and transparency, as well as the fact that it is the first multilateral agreement since the establishment of the WTO in 1995.
Coincidentally, the Trading Across Borders (TAB) indicator of Doing Business measures the efficiency of national regulations in trade facilitation and keeps track of relevant reforms, allowing us to analyze how the provisions of the TFA are related to the reform efforts of governments around the world.
Since the inception of the TAB indicator in 2004, 119 of the 190 economies currently monitored have implemented a total of 264 reforms to improve the efficiency of trade facilities. The most commonly implemented reforms include the adoption of e-systems to enable electronic processing of trade procedures; implementation of risk-based inspections; elimination of redundant procedures to increase the efficiency of customs administration; and improvements in customs/border infrastructure. These features are also reflected in most of the 12 articles of Section I of the TFA.
Which Doing Business reforms are related to TFA?
Drawing on the reforms recorded by Doing Business 2018, we find that reforms in line with TFA recommendations were implemented in 30 economies, of which 80% are developing economies. Article 10 of TFA is the most popular area of reform. Specifically, 20 economies streamlined the formalities and documentation requirements (Art. 10.1), 7 economies began accepting paper or electronic copies instead of original documents (Art. 10.2) and 6 economies implemented Single Windows that enable sharing of information between trade actors through a single platform (Art. 10.4).
Sub-Saharan Africa carried out the highest number of reforms within the scope of the agreement, with 15 economies reforming under TFA. The case of Mauritius, which has the highest number of TAB reforms related to TFA, shows that the recommendations can be implemented fairly quickly with significant results. Mauritius is one of first economies to ratify the TFA agreement (March, 2015) and start working on the TFA agenda, even before the agreement came into force in February 2017.
Since June 2016, Mauritius has allowed pre-arrival submission of the manifest and customs declaration (Art. 7.1); improved its risk-management system (Art. 7.4); reduced the use of paper copies (Art. 10.2); and started a systematic process of information sharing with other control agencies (Art. 10.4). The combined impact of these initiatives has decreased the time to comply with border procedures by 21 hours for exports and 20 hours for imports.
What is the impact of TFA?
The WTO predicts that TFA will promote the simplification, modernization and harmonization of trade processes to reduce cost and time, boost trade flows and increase the world GDP growth. Although it is too early to assess the full impact of TFA, the World Trade Report 2015 concludes that it has the potential to reduce trade costs by an average of 14.3% and increase exports by $1 trillion per year. Another study says that the implementation of TFA will lead to an increase in export diversification. The potential benefits are further supported by the OECD, which finds that TFA will create efficiency at the border, thereby reduce trade costs and increase participation in global value chains.
Likewise, Doing Business analyzes the impact of reforms in many areas promoted by TFA. Among these, Doing Business 2018 reveals that introducing or improving customs Electronic Data Interchanges and Single Windows, which are featured in Articles 1, 5, 7 and 10 of TFA, allowed a total time reduction of 742 hours. Infrastructure reforms have the second most significant impact on reducing the time and cost of trade procedures as measured by Doing Business; however, TFA is mostly silent about border infrastructure.
Both TFA and Doing Business point out that the future of efficient trade lies in the modernization of electronic platforms, international cooperation at both the customs and borders, efficient risk-based inspections and simplified documentary requirements. The Doing Business data confirm that implementing reforms promoted by both TFA provisions and the Doing Business Trading Across Borders indicator set significantly reduces the red tape that impedes international trade. Further reductions are expected when more countries ratify the TFA.
As more data become available over time, it would be interesting to investigate whether reductions in red tape translate into further increase in exports and economic growth as predicted by the WTO, especially in developing countries facing various types of constraints to trade.
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tralac’s Daily News Selection
Implications for Africa’s policy makers? China plans to set up a new international development cooperation agency ”as a key means of major-country diplomacy, enhance strategic planning and coordination of foreign aid”
African Development Bank’s Economic Outlook shows decline in regional economies (AfDB)
The AfDB has expanded its flagship publication, the African Economic Outlook, with five regional reports. The regional economic studies were released yesterday. “By offering regional approaches for the first time, we want to leverage the Bank’s expertise and give more depth of analysis and relevance to this publication,” said Celestin Monga, Chief Economist and Vice President of the AfDB’s Economic Governance and Knowledge Management. “The integration of specific reports for each region reflects the importance the Bank’s focus on the regional dimensions of development and inclusive growth in Africa,” said Mohamed El Azizi, Director General of the North Africa Region. Profiled regional report:
East Africa (pdf), with thirteen countries, recorded the continent’s best economic performance with a GDP growth rate of 5.9% in 2017 −a rate much higher than the growth recorded by the other regions of the continent, and above the continental average of 3.6%. The good performance of the East African sub region is stimulated by six countries: Ethiopia, Tanzania, Djibouti, Rwanda, Seychelles and Kenya. The outlook remains positive for 2018 and 2019, with growth expected to continue, reaching 5.9% in 2018 and 6.2% in 2019. [The regional reports can be downloaded from here]
Botswana-UAE Business Forum: UAE, Botswana officials in talks to boost trade ties (Gulf News)
During the UAE-Botswana Business Forum taking place in Dubai on Monday, officials from the UAE said there is “huge potential” to extend the scope of bilateral trade as the Emirates aims to capitalise on high-growth economies. “[Most of] the trade now is on precious stones and mainly, diamonds, but if we introduce the potential to diversify our trade in goods between the two countries, I think we can double the trade figures easily,” said Abdullah Al Saleh, undersecretary of foreign trade and industry at the UAE’s Ministry of Economy. Non-oil trade between Dubai and Botswana specifically exceeded $1bn (Dh3.67 billion) in the first nine months of 2017, and was dominated by trade of precious and semi-precious metals. “The trade balance now is in favour of Botswana because of the diamonds exports to the UAE, but if we diversify trade, I’m sure there are a lot of opportunities of our industries to export to Botswana,” he said. [Dubai presents itself as re-export hub for Botswana diamonds]
Nigeria-Tunisia Business Forum: Strengthen bilateral relations in trade, economic, technology (Vanguard)
Nigeria’s Minister of Foreign Affairs, Geoffrey Onyeama: “We appreciate the impressive development that had taken place in Tunisia which had really catapulted the country to the level mid income country. In all categories Tunisia is showing itself to be a leading country in the world today in the ICT, medical and agriculture among others, it has a made tremendous stride. That is why we are particularly happy in strengthening the bilateral relations between the two countries.” Tunisia’s Minister of Foreign Affairs, Mr Khemaise Jhinaoui, said the discussions would identify new area of common interest mainly in investment, science and technology. He said the agreement to be signed later would enhance the relationship between the two countries especially in the area of business and technology. He noted with the concern that the relations between Nigeria and Tunisia were still below expectation.
Nigeria: NLC cautions government against signing Africa continental free trade agreement (The Guardian)
The Africa Continental Free Trade Agreement would lead to massive job losses, closure of businesses and incapacitate local technological advancement, the Nigeria Labour Congress has said. NLC’s president, Ayuba Wabba, said the Nigerian local business community and organised labour have not been consulted even when the government directed the promoters of the agreement to do so. [Capital Economics: A note of caution on African economies; Todd M Johnson: Looking skyward towards African economic integration]
Rwanda can be a $20bn economy by 2025 (new Times)
Rwanda is at an interesting juncture. Over the last 12 years, it improved its Ease of Doing Business rank by 98 places – the highest globally, which resulted in strong FDI inflows in recent years. At the same time, the young median age of its population demands sustained growth in jobs and income which makes expanding the economy’s size a necessity. So if Rwanda wants to grow its GDP from the current $9bn to $20bn by 2025, to what extent should it focus on each growth-driver to realize this target? This is what we explore here. [The author, Sourajit Aiyer, is an author and financial services professional, and researches for South Asia Fast Track]
Ghana: Cashew in-shell exports rake in $981m (GEPA)
Ghana achieved a significant feat in the global exportation of cashew in-shell: it emerged as the number one exporter of cashew in–shell for 2016 (pdf), with total export value of $981m, representing 43.8% of total global exports of cashew in-shell. Other global exporters of cashew in-shell in 2016 include La Cote d’Ivoire ($340m); Tanzania ($333m); Guinea Bissau ($209m); Burkina Faso ($105m); Indonesia ($100m). Major market destinations for Ghana’s cashew in 2016 include Vietnam ($533m) and India ($445m). [Related GEPA analysis: exports of cashew kernels to the US, pdf; Ghana may struggle to repay $1.3bn cocoa loan]
South Africa: Structural transformation, competition and economic power - the need for better policies (Econ 3x3)
The entry and success of new competitors are crucial. We propose a positive agenda for competition policy, regulation and related policy areas that includes the following: [The authors,Pamela Mondliwa and Simon Roberts, are attached to CCRED]
Kenya: Kinyua now orders State contractors to use SGR (Business Daily)
Head of Public Service Joseph Kinyua said in a 7 March circular that “all cargo imported and/or exported by government agencies, including cargo for projects undertaken by third parties, must be moved on SGR.” Movement of any cargo between Mombasa and Nairobi by any other means shall require written consent from the Transport Principal Secretary, Mr Kinyua says. Kenya’s railway freight traffic has over the years been on a steady decline, plunging 9.3% in 2016 to 1.429 million tonnes from 1.575 million tonnes in 2015. The decline happened even as total cargo arriving at the Mombasa port grew significantly, hitting a high of 10.9% in 2017 to 30.35 million tonnes. Container traffic rose from 98,586 twenty-foot equivalent units (TEUs) handled in 2016 to 1.190 million TEUs in 2017.
Simon Allison: Port deal underscores Djibouti’s reliance on Ethiopia (ISS)
Therefore Somaliland too is becoming an attractive investment destination on the coast of the Horn of Africa – and Ethiopia, in acquiring its Berbera stake, clearly agrees. What does this mean for Djibouti? Will Ethiopia incentivise local freight traffic to run through the port in which it retains a financial interest? Or is there enough cargo to go around?
Zimbabwe: Digesting ramifications of Kazungula Rail Road Project (The Herald)
Zimbabwe must put its house in order as a matter of urgency. We must urgently attend to our inefficiencies. Let us speed up the dualisation of the Beitbridge-Chirundu Highway for traffic flowing into Zambia, DRC and Tanzania. It is also important to dualise the Harare-Nyamapanda Highway for traffic heading for Malawi. Let us dare to dream of a railway line from Beitbridge to Chirundu. The talk on the dualisation of the Beitbridge-Chirundu road has taken too long and it is time action begins on the ground. Knowing our great potential by virtue of our geographical location within Sadc, our brothers and sisters are not sleeping. They are upgrading their infrastructure and this was confirmed by the Zambian Housing and Infrastructure Development Minister Ronald Chitotela on Saturday at a Press conference in Kasane. He said Zambia was constructing new roads linking it with many other countries in the Southern African Development Community region and beyond as Lusaka was opening up for business. This certainly is call to action for authorities in Harare. The time for cross-border verbal diarrhoea is over. Lastly, Zimbabwe must address system deficiencies at ports of entry like Beitbridge, Forbes Border and Chirundu.
Morocco-IMF updates:
(i) 2017 Article IV Consultation report: Growth has recovered and should reach 4.4% in 2017, although non-agricultural activity remains subdued. Inflation is low and well-anchored. The fiscal deficit is expected to decline to 3.5% in 2017 and public debt is sustainable. The current account deficit is projected to decline moderately and international reserves are at a comfortable level. Job creation has improved, but social tensions have increased in 2017, and much remains to be done to reduce structural unemployment, especially for the young, and to promote higher and more inclusive growth.
(ii) Selected Issues report: Morocco would benefit from a comprehensive and well explained tax reform strategy aiming to reduce inequality and boost growth. For this, a recommended tax reform package should combine several key components: aligning the reduced VAT rate on manufacturing goods and services to the standard VAT rate; reducing tax exemptions; raising property tax; and lowering corporate tax rates. At the same time, the targeting of social programs should be strengthened. Such a reform approach would protect the most vulnerable and help broaden the tax base, remove tax distortions, and better share the tax burden.
Over the last decade, productivity gains within the agricultural sector accounted for the bulk of aggregate productivity growth in Morocco, while about one third of the gains came from labor reallocation from low to higher-productivity sectors (structural transformation). Our analysis shows that higher structural transformation would significantly boost productivity. To facilitate labor reallocation and structural change, Morocco needs to improve its business climate, governance, access to finance, and education, and reduce its labor market rigidities. [(iii) Third review under the arrangement under the Precautionary and Liquidity Line]
AU STC on transport, transcontinental and interregional infrastructures, energy and tourism: profiled papers (21-23 March, AU)
(i) Africa Clean Energy Corridor / West Africa Clean Energy Corridor: National and regional planning to fully consider cost-effective renewable power options (pdf). Africa Clean Energy Corridor: Development of least-cost System Planning Test models to support planning for long-term power generation expansion plans (over the next 20 – 40 years) in continental Eastern and Southern African countries. These models also allow policy makers to assess least-cost investment options in light of a specific policy goal, such as a renewable energy penetration target, import independence, affordability or CO2 targets, in order to assess investments in international transmission lines for renewable energy deployment. The tools have been made available and regional training seminars were held, with the attendance of more than 50 energy planners in total. Ongoing work has also been initiated to incorporate the zoning results into regional planning in Eastern and Southern Africa power pools.
(ii) Technical paper on Grand Inga hydropower project: implementation challenges (pdf). It is important to mention that political stability of the DRC over the next decades would be an essential prerequisite to enable Grand Inga project completion, sustain the INGA 3 operation and the development of the other phases of the Grand Inga project and related power transmission corridors. The speedy completion of all technical studies including positive conclusions of the ESIA studies as well as the negotiations with partner countries committed to purchase the additional power generated by the Inga 3 new concept project would not delay nor hamper the development of the project. Finally, the capacity of DRC Government to mobilize its own contribution to this project would be encouraging.
(iii) The African Union Bioenergy Development in Africa Programme (pdf): Harmonize Regional Bioenergy frameworks and policy guidelines taking into consideration lessons learnt from the mainstreaming of Framework. The RECs should have their approach, tailored to region’s distinct situations. The ECOWAS region has developed its own bioenergy strategy a few years ago. Other regions of Africa should have their own regionally-tailored framework and strategy that are harmonized with the continental bioenergy framework and policy guidelines. Enhance the capacity of the regional organizations to mainstream bioenergy in their regions.
Better coordination of all renewable energy programmes, and it is important that the implementation of the “Bioenergy Development in Africa” should be done within the overall African strategy aimed at increasing the share of renewables in Africa. This is will be achieved through cooperation with the Regional Economic Communities and other Institutions and Initiatives. The AUC and partners will continue to advocate for strong political will and co-operation amongst Member States in the area of bioenergy development in Africa. This will ensure that bioenergy is prioritized like other sources of energy.
Today’s Quick Links: Wharton: Is the trade resurgence sustainable? World Conference on Tobacco or Health closes in Cape Town: Finance Ministers urged to prioritise funding for anti-tobacco initiatives South African Airways to scale back in bid to break even in three years Tanzania imports 44 tonnes of fruits from Egyptian suppliers Zambia exports confiscated logs in controversial timber ban OECD Sahel and West Africa Club: Gender inequality in West African social institutions UN Women’s Commission session opens: summary of Day 1 inputs Growing united: Upgrading Europe’s convergence machine |
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African Development Bank’s Economic Outlook shows decline in regional economies
The African Development Bank has expanded its flagship publication, the African Economic Outlook, with five regional reports. The regional economic studies were released in Tunis (North Africa), Abidjan (West and Central Africa), Nairobi (Eastern Africa) and Pretoria (Southern Africa).
“By offering regional approaches for the first time, we want to leverage the Bank’s expertise and give more depth of analysis and relevance to this publication,” said Celestin Monga, Chief Economist and Vice President of the African Development Bank’s Economic Governance and Knowledge Management.
“The integration of specific reports for each region reflects the importance the Bank’s focus on the regional dimensions of development and inclusive growth in Africa,” said Mohamed El Azizi, Director General of the North Africa Region.
North Africa: a positive outlook for 2018 and 2019
North Africa ended 2017 with growth of 4.9% of real GDP, up from 3.3% recorded in 2016. The region’s economic performance is above a 3.6% average for the continent, thanks to higher than expected oil production in Libya and the performance of Morocco, which saw growth rise from 1.2% in 2016 to 4.1% in 2017, on account of increased agricultural productivity.
Egypt’s macroeconomic and structural reforms led to a 4% growth in 2017. Overall, growth in the North Africa region was fueled by new high value-added sectors such as electronics and mechanics, as well as private and public consumption. The region’s outlook remains positive for 2018 and 2019, on account of structural reforms. Growth in North Africa is expected to reach 5% and 4.6% respectively in 2018 and 2019.
East Africa: the best economic performance of the continent
According to Nnena Nwabufo, the Bank’s Deputy Director General for the East Africa Region, the East African Economic Outlook highlights a number of policies that member countries must implement to transform their economies.
East Africa, with thirteen countries, recorded the continent’s best economic performance with a GDP growth rate of 5.9% in 2017 − a rate much higher than the growth recorded by the other regions of the continent, and above the continental average of 3.6%.
The good performance of the East African sub region is stimulated by six countries: Ethiopia, Tanzania, Djibouti, Rwanda, Seychelles and Kenya. The outlook remains positive for 2018 and 2019, with growth expected to continue, reaching 5.9% in 2018 and 6.2% in 2019.
Southern Africa: economic recovery started, but contrasting growth
Estimated at 1.6% on average in 2017, real GDP growth in Southern Africa is expected to improve to 2% in 2018 and 2.4% in 2019.
Deputy Director General of the Bank for Southern Africa, Josephine Ngure said: “The Southern Africa region has made considerable progress in the fight against poverty and improvements in the quality of life of its inhabitants, through the implementation of policies targeting the acceleration of industrialization and the promotion of growth and job creation.”
However, economic forecasts remain cautious, especially given the very different growth patterns of the region’s economies. The economic “locomotive” of the region, South Africa, shows signs of slow growth, and possibly declining growth, while low-income countries and the economies in transition, such as Madagascar and Mozambique, recorded more important growth.
“High fiscal deficits and rising public debt pose challenges to macroeconomic stability in several southern African countries. Governments should put in place measures to improve the mobilization of domestic resources and funds from the private sector to ensure adequate levels of development spending, stimulate growth and create jobs, especially for young people, “said Stefan Muller, Bank’s Senior Economist for Southern Africa.
West Africa: Progress in a contrasting panorama
After several good years, economic growth in West Africa stagnated at 0.5% in 2016. The decline in the price of raw materials and the unimpressive performance of Nigeria, which alone accounts for about 70% of the sub region’s GDP, were some of the key factors identified as responsible for stagnation. Economic growth in West Africa rebounded to 2.5% in 2017 and is projected to rise to 3.8% in 2018 and 3.9% in 2019. Household consumption and the relative price recovery of certain materials are expected to contribute to this performance.
Marie-Laure Akin-Olugbade, Deputy Director General of the African Development Bank for West Africa, identified job creation, especially for young people as the big challenge for the sub-region.
“The 2018 Regional Economic Outlook for West Africa presents a comprehensive analysis of the economy and the labor market of 15 countries, focusing on macroeconomic stability, employment and poverty of the population living in West Africa. Let us not forget that some of the countries in this sub-region are facing enormous security challenges,” she said.
Central Africa: Better prospects after a modest performance
The Central African region recorded 0.9% real GDP in 2017, the lowest growth rate of the continent, although it represents a relative improvement over growth of 0.1% in 2016. This sub regional performance masks many disparities between countries: relatively good growth for Cameroon and the Central African Republic, and very low growth for Equatorial Guinea and Congo.
The economic difficulties in Central Africa are largely due to lower raw material prices, which some countries in the region are heavily dependent on, as well as recurring security threats in others.
The outlook for 2018 and 2019 is more encouraging, fueled by rising world prices for raw materials and domestic demand. According to the Bank’s projections, real GDP growth in Central Africa is expected to reach 2.4 percent in 2018 and 3 percent in the following year. Other enabling factors include sound macroeconomic management and a more favorable institutional environment.
“With improvements in the economic situations of Congo and Equatorial Guinea, the economic performance of the sub-region is expected to improve in 2018 and 2019. It would be good to include this improvement over time through the diversification of economies of the sub region,” said Racine Kane, Deputy Director General of the African Development Bank for Central Africa.
The African Economic Outlook is a flagship publication of the Bank, which provides an overview of the economies of the 54 African countries. The general launch took place on January 17 in Abidjan, Côte d’Ivoire. A second presentation ceremony was held in Addis Ababa on 26 January, on the sidelines of the Thirtieth Summit of the African Union.
Southern Africa Economic Outlook 2018
GDP growth and key drivers
Over the last two decades, the economies of Southern Africa experienced two distinct growth patterns. Before the 2008-09 global recession, they experienced moderate growth, reaching 6.5 percent in 2007, just below the regional growth target of 7 percent. These were the region’s high-growth years, underpinned by high commodity prices and favorable domestic conditions, especially in low-income economies, some graduating to lower middle-income (Zambia).
The sharp decline in growth in 2008 and the mild recession the following year were mainly due to the global recession, which had a large contractionary effect on global demand, especially for the region’s main exports. This constrained incomes and cut jobs in mining. The spillovers to other sectors were considerable, as growth faltered, reaching a nadir of 0.08 percent in 2009. Although growth has since recovered, it has remained below the pre-crisis levels and for the most part been on a downward trend. This slowdown has reinforced structural weaknesses in the region, highlighting the imperative of strengthening alternative sources of growth.
Individual countries contributed differently to the overall trend – some are consistent as growth leaders while others trade places. Before the global crisis, Angola, Mozambique, and Namibia exhibited robust growth trends that collectively outperformed the region’s growth expectations. The postcrisis recovery has been largely led by smaller economies, posting moderate but consistent growth. Clustering reveals weakgrowth economies, average-to-moderate growth economies, and expansive-growth economies.
The notable exception is the persistently weak growth in South Africa, weighing down the regional average. Apart from its short-lived post-crisis rebound, South Africa has registered weak and declining growth since 2011. In the last decade, South Africa has consistently posted the lowest growth rates in the region.
While real GDP gains from select economies offer a positive outlook, they are inadequate and do not create sufficient momentum to significantly alter the region’s medium-term growth trajectory, which remains fairly flat. With population growth largely unchanged across the region, per capita income has tracked real GDP growth’s low levels.
The neighborhood effects of South Africa’s slow growth have been significant, particularly on Namibia and Swaziland, the latter’s situation compounded by domestic macroeconomic imbalances characterized by large fiscal deficits. In contrast, Lesotho has grown at respectable rates, benefiting from strong manufacturing activity, boosted by AGOA exports.
The post-crisis recovery in the region generally reveals great diversity in growth patterns, responses to exogenous shocks, and domestic macroeconomic conditions. For instance, despite mounting debt, growth in Mozambique accelerated to 4.7 percent in 2017 from 3.8 percent in 2016, buoyed by mineral exports. Agriculture also performed strongly, bringing much needed relief to inflation, dominated by food inflation. But its fiscal deficit remains elevated, and fears of debt distress could unwind growth’s gains. Per capita income growth remained in positive territory at 2 percent in 2017 and is projected to rise to 2.6 percent in 2018, as GDP growth accelerates to 5.3 percent. The main challenges in Mozambique stem largely from financing constraints amid spending pressures and high external debt burdens, estimated at about 90 percent of GDP in 2016.
Real GDP growth in Namibia is projected to more than double to 2.6 percent in 2018 from 0.8 percent in 2017 and in Swaziland from 1.0 percent to 2.5 percent. Namibia will benefit from recovery in the global prices of its main export commodities.
The change in leadership in Zimbabwe has renewed optimism about the country’s ability to reclaim its position in the region. The budget presented to parliament offered glimmers of hope to investors on prospects of new reforms, especially on minimal investment thresholds for external investors. But the economy is still experiencing financial constraints, and debt remains high, with accumulated arrears. So, real GDP growth is projected to remain weak at 1 percent in 2018, with a marginal gain of 0.2 percentage points the following year. This projection could be reversed however, depending on the outcome of the budget pronouncements and the country’s re-engagement with the international community, especially its creditors.
Policy challenges
Structural policies
Boosting structural transformation and industrialization
From a long-term perspective though, transformation of the economies of the region appears to have been toward services not industry. A large share of the growth in (non-farm) employment was in household enterprises, not in modern industrial enterprises.
Policies should, thus, focus on speeding up industrialization in the Southern African countries. Policy harmonization is necessary across regional countries. In addition, policy changes should ensure efficiency in the linkages between the various sectors.
Countries in the region should seize new opportunities emerging from cooperation and collaboration with other economies. In this regard, developing a regional strategy can facilitate the participation of regional firms in global value chains through access to finance, technology, and markets.
Countries also need to strengthen fair trading and competition policies and regulations, since anti-competitive practices are common. Competition policies and laws should level the playing field in the market.
Collaborative measures should also be developed to support the region’s drive toward industrialization by cooperating in public procurement. That would reduce the tendency to exclude regional suppliers from participating in public bids in pursuit of national and local development objectives.
Policy recommendations to promote Southern Africa’s industrialization include:
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Identify sectors with good potential for value addition and transformative growth. Madagascar and Mozambique have considerable untapped potential for agro-based and blue economy-led industrialization. Others enjoy endowments of oil, gas, and minerals.
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Develop sectors and industries with an identified potential for industrialization and largescale employment as a top priority, notably by providing infrastructure, putting in place adequate legal and regulatory environments, and imparting the right skills.
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Design tailor-made support policies and schemes through tax-free land and other incentives, promote business incubators, build industrial clusters and parks, and establish special economic zones.
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Enable and promote the transfer of necessary know-how and technology from abroad to boost productivity, with South-South cooperation as entry points.
Modernizing Southern Africa’s agricultural sector – Feed Southern Africa
Agriculture remains a significant source of income and employment for most poor families in the region. So, investments that boost agricultural productivity and technology in the sector should catalyze the conversion of small-scale activities from the informal to the formal sector. Governments in the region should foster a self-reinforcing catalytic economic growth process – investing in agricultural innovations and vocational skills to support and promote youth self-employment as a viable path to economic growth.
Large businesses have operations extending across the region, and are linked into global value chains and international production systems. Economic policies must engage with the interests of these firms if they are to influence their decisions toward investing in productive capabilities. Large firms can realize economies of scale, but they can also exert market power to exclude smaller firms and entrants.
Reaping the benefits of Southern Africa’s rich gas, oil, and mineral resources – Power Southern Africa
Mozambique could become one of the largest economies in Africa when production of natural gas in the north reaches its peak in 2028. The country’s economy is expected to grow at 24 percent a year, and half of Mozambique’s GDP might come from natural gas. Fast-tracking natural gas production and improving budget management can maximize the benefits in human development outcomes.
A portion of the gas should be allocated to meet local demand, especially for power generation, processing, and industrial needs. Mozambique should improve sector governance, put in place a policy framework, and provide fiscal incentives for investments in infrastructure to harness the benefits for inclusive development.
Policy recommendations to manage Mozambique’s gas reserves include:
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Develop specific domestic gas utilization policies.
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Target policies that promote interregional trade of gas resources.
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Develop gas revenue management policies.
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Promote policies that pursue industrial development using gas, and develop industrial zones where gas can be supplied to several industries.
Angola is Africa’s second largest oil producer, producing 1.8 million barrels of oil per day on average, with an estimated proven oil reserve of 11.6 billion barrels. Although Angola produces a lot of oil, it still imports petroleum products. It needs to develop policies that sustain the economy using petroleum resources processed in the country. The recent restructuring of the national oil company and the general management of the oil and gas sector is likely to improve the oil sector’s performance.
Policy recommendations to ensure that Angola’s oil resources are used transparently and effectively include:
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Design policies that review institutional frameworks to separate and enhance clarity on the roles of different institutions in the oil sector.
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Develop petroleum revenue management policies.
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Favor value addition for petroleum resources in order to satisfy the domestic market.
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Promote the maximization of gas resources to generate electricity.
South Africa is endowed with a variety of mineral resources and has a well-developed mining and quarrying industry based on over 100 years of experience, especially in gold, diamonds, and coal mining. While mining is spread across the country, there is a greater concentration of both mining and industry in the northeast covering the Gauteng and Limpopo provinces. Gauteng province is a major industrial area that developed largely as a result of gold and coal mining.
Policy recommendations to allow the mining and quarrying industry to respond to external and internal developments include:
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Boost the low investor confidence and therefore increased difficulties in raising capital due in part to the downgrading of the country’s credit ratings.
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Improve investor perceptions of regulatory uncertainty. For long-term sustainability, investments are required in exploration to replace or replenish depleted resources
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Develop local content policies to increase local communities’ benefits from the mining industry.
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Rehabilitate disused mines. Some mines that have not been fully rehabilitated are encouraging illegal mining, which causes both safety issues and risks of criminal activity such as illicit dealing in minerals and money laundering.
Integrating Southern Africa
The Southern Africa region needs to coordinate growth, trade, and job creation policies to engender a multiplier effect. Shifting resource exporters higher on the global value-added chain from raw material conduits to intermediate product processors can provide economies of scale, a base to defray upfront investment costs, and an organic middle-skill job creation engine.
In Zambia, this would involve exporting intermediate and processed copper goods in addition to raw copper. New regional trade agreements with emerging high-demand economies like China could provide ready markets for such initiatives.
Challenges such as food security, energy, water, and transport and communications infrastructure require solutions integrating the region. For example, the Lesotho Highlands Water Project will generate hydroelectric power for Lesotho, while increasing the volume of water transferred to South Africa from the current 10 billion cubic meters a year to about 15 billion. It comprises dams, hydropower stations, and tunnels between South Africa and mountainous, landlocked Lesotho.
More coordinated and robust regional infrastructure corridors such as water, ports, roads, and rail can integrate economies within the region, as can regulatory and legal frameworks for access to and efficient pricing of such services.
Increased regional and international trade will require significant investment in standards, quality assurance, accreditation, and metrology. Strengthening the regional SQAM infrastructure will also prevent the dumping of cheap, substandard manufactured goods in the regional market. A regional approach to SME support and development can promote the formation and growth of the sector to participate in regional trade and global supply chains.
Policy recommendations to promote regional integration in Southern Africa include:
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Undertake rigorous political economy analysis of factors preventing progress on the region’s integration agenda, including the identification of winners and losers. This will help policy makers understand the real bottlenecks to regional integration and allow the design of policies and reforms to accelerate the process of integration.
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Strengthen regional infrastructure, notably the multimodal transport corridors such as the Maputo Development Corridor, North-South Corridor, Dar-es-Salaam Corridor, Beira Corridor, and the Nacala Corridor, which offer great potential for growth and development.
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Remove nontariff barriers to trade, such as cumbersome custom procedures, and strengthen soft infrastructure, such as one-stop border posts and single window information portals.
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First Ordinary Session of the African Union STC Sub-Committee on Energy
The African Union, in collaboration with Government of the Islamic Republic of Mauritania, is organizing the First Ordinary Session of the STC Sub-Committee on Energy of the STC on Transport, Intercontinental and Interregional Infrastructure, Energy and Tourism (STC-TTIET), from 21-23 March, 2018 in Nouakchott, Mauritania.
The overall objective of the STC-TTIIET Sub-Committee on Energy meeting is to take stock of the outcomes of the July 2017 summit and the approved Action Plans on energy. The STC-TTIIET Sub-Committee on Energy will deliberate on a Monitoring and Evaluation (M&E) System to follow-up on the implementation of the Action Plans on energy.
The Meeting is composed of a 2-day meeting of experts and a Ministerial Session on the last day. The STC-TTIIET Sub-Committee Meeting on Energy will be attended by (1) Ministers of Energy from Member States; (2) Continental and Regional Organizations; (3) Energy Experts; (4) Development Partners; (5) academia and Civil Society organisations.
Background
The First Ordinary Session of the AU Specialized Technical Committee on Transport, Transcontinental and Interregional Infrastructure, Energy and Tourism (STC-TTIIET) was held in March 2017 in Lomé, Togo. The STC-TTIIET in accordance with its rules of proceedings, adopted the creation of three sub-committees including: (a) Sub-Committee on Energy, (b) Sub-Committee on Transport and (c) the Sub-Committee on Tourism. The STC-TTIIET also adopted Plans of Actions for the various sub-sectors.
The outcomes of the Lomé STC-TTIIET were considered by the AU Summit in July 2017, with recommendation for the AUC to implement the recommendations of Lomé STC-TTIIET. In this context, the Bureau of the STC-TTIIET held its first meeting in Addis Ababa on 25-26 July 2017 and as an outcome, recommended the operationalization of the sub-committees of the STC-TTIIET.
The Energy sector Plans of Action covers key areas including energy technologies, policies, regulations and infrastructure development. There are several on-going projects at the continental and regional levels including the Programme for Infrastructure Development in Africa (PIDA), the AfDB New Deal on Energy, the Africa Clean Energy Corridor, the Africa Renewable Energy Initiative (AREI), the Geothermal Risk Mitigation Facility, the Programme Harmonisation of Regulatory Frameworks in the African Energy Sector, the Programme on Africa Bioenergy Policy Framework and Guidelines, among others.
The major role of the STC Sub-Committee on Energy is to monitor and evaluate the implementation of these vital continental and regional projects including ensuring availability of adequate financial and human resources for implementation.
The main decisions of the Lomé STC-TTIET on energy technologies include the operationalization of the Africa Renewable Energy Initiative (AREI) and the AfDB New Deal on Energy. The main decisions on energy policies and regulations include the continued implementation of the programme on Harmonised Regulatory Frameworks in the Energy Sector and the Sustainable Energy for All (SE4ALL) in Africa Initiative.
The full set of conference papers is available here.
AFREC Technical Paper on African Energy Information System and Database
Energy is essential for human development and reliable energy information is imperative for formulating sound energy policies and designing strategic development and investment plans. However, the quality and depth of energy information and statistical databanks available in Africa are either absent or fall below the required level of international standards.
Therefore, one of the prime responsibilities of the African Energy Commission (AFREC) is to create and manage a comprehensive energy database and Information System for Africa through the establishment of the “African Energy Information System and Database” (AEIS) and make it available for use by the end-users in the African Member States and world energy communities. AFREC has to demonstrate this task in most effective manner in order to be recognized and supported by the highest levels of African governments and specialized institutions.
It is evident from the daily practices that reliable information is fundamental to decision making process associated with all energy activities. No policies can be developed without careful analysis of the situation under consideration and that requires information and perfect data. The implication though is that data and information must be collected and prepared in a usable format, continually updated and disseminated through various channels to the end users. AFREC has to undertake such a task through a framework of networking and partnership with various African and international partners and stakeholders.
On the other hand, while data and information is but one piece of the larger range of energy development process, provision of adequate training and capacity building to energy experts and energy statisticians in the African Member States remains essential to the overall development practices.
It is within this context that AFREC has taken all measures to establish and manage the AEIS and to provide training on data collection and energy balances to its Focal Points and energy statisticians in the African ministries in charge of energy. The information and inter-linkages with good training in data energy collection, refinement and delivery to a central databank at the AFREC’s Headquarters represent a central issue in the establishment of the energy databank upon which the Information System will be structured around.
Implementation of the AEIS
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The objective of the creation of an African Energy Information System and Database (AEIS) as instructed by the AFREC’s Convention is to “Design, create and update an energy continental data base and facilitate rapid dissemination of information and exchange of information among Member States, as well as among the Regional Economic Communities (RECs).
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Since the creation of such system will be the first ever in Africa AFREC collaborated with the International Energy Agency (IEA), which is famous globally in the operation of energy statistics database to support AFREC with technical knowledge, know-how and training of its National Focal Points in the Member States. AFREC also collaborated with the Ministers in-Charge of Energy in Africa to establish a network of National Focal Points in the ministries in-charge of energy around the continent to collect the energy data of their countries and assist in the creation of the system.
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While AFREC adopted the creation of a series of energy databases it started in 2012 with the creation the “African Energy Statistics Database” and since then it published annual editions for 2012, 2013, 2014, 2015, 2016 and 2017.
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In 2014, AFREC started creation of additional African energy databases including the following 8:
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African Energy Infrastructure Database
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African Energy-related Socioeconomic Database
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African Energy Efficiency Indicators Database
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African Solar Energy Radiation Database
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African Wind Energy Resources Database
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African Hydropower Resources Database
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African Geothermal Energy Resources Database
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African Bioenergy Resources Database
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In addition to the above databases AFREC also planned to create the following databases:
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African Hydrocarbons Resources Database (Oil, Gas, Oil / Gas-Shale, Refineries, Pipelines / Interconnections)
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African Coal Resources Database (consumption rates, total reserves, power plants)
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African Electricity Sector Database
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African Energy Prices Database (Crude Oil, Oil Products, Electricity, Gas, Coal, Wood fuel, Charcoal)
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African Energy-related Environmental Database (Carbon Emission, Climate Change)
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African Nuclear Energy Database (power plants, prospects, uranium deposits)
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In order to undertake this program AFREC in collaboration of the Energy Ministers established National Focal Points for collecting national data on energy statistics in most Member States and there is process for establishing another group of National Focal Points for collecting national data of energy efficiency indicators of which 18 countries have already nominated their experts.
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The African Development Bank (AfDB) established a data Portal to AFREC free in its system which is also managed by its technical experts. The cost of such a system is US$100,000.
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AFREC in collaboration with the IEA provided the National Focal Points with continuing regional and continental training and capacity building session in energy statistics and database. AFREC/IEA provided training to 474 energy statistics experts in the Member States
Africa Clean Energy Corridor / West Africa Clean Energy Corridor
The Africa Clean Energy Corridor (ACEC) is a regional initiative that seeks to secure the accelerated development of renewable energy potential and cross-border trade of renewable power within the Eastern Africa Power Pool (EAPP) and Southern African Power Pool (SAPP). The initiative builds upon the strong political commitment of African leaders to strengthen regional institutions and transmission infrastructure, forming large competitive markets and lowering costs across production sectors. By creating a larger regional electricity market, the ACEC could attract investments to meet 40-50% of power needs in the EAPP and SAPP regions by 2030. Combined efforts will also diversify resource availability, improve energy security and foster investment opportunities and job growth.
Scaling up renewable energy also offers a comprehensive opportunity to avoid lock-ins with carbon-intensive infrastructure and leapfrog towards a low-carbon future. Such region-wide renewable energy deployment could cut the annual CO2 emission level in 2030 by 310 Mega tonnes (Mt), translating into 2,500 Mt savings of cumulative CO2 emissions between 2010 and 2030 while increasing electricity supply by 2.5 times.
Development of the ACEC is guided by a Communiqué endorsed by Ministers and heads of delegations from the EAPP and SAPP countries in January 2014. Since then, support for the initiative has expanded exponentially, with the additional engagement of more than 30 governments, regional organizations, development partners and financial institutions.
The Communiqué called for an Action Agenda with five main pillars of (i) Zoning and Resource Assessment to identify sites for renewable power generation in areas with high resource potential and suitable transmission routes; (ii) National and Regional Planning to fully consider cost-effective renewable power options; (iii) Enabling Frameworks for Investment to open markets and reduce financing costs; (iv) Capacity Building to plan, operate, maintain and govern power grids and markets with higher shares of renewable electricity generation; and (v) Public Information and Awareness Raising on how the corridor can provide secure, sustainable and affordable energy.
In response to the high interest from other African sub-regions and benefitting from the experiences gained during the initiation and development of ACEC, IRENA initiated the process in 2015 to expand the initiative to West Africa through the West Africa Clean Energy Corridor (WACEC). WACEC aims to support the region’s ongoing efforts to address the key energy challenges, including, increasing power demand-supply imbalance, high cost of power generation, and poor access to energy in coordination and collaboration with all relevant stakeholders.
The African Union Bioenergy Development in Africa Programme
The African Union Commission (AU) in partnership with the UN Economic Commission for Africa (ECA) and NEPAD Planning and Coordinating Agency (NPCA) initiated a Programme to modernize the bioenergy sector in Africa, through a consultative process spanning several years and involving a cross section of stakeholders and African member States. This culminated in the development of the African Bioenergy Framework and Policy Guidelines in 2013. The purpose of the Framework is to (a) build consensus on shared framework that inspires and provides guidance to individual countries and regions in developing bioenergy policies and regulations; and (b) enhances awareness among African policymakers and the civil society about the need for environmentally friendly and socially acceptable bioenergy development policies.
There are a number of outputs and generated by the Programme since 2011. These programmes were systematically implemented to build capacity and also expose some of the best practices on the African continent. The ultimate expected accomplishment was threefold:
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To ensure that that bioenergy energy development is at the center of the policy development and that countries and regions put priority in modernizing the bioenergy energy sector.
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Capacity is built across African stakeholders, particularly policy makers, civil society, local private sector, academia and community-based organizations
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To deliver demonstration projects that are centered on improving bioenergy for the household and transport sectors.
Lessons learned in the implementation
While the projects achieved several important milestones, there were notable drawbacks that could influence its impacts at national and regional level. The first budget limitations at the Institutional level. There were noted financial limitations at the AUC and partners’ level in reaching out to a wider range of stakeholders including project developers; rural areas, civil society, women and youth. As identified above the greatest setback was limited expertise in project development and packaging, as well as how to finance such capacity. Project developers, both public and private identified limited capacity to design and implement bioenergy programmes, and as such, their proposed projects were very small and difficult to finance.
Secondly, and related to the above, bioenergy projects are generally difficult to be attract normal financing or investment. The challenge is therefore how to mobilize required financing for projects, as well as attracting private sector participation. Lastly, there general lack of awareness at all levels about new and modern bioenergy projects. This prevents these projects getting full attention of the public and policy makers, like other renewable energy solutions such as solar and wind projects.
Technical paper on Grand Inga hydropower project which is one of the Agenda 2063 Flagship Projects
One of the Agenda 2063 Flagship Projects is the “Grand Inga Hydropower Project” in D.R. Congo. It is under preparation following an overall scheme which should reach by stage a total capacity over 42,000 MW and designed to contribute to electricity supply to the entire continent.
Its first phase named Inga 3 will be equipped for 4,800 MW with low head dam, with an option of 7,800 MW with high head dam. Other five phases, Inga 4 up to Inga 8, are also envisaged. It is worth recalling that Inga 1 is under operation since 1972 with a capacity of 342 MW and Inga 2 since 1982 with 1424 MW.
Given the today very low electricity access rate of 15% only, the DRC government is committed to enhance hydropower generation, on the identified many big and/or medium size sites, to cover the increased national demand, expand the access up to 30% by 2025 and also export electricity to neighboring countries in order to support socio-economic development of the country.
Therefore, to meet these objectives, the Government has embarked on following policy and programmes: liberalization of the electricity sector, enhancing Public Private Partnerships (PPP), rehabilitation of existing power plants such as Inga1 and Inga2, improving and expanding transport and distribution network, undertaking new power plants construction, being big like Inga Dam or medium size projects, as well as enhancing regional cooperation in the energy sector.
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IMF Executive Board 2017 Article IV Consultation with Morocco
On December 13, 2017, the Executive Board of the International Monetary Fund concluded the Article IV Consultation with Morocco.
Following last year’s drought, economic growth has picked up in 2017 and is expected to reach 4.4 percent, mostly driven by a significant rebound in agricultural activity while non-agricultural activity remains subdued. The unemployment rate increased to 10.6 percent in Q3 2017 (year-on-year) while youth unemployment remains high at 29.3 percent. Headline inflation (year-on-year) is expected to decline to 0.6 percent in 2017, reflecting lower food prices.
Following a marked deterioration in 2016, the current account deficit is projected to improve in 2017 to 3.9 percent of GDP. This primarily reflects Morocco’s global environment, particularly the stronger recovery in Europe, and strong export growth (6.5 percent), mostly due to the good performance of food product and phosphate and derivatives exports. International reserves are expected to remain comfortable, at about six months of imports.
On the fiscal side, the consolidation process continues and developments as of end-October 2017 were broadly positive. Tax revenues performed better than projected, but grant revenues were lower than anticipated. Public spending on wages and interest payments was below expectations and capital expenditures decelerated (by 2 percent year-on-year).
Banks are well capitalized, and the risks to financial stability are limited. Nonperforming loans remain relatively high but they are closely monitored and are well provisioned. Regulatory limits to reduce credit concentration as well as collaboration with cross-border supervisory bodies to contain risks related to Moroccan banks’ expansion in Africa are being strengthened. Morocco’s medium-term prospects remain favorable, with growth expected to reach 4.5 percent by 2021.
However, risks remain elevated, and relate mainly to growth in advanced and emerging countries, geopolitical tensions in the region, world energy prices, and global financial market volatility. Stronger medium-term growth will hinge on continued implementation of comprehensive reforms regarding labor market efficiency, access to finance, quality of education, public spending efficiency, and further improvements to the business environment. Strengthening the social safety nets system will also be crucial to achieve more inclusive growth.
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tralac’s Daily News Selection
Featured tweet, @Trade_Kenya: PS Trade Dr Kiptoo this morning conducted an induction seminar for 11 newly appointed ambassadors on foreign policy, negotiations and economic diplomacy
Underway, in Kampala: AERC’s Senior Policy Seminar on the theme Regional Integration in Africa. For tweeted updates: @AERCAFRICA, #AfricaIntegration
Starting tomorrow, in Nairobi: EAC experts meeting on trade in services
Diarise: The inaugural AfCFTA Business Summit (20 March, Kigali) on the theme leveraging the power of business to drive Africa’s integration. The draft abridged programme (pdf)
African trade ministers adopt legal instruments to establish the African Continental Free Trade Area (UNECA)
Strong interest has been expressed by some member states to host the AfCFTA Secretariat that will oversee the implementation of the agreements. Commenting on the outcome of the AMOT meeting, David Luke, coordinator of the African Trade Policy Centre who led ECA’s delegation said: “The sceptics have been proved wrong. What has been achieved in the conclusion of the first phase of the AfCFTA negotiations is remarkable. A continent-wide market is being opened for trade and investment. This is a massive game-changer. There will be far-reaching impacts on the business environment, the development and consolidation of supply chains, and the potential to lift millions out of poverty. The AfCFTA will further ensure policy coherence in Africa’s trade relations with international partners”.
The second phase of the AfCFTA negotiations, which will focus on investment, competition policy and intellectual property rights, is slated to commence later this year.
Fake processed food is becoming an epidemic in African urban life (Quartz)
A number of issues are driving the rise of food fraud in Africa. First, the increasing complexity of food systems, ingredients with long supply chains and varying levels of scrutiny and standards, makes it very difficult to trace the origins of food products. Second, local manufacturers face increased competition from cheaper imports, which often have lower standards for African destinations, and so they may use inferior or even unregulated ingredients in their products to reduce their production costs. Third, weak regulatory standards, systems and tracking mechanisms create loop holes in which counterfeiters can thrive.
What needs to be done: African governments must set high regulatory standards for food content and labeling, track and prevent counterfeit imported and local produced food. Like the global war waged against counterfeit drugs, actions against food fraudsters must be bold, swift and unrelenting. The African Union should establish a Food Fraud Network, similar to that of the European Union, to detect cross-border fraud, and train food inspectors, police, customs officers and others. The African Regional Economic Communities must sign formal trade agreements with their counterparts in Europe, Latin America, Asia and the Americas focused on food safety and food fraud standards. [The author, Ndidi Okonkwo Nwuneli, is Director of AACE Food Processing & Distribution Ltd, Founder of LEAP Africa and a 2018 Aspen Institute New Voices fellow]
Namibia: Budget Speech, 2018-2019 (MoF)
For FY2018/19, total revenue is estimated at N$56.70bn, about 1.3% decline from the estimated outturn for 2017/18, due to the decline in SACU revenue and the slowdown in diamond corporate tax and related income as a result of operational factors. Over the MTEF, revenue growth is projected to average 3.4%, at N$57.7bn in FY2019/20 to reach N$61.3bn by FY2020/21. As a proportion of GDP, total revenue is estimated to moderate to 30.7% in FY2018/19 from 33.0% in FY2017/18 and average around 30.0% over the MTEF mainly on account of the expected decline in SACU receipts. The most significant downside risks to revenue regards SACU receipts, which are projected to decline sharply by a cumulative of 18% during the next two years. As such, domestic replacement revenue, combined with increased tax administration effort is necessary to mitigate revenue volatility and support the budget implementation.
Other macroeconomic fundamentals have recorded improvements since 2016. The merchandise trade balance has reduced by 51.6% from N$17.6bn during the second half of 2016 to N$8.5 billion during the second half of 2017, thanks to increased exports. Similarly, the current account deficit has narrowed to about 1% of GDP, and international reserves have firmed up to 4.7 months of import cover by the end of 2017. [Download related Budget documentation, here; Namibia to scrap preferential tax; Deloitte’s Namibian Budget 2018/2019 commentary]
Zimbabwe part of Kazungula Bridge project (ZNBC)
Zambia and Botswana have agreed to allow Zimbabwe to join the Kazungula bridge project across the Zambezi river, in phase two of the works. And the three countries have further agreed to set up a one-stop border post at Kazungula in Southern province. The decision was made on Saturday, after President Edgar Lungu held talks with Botswana’s President, Lieutenant-General Seretse Khama and Zimbabwe’s President Emmerson Mnangagwa. [Zimbabwe, Botswana in multi-million dollar rail talks]
Mozambique: Bulk ore must go by rail and not road – Minister of Transport (Club of Mozambique)
Minister of Transport and Communications Carlos Mesquita is pushing for the speedy implementation of measures to move road freight to the rail system, with a view to mitigating the impact of heavy goods traffic on National Highway Number Four (EN4) – including road degradation, congestion, accidents, increased operational costs for the transport of goods and passengers and environmental problems. Among the measures identified are the creation of a dry port to function as a buffer zone for better traffic management, the extension of the Ressano Garcia and the Quilómetro Quatro border posts, and improved handling of rail freight at the Port of Maputo. Mesquita was speaking at the opening of a transport forum on congestion organised by Maputo Port Development Company.
Presentations to the Parliamentary Portfolio Committee on Trade and Industry by Dr Rob Davies (SA Minister of Trade and Industry): pdf Minister response to SONA 2018 (1022 KB) ; pdf Outcome of the 11th WTO Ministerial Conference (289 KB)
Anzetse Were: Hurdles facing Africa innovation (Business Daily)
Last week, I attended the Innovation Summit organised by The Economist magazine. The event focused on digital transformation for accelerated growth in Africa. There are several points I want to share concerning the interface between the public and private sector, and innovation. [FT Africa Payments Innovation Summit: Africa’s banks lag behind on innovation in financial services]
International Solar Summit helps India take on leadership role (Economic Times)
Consider the presence of Western African leaders in this Summit besides the participation of leaders from Seychelles, Mauritius, Djibouti, Somalia and Comoros (Eastern Africa). While India has significant footprints in Eastern and Southern Africa, Delhi is keen to raise its profile in Western and Central Africa - Mali, Niger, Chad, Burkina Faso, Togo, Ghana, DRC (Central Africa), Gabon, Rwanda and Equatorial Guinea.
Top leaders of all these countries were present at the Summit which India put together after months of painstaking efforts. Interestingly, all these nations except Rwanda, Equatorial Guinea and Ghana were French colonies, and Paris still maintains strong ties with these countries. Modi made it a point to hold separate meetings with leaders of each of these nations over this weekend. While India is partnering with Japan in its quest to expand development and infrastructure initiatives in Eastern Africa, France is being considered as India’s partner in Western Africa or largely Francophone Africa. [Modi presents 10-point Action Plan at Solar Summit with French President Macron]
Enhancing cross-border coordination and cooperation in the Horn of Africa (UNDP)
The $10m three-year project for the Support for Effective Cooperation and Coordination of Cross Border Initiatives in South West Ethiopia – North West Kenya, Marsabit – Borana and Dawa, and Kenya – Somalia – Ethiopia, will be implemented by the UNDP in collaboration with UNEP, in partnership with IGAD. The objectives of the programme include strengthening regional policy frameworks, structures, and protocols for cross border cooperation between national and local governments; capacities of communities, local governments and civil society to fully engage in processes for development planning and results are built; and to ensure effective cooperation and coordination, monitoring and evaluation of cross-border initiatives including involvement of relevant national and regional actors in these processes.
Tanzania-Kenya: Unified Namanga border post set for a launch (The Citizen)
Finally, the unified Namanga one stop border post will be officially launched on 20 April this year. Unveiling of the facility, to be jointly operated by Kenya and Tanzania, has been delayed due failure to install the electronic equipment in time. Sources close to the EAC secretariat said preparation for the launch of one of the busiest border posts in the region were in high gear. The facility at Namanga is one of the dozen upgraded structures at the key border areas across the region.
Today’s Quick Links: Pradeep S. Mehta: Trade in an increasingly protectionist world South Africa to make tariffs submission as Trump leaves door open for exclusions South Africa’s Sanlam looks for more African deals after $1.1bn investment in Morocco’s Saham Zimbabwe: Minister to tackle border chaos Kinshasa’s informal economy is trapped by a corrupt “tax” system for powerful public officials Carter Centre’s 46-page final report on 2017 Kenyan elections AUC-Russia joint communique |
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Agreement establishing the African Continental Free Trade Area (AfCFTA) concluded by AU Ministers of Trade meeting in Kigali
The Minister of Trade and Industry, Dr. Rob Davies and Deputy Minister Mr. Bulelani Magwanishe have arrived back in South Africa after attending the African Union Ministers of Trade (AMOT) meeting in Kigali, Rwanda.
The African Ministers of Trade considered and approved, for submitting to the Extra-Ordinary Summit of the African Union (AU) Heads of State and Government, the Agreement Establishing the African Continental Free Trade Area (AfCFTA) as well as the Protocols on Trade in Goods and Trade in Services that will form part of the Agreement.
The Ministers also approved a Work Programme for concluding the outstanding issues for implementation that will start after the Extra-Ordinary Summit of the AU Heads of State and Government that will take place on 21 March 2018 in Kigali, Rwanda.
The negotiations were launched in Johannesburg in June 2015. The AU Assembly of Heads of State and Government held in January 2018 in Addis Ababa, Ethiopia, agreed to hold an Extraordinary Summit on 21 March 2018 to consider the AfCFTA legal instruments and Declaration launching the Agreement Establishing the African Continental Free Trade Area.
The envisaged AfCFTA offers an opportunity to create larger economies of scale, a bigger market and improve the prospects of the African continent to attract investment. South Africa is, therefore, committed to a coordinated strategy to boost intra-Africa trade and to build an integrated market in Africa that will see a market of over 1 billion people with a GDP of approximately US$2.6 trillion.
Beyond the Tripartite Free Trade Area (TFTA), the AfCFTA will provide new export opportunities for South African products and services in West Africa and North Africa.
The AfCFTA is being pursued under the development integration approach. This combines market integration with industrial and infrastructure development to address Africa’s productive capacity and supply side constraints, promote the diversification of Africa’s export base from dependence on raw materials to value-added products, as well as alleviate the chronic infrastructure deficit in Africa.
The AfCFTA is also expected to facilitate the movement of goods and services among African countries. It will also result in harmonisation of customs documentation and processes thus enhancing trade facilitation.
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African Trade Ministers adopt legal instruments to establish the African Continental Free Trade Area (AfCFTA)
The fifth meeting of African Union Ministers of Trade (AMOT) chaired by the Minister of Trade and Investment of Nigeria, the Honourable Okechukwu Enelamah took place in Kigali on 8-9 March, hosted by the Government of Rwanda. The President of Rwanda is the current Chair of the AU Assembly of Heads of States and Governments.
The meeting adopted the legal instruments constituting the African Continental Free Trade Area (AfCFTA) namely (a) the Agreement Establishing the AfCFTA (b) the Protocol on Trade in Goods (c) the Protocol on Trade in Services and (d) the Protocol on Rules and Procedures for the Settlement of Disputes.
The AMOT meeting also adopted the Transitional Implementation Work Program which includes a built-in agenda for the finalization of some annexes to the Protocol on Trade in Goods and other arrangements for the operationalization of the AfCFTA.
These instruments are to be recommended to the African Union Executive Council for adoption by the Assembly of Heads of State and Governments at the extraordinary Summit that is scheduled to be held in Kigali on 20-21 March to sign the legal instruments and mark the conclusion of the first phase of the AfCFTA negotiations.
The AMOT meeting further considered and approved the Kigali Declaration for the Launch of the AfCFTA for transmission to the African Union Executive Council and adoption by the Assembly of State and Governments. This is a statement that reaffirms the integrity of the negotiations and the commitment of all AU member states to proceed to the ratification of the legal instruments.
Strong interest has been expressed by some member states to host the AfCFTA Secretariat that will oversee the implementation of the agreements.
Commenting on the outcome of the AMOT meeting, David Luke, Coordinator of the African Trade Policy Centre who led ECA’s delegation said: “[T]he sceptics have been proved wrong. What has been achieved in the conclusion of the first phase of the AfCFTA negotiations is remarkable. A continent-wide market is being opened for trade and investment.
“This is a massive game-changer. There will be far-reaching impacts on the business environment, the development and consolidation of supply chains, and the potential to lift millions out of poverty. The AfCFTA will further ensure policy coherence in Africa’s trade relations with international partners.”
In a special ceremony during the AMOT meeting, the AU Trade and Industry Commissioner, H. E. Albert Muchanga awarded certificates of recognition to the chief negotiator and alternate of each member state. “The negotiators have served Africa well. History will not forget them,” Commissioner Muchanga said. The Chairperson of the Trade Negotiating Forum, Mr. Chiedu Osakwe of Nigeria was also recognized in a special note of appreciation.
The second phase of the AfCFTA negotiations which will focus on investment, competition policy and intellectual property rights is slated to commence later this year.
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Namibia Budget Statement 2018/19
Presented by Calle Schlettwein, MP Minister of Finance, on 7 March 2018
This budget comes at a time after the Namibian economy had endured its most precarious phase. It is an economy at a turning point and this budget is a funding compact for growth, bringing about jobs, less inequality, less poverty and improved service delivery. It is a fiscal proposition to further consolidate non-core spending and align resources to core national priorities. It is a budget which offers policy consistency with the pro-growth, pro-poor policy stance of long duration. It is a budget anchored on the gains of the necessary but difficult decisions which we have taken since 2016:
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we had to make deep but necessary budget cuts to ensure fiscal sustainability and protect macroeconomic stability,
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the economy has now rebounded to positive growth territory, with a potential boost on jobs and incomes, after a mild contraction in 2017,
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we have realigned the macroeconomic framework and stabilized public finances,
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domestic revenue has shown resilience, amidst subdued economic activity
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with the exception of uranium, commodity prices are rising, rekindling new opportunities for mining activity,
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key macroeconomic fundamentals have strengthened, fast closing the current account and trade deficits and a strong international reserves position, and
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the global economy has regained unprecedented momentum since the 2007 financial crisis, offering favourable tailwinds for export-oriented open economies such as Namibia.
These early gains should be protected. We should rise up to the occasion to harness the growth opportunities and advance our national development agenda to new heights and with great latitude of quality of outcomes.
The effects of a low growth environment in our most important trade partners in the region, external shocks to our small open economy over the past two years, coupled with a weaker domestic fiscal space have led to our growth trajectory to be decoupled from the stronger global growth dynamics in the short-term.
Our policy interventions have reinforced the automatic stabilizers and yielded positive results. Domestic economic fundamentals are strengthening and the improving global economic and financial landscape offer a favourable environment for policy effectiveness.
We realize too well that a substantial lot still needs to be done, requiring a coherent and multidimensional set of actions to achieve the shared prosperity for an industrialized economy we aspire for in Vision 2030. To transform our economy, strategy implementation must now be greatly enabled and well-considered targeted action taken to implement the high impact initiatives engendered in the Harambee Prosperity Plan. We must do what we know must be done, we must do it with confidence and conviction and then we shall be more and better.
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without timely and coherent policy interventions, resurgent growth will be weak for longer,
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the structure of the economy remains dualistic and is in need of diversification and transformation,
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poverty is on a declining path, but levels are still high for an Upper Middle Income Country and so is inequality,
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at 34 percent, unemployment is structurally high and youth unemployment distinctively higher,
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the skills deficit is wide, and
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we need to hone competitiveness, productive capacity and innovation so as to expand our productivity frontiers and gains from trade, given the increasingly integrated and globalized regional economy.
The budget before you seeks to increasingly align resources to these key priority areas. It mobilizes and aligns resources to support long-term economic growth and social development. It retains the policy stance to entrench macroeconomic stability and fiscal sustainability.
Key Policy Priorities for the Budget
To realize increasing benefits of a successful fiscal consolidation and securing a firm sustainable economic growth trajectory which supports broadbased improvements in per capita income, we must have our priorities right and implement effective strategies to fend for these priorities. A sustainable growth trajectory is one which is underpinned by robust growth engines.
In line with the Harambee Prosperity Plan, this budget and MTEF summons resources and structural reform implementation agenda, centered on five key priority areas, namely:
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maintaining a gradual fiscal consolidation policy stance to safeguard macroeconomic stability and long-term fiscal sustainability,
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providing targeted support to fledgling economic growth,
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protecting core spending in the social sectors of education, health, skills development and housing and sanitation,
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improve domestic resources mobilization through fair and equitable tax policy, efficient and effective tax administration, mobilizing domestic savings as well as utilizing affordable alternative forms of financing, and
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implementing supportive policies and structural reforms to enhance overall policy effectiveness and bolster the competitiveness of the national economy.
To support economic growth, provide resources and implement the strategy towards the achievement of these priority areas:
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the development budget is increased by 30.0 percent relative to the revised allocation for the previous year,
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an economic and social infrastructure investment stimulus is unveiled for capital projects in the logistics, industrial development, agricultural mechanization and social sector infrastructure,
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initial funding is provided for the roll-out of SME Financing Strategy and youth entrepreneurship, comprising of the Venture Capital Fund, Credit Guarantee Scheme and Training and Mentorship Program. This is in addition to funding for the Equipment Aid Scheme and related SME support programs, and
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targeted budgetary transfers to the Development Financial Institutions for private sector support.
Structural policy reforms
Reforms targeting competitiveness, ease of doing business and investment climate have been identified through, amongst others, the successive business climate surveys and global competitiveness assessments. The reforms should facilitate enabling conditions for a successful fiscal consolidation, improve institutional capacity and coordination, administrative efficiency, local economic development and a more competitive investment climate.
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the Ministry of Finance is addressing the institutional framework for implementing the Procurement Act, by strengthening institutional capacity and regulatory environment as well as effective implementation of the preference provisions. The envisaged repeal of the State Finance Act by the new Public Finance Management Bill will not only enhance public finance management, but also instil provisions for robust financial disciple across the entire public sector. The roll-out of ITAS in July this year and the establishment of NAMRA on 1 March 2019 are an integral part of this reform package.
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The Ministry of Industrialization, Trade and SME Development is overseeing the implementation of the National Single Window facility in collaboration with Namport and the finalization of amendments to the Investment Promotion Act and the repeal of the Export Processing Zones Act this year,
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the New Equitable Economic Empowerment Bill, is set for finalization this year under the leadership of the Office of the Prime Minister, following wide stakeholder consultation,
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the anticipated Land Conference this year will give certainty with regards to land reform, land ownership and tenure as well as land utilization in both rural and urban settings.
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the public wage bill should be managed more effectively, with specific wage bill reduction target ratios set for realization over the MTEF.
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Public Enterprises reforms are indispensable to the realisation of a successful fiscal consolidation measures. Perpetual bail out of the public enterprises, especially those in the economic, financial and commercial sectors is unsustainable and should be reined in.
Macro-fiscal Developments and Medium Term Outlook
For 2018, growth is estimated to have returned to positive rates at about 1.2 percent and 2.1 percent for 2019. Over the MTEF economic activity rate is projected to average 3.1 percent, underpinned by robust export growth most especially from mining output, improvements in private and public investment as well as other components of final demand.
Recovery is expected to be led by increased activity in the mining sector on account of better commodity prices. While commodity prices have improved, the weak rain conditions this year threaten to slow the pace of continued better recovery in this sector since 2017. Thirdly, the easing of recessionary pressures in the construction industry and key sectors in the tertiary industry services sector comes to bear over the MTEF. Climate change is certain and comes with associated costs, requiring us to implement environmental fiscal reforms. Accessing the Global Climate Fund is a priority.
However, this growth outlook is generally too weak to support robust expansion of per capita incomes and requires supportive policy interventions going forward to reinvigorate the pace and quality of growth. Timely interventions set out in this budget and an improved external environment offer an opportunity to lift the growth potential.
Fiscal Policy Developments
The FY2017/18 Mid-Year Budget Review gave an account of the fiscal outturns in respect of the previous year and estimates for FY2017/18. The Appropriation Amendment Bill, 2017 provided for an additional budget of N$4.1 billion, equivalent to 6.5 percent of appropriated expenditure of which N$2.2 billion was for the settlement of outstanding spending arrears.
The Medium-Term Budget Policy Statement revised revenue for FY2017/18 upward by about ½ percentage point, from N$56.4 billion to N$56.7 billion on account of the estimated better collection. This outturn marks 11.5 percent growth from N$50.8 billion collected in FY2016/17, mainly due to better SACU receipts at that point in time and growth in some of the domestic revenue streams.
By the end of February 2018, the preliminary revenue outturn for FY2017/18 stood at N$52.4 billion, reflecting a collection rate of 92.3 percent of the revised target of N$ 56.7 billion, against the historical average of 89.0 percent collection rate. Against this backdrop, the revenue outturn is further revised to N$56.8 billion or some 1 percent better than the original budget. A total of N$ 972.02 million was collected from the recovery of outstanding tax arrears through the Tax Arrear Recovery Incentive Program initiated last year.
The moderate improvement in revenue collection is attributed to better performance of domestic tax revenue, particularly individual income tax and company tax from non-mining and other mining activities as well as the buoyancy arising from tax administration reforms.
For FY2018/19, total revenue is estimated at N$56.70 billion, about 1.3 percent decline from the estimated outturn for 2017/18, due to the decline in SACU revenue and the slowdown in diamond corporate tax and related income as a result of operational factors. Over the MTEF, revenue growth is projected to average 3.4 percent, at N$57.7 billion in FY2019/20 to reach N$61.3 billion by FY2020/21.
As a proportion of GDP, total revenue is estimated to moderate to 30.7 percent in FY2018/19 from 33.0 percent in FY2017/18 and average around 30.0 percent over the MTEF mainly on account of the expected decline in SACU receipts.
The most significant downside risks to revenue regards SACU receipts, which are projected to decline sharply by a cumulative of 18 percent during the next two years. As such, domestic replacement revenue, combined with increased tax administration effort is necessary to mitigate revenue volatility and support the budget implementation.
FY2018/19 Budget, Medium-term Expenditure Outlook and Fiscal Policy Stance for the MTEF
Tax Policy, Revenue enhancement and Tax Administration Reforms
The successful implementation of the fiscal adjustment and placing the economy on a firm inclusive growth trajectory needs to be funded.
In this respect, I wish to propose the following tax policy changes:
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phasing out the preferential tax treatment that is only granted to some existing manufacturers to achieve equity and equal treatment of all operators. As an intervention to encourage business development and job creation, support instruments for SMEs and start-ups will be introduced and developed over the MTEF,
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repealing the Export Processing Zone Act and introduce the Special Economic Zones, with a sunset clause for current operators with the EPZ status,
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re-adjust the current tax brackets for Individual Income Tax, reduce the lower bracket tax rate from 18 percent to 17 percent and introduce new tax rates of 39 percent and 40 percent for individuals earning over N$1.5 million and N$2.5 million respectively. This proposal seeks to relieve the low income earners and reinforce the progressivity of the tax system,
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introduce a 10 percent dividend tax for dividends paid to residents to enhance the fairness of the tax system,
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abolish the current practice of a conduit (flow through) principle in the taxation of trusts to harmonize the taxation of trusts in line with regional economies,
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subject income derived from commercial activities by charitable, religious, educational and other types of institutions under Section 16 of the Income Tax Act to normal corporate tax. Such institutions will be required to register as taxpayers and file annual income tax returns,
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deepen the current hybrid tax system by taxing all income earned from foreign sources. Namibian residents will have to declare such income in their annual tax returns,
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explore a profit tax of 37 percent on betting and gaming entities,
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introduce VAT on income of listed asset managers, and
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introduce VAT on proceeds on the sale of shares or membership in a company owning commercial immovable property.
The following excise levies and duties will also be introduced:
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increase the fuel levy by 25 cents per litre for all levied fuel products in terms of the Section 54 of the Customs and Excise Act,
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expand coverage of export levy to include other specific agricultural, forestry and game products and other mining products currently not covered,
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introduce additional 5 percent national “sin” tax on alcohol and tobacco products for national revenue purpose.
The tax proposals for national revenue purposes are anticipated to generate about N$500 million. Income tax changes will come into effect in 2019 after drafting and tabling of the specific tax proposals. Excise duties will become effective upon the tabling and gazetting of the schedules.
It is an unfortunate error that Namibia has been classified by the European Union as a tax haven. Tax havens by their nature wield below average or zero tax rates and used as a conduit for transfer pricing. Multinational companies would tend to establish their principal office in tax haves to serve as conduits for transfer pricing and tax planning activities. We do not subscribe to the subjective classification of Namibia as a tax haven because we are not. We are now engaging the EU authorities and we trust that Namibia will be delisted.
In fact, Namibia as a resource-based economy is wary of the pervasive transfer pricing, illicit financial flows and misinvoicing prevalent on the African continent which leads to an estimated US$50 billion illicit financial flows from the continent annually, based on the evidence from the African Union Report by Former President Thabo Mbeki Report. As a resource based economy and a transparent sovereign, Namibia stands to benefit from international tax cooperation and exchange of information for tax purposes.
The FY2018/19 Appropriation Bill
Economic and infrastructure sectors
Economic and infrastructure sectors take up the third largest share of the budgetary allocations, with a total sectoral share of 21.7 percent and in line with the increased weight accorded to the Development Budget. For FY2018/19, an amount of N$12.7 billion and about N$37.7 billion are allocated over the MTEF.
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Transport receives N$3.5 billion, and over the MTEF, the allocation stands at N$9.7 billion. This allocation is mainly for the completion of on-going phases of road capital projects with contractual awards. The amount is supported by N$2.6 billion from the Road Fund in FY2018/19 or about N$ 13 billion over the MTEF as well as N$2 billion annually for project financing under the AfDB loan arrangement over the next two years. The envisaged industrialization and Logistics hub investment stimulus will further reinforce this allocation.
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The Ministry of Agriculture, Water and Forestry receives N$2.1 billion, and about N$6.7 billion over the MTEF,
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The Ministry of Finance is allocated N$4.0 billion and about N$12.1 billion over the MTEF. Out of this amount N$2.5 billion or 62.5 percent is allocated for PSEMAS or some N$7.5 billion over the MTEF, N$124 million is earmarked for transfers to DBN over the MTEF to support implementation of the SME Financing Strategy, N$70.5 million is earmarked for transfer to AgriBank over the MTEF to support the AgriBank’s loan book and lending activities. A total of N$319.9 million is earmarked for the transitional arrangements for the establishment of NAMRA over the MTEF on top of the allocations made for the Departments of Inland Revenue and Customs and Excise. N$ 2 million is allocated annually for the Financial Literacy Initiative.
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tralac’s Daily News Selection
ECOWAS Commission gets a new President: Ivorian Jean-Claude Brou takes over from Marcel De Souza
African Union Commission, US State Department perspectives on AU-US relations:
Chairperson Faki: In this visit, we see the illustration of the will of the United States to strengthen the partnership with the African Union and the continent. The visit of Secretary of State Tillerson is taking place at a time when Africa is firmly embarked on the path to integration and reform. We informed him of our efforts aimed at establishing a market of more than a billion people, and to stress that a strong African Union is in the interest, not only of the continent, but that of our partners also, including the United States of America. We have agreed to work for the strengthening of the trade and commercial relations between Africa and the United States, including the post-AGOA arrangements.
Secretary Tillerson: The African Union truly is a force for good, and we’re grateful to the African Union’s role in seeking solutions to help this continent move towards greater stability. On trade, we also support the African Union’s economic regional integration efforts to lower intra-trade barriers on the continent, boost more intra-regional trade, which we know has been a central goal of the negotiations around the continental free trade agreement which we are quite supportive of. We look forward to engaging further with the African Union once that agreement is in place on how this will also promote greater participation of U.S. private sector business interests as well.
Final remarks by WTO General Council chair Xavier Carim (South Africa): transparency and inclusivity important to build trust
From the vantage point of the Chair of the Council, I now have a much better appreciation of the myriad of processes, procedures and decisions that shape the day-to-day workings of the organisation. Effective decision making at this level is vital for the proper functioning of the organisation and, generally, these processes and decisions are uncomplicated. However, where procedures are not set out precisely, and where discretionary action is called for, transparency and inclusivity may be even more important to build the trust that is needed to advance our collective, multilateral work. Issues related to such matters arose periodically in the course of the year, and we should deal with such matters sensitively.
African Ministers of Trade meet in Kigali to review draft agreement (New Times)
The ministers’ meeting follows a meeting of technical experts from trade and justice departments of AU member states, where the draft underwent the final negotiating stages. The experts meeting aimed to ensure that the 250 page draft is well aligned in all AU official languages, and also ensure the legal scrubbing of the document. Prudence Sebahizi, the Chief Technical Advisor and Head of the CFTA Unit at the AU Commission’s Department of Trade and Industry, told The New Times that the ministerial gathering will also review protocol for dispute resolution. Once the ministers of trade have reviewed and approved the draft, it will be submitted to Justice Ministers who will review the legal consistency. “The Ministers for Justice will submit it to ministers of Foreign Affairs ahead of the signing,” Sebahizi said. The agreement has been tailored to ensure that it is not in contravention of any international trade rules and is compatible with existing trade agreements in the eight regional economic zones. [CFTA Summit 2018, 17-21 March: AU launches conference www; AMOT: Vote of thanks by Uganda]
The AfCFTA and African quality standards: ECOWAS update (UNECA)
Mr David Luke (ATPC coordinator) highlighted that the AfCFTA offers substantial opportunities for industrialization and diversification, but that this transformative potential will not be realized without the development and implementation of African quality standards. Mr Luke commended ECOWAS as being the first REC to publish its Quality Policy and emphasized the need for strong National Quality Infrastructure to support its implementation. He concluded by noting that RECs serve as building blocks for the AfCFTA, and will continue to have a crucial role to play in African standards.
African Development Bank Governors: Africa’s population explosion is a ticking time bomb
The AfDB and its East and North African Governors have stressed the need for urgent measures to match the continent’s growing population and youth unemployment, which they likened to a “ticking time bomb.” The meeting described the continent’s growing young population as a potential growth engine for the world. “The good news is that the solution is within our reach and will require investments,” said Akinwumi Adesina, President of the AfDB. At the end of a two-day consultation at the headquarters of the Bank in Abidjan, the Bank and the Governors discussed strategizes for closing Africa’s $170bn infrastructure investment gap. To bridge the investment gap, ensure inclusive growth, and create employment for the continent’s population, the meeting endorsed the AfDB-led African Investment Forum and described it as a timely opportunity to catalyze investments into projects and attract social impact financing to Africa. [AIF updates: The Africa Investment Forum will be held in Johannesburg, 7-9 November; Ms Stella Kilonzo has been appointed Africa Investment Forum senior director]
January passenger demand growth slows on temporary factors (IATA)
IATA announced global passenger traffic results for January 2018 showing traffic (revenue passenger kilometers or RPKs) rose 4.6% compared to January 2017. This was the slowest year-over-year increase in nearly four years, but results were affected by temporary factors including the later timing of the Lunar New Year in 2018 as well as less favorable comparisons with the strong upward trend in traffic seen in late 2016-early 2017. African airlines saw January traffic rise 4.9% against a mixed backdrop for the region’s largest economies. In Nigeria, business confidence has risen sharply while in South Africa, political uncertainly continues to inflict an economic toll. The region’s capacity rose 4.2%, and load factor edged up 0.5 percentage point to 70.3%.
Tanzania lags behind on private equity (The Citizen)
Data compiled by the African Venture Capital Association show that the East African countries attracted a total of $2.4bn (about Sh5.4 trillion) in venture capital in the period from 2013 to 2017. However, Tanzania accounted for only 17% of the capital. As it is, the funding financed a total of 180 deals out of which Tanzania accounted for only 10%! According to the co-founder of the Tanzania Venture Capital Network (TVCN), Mr Salum Awadh, Kenya beat the other EAC countries, accounting for 56% of the value, and 49% of the deals. Uganda accounted for 19 and 6% of the total value and deals respectively – while Rwanda’s share of the total value was 6%. [Request a copy: 2017 Annual African Private Equity Data Tracker and regional spotlights]
Mauritius: Promoting female participation in the economy (NPCC)
The National Productivity and Competitiveness Council has launched its latest report which highlights salient features about the current situation, best practices used globally and presents strategies as well as an action plan to improve the participation of women in the economy. Extracts (pdf):
Employment by industrial sector. Table 3.9 shows that the tertiary sector is becoming increasingly important in terms of employment. Over the last decade, women’s employment has fallen in the primary and secondary sectors, whereas it has increased in the tertiary or services sector. This has been in line with the diversification of the Mauritian economy, initially from heavy reliance on agriculture towards manufacturing, especially with the setting up of the Mauritius Export Processing Zone, which employed a significant proportion of women who had very basic education. The economy is currently moving towards expanding the tertiary sector especially services, which is in line with the investment in education and type of human capital available in the country.
Senior positions in trade unions, employers’ associations and NGOs. Women remain in a minority in senior positions as director or head of trade unions, employers’ associations and in NGOs. The figures are lowest for trade unions, where women comprise only 11.9% of leaders of trade unions. In employers’ associations, women make up 40% of leaders, whereas they comprise 31.3% of leaders of NGOs. [Tanzania: Only 8% of TZ CEOs are female; Hannah Wanjie Ryder: Are women holding up Chinese and African skies?]
UNGA adopts resolution seeking alignment of efforts to end illicit diamond trade, achieve 2030 Agenda for Sustainable Development (UN)
Julie Bishop, Minister for Foreign Affairs of Australia, introduced the draft resolution titled, “The role of diamonds in fuelling conflict: breaking the link between the illicit transaction of rough diamonds and armed conflict as a contribution to prevention and settlement of conflicts”. Noting that Australia was the outgoing Chair of the Kimberley Process she said that scheme had made a valuable contribution to international security, development and human rights. Noting that young people today were three times more likely than older generations to avoid diamonds unless they had been responsibly sourced, she nevertheless emphasized that more work remained to be done. The international community should examine new ways to align the diamond trade with the 2030 Agenda and sustaining peace, and should seek a diamond market free from human rights abuses and forced labour. The resolution was a critical link between the Kimberley Process’ excellent work and its potential to contribute to the broader United Nations agenda by requesting the establishment of a dedicated secretariat and a multi‑donor trust fund to support broad‑based participation.
What did the world trade in 2017? (ITC)
The rise of artificial intelligence, political changes and severe weather conditions all contributed to changes to trade in 2017. To allow its clients keep abreast with the latest export and import trends, the International Trade Centre has so far made available on its TradeMap.org portal yearly trade data for 2017 covering more than 30 countries. This represents more than 40% of world trade flows providing us with some indicators of what actually happened with trade last year. While we have yet to see a single coffee tree on the shores of Lake Geneva or elsewhere in Switzerland, the Alpine country exported roasted coffee worth an estimated $2bn in 2017. While it did not make it into the top 5 of global coffee exporters when it comes to volume, in 2017, Switzerland also increased the volume of roasted coffee it exports by 7%, hitting 65,000 tons. Could all this be down to the Clooney’s effect?
The changing economy: going factory-free (VoxDev)
In this column, we focus on unpacking the concept of deindustrialisation, or what we call the ‘factory-free economy’, and the role globalisation has to play in it. If manufacturing firms increasingly create services, while sourcing and design activities are performed by factory-less goods producers whose activities were once done by manufacturers, this need not be a contradiction. The boundaries of the firm – especially for multinational companies – are adjusted to focus on core competencies. These competencies have evolved. This raises two questions: What should the firm internalise? How has globalisation shaped these choices? [The authors: Lionel Fontagné, Ann Harrison]
José Antonio Ocampo: A better way to fight corporate tax avoidance (Project Syndicate)
The Independent Commission for the Reform of International Corporate Taxation, which I chair, evaluated alternative proposals to fix the current system. In arecent report, we found that the fairest and most effective way to allocate and tax corporate profits is to treat multinationals as single firms doing business across international borders. Thus, a firm’s total global profits would be taxed according to factors such as sales, employment, and resource usage – all of which reflect real economic activity – in each jurisdiction. As it happens, the European Union currently is considering a similar proposal, whereby it would treat all multinationals operating within its borders as single firms.
Today’s Quick Links: Jaindi Kisero: Approach Kenya’s economic woes honestly Kenya dismisses US concerns over mounting Chinese loans Wharton Business School: How aviation can help African economies take off SADC Food Security Update: 2017/2018 agricultural season (pdf) WCO, SACU sign a cooperation framework agreement Afreximbank, Development Bank of Central African States sign MOU Namibia to establish National Productivity Organisation Tanzania: Industrial drive gets army boost South Africa: Tackling illicit trade a quick fix for Treasury’s cash shortfall |
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Road to CFTA: Trade ministers review draft agreement
Ministers for Trade and Commerce from across the African continent are convening in Kigali to review the draft African Continental Free Trade Area (CFTA) Agreement ahead of its signing later this month.
The ministers’ meeting follows a meeting of technical experts from trade and justice departments of AU member states, where the draft underwent the final negotiating stages.
The experts meeting aimed to ensure that the draft is well aligned in all AU official languages, and also ensure the legal scrubbing of the document.
Prudence Sebahizi, the Chief Technical Advisor and Head of the CFTA Unit at the AU Commission’s Department of Trade and Industry, told The New Times that the ministerial gathering will also review protocol for dispute resolution.
“The technical experts ensured that the content of the text is maintained as was negotiated. The package of legal instruments which include; agreement establishing CFTA, protocol on trade of goods, protocol on trade of services as well as protocol of settlement of disputes will be packaged to be approved by trade ministers,” Sebahizi said.
The ongoing ministers’ meeting will see the review of 250-page draft agreement that seeks to create the largest free-trade area in the world.
The agreement is expected to significantly increase intra-Africa trade.
At the meeting countries are expected to cite issues they do not agree with.
Even as they move in to open up trade across the continent, experts involved in the negotiations said they were keen to ensuring it was also in the best interests of their countries economies.
Countries interests include protection of emerging industries, and quality of products entering.
African Union Commissioner for Trade and Industry Albert Muchanga said the agreement, once signed, will ease intra-Africa trade by increasing openness.
He said this is a sure step towards realising integration and increased industralisation which will be facilitated by trade.
Rwanda’s Minister for Trade and Commerce Vincent Munyeshaka said that there are very few contentious issues at the moment which will be easily resolved during the ministerial meeting.
“Let’s focus on what unifies us and not what divides us. We may have different approaches on how to get there, hence the need to agree on the draft agreement,” he said.
Once the ministers of trade have reviewed and approved the draft, it will be submitted to Justice Ministers who will review the legal consistency.
“The Ministers for Justice will submit it to ministers of Foreign Affairs ahead of the signing,” Sebahizi said.
The agreement has been tailored to ensure that it is not in contravention of any international trade rules and is compatible with existing trade agreements in the eight regional economic zones.
African Union Extra Ordinary Summit on the AfCFTA
Kigali, 17-21 March 2018
The Extra Ordinary AU Summit on the African Continental Free Trade Area (AfCFTA) is scheduled to take place in Kigali, Rwanda from 17-21 March. A detailed programme of the public events will be made available shortly. The following schedule of events has been released:
17 March 2018
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Permanent Representatives Committee (PRC)
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19 March 2018
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18th Extraordinary Session of the Executive Council
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21 March 2018
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Extraordinary Session of the Assembly of AU Heads of State/Government
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20 March 2018
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Side event: AFCFTA Business Summit
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22-23 March 2018 |
tralac Annual Conference: The AfCFTA – an opportunity for Africa |
Visit the Summit website for further details: https://au.int/en/CFTASummit2018
For more on the tralac Annual Conference, see http://bit.ly/tralacConf2018
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WTO General Council chair: transparency and inclusivity important to build trust
Remarks by Ambassador Xavier Carim (South Africa) at the conclusion of his final meeting as chair of the General Council
Let me start by saying that it has been a privilege to serve as your Chairman of the General Council. What I say now are my broad reflections on the past year.
It should be increasingly clear that our work is not immune to the growing concerns about the impact of globalisation, trade and trade agreements on job security, inequality and development. Such concerns have been raised by many developing countries in the past, but the fact that similar concerns are now more strongly voiced by citizens across developed countries is a significant new development and manifests in ways that deeply affect our work.
Many of you will know that this year we are celebrating the centennial of Nelson Mandela’s birth. Twenty years ago at an event in Geneva commemorating the 50th anniversary of the GATT, President Mandela delivered a wonderful speech on the multilateral trading system. Many of the issues he raised then continue to resonate – and one line has a particular bearing today. He stated that: “Rules must be applied… but if they contain prescriptions that cannot be complied with by all, or if the results benefit too few, then injustice will emerge. Then it is prudent to remember that no amount of rules or their enforcement will defeat those who struggle with justice on their side.” President Mandela was of course drawing on his own experience of South Africa’s struggle for freedom but it does have a bearing on our work.
In our organisation, where decisions are taken by consensus, ongoing and practical expressions of the principles of transparency and inclusivity are a baseline for a fairer, more inclusive and developmental multilateralism. At a minimum, inclusivity requires that our processes and decisions fully take into account the views of Members from the different geographic regions, at different levels of development, but the decisions and processes should also fully engage with the competing policy perspectives and priorities of Members.
We all know that the General Council oversees all the regular work of the organisation related to the on-going implementation of the Uruguay Round Agreements and subsequent Ministerial decisions. We also know that four of the five Decisions taken at MC11 will need to be carried forward under the General Council.
But from the vantage point of the Chair of the Council, I now have a much better appreciation of the myriad of processes, procedures and decisions that shape the day-to-day workings of the organisation. Effective decision making at this level is vital for the proper functioning of the organisation and, generally, these processes and decisions are uncomplicated.
However, where procedures are not set out precisely, and where discretionary action is called for, transparency and inclusivity may be even more important to build the trust that is needed to advance our collective, multilateral work. Issues related to such matters arose periodically in the course of the year, and we should deal with such matters sensitively.
In the course of the year we also confronted a range of other challenges. At the outset we ran into a serious delay in appointing Chairs of the regular and negotiating bodies. At the May General Council, we encountered difficulties in adopting the Council agenda. I understand that all the difficulties reflect the seriousness that Members attach to all aspects of the work of the organisation, and are an expression of their legitimate interests.
In many instances, the key to addressing the challenges is to frame and approach the issues in ways that give sufficient comfort to all Members that their concerns are being taken on board – in an even handed manner. It seems to me – and this is personal – that if there is any bias, it should favour the less developed members amongst us.
A great deal of time last year was taken up with the preparations for MC11. Most of this went smoothly but sensitive issues, particularly issues regarding observer status, raise difficulties that are sometimes beyond resolution at the WTO. Most Members seem to agree that the work we undertook just before MC11 on both the Outcome Document and on e-commerce was positive, and I was struck by the fact that the process was marked by a genuine and constructive attempt to narrow differences amongst Members, even though, ultimately, we were unsuccessful.
I am grateful to the Chairs of the Regular Bodies as the work they oversaw allowed the General Council to deliver comprehensive reports of all our work to Ministers at the opening of MC11. I again congratulate Argentina for a well-organised Ministerial Conference that many have said met high standards of inclusivity and transparency. In no small measure, this was due to the qualities Minister Malcorra brought to the process. We should build on this experience.
Aside from a few troubling moments, the experience of chairing the General Council has been a rewarding one – personally and professionally – and in ways I had not foreseen just one year ago. I have been enriched by the many opportunities to work with exceptional individuals: highly experienced Ambassadors, Delegates and Members of the Secretariat.
I want to thank you, Roberto, for our collaboration over the course of the year, particularly in the run up to and at MC11. I also thank Victor and all the Members of his team for the support and guidance they provided over the year, always in a spirit collegiality and good humour. Stefania offered support on almost a day-to-day basis, even though I may have tested her patience with countless revisions of speaking notes. I am grateful to Zainab and Joan for their support over the year, particularly during the intense weeks leading to MC11, and at the Conference itself.
I had always been aware that the Secretariat is a reservoir of accumulated institutional knowledge but I now have a deeper appreciation of the depth and scope of that expertise. The WTO is a Member-driven organisation but it is absolutely clear that the Secretariat is a valuable asset and an indispensible pillar of the system.
In light of the challenges we confront with respect to the WTO’s negotiating function and dispute settlement function, we may need to pay greater attention and – indeed we are duty bound – to protect the international stature of the Secretariat by ensuring it always remains above the partisan positions Members take on issues.
Let me conclude by thanking all delegations for their dedicated work and for support over the year. I remain grateful to the African Group for nominating me as their candidate for the DSB in 2016, when the long, six-year rotation passed back to Africa. After a year’s sojourn as General Council Chair, I am happy to return home to the Group!
I’ll stop here and thank you for your kind attention.
Summary of General Council meeting on 7 March 2018
The WTO General Council held a Formal Meeting on 7-8 March 2018 in Geneva. The meeting was preceded by an Informal Meeting of the Trade Negotiations Committee at the Heads of State level on 5 March. Director-General Roberto Azevêdo called on WTO members to avoid triggering an escalation in trade barriers.
He responded to a series of announcements from WTO members in recent days which suggested that a range of new, unilateral trade barriers could soon be put into force. DG Azevêdo warned of the risks posed by such measures, calling on members to reflect and avoid escalation.
“In light of recent announcements on trade policy measures, it is clear that we now see a much higher and real risk of triggering an escalation of trade barriers across the globe. We cannot ignore this risk and I urge all parties to consider and reflect on this situation very carefully. Once we start down this path, it will be very difficult to reverse direction. An eye for an eye will leave us all blind and the world in deep recession. We must make every effort to avoid the fall of the first dominoes. There is still time.”
In his statement the Director-General also reflected on the way forward after the 11th Ministerial Conference (MC11) in Buenos Aires in December. He encouraged members to learn from the experience of MC11 and to find ways of increasing the levels of flexibility that they show to each other.
DG Azevêdo also commented on the current situation in the WTO's Appellate Body, specifically regarding the impasse in the selection process for new Appellate Body members. He urged members to act on this point, which he described as an “extremely serious and urgent concern for us all”, as the dispute settlement function underpins the whole trading system. The Director-General said that members should be actively formulating and discussing solutions, and that he would be facilitating further conversations on the issue in the coming days.
Formal Meeting of the General Council
The following items were on the agenda:
1. Report by the Chairman of the Trade Negotiations Committee (TNC) and Report by the Director-General
The Chairman referred to the Director-General’s report at the 5 March Informal TNC and Heads of Delegation meeting. At that meeting, 45 delegations intervened. Under this item, Burkina Faso spoke.
2. Implementation of the Bali, Nairobi and Buenos Aires Outcomes – Statement by the Chairman
The Chairman reported on the work taking place in WTO regular bodies to fulfil the Bali, Nairobi and Buenos Aires Ministerial mandates.
3. Work Programme on Small Economies – Report by the Chairman of the Dedicated Session of the Committee on Trade and Development (CTD)
The CTD Chairman recalled the Buenos Aires Ministerial Decision on this matter and informed Members that the CTD Dedicated Discussion would continue to discuss how to take it forward. Guatemala (for the Group of Small, Vulnerable Economies) and the Republic of Moldova spoke.
4. Aid for Trade Work Programme – Statement by the Chairman on Trade and Development
The CTD Chairman reported that consultations on the latest work programme on Aid for Trade had been ongoing since early January. Although progress had been made, the CTD would need more time to deliberate on the matter. Following the CTD Chair’s suggestion, the General Council would again take up the item at a future meeting. Chad (for the Group of Least-developed Countries) spoke.
5. Appointment of Officers to WTO Bodies
In line with the Guidelines for Appointment of Officers (WT/L/510), the General Council took note of the consensus on the slate of names for chairpersons to WTO bodies. The Council for Trade in Goods and Council for Trade in Services Chairs announced that they would conduct consultations to select Chairs for the bodies established under their respective Councils. Chile intervened.
6. Election of Chairperson
The Council elected by acclamation Ambassador Junichi Ihara (Japan) as Chair for 2018. Honduras (for the Informal Group of Developing Countries), Kenya and Rwanda (for the African Group) intervened.
Under Other Business, 18 delegations raised concerns regarding proposed national trade restrictive measures by one Member. Canada made a statement on a workshop on Trade and Gender Based Analysis. Montenegro and the European Union intervened. The Chairman also made an announcement regarding Members and Observers in arrears.
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Secretary Tillerson’s meeting with African Union Commission Chairperson Moussa Faki Mahamat
Secretary of State Rex Tillerson met with AUC Chairperson Moussa Faki on 8 March 2018 to reaffirm the United States’ and AU’s mutual respect and strong commitment to the shared goal of a stable and prosperous Africa. Their conversation builds upon the momentum created by their previous meeting in November on the margins of the annual U.S.-AU High Level Dialogue in Washington D.C.
The United States applauded the launch of the AU’s 2018 “African Anti-Corruption Year,” with Secretary Tillerson indicating the United States stands ready to support AU anti-corruption efforts. The United States and the AU share a commitment to combat corruption, which in turn improves the conditions for free and fair trade, enables an open environment for business, and sets the stage for good governance.
The two also discussed a few country-specific issues, including the Democratic Republic of Congo (DRC), where the United States continues to urge the AU to press all parties – including the DRC government and the political opposition – to work towards December 2018 DRC elections. Secretary Tillerson and Chairperson Faki agreed the AU and Intergovernmental Authority on Development should continue to apply pressure on the warring parties in South Sudan for a negotiated solution, to protect the lives and welfare of innocent South Sudanese.
Secretary Tillerson thanked Chairman Faki and the AU for its continued attention to and good work across the Continent and underscored the strong U.S.-AU bilateral relationship.
Press Conference – African Union Headquarters
Addis Ababa, 8 March 2018
MODERATOR: (In progress) Excellency Chairperson of the African Union Commission Mr. Moussa Faki Mahamat, Excellency Secretary of State of the United States of America Mr. Rex Tillerson, ladies and gentlemen of the media, representatives from the diplomatic corps, thank you very much for joining us this morning for this press conference. We’re very pleased to have our key principals today, who are going to make brief statements, in addition to the discussions that they had this morning. And without further ado, I will kindly ask His Excellency the Chairperson of the African Union Commission to address the members of the media. Thank you.
CHAIRPERSON FAKI: Thank you. (Via interpreter) Ladies and gentlemen of the press, first of all, I would like to welcome the Secretary of State and his delegation once again. I have just had a very fruitful meeting with the Secretary of State Mr. Rex Tillerson. And first of all, I would like to state that we appreciate the visit of the Secretary of State. In this visit, we see the illustration of the will of the United States to strengthen the partnership with the African Union and the continent. The visit of Secretary of State Tillerson is taking place at a time when Africa is firmly embarked on the path to integration and reform. We informed him of our efforts aimed at establishing a market of more than a billion people, and to stress that a strong African Union is in the interest, not only of the continent, but that of our partners also, including the United States of America. We have agreed to work for the strengthening of the trade and commercial relations between Africa and the United States, including the post-AGOA arrangements.
We discussed other aspects of our cooperation, particularly the support to the African Center for Disease Control, agriculture, food security, as well as cybersecurity. In all these areas, initiatives are underway which we now have to intensify. We also talked of some conflicts or crisis situations faced by the continent, and the best way the United States can support the African efforts in order to promote peace and security. I earnestly requested the support of the United States for the ongoing initiatives in order to mobilize a more sustainable and perennial support, financial support – the support to AMISOM and to the – in the Sahel, the G5 Joint Force, the G5 Sahel Joint Force. And also, the fight against corruption as well as control of illicit financial flows. All of these were discussed.
We underscored the importance of nonproliferation of weapons of mass destruction, particularly nuclear weapons, calling for the scrupulous observance and compliance with international instruments. I recall the commitment of the African Union to multilateralism as being the most effective tool to promote peace and prosperity.
Finally, on this International Day of – the International Women’s Day, we seize the opportunity to reaffirm our commitment to gender equality and the promotion of the gender. The African Union and Africa in general in this matter have made special efforts, and particularly at the last summit of the African Union, we have adopted a decision which, by 2025, will bring about gender parity in the African Union – that is, the balance between men and women.
Thank you.
SECRETARY TILLERSON: Well, first, let me thank Chairperson Faki for taking the time to meet with me. We had a very good meeting when I was able to host him at the high-level dialogue in Washington this past November, when we met with many other African leaders as well. And I’m really pleased to be here in the continent and I expressed to the chairperson and his colleagues that it was appropriate that I begin my visit to Africa here with the African Union leaders as well, to further our partnership with the African Union.
I, too, want to acknowledge and celebrate International Women’s Day, a day where we recognize the social, economic, cultural, and political achievement of women across the world. And I also want to amplify our support for the very strong statements that have been issued by the African Union in their efforts to encourage women’s empowerment and their participation in economic activity across the continent. We know that when we enable women’s economic participation and entrepreneurship in local communities, it really has a transformative effect not just on their families, but in that community at large, and I have seen this myself firsthand around the world. So we celebrate Women’s – International Women’s Day today with others.
The African Union truly is a force for good, and we’re grateful to the African Union’s role in seeking solutions to help this continent move towards greater stability. Recognizing health security also advances national security, economic development, and political stability. We applaud the Africa Centers for Disease Control, which has been quite successful in tracking and responding to disease outbreaks on the continent. We look forward to continuing our close cooperation with the African Union on this important initiative, and we’re currently in very important discussions to update our joint memorandum of understanding to guide our future efforts, our collaborative efforts in that regard.
On trade, we also support the African Union’s economic regional integration efforts to lower intra-trade barriers on the continent, boost more intra-regional trade, which we know has been a central goal of the negotiations around the continental free trade agreement which we are quite supportive of. We look forward to engaging further with the African Union once that agreement is in place on how this will also promote greater participation of U.S. private sector business interests as well.
I mentioned to Chairperson Faki that we appreciate the African Union’s very strong statements made on South Sudan at the recent AU summit. We truly call on all parties to abide by the cessation of hostilities and be open to compromise for the good of the South Sudanese people. We urge the AU and the Intergovernmental Authority on Development to keep their maximum efforts moving forward to push for a solution to this conflict for the good of the people in South Sudan.
I also appreciate Chairperson Faki’s role in leading the African Union through a number of security challenges, and as you might imagine, that was a substantive part of our discussion today as well. The African Union’s Mission in Somalia, clearly an example of countries coming together to counter terrorism, promote stability, and enable delivery of much-needed aid to the Somali people. We encourage the African Union to continue these efforts. We will continue our own efforts as well. We have not yet won that battle in Somalia, and we must stay at it.
We also discussed ways to ensure the G5 Sahel forces have the necessary resources to continue their fight against terrorism, and how we can put in place more sustainable funding models where there’s – they have greater certainty around how to plan the future fight against terrorism in the Sahel region as well. And we applaud the brave efforts of the – on the part of the G5 Sahel forces.
We discussed African Union reform and the chairperson’s efforts to increase member-state financing for the African Union and really put in place a more sustainable funding model with greater certainty as well. Last year’s self-financing of African Union programs expanded to more than 40 percent, which is up from 26 percent just the prior year, so clearly the chairperson’s efforts are yielding very good results.
Fighting corruption is another area of common cause, and we’re very pleased to see that the African Union has named 2018 as the year for winning the fight against corruption. From high-level secret deals to petty bribes on the street, corruption really does steal the precious resources from job creators and entrepreneurs and others who would promote benefits to the greater society and to the citizens of those countries. Good governance and transparency are essential to creating the conditions for economic growth and prosperity, and we look forward to continuing our joint efforts with the African Union to improve the business environment on the continent. But transparency really is an essential requirement for good business conditions and will attract greater investment and economic activity as well. That includes supporting greater intra- and global-trade investments in Africa as the environment creates competitive conditions.
And finally, I reiterate our desire for more African nations to apply concrete diplomatic and economic pressure on North Korea. The goal of the global maximum pressure campaign, which has been supported by multiple UN Security Council resolutions, is to motivate North Korea to achieve the complete, verifiable, and irreversible denuclearization of the Korean Peninsula. African nations can contribute to this goal, and we need, country by country, for nations to take action to support this international effort towards a denuclearization of the Korean Peninsula.
Again, I want to thank Chairperson Faki for his warm welcome and the hospitality during our discussions here at the African Union, and most importantly, for your leadership of the African Union. Thank you very much, Mr. Chairperson.
QUESTION: Mr. Secretary, this is your first trip to Africa as a top U.S. diplomat. You are calling it a listening tour, but how much listening do you expect to be doing about the President’s allegedly derogatory remarks? How committed is the United States to the security and investment in Africa? Separately, what is your message to AU and the proposal to self-finance by levying tariffs on imports?
Chairman Faki, if I may, first question: Ethiopia is the host of AU and a member. How concerned are you about the decision to impose a state of emergency that restricts freedom of speech? And do you believe the arbitrary detentions have violated people’s rights? Separately, has the AU requested an apology for the U.S. President’s recent remarks?
Thank you very much.
SECRETARY TILLERSON: Well, the United States and the African continent have enjoyed many, many years of very strong and positive relationships. In fact, we have diplomatic relations with some countries on the continent that span more than a century now. With the creation of the African Union, it has provided yet another area in which we can cooperate, collaborate, to address security issues more broadly on the continent as we discussed in both of our remarks, and bring greater stability to the continent, and to discuss ways in which we can create economic prosperity which will attract U.S. foreign direct investment.
So the purpose of my trip to this continent is to listen. I think it is important that we listen to what the priorities of the countries here on the continent are and see where there is good alignment between their priorities and our areas of greatest interest as well. And I think we’ve already found there are many, and that should not surprise anyone. We have important joint security activities underway and we appreciate the commitment made by many countries on the continent, not just with their own financial resources, but with their own men and women in uniform who are going right out on the front lines to fight this war against terror that we all are fighting globally.
So this is an important trip. I think it is an indication of the importance the continent plays in the future of the United States, both from a security but also an economic standpoint. Africa, as a continent, is going to undergo significant population growth. Five of the world’s fastest-growing – 12 fastest-growing economies are here in Africa, so clearly there is significant opportunity for American interest in the future. So it’s important that we have very open dialogue with one another to understand our priorities and to understand how we align those priorities, and we support each other. So this is a vitally important continent to the U.S. and our future interest as well.
I think with respect to the support for the counterterrorism efforts, we had a very good exchange on various ways that we can consider creating a more sustainable and certain funding model for the counterterrorism efforts both – not just through the G5 Sahel, but also AMISOM and other activities to win the war against terror on the battlefield. But we also discussed the need to win the war in the social media and cyber space as well. With Africa’s very large and growing youth population, we must create good opportunities for education, for future jobs, so that the youth of Africa do not become easy targets for recruiting violent extremist messaging, and we had a good discussion about that as well today.
So, a very broad canvas of common interests that we have to discuss.
CHAIRPERSON FAKI: (Via interpreter) Before I reply to the question on Ethiopia, I want to add that I am satisfied with discussions that I have had with the Secretary of State Tillerson, the commitment of the United States to support the African continent in its fight against terrorism in the – whether it is the Horn of Africa, the support to AMISOM, or in the Sahel, ready to support the G5 Sahel Joint Force, through the mobilization of financial and material resources in order to support these important missions.
As regards Ethiopia, I would like to recall that in the beginning of the year, in January, the Ethiopian Government has adopted a number of measures that is to expand and open up the democratic and political space. And I react to this important issue by encouraging the Ethiopian authorities and also congratulate them on this important decision. We have also followed the resignation of the prime minister, whom I met later on, and also the commitment of the authorities of this country that is in a consensual manner to pursue and continue the reforms and to have a representative government. It is an ongoing process, and we have been reassured by the authorities of the country, and we think that in a concerted manner, through dialogue, through consensus, this is a way the country can move forward. You know Ethiopia is an important country; not only it is the headquarters, hosting headquarters of the African Union, but also its role it plays in the region. So the situation in Ethiopia is of capital importance. And I have been reassured by the authorities that the political and social forces of this country through consultation and dialogue will find the formula that will allow this country to pursue and continue its way, because at the economic level it has produced early substantive results, and we hope the reforms will enable the country to move forward.
QUESTION: Thank you very much, Chair and Secretary. Mr. Chair, my question is: At the moment, there is no clear policy towards Africa from President Donald Trump’s administration. Does that bother you? Do you want more from the U.S. administration at the moment?
And number two, Mr. Tillerson, you’ve made a statement about China, saying that China encouraged dependency, utilized corrupt deals and endangered Africa’s natural resource. Is it something that you want to say again, and what’s the base of that? And Mr. Chair, do you agree with the comments of Mr. Tillerson?
Final question: President Donald Trump, we’ve heard, has called Africa a “shithole,” and Africans. This is something that Africa is still digesting. Do you agree with that and do you believe Africa – I mean President Donald Trump owes Africans an apology?
Thank you very much.
SECRETARY TILLERSON: I think the United States commitment to Africa is quite clear in terms of the importance we place on the relationship. The President himself wrote a personal letter to the chairperson, reaffirming the importance of this relationship from the standpoint of all aspects that I covered in answering a previous question.
With respect to China’s approach, as I’ve said to others around the world, we are not in any way attempting to keep Chinese investment dollars out of Africa. They are badly needed. However, we think it’s important that African countries carefully consider the terms of those investments, and we witness the model that the Chinese follow. They do not bring significant job creation locally; they don’t bring significant training programs that enable African citizens to participate more fully in the future; and oftentimes, the financing models are structured in a way that the country, when it gets into trouble financially, loses control of its own infrastructure or its own resources through default.
So our message is for countries to consider carefully what the terms of those agreements are, and not forfeit any elements of your sovereignty as you enter into such arrangements with China. We welcome Chinese participation, but we hope they will follow international rules, international norms, and respect the sovereignty of countries and respect the need to develop the citizens of those countries and create a future for their own – for the people of those countries as well.
CHAIRPERSON FAKI: (Via interpreter) Yes, I confirm that I received a letter dated 25 January written by President Trump to myself, and which I have also copied to all the leaders of Africa, and I believe that this incident is of the past. Africa – and with the visit of Secretary of State Tillerson. And the evidence of the relations between Africa and the United States is personified through his visit. I believe reasonably this partnership has produced results. It is useful for both parties, whether in the area of trade or investment, or whether it is peace and stability in Africa.
You are aware the African continent has many partnerships. I think the Africans are mature enough to engage in partnerships of their own volition which will be useful for the country – for the countries and the continent. So there is no monopoly. We have multifaceted, multifarious relations with other parts of the world. We know where our interests, and it is our full awareness I think that is most important.
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Africa’s population explosion is a ticking time bomb – African Development Bank Governors
The African Development Bank and its East and North African Governors have stressed the need for urgent measures to match the continent’s growing population and youth unemployment, which they likened to a “ticking time bomb.”
The meeting described the continent’s growing young population as a potential growth engine for the world.
“The good news is that the solution is within our reach and will require investments,” said Akinwumi Adesina, President of the African Development Bank.
At the end of a two-day consultation at the headquarters of the Bank in Abidjan, Côte d’Ivoire, the Bank and the Governors discussed strategizes for closing Africa’s $170 billion infrastructure investment gap.
To bridge the investment gap, ensure inclusive growth, and create employment for the continent’s population, the meeting endorsed the African Development Bank-led African Investment Forum and described it as a timely opportunity to catalyze investments into projects and attract social impact financing to Africa.
Tanzania’s Minister for Finance and Planning, Isdor Mpango, called for closer involvement of the private sector in financing development on the continent.
“The African Development Bank is well positioned to advise and assist Governments and the private sector to come up with bankable projects,” Mpango said, calling for direct resources to provide budget support and investment opportunities.”
Through the African Investment Forum, scheduled for November 7-9, 2018 in Johannesburg, South Africa, the Bank and its partners intend to showcase bankable projects, attract financing, and provide platforms for investing across Africa. The forum will bring together the African Development Bank and other global multilateral financial institutions to de-risk investments at scale.
“A uniqueness of the African Investment Forum is that there will be no speeches. The only speeches will be transactions,” said President Adesina.
Rwanda’s Minister of Finance and Economic Planning, Claver Gatete said: “The African Development Bank has already discussed the concept of the African Investment Forum with us. The Rwandan Government takes this Forum very seriously.”
“Jobs will come from industrialization. The new approach using the African Investment Forum to de-risk the sector and attract investors is the way to go,” said Kiplagat Rotich, Kenyan Finance Minister.
13 per cent of the world’s population is estimated to live in sub-Saharan Africa today. That number is projected to more than double by 2050. Four billion (or 36 per cent of the world’s population) could live in the region by 2100, according to the UN Population Division. Africa is projected to have over 840 million youth by 2050 with the continent having the youngest population on earth.
According to Adesina, “We have 12 years left to the SDGs. It is an alarm bell because if Africa does not achieve the SDGs, the world won’t achieve them. The African Development Bank is accelerating development across Africa through the High 5s. We are deepening our reforms. We deepened our disbursements to the highest levels ever last year and we are leveraging more resources for Africa.”
Tunisia’s Development, Investment and International Cooperation Minister Zied Ladhari recalled how the Bank’s 11-year temporary relocation to his country helped strengthen the bonds between them. “We share the Bank’s vision. Africa is the continent of the future. This is a great Africa moment with the Bank at the centre. Unleashing the potential of African economies is a task which the Bank must accomplish.”
As part of the Bank’s High 5 agenda, 13 million African women have benefitted from new electricity connections and 23 million from improvements in agriculture. Also, 10 million African women have benefited from investee projects
An analysis of the African Development Bank’s impact from 2010-2017 indicates that 27 million Africans gained access to new electricity connections. 899,000 small businesses were provided with financial services. 35 million have benefitted from improved access to water and sanitation.
“With the Bank’s support, Somalia has evolved from a failed to a fragile state,” asserted Somalia’s Finance Minister, Abdirahman Beileh. “The African Development Bank has been with us throughout. Together we can reach the bright light at the end of the tunnel.”
Algeria’s Finance Minister, Abderahmane Raouia, said “The biggest challenge for Africa today is job creation. It is a stake of stability and a lever to pull economic growth upwards. We must offer job opportunities for young people to convince them to stay here on the continent.”
According to Simon Mizrahi, Director, Delivery, Performance Management and Results, the Bank needs to move from billions to trillions in its funding and leveraging effect.
Egypt’s Ambassador to Côte d’Ivoire, Mohamed El-Hamzawi, who represented the Finance Minister, said the country has seen two revolutions in 2011 and 2014. He thanked the Bank for supporting the country’s macroeconomic stabilization, financial reforms, infrastructure, and energy projects, among others.
Morocco’s Economy and Finance Minister, Mohammed Boussaid, praised the Bank’s ambition for Africa, and underscored its support for energy, agriculture and infrastructure projects. He said “a capital increase today is not a choice, it is a necessity. Today, the leading export sector in Morocco no longer belongs to traditional sectors, such as phosphates, but to the automotive industry. This generates jobs and adds value for sustainable and robust growth.”
With a substantive capital increase, the African Development will be able to execute its robust pipeline of operations (15bn in 2018 alone), including infrastructure and regional integration projects. The prospects for 2018-2020 are bright, with 50.3 million people benefitting from improved access to transport compared to 14 million in 2017. Also, more than 35 million people are expected to benefit from new or improved electricity connections, in contrast to 4.4 million delivered in 2017.
East African Ministers share African Development Bank’s vision for the continent
In a historic first, East African Governors of the African Development Bank met with the President Akinwumi Adesina and Executives to discuss economic challenges, opportunities and successes in the continent’s fast-growing powerhouse region.
President Adesina assured the gathering that the Bank intends to make the strategic regional consultations an annual event to allow for more open dialogue, constructive feedback and the acceleration of development reforms.
The Governors – chiefly Finance Ministers and Ministers of Economic Planning representing Burundi, Comoros, Djibouti, Ethiopia, Kenya, Rwanda, Somalia, South Sudan, Sudan and Tanzania – shared these sentiments.
“The High 5s are what Africa needs now,” said Henry Rotich, Kenyan Minister of Finance. “The Bank has financed one of our key interventions, the Last Mile Project, thanks to which 70 percent of Kenyans now have access to power in rural areas. You know what that means? It means more people can work, shop, study and create jobs. If we implement the High 5s successfully, we can address some of the key challenges we face. ”
Similarly, Tanzania’s Minister for Finance and Planning, Isdor Mpang, noted that his country has aligned its own development priorities with the High 5s of the Bank. “We want to be a middle income country,” he said. “How do you do that? These are exactly the five points that you need to work on.”
Somalia’s Finance Minister, Abdirahman Beileh, described the Bank’s unique role in his country’s transition. “With the Bank’s support, Somalia has evolved from a failed to a fragile state,” he said. “The African Development Bank has been with us throughout.”
President Adesina highlighted some of the Bank’s achievements over the last seven years. Approximately 27 million Africans have benefitted from new electricity connections, while 49 million enjoyed improvements in agriculture. Some 35 million gained better access to water and sanitation, and nearly a million small businesses have been provided with financial services. Over the same period, 23 million women saw improvements in agriculture and 10 million were able to take advantage of investee projects.
Lending to low-income countries increased seventeenfold, from $434 million in 2010 to $7.5 billion in 2016. Lending to middle income countries doubled. The Bank’s active portfolio rose from $15 billion in 2010 to $30 billion in 2016.
President Adesina noted that the Bank leveraged $9.73 billion from the capital markets for African countries last year and achieved its highest annual disbursement ever in its history, at $7.67 billion.
Djibouti Finance Minister Hmadou Ibrahim asked the Bank to ensure that infrastructure projects being financed in neighbouring countries are extended to his country, emphasizing the importance of regional integration through rail and roads.
“For a country like mine, regional integration is a survival issue,” he said. “Without regional integration, Djibouti, this link between Africa and Asia, would not exist. As a result, all our investments bear the mark of regional integration to our environment.”
Hassatou N’Sele, the Bank’s Treasurer and acting Finance Vice President, highlighted the Bank’s outstanding private sector portfolio in low-income countries, with close to $2.4 billion funding in 2017. More than 458 companies have been financed by the Bank in these countries.
Matia Kasaijja, Uganda’s Minister of Finance and Economic Planning and Governor for his country at the Bank, expressed strong support for a general capital increase to enable the Bank to accelerate Africa’s social and economic development. He noted that the Bank has retained its AAA rating during challenging economic headwinds when many institutions and countries have been downgraded.
Sudan Minister of Finance and Economic Planning, Mohammed Osman Al-Rikabi, said: “Most of our partners have focused on humanitarian support. But the African Development Bank has worked hand in hand with the Government to address macroeconomic issues and development projects. As we battle to recover our economy, the African Development Bank is providing support.”
President Adesina thanked the Governors for their acknowledgement of the Bank’s work in their respective countries.
“Your support and confidence in the Bank are uplifting; they mean a lot to us,” he told them. “You are the wind in our sails.”
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ECOWAS Quality Policy Workshop agrees to champion Mutual Recognition Agreements to facilitate trade and industrialization
The African Trade Policy Centre (ATPC) of the United Nations Economic Commission for Africa (ECA) in partnership with the African Organization for Standardization (ARSO) organized a capacity building workshop on National Quality Policy Implementation in the Economic Community of West African States (ECOWAS) from March 6 to 7, 2018 in Abidjan, Côte d’Ivoire.
In his opening presentation, the Secretary General of ARSO, Mr. Nsengimana emphasized that complying with standards and technical requirements is crucial for participation in regional and global trade, particularly in industrial goods. At the same time, he noted that standards are complicated and can create significant challenges for capacity constrained African small and medium enterprises (SMEs), highlighting the need to simplify and harmonize standards, as well as build awareness and develop tailored outreach materials.
For his part, Mr. David Luke, Coordinator of ATPC highlighted that the African Continental Trade Area (AfCFTA) offers substantial opportunities for industrialization and diversification on the continent, but that this transformative potential will not be realized without the development and implementation of African quality standards.
Mr. Luke commended ECOWAS as being the first Regional Economic Community (REC) to publish its Quality Policy and emphasized the need for strong National Quality Infrastructure (NQI) to support its implementation. He concluded by noting that RECs serve as building blocks for the AfCFTA, and will continue to have a crucial role to play in African standards.
Mr. Lawson-Hechelli, ECOWAS Director of Industry, in his opening remarks, emphasized that the ECOWAS Quality Policy (ECOQUAL) is home-grown and that its development was informed by a series of consultative and participatory missions to ECOWAS Member States.
He noted the enthusiasm among ECOWAS Member States to develop and improve their National Quality Policy (NQP) in line with the five pillars of quality identified in ECOQUAL. Finally, Mr. Lawson-Hechelli highlighted that the workshop would be led by two experts responsible for the development of ECOQUAL.
Six important steps were identified for the successful implementation of ECOQUAL at the national level: 1) Formally adopt ECOQUAL as the NQP; 2) Appoint a champion organization for the implementation of the NQP; 3) Set up a National Quality Infrastrjcture (NQI) coordination mechanism; 4) Revise the institutional and legal framework including the establishment of a fully functional National Standards Bureau (NSB); 5) Sensitize stakeholders on the NQP; and 6) Explore sources for funding implementation.
The workshop concluded with a set of concrete recommendations to pave the way forward for ECOQUAL domestication. These included the need to improve NQI; effectively engage the private sector to ensure standards harmonization is demand-driven; expand the financial contributions of Member State governments to QI; and carry out assessments to establish the current QI status in Member States and guide regional capacity building initiatives.
The main resolution of the workshop was the decision for Member States to facilitate the free movement of products through Mutual Recognition Agreements (MRAs) of certified products. The workshop agreed to establish a Champions Pilot Project, to first establish good practices, which could then be rolled out across the ECOWAS region.
Eight Member States were selected as Champions – Nigeria (Chair), Ghana (Vice Chair), Niger (Secretary), Benin, Burkina Faso, Sierra Leone, Guinea and Mali. These States agreed to develop or adapt a Mutual Recognition Protocol on products for which they have exclusive jurisdiction. The African Export Import Bank (AFREXIMBANK) and ECA will support the Champions to establish a Roadmap for the pilot project and towards subsequent roll-out in the ECOWAS region.
The workshop was attended by thirteen of the fifteen ECOWAS Member States, with high-level representation from National Bureaus of Standards, regulatory bodies, conformity assessment bodies and the private sector. ARSO, AFREXIMBANK, ECOWAS Secretariat and ECA officials were also in attendance.
Download: pdf ECOWAS Quality Policy and Implementation Framework signed February 2013 (1.54 MB)