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Ivorian Jean-Claude Brou takes over from Beninois Marcel De Souza at the helm of the ECOWAS Commission
Having served for almost two years as President of the Commission of the Economic Community of West African States (ECOWAS), Marcel de Souza handed over to his successor, Jean-Claude Brou, on Thursday 1 March 2018 in Abuja, Nigeria.
The handover ceremony was attended by Ally Coulibaly, Minister of African Integration and Ivorians Abroad, Mrs Khadija Bukar Ibrahim, Nigeria’s Minister of State for Foreign Affairs, members of the Diplomatic Corps accredited to Nigeria and ECOWAS, alongside staff and heads of Community Institutions.
In his farewell address, Mr de Souza outlined the significant progress made by the outgoing Commission. He cited in particular the ongoing ECOWAS institutional reform; renewed commitments of Member States to the creation of the ECOWAS single currency by 2020; and plans for the construction of a new Commission headquarters.
He also recalled the establishment of a regional television station; successful conduct of presidential elections in 2016 and 2017 in six ECOWAS Member States; launch of the West African Police Information System (WAPIS) in 2017; and the transformation of the early warning system into a tool for human security and natural disaster monitoring.
The outgoing President also highlighted the enhanced harmonisation of macroeconomic and monetary integration policies; signing of the Association Agreement with Mauritania; repayment of debts and improved solvency, credibility and corporate image of the Commission; adoption and implementation of the ECOWAS Code of Ethics and Professional Conduct; as well as cost containment measures.
This notwithstanding, Mr de Souza underscored the major challenges to be addressed, in particular late payment of Community Levy by Member States; non-compliance with decisions of the ECOWAS Court of Justice; no solution to the political crisis in Guinea-Bissau; strengthening of regional integration; sustaining the gains made in managing staff welfare and cost control measures; operationalisation of Joint Border Posts in Noépé between Ghana and Togo, and Sèmé between Benin and Nigeria.
Taking his turn, the new President of the ECOWAS Commission, Jean-Claude Kassi Brou, congratulated and thanked his predecessor for the impressive manner in which he led the regional organisation.
“Your actions further lifted and raised ECOWAS’ flag high. Your commitment to hard work is not a secret to anyone, especially me. I would like to extend my congratulations to all outgoing Commissioners and statutory officers. You can leave with head held high for a job well done that will forever be remembered by the entire Community,” Mr Brou said.
He welcomed the progress made by ECOWAS at political, institutional, security, economic and social levels and pledged to further strengthen them.
For Jean-Claude Brou, the challenges to be addressed include Member States’ expectations in the areas of economic, social and human development; synergy of actions for greater efficiency in their implementation; sound business environment to support and finance infrastructure, industrialisation, agriculture and the economy.
Prudent operational and financial management of ECOWAS resources; improved implementation of the Community Levy mechanism to ensure the financial stability of Community Institutions; performance of ECOWAS staff are further challenges to be addressed, he stated.
He availed himself of the opportunity to express his gratitude to ECOWAS Heads of State for approving his appointment for the next four years, in particular Faure Gnassingbé, Togolese Head of State and Chairman of the regional organisation, Muhammadu Buhari, Nigerian President, and Alassane Ouattara, Ivorian Head of State, as well as Prof. Robert Dussey, Togolese Minister of Foreign Affairs, Cooperation and African Integration,.
A native of Cote d’Ivoire, the new ECOWAS Commission President holds a PhD in Economics, an MBA in Finance from the University of Cincinnati, Ohio, United States of America and, a Master’s degree from the National University of Cote d’Ivoire.
He began his professional career at the International Monetary Fund (IMF) in 1982, first as a Senior Economist and served mainly in Senegal from 1990 to 1991 as IMF Resident Representative.
Until his appointment as President of the Commission, Jean-Claude Brou served as Minister of Industry and Mines in Cote d’Ivoire since November 2012. Prior to that, he was Economic and Financial Adviser to the Prime Minister of Cote d’Ivoire from 1991 to 1995. In 1996, he was named Chief of Staff to the Prime Minister, a position he held until 1999. He was also Chairman of the Privatisation Committee.
Jean Claude Brou also worked for eight years at the Central Bank of West African States (BCEAO), where he was successively Director of International Relations and Director of Studies until 2005. He thereafter headed the Department of Economic and Currency Studies before being appointed Special Adviser and Comptroller General from 2007 to 2008.
He was also the World Bank’s Resident Representative for Chad from 2010 to 2013, and Consultant to the Government of the Democratic Republic of Congo. Jean-Claude Brou is married with two children.
Contribution to the ECOWAS integration process: Review of the transitional mandate
by Marcel de Souza, President of the ECOWAS Commission
Having served for almost two years as President of the Commission of the Economic Community of West African States (ECOWAS), I would like to provide a brief overview of the major initiatives undertaken and progress made with the support of all Community statutory officers, as well as commitment of all staff of Community Institutions. I should therefore like to express my gratitude and sincere appreciation for the outstanding support I enjoyed from every single one of them.
This report is structured in three (3) parts. It, first, presents an overview of the situation at the time we assumed office. It then highlights major achievements in the implementation of regional integration programmes, service delivery and working conditions. Lastly, it outlines challenges and prospects for strengthening regional integration.
Status report
On assumption of office, we noted that the Community was faced with multiple and multifaceted challenges, in particular:
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increased risk of non-payment of salaries to staff members;
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cash-flow problems and huge arrears towards suppliers and service providers;
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non-rationalization in the use of energy resulting in huge running costs;
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inadequate working tools for staff;
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slow progress in the institutional reform process;
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lack of progress in a number of Community programmes;
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high number of disputes with staff;
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poor internal control;
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failure to audit the 2013, 2014 and 2015 financial statements;
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Lack of predictability in the rotation of statutory positions.
Implementation of the ECOWAS Trade Liberalisation Scheme
During the period under review, the Task Force on the ECOWAS Trade Liberalisation Scheme, set up by ECOWAS Heads of State and Government, became operational and was able to field advocacy missions to thirteen (13) Member States. It observed that obstacles to free movement and right of residence and establishment persist in Member States. It therefore proposed strong measures to political authorities to remove these obstacles as soon as possible.
Furthermore, awareness and advocacy activities were carried out through the production of a short hidden-camera film entitled “ECOWAS Taxi”. The short film focused on harassment along borders and on roads in Member States. In addition, the Commission provided funding for the film “Borders”, produced by a Community citizen, who won an award at FESPACO 2017. “ECOWAS Taxi” and “Borders” highlight practices contrary to the rules and principles adopted by Member States of the Community.
It should be pointed out that during periodic meetings with ECOWAS Member States’ Ambassadors accredited to the Commission, I consistently emphasized the need for all Member States to ratify the various Protocols relating to free movement of persons and goods and right of residence and establishment. More specifically, I carried out actions in support of Cabo Verde to ensure that this founding ECOWAS Member State, sees itself as an integral part of the region. In that regard, the parties mutually agreed to open diplomatic missions in Abuja and Praia.
Implementation of the ECOWAS Common External Tariff
To assist Member States in the implementation of the ECOWAS Common External Tariff (ECOWAS CET), which entered into force on 1 January 2015, necessary support was provided to the two countries (Cabo Verde and Sierra Leone) that had technical challenges. Furthermore, strong measures were taken to ensure the smooth implementation of the Common External Tariff and adoption of the Community Customs Code.
Adoption of the ECOWAS Customs Code
The objective of the ECOWAS Customs Code is to ensure harmonisation of customs legislation and operations in the region, and facilitate trade in accordance with the requirements for the smooth functioning of a customs union. The Customs Code was reviewed and adopted at the meeting of Member States’ Finance Ministers held in Abuja, Nigeria on 24 November 2017. The Customs Code will be complemented by a manual of procedures to ensure its proper implementation by Member States.
Challenges and prospects
Lack of Community spirit in the region
The lack of Community spirit among Member States is very obvious and constitutes a barrier to integration and solidarity. It is therefore necessary to rebuild this spirit and ensure that regional policies are adopted and that national laws align with Community policies. Similarly, political interference has a significant impact on the Commission’s efficiency, in particular with regard to purely internal management decisions.
Delay in remittance of Community Levy
Member States should continue to be sensitised on the importance of the Community Levy for programme implementation. However, cases of wasted resources and mismanagement should be discouraged in the strictest terms.
Non-compliance with decisions of the Court of Justice
Judgements of the Community Court of Justice are neither complied with nor enforced. There is a need for in-depth reflection on the issue. It is recommended that sanctions should be considered as ultimate measures for the smooth functioning of the Community.
No solution to the political crisis in Guinea Bissau
ECOWAS is very active in Guinea-Bissau and should continue its efforts for the resolution of the political crisis. The key to resolving the impasse is the implementation of the Bissau and Conakry Agreements. Sanctions imposed recently by the Authority of Heads of State and Government constitute a means of exerting pressure to end the crisis. It should be pointed out that the cost of maintaining ECOWAS troops in the country is a huge burden for the Community. A speedy resolution of the crisis is therefore strongly encouraged to mitigate the risks of destabilization throughout the sub-region.
Need for enhanced regional integration
With a view to consolidating Community spirit and encouraging people’s commitment to Community life, it is recommended that each Member State should provide a land for the construction of an ECOWAS House. Efforts being made to transform the radio provided by the United Nations Mission in Liberia (UNMIL) into an ECOWAS Communications Agency should be sustained.
“Living Together” and inter-religious dialogue are major concerns to be addressed through communication.
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IOM holds regional transnational crime workshop for security officials from Kenya, Somalia, Tanzania
IOM, the UN Migration Agency, facilitated a workshop in Somalia, Transnational Organized Crime and Immigration Risk Analysis, from 20-22 February 2018, bringing together senior government officials in the security sector including immigration directors, policy makers and intelligence agencies from Somalia, Kenya and Tanzania.
The workshop was organized by IOM’s Africa Capacity Building Centre (ACBC), the region’s hub for border management expertise. Participants were provided with a wealth of experience, knowledge, and examples of real-life scenarios from the complex world of transnational organized crime.
Guest speaker Tuemay Aregawi Desta, Head of the Transnational Organized Crime Pillar from the Inter-Governmental Authority on Development (IGAD), provided an overview of the transnational crime context in the region, referencing challenges with human trafficking and smuggling, as well as drug and firearm control.
“Just because we can’t see it doesn’t mean cooperation between these countries isn’t there,” said Desta. “It exists – between Kenyan and Tanzanian intelligence, between Somalia and Kenya immigration – it just has not been formalized and operationalized.”
Transnational organized crime was described through the analogy of a Hydra, with one participant, the Regional Immigration Director for Jubbaland, Somalia, commenting, “Transnational organized crime functions like the snake whose head is cut off, only for two to grow back in its place. If you’re able to get rid of one threat, another replaces it, how can we eliminate it?”
The workshop provided possible answers, which included a new level of coordination between Tanzania, Somalia and Kenya. Discussions centred on the international, regional and bilateral cooperation mechanisms in place and the gaps that exist to adequately address the phenomenon of transnational crime. It also provided the occasion to build transnational networks amongst intelligence, police and immigration.
As a result of the brainstorming, group work, discussion and debate, IOM drafted recommendations that will be published and shared with the respective governments. Participants gained an understanding of the legal frameworks that can underpin progress toward addressing transnational crime.
The workshop was supported by an IOM regional project funded by the Government of Canada. The project aims to reduce regional security threats by promoting cooperation, dialogue and information sharing, as well as strengthening border management capacities and community awareness.
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Building environment and natural resources management resilience in East Africa
The East African Community (EAC) Secretariat in collaboration with the Lake Victoria Basin Commission (LVBC) and the United States Agency for International Development (USAID), held a Regional Learning Event and Investors Forum/Donors Roundtable on Environment and Natural Resources Management under the theme Building Resilience in East Africa: Bridging the Gaps in Policy & Practice at the EAC Headquarters in Arusha, Tanzania.
The forum showcased the EAC’s regional priority programs in environment and natural resources management including climate change adaptation; biodiversity conservation; water, sanitation and hygiene; and transboundary water resources management.
The forum brought together regional and national practitioners, policy makers, researchers, non-governmental organizations, international organizations, regional intergovernmental organizations, private sector representatives and development partners from the EAC region. Participants explored these themes with objective of stimulating concrete and practical actions that will impact the most vulnerable ecosystems and societies
Addressing the forum Forum/Donors Roundtable, the EAC Secretary General Amb. Liberat Mfumukeko commended the fundamental support from USAID extended towards different sectors including Trade and Investment, Agriculture, Energy, Health and institutional strengthening.
He said for the last 5 years EAC has been collaborating with USAID through different projects and programs including the Planning for Resilience in East Africa through Policy, Adaptation, Research and Economic Development (PREPARED).
“I would wish to emphasize that sustainability and scaling up of PREPARED achievements is very key and is one of the reasons why we are gathered here today.”
On his part, Mr. Brad Arsenault, Deputy Chief, USAID Kenya and East Africa said the U.S. Government, through USAID, focuses on the sustainable management of the region’s rich natural resources as a driver for socio-economic growth and sustainable development. Our joint commitment to managing natural resources is critical,” explained USAID’s Acting Director.
Mr. Brad pledged USAID’s commitment to support the strong strategic leadership by the EAC and maintaining the collaborative management structures to ensure the management and conservation of transboundary natural resources.
About the program
USAID’s PREPARED program is implemented by six regional partners including the EAC, LVBC, Intergovernmental Authority on Development (IGAD), Climate Prediction and Application Centre (ICPAC), Famine Early Warning Systems Network (FEWSNET), Regional Centre for Mapping of Resources for Development (RCMRD) and Tetra Tech ARD. The program seeks to mainstream climate-resilient development planning and program implementation into regional and national development agendas.
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tralac’s Daily News Selection
PIDA Week 2017 (held on 10-14 December 2017, Swakopmund): outcomes
Extract from the conference proceedings: Good practice for PIDA Corridor Implementation (pdf). Several recommendations and conclusions emerged from the rich discussions, for the proposed corridor guide, namely that it is important to: (i) Put more effort into setting up legal frameworks and instruments for corridor management, as MOUs are not really legal instruments that reassure parties, including the private sector; (ii) Take a commercial approach to corridor development while factoring in socio-economic development of the communities along the corridors. This should include rigorous analysis of the assets to be realised from corridor development, what benefits these assets would generate (e.g. how the corridors would support trade) and some form of performance indicators (KPIs); (iii) Develop data-driven decision-making models to prioritizing project selection and better inform corridor development; (iv) Ensure that corridor development includes funding plans that take into account analysis of funding models suitable for the different projects along the corridor (look into innovative funding mechanisms including the 5% agenda, recommendations in NEPAD-ECA domestic resource mobilisation report, establishment of listed SPVs as in China); (v) Designate champions to promote corridor projects, ensure that political commitments translate into tangible action and ensure that there is absolute commitment at all levels. [Final communique]
Egypt to take part in African trade ministers’ preparatory meeting in Rwanda (Egypt Today)
Minister of Industry and Trade, Tarek Kabil, said yesterday Egypt will take part in next week’s preparatory meeting of the African trade ministers in the Rwandan capital Kigali for talks on the establishment of an African free trade area. The minister’s statements were made after his meeting with Nigerian Minister of State for Industry, Trade and Investment Aisha Abubakar, currently visiting Cairo, for talks on means of enhancing trade exchange and joint investments between the two countries in the coming period.
Kaushik Basu: The ABCs of Doing Business (Project Syndicate)
Every year when the World Bank publishes its report on the “ease of doing business” in 190 economies, countries that fall in the ranking are quick to cry foul or complain about methodological errors. But governments make a much bigger mistake when they view the Doing Business index as a measure of overall wellbeing.
WCO visits World Bank for discussions on “Doing Business”
As regards “Doing Business” in particular, the discussions addressed the quality and sources of data; the methodology, including how best to convey information on process changes; the measurement of the use of means of transport (land, sea and air); the treatment of commodities (agricultural and industrial); and the impact of intra-Member trade by Customs Unions. It was agreed to continue cooperating on and further discussing these matters and other areas. The WCO Secretariat and the World Bank’s “Doing Business” Unit will inform WCO Members, at a suitable opportunity, about the “Doing Business” process with a view to Customs taking a more active role in the process to ensure that sufficient account is taken of Customs’ point of view. [Nigeria: Governor Ifeanyi Ugwuanyi of Enugu State inaugurates Ease of Doing Business Council]
India Responsible Business Index 2018: analysing inclusive policies, disclosures and mechanisms of Top 100 companies (pdf). Livemint: Social inclusion is not a priority for Indian businesses
Shoprite Holdings ramps up Africa expansion with Kenya entry
Non-RSA supermarkets, spread across 14 countries, had a challenging six months. Supermarket sales in Angola were down 9.5% in local currency (against prior year growth of 155.4%), reflecting last year’s exceptional performance; a drop in internal inflation of 17.3 percentage points across the Non-RSA operations and a more competitive landscape. Nigeria’s turnover growth in local currency was 9.3%, hampered by import restrictions and forex shortages in the country. Zambian operations, however, are starting to show positive growth, with sales up 4.5% in local currency. Expansion in Africa continues with a planned entry into Kenya before the end of 2018, where weakened competitor positions have opened a window of opportunity, to strengthen the Group’s presence in East Africa.
Namibia: 2017 Article IV Consultation (IMF)
Under current policies, staff estimates the fiscal deficit to narrow in FY17/18, but with SACU revenue declining, future deficits would remain large and public debt continue to rise. Despite higher revenue than projected by the authorities, staff expect rising wages and spending pressures from the previous year to bring the FY17/18 fiscal deficit to about 5% of GDP. While the projected deficit is lower than in the previous year (9.3% in FY16/17), the decline largely reflects temporarily higher SACU revenue and is not sustainable. Over the medium term, SACU revenues are expected to decline and, in the absence of additional actions, the fiscal deficit is projected to increase to around 9-10% of GDP. Against this background, public debt would continue rising and approach 70% of GDP by 2022, and government’s gross financing needs would average about 21% of GDP per year, creating financing pressures and possible funding risks. This fiscal outlook is subject to significant risks. The main risks arise from larger contingent liabilities as the government plans to boost public-private partnerships and extra-budgetary financing of large infrastructural projects (Box 1; Annex IV). [Note: Figure 3 - Persistent external vulnerabilities, pdf; IMF statement]
Inaugural COMESA Gender Statistics Bulletin is posted
COMESA has launched the inaugural Gender Statistics Bulletin which seeks to improve the availability of gender disaggregated data to Member States. COMESA Assistant Secretary General Dr. Kipyego Cheluget said the Bulletin was a fulfilment of the Council of Ministers’ decision in October 2016 at the COMESA Summit in Madagascar. Inaugural COMESA Gender Statistics Bulletin (pdf). The thematic areas covered in the report include: population and gender gaps; economic empowerment of women and youth; maternal, child and adolescent health, and HIV and AIDS, education, training, science and technology, human rights issues, leadership, politics and decision-making. Finally, the report highlights issues with data limitations and presents some recommendations for Member States and Secretariat.
Nigerian Annual Trade Report: launch speech by Dr Okechukwu E. Enelamah
The Trade Statistics Chapter is a first. The statistics shall be updated quarterly for careful monitoring, analysis and negotiating adjustments. But even now, there are key lessons that we are drawing. Nigeria must be more innovative, more enterprising and more aggressive in the use of trade, investment, technology and the abundant intellectual property of creative Nigerians to grow the economy, enhance welfare and diversify the Nigerian economy away from primary commodities. We must negotiate better than we have done so far, so that investors who seek market access in Nigeria, must link their investments to industrial activities to enable creation of regional and global value chains. We must be more creative in making trade and investment count for growth, diversification, modernization and job creation in the Nigerian economy. Going forward, access to Nigeria’s markets must no longer be for free. No free market access! Investors who seek market access in Nigeria to sell their goods and services, must invest and connect to our industrial and manufacturing activities.
Pakistan aims at $5bn annual trade with Africa in next five years (UrduPoint)
The Islamabad Chamber of Commerceand Industry in collaboration with Trade Development Authority of Pakistan/Ministry of Commerce organized a “Look Africa” Trade Forum that was aimed at exploring new avenues of promoting trade and exports with African countries. Ms Maria Kazi, Joint Secretary, Ministry of Commerce gave a detailed presentation on trade potential with Africa. She said Pakistan’s exports to Africa were confined to few products including rice, pharmaceuticals, cement, textiles, surgical and sports goods and urged that private sector should focus on exporting more products to Africa. About planned initiatives of the government for Africa, she said new commercial sections would be opened in Africa and Pakistan would offer PTAs/FTAs on bilateral basis and with African Trading Blocks to promote its trade and exports. She said local Trade Development Officers in African countries would be appointed in African countries where resident missions were not stationed. She said special incentives would be provided to Pakistani companies through new strategic trade policy framework for participating in trade fairs in Africa. [Thailand’s engagement with Africa]
Fifth German-African Economic Forum: selected updates
(i) Build value-added economies - President calls on African countries. The continent’s second priority, he said, should be to increase trade and investment co-operation, and not aid, as it was one of the ways healthy economic relations could be developed between Africa and Germany and, indeed, with the rest of the world. “With Africa’s population set to reach some two billion people in 20 years’ time, there are immense opportunities to bring prosperity to Africa, and to Germany too, with hard work, enterprise and creativity. I urge German organisations and companies present to take advantage of this and enhance their trade relations with Africa,” the President said. “The time to deepen German-African trade and investment is now. We must generate investments in agro-industry, the energy and power sectors and infrastructural development of Africa, capable of producing positive outcomes for the private sector, especially small and medium enterprises, of Germany and Africa,” he added.
(ii) Ghana must review investment laws: Germany’s economic affairs and energy minister. Delivering one of two keynote addresses at the Konrad-Adenauer-Stiftung Foundation’s German-Ghana Business Forum in Berlin, the Minister called on President Akufo Addo and his government to take a second look at the investment laws of Ghana if the new wave of German-Ghanaian Economic Relations is to see the full benefits of the business potential it presents. Zypries who has headed the Federal Ministry for Economic Affairs and Energy since 27 January 2017said Ghana’s economic performance the last one year is quite impressive. President Akufo-Addo for his part indicated that he has taken notice of the suggestion by the Minister for a review of Ghana’s investment laws. The lawful processes the President assured, will be initiated for purposes of considering the investment laws of the country. Additionally, he told the gathering that his Government has taken specific measures which will lead the country and its economy into the new digital age.
(iii) Germany alone cannot afford a new “Marshall Plan” for development in Africa: Chancellor Angela Merkel. Speaking at a joint news conference with Ghanaian President Nana Akufo Addo in Berlin, Merkel called for other European partners to take more responsibility. “A Marshall Plan for Africa cannot be realised by Germany alone, it should be a European project,” she said. Merkel said Germany would host a meeting of the G20 and African countries this autumn to evaluate progress of the Compact with Africa program. [Note: The next German-African Business Summit will take place in Accra, 11-13 February 2019]
IGAD urges Uganda to prepare for borderless region (New Vision)
According to Lucy Daxbacher, a migration expert at IGAD, there are vast opportunities that await Uganda if member states agree to a borderless region. She says given Uganda’s agricultural potential and the high demand for food within member states, the country is bound benefit exponentially from food exports. The IGAD team fast-tracking the free movement of persons consultations have already visited Uganda, South Sudan, Sudan and Somalia. They are yet to visit Djibouti and Ethiopia. According to Daxbacher, the countries they visited have embraced the idea. However, she is quick to add that some member states want the eventual protocol to be tailor-made to suit the circumstances of member countries. The team visited Kenya last week and the response from the Kenyan team was very positive, according Daxbacher. The workshop also developed a roadmap for the negotiation and adoption of the Protocol on Free Movement of Persons in the IGAD Region.
International migration from sub-Saharan Africa has grown dramatically since 2010 (Pew Research Group)
The total number of emigrants worldwide from all sub-Saharan African countries combined grew by 31% between 2010 and 2017, outpacing the rate of increase from both the Asia-Pacific (15%) and Latin America-Caribbean (9%) regions. Only the Middle East-North Africa region saw a larger increase (39%) of people living outside of their birth country during the same span, driven largely by people fleeing conflict in Syria. Some 25 million sub-Saharan migrants lived outside their countries of birth in 2017. The number of international migrants from sub-Saharan Africa between 2010 and 2017 has grown at a higher rate (31%) than in the 2000s (25%) and the 1990s (1%). [Aloysio Nunes Ferreira: A global refugee strategy]
Today’s Quick Links: USTR: Trump Administration sends Annual Trade Agenda Report to Congress Kenya-Tanzania trade row talks set to begin Monday Mauritius, Arab Bank for Economic Development in Africa sign MoU for development projects in priority sectors Burkina Faso Customs Administration prepares for its first Time Release Study Andrew Sheng, Xiao Geng: Why there is no “Beijing Consensus” |
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2017 PIDA Week: Conference proceedings
Enhancing Trade and Economic Transformation through Regional Infrastructure Development
Opening session
NEPAD CEO Dr. Ibrahim Assane Mayaki welcomed the participants to PIDA Week and thanked the Government of Namibia for the warm hospitality extended to all guests and for organizing the event. Introducing PIDA and the theme of 2017 PIDA Week, Dr. Mayaki noted that African Heads of State and Government including leaders of Industry and Finance recognize the lack of technical capacity for project preparation as one of the key bottlenecks in the implementation of PIDA projects.
Dr. Mayaki explained that ‘the African Union Commission and NEPAD established the PIDA Service Delivery Mechanism (SDM) as an instrument for tackling the lack of technical capacity during the project preparation phase. The CEO also spoke about the 5 Percent Agenda that NEPAD launched this year under the leadership of the African Union Commission Chairperson Mr. Moussa Faki Mahamat. Noting that the private and public sectors are joining forces in Africa to create conducive environments to attract investments, which are so vital for the continent’s growth, Dr. Mayaki explained that the 5 Percent Agenda is a campaign to increase investment allocations by Africa asset owners into African infrastructure from its low base of about 1.5% of their assets under management to an impactful 5%.
Mr. Cheikh Bedda said that policy makers, infrastructure experts and the private sector have a crucial role to play in training and skills acquisition in infrastructure development to prepare young Africans for the implementation of complex programmes such as PIDA. He highlighted that the continent needs as a matter of urgency, to scale-up capacity for project preparation in terms of resources, skills and development of bankable project pipelines to create enough jobs and opportunities for the large African youth population entering the labour market. Reflecting on the mid-term review of the PIDA Priority Action Plan (PAP) that the AUC is currently conducting, the Director stated that early indications on the implementation of projects clearly show the critical importance of a sound project preparation, given that more than half of the portfolio of projects are still at the conceptual stage.
Referring to the theme, Mrs. Emilie Mushobekwa stated that SADC has taken a multi-pronged approach to accelerate the preparation and implementation of PIDA Projects in the region to facilitate regional integration and job creation. A case in point, Mrs. Mushobekwa stated that SADC Secretariat has allocated an annual budget since May 2016 to support project preparation to bankability and corridor development.
Mr. Shem Simuyemba, offered more suggestions on possible solutions by highlighting the AfDB’s financial commitments to Africa’s infrastructure development, which accounts for half of its total spending. He noted that the African Development Bank is stepping up the pace by focusing on the High 5 priorities, which include Light upand power Africa, Feed Africa, Industrialise Africa, Integrate Africa, and Improve the quality of life for the people of Africa, that are crucial for accelerating Africa’s economic transformation. He added that the solution is to scale-up capacity for project preparation and development as the only means to assess, package and structure the projects in such a way that there is a‘rolling pipeline’of bankable projects.
H.E. Mr. Namibia’s Minister of Works and Transport, Alpheus Naruseb called for strong coordination in the implementation of PIDA and the preparation of bankable, investment-ready projects that can attract financing for implementation.
Parallel session: Good Practice for PIDA Corridor Implementation
The main objective of the session was to take stock of current corridor management practices but also to learn from the experiences of other partners.
The intervention of the representative of SADC allow to better understand the crucial role of the prioritization of projects in the success of the corridor approach. Similarly, the collaborative approach has played an important role in the success of two flagship corridor management projects in the SADC area, with involvement of several partners: the NBF (support for PPP mechanisms), GIZ, EU, etc.
The NBF emphasised on the importance of resources, in particular, capacity building of actors through training. Involvement of all actors is useful for the success of projects. Thus, it is not only the dedication of the REC but also a real commitment of the Member States. For instance with the North South Rail Corridor project there are six member states which makes management complex. This is where the political role played by SADC is crucial.
The example of the Trans-Kalahari Corridor has shown that both a political commitment and an economic approach to corridor management are required. The existence of a joint entity in charge of the corridor management and with a secretariat, has made it possible to have a good coordination of the services rendered on the corridors in all the countries traversed by the infrastructure. Thus, the interest of all the countries is safeguarded, while tending towards the efficiency of the corridor with a good maintenance of the corridor which started since 2 years of management. JICA has been particularly interested in the development of a regional master plan as part of the success of the corridor approach. Indeed, the divergence of master plans at the level of each country, makes global coordination difficult. The regional master plan also makes it possible to better introduce the economic approach by integrating all the present economic sectors such as agriculture, commerce, etc.
The presenters did not neglect the lessons of the Abidjan Lagos Corridor where the high level advocacy of the NEPAD Agency allowed a serious commitment of the Member States. The implementation of the corridor management framework is a good step forward because for the moment, each country thinks about its interests and not really about the efficiency of the corridor. Also, the major challenge remains how to interest the private sector and get them involved enough to invest.
Summary of discussions
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Corridor development should centre on delivering value, accelerating economic integration and development; for each country through which a corridor passes, there should be analysis of the needs, value addition, comparative advantage and services to be provided along and by the corridor for that country
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Project preparation is key and this should be prefaced by careful prioritization and selection of projects, e.g. Central Corridor acceleration started with 180 projects and ended up with 27 priority projects which are now under preparation; SADC acceleration started with 38 projects and prioritized 5
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Ensure that the corridor have the requisite support structures: a management institution, national policy, PPP support, training and capacity
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Learn from example of Asia where corridors and cross-border infrastructure were a critical success factor in the expansion of the region’s share of global trade. Corridors in Asia were developed as part of long-term masterplans including a focus on multi-sectoral approaches and recognizing that corridors are not only about infrastructure development but economic activity and economic development.
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Include soft infrastructure (policy, legal and regulatory frameworks) as quick wins in corridor development
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develop strategic partnerships around corridor development and put in place effective management structures for corridors, which involve all key stakeholders and create attractive conditions for the private sector e.g. SADC Secretariat harnessed resources, capacity and expertise through strategic partnerships with NEPAD Business Foundation (NBF), SADC PPP Network, SADC PPDF, PPIAF
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Document and learn from good practice as exemplified by the Abidjan-Lagos corridor, the Trans-Kalahari Rail, the Maputo Development Corridor, the North-south Corridor, the Beira Corridor, projects in East Africa, etc. in particular, take better inspiration from Southern Africa's good practices and lessons in corridor management;
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Recognize that each country or region is unique and has specificities which may require adaptations that take into account political, economic and other realities.
Other elements to consider for corridor development:
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Enhance stakeholder capacity
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Have a responsive border regulatory framework
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Improve border infrastructure
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Improve road safety and security
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Improve Road infrastructure
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Improve stakeholder relations
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Improve communication infrastructure.
Key recommendations
Several recommendations and conclusions emerged from the rich discussions, for the proposed corridor guide, namely that it is important to:
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Put more effort into setting up legal frameworks and instruments for corridor management, as MOUs are not really legal instruments that reassure parties, including the private sector;
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Take a commercial approach to corridor development while factoring in socio-economic development of the communities along the corridors. This should include rigorous analysis of the assets to be realised from corridor development, what benefits these assets would generate (e.g. how the corridors would support trade) and some form of performance indicators (KPIs).
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Develop data-driven decision-making models to prioritizing project selection and better inform corridor development
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Ensure that corridor development includes funding plans that take into account analysis of funding models suitable for the different projects along the corridor (look into innovative funding mechanisms including the 5% agenda, recommendations in NEPAD-ECA domestic resource mobilisation report, establishment of listed SPVs as in China).
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Designate champions to promote corridor projects, ensure that political commitments translate into tangible action and ensure that there is absolute commitment at all levels
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IMF Executive Board 2017 Article IV Consultation with Namibia
On February 26, 2018, the Executive Board of the International Monetary Fund concluded the Article IV consultation with Namibia.
Since 2010, Namibia has experienced a period of exceptional growth. Growth was partly attributable to temporary factors. An expansionary fiscal policy, the construction of large mines and buoyant credit supported growth and better living standards. However, robust growth masked rising macroeconomic vulnerabilities and deteriorating productivity performance. Moreover, structural impediments have contributed to keep unemployment and income inequality unacceptably high.
With temporary expansionary factors ending, the economy has reached a turning point. GDP sharply decelerated in 2016 and contracted in 2017 as construction in the mining sector came to an end and the government began consolidating. With the economy contracting and Southern Africa Customs Union (SACU)’s receipts temporarily increasing, the current account balance improved significantly. However, despite significant fiscal adjustment, the public debt ratio continued to increase and almost doubled over the last four years, exceeding in 2017 the median of the countries at the lowest tier of investment grade.
The outlook remains positive with considerable vulnerabilities and risks. Growth is projected to resume in 2018, as mining production ramps up, construction activity stabilizes and manufacturing recovers, before converging to a long-term rate of about 3½ percent, below the average of recent years. Inflation is anticipated to remain below 6 percent. However, as SACU revenues are expected to decline, in the absence of policy action, the fiscal deficit would remain large and public debt would continue rising and approach 70 percent of GDP by 2022. On the positive side, the current account deficit is expected to narrow on average to around 6 percent of GDP on the back of larger mining exports, but international reserve coverage is projected to gradually decline.
Downside risks dominate the outlook. They stem mainly from possible fiscal slippages that could undermine policy credibility, lower demand for key exports, further declines in SACU revenue, and slower recovery in mining and construction activities. Extensive macro-financial linkages could amplify the negative impact of shocks.
Staff Report
Context: Economy at a turning point
Since 2010, Namibia has experienced a period of exceptional growth fueled in part by temporary factors, while vulnerabilities have risen and structural challenges remain. Despite being a small commodity-dependent economy exposed to external shocks, between 2010-2015, Namibia’s annual GDP growth averaged 5½ percent and living standards improved. This strong performance was in part due to the construction of large mines and an expansionary fiscal policy that temporarily boosted investment. The peg with the South African rand contributed to contain inflation. However, strong growth masked a deteriorating productivity performance, that negatively contributed to the recent growth dynamics, while macroeconomic vulnerabilities rose. Large fiscal deficits led to a sharp increase in public debt. The current account deficit widened, and international reserve coverage fell below adequate levels. Rapid credit growth financed the economic expansion, but also fueled fast-rising house prices and elevated private sector indebtedness. Yet, unemployment has remained high and inequality, although declining, is among the highest in the world.
In 2016, the economy reached a turning point and sharply decelerated and began contracting in 2017. The engines that temporarily boosted growth grounded to a halt and set off a complex adjustment process.
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Real GDP growth decelerated in 2016 to 1.1 percent, as construction in the mining sector came to an end and the government began consolidating. Public and private investment declined, and consumption decelerated as unemployment rose. The weak performance continued in 2017, with the economy contracting in the first three quarters of the year as construction and retail and wholesale activities declined further.
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Despite weak domestic demand, the 2016 current account deficit remained large and wider than justified by macroeconomic fundamentals (Annex I). Lower imports and improved exports reduced the trade deficit. However, the current account deficit remained unchanged at 14.1 percent of GDP, as SACU receipts declined and income flows deteriorated. Moreover, external vulnerabilities built up. External public and private debt increased to 60.2 percent of GDP (48.2 percent in 2015), and the net international investment position turned negative. On the positive side, international reserve coverage improved to 3.7 months of projected imports, partly sustained by Bank of Namibia (BoN)’s swap operations. With the economy contracting, in the first three quarters of 2017, the trade deficit narrowed further driven by import compression and the current account balance sharply improved because of a temporary increase in SACU receipts.
The government began implementing a medium-term consolidation plan to bring public finances on a sustainable path, and contributed to the economic slowdown. Despite a sharp decline in SACU revenue (3 percent of GDP), the FY16/17 deficit only increased by about ¾ percentage point of GDP to 11.1 percent of GDP (10⅓ percent in FY15/16), as the authorities implemented substantial reductions in non-wage expenses and capital outlays. However, most of the spending reductions were introduced late in the fiscal year, prompting a sudden policy correction that led to the accumulation of about N$3.9 billion in domestic arrears (2.4 percent of GDP) and weighed heavily on the 2017 growth. As the fiscal deficit remained large, public debt increased to 44.3 percent of GDP (including domestic arrears), above the median of the countries at the lowest tier of investment grade. Gross financing needs remained high (about 18 percent of GDP) and, as the authorities increasingly tapped domestic markets, yields on government debt rose. Against this background, Moody’s and Fitch lowered the sovereign credit rating to below investment grade.
With the economy adjusting, credit to the private sector and housing prices growth decelerated amid still elevated household indebtedness. After averaging 14 percent between 2010-15, private sector credit growth started declining in 2016 and reached 4.5 percent at end 2017. The deceleration reflected both banks’ tight funding constraints and low demand from a highly leveraged private sector. Against this background, both corporate and household lending (including individuals’ mortgage loans) decelerated, contributing to contain the annual increase in house prices to 7 percent (9 percent on average over the last five years). However, household and corporate leverage remained high and close to the level of more advanced economies. At the same time, banks’ asset quality showed signs of deterioration, with NPLs increasing, albeit from very low levels. As government’s financing needs remained high, banks’ direct exposure to the public sector rose, and holdings of government securities reached about 10 percent of banks’ assets.
Against this background, headline inflation has recently declined and the central bank has eased the monetary stance. After averaging 7.3 percent in 2016, headline inflation peaked to 8.2 percent in January 2017, mostly because of high food prices, reflecting a prolonged drought and increases in administrative prices. Since then, inflation has rapidly declined and reached 5.2 percent in December 2017, reflecting better crop yields and economic slack. In the context of the currency peg, the BoN followed the South African Reserve Bank (SARB), and in August reduced its policy rate to 6.75 percent, citing lower projected inflation.
Authorities are adjusting their macroeconomic and developmental policies to deal with the new economic realities. They have recently issued a new national development plan (NDP) emphasizing private sector financing of large infrastructure projects, and prioritized the implementation of high impact projects and policies in the social sectors. Broadly following staff’s past advice, they have also embarked on medium-term fiscal adjustment plans, and adopted LTV ratio limits for non-primary residential houses to manage fast-rising real estate market prices. With the economy decelerating, and in preparation of the FY18/19 budget, they have recently revised their fiscal adjustment plans to better consider the economic cycle.
In 2016, the economy reached a turning point and sharply decelerated and began contracting in 2017. The engines that temporarily boosted growth grounded to a halt and set off a complex adjustment process
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Real GDP growth decelerated in 2016 to 1.1 percent, as construction in the mining sector came to an end and the government began consolidating. Public and private investment declined, and consumption decelerated as unemployment rose. The weak performance continued in 2017, with the economy contracting in the first three quarters of the year as construction and retail and wholesale activities declined further.
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Despite weak domestic demand, the 2016 current account deficit remained large and wider than justified by macroeconomic fundamentals. Lower imports and improved exports reduced the trade deficit. However, the current account deficit remained unchanged at 14.1 percent of GDP, as SACU receipts declined and income flows deteriorated. Moreover, external vulnerabilities built up. External public and private debt increased to 60.2 percent of GDP (48.2 percent in 2015), and the net international investment position turned negative. On the positive side, international reserve coverage improved to 3.7 months of projected imports, partly sustained by Bank of Namibia (BoN)’s swap operations. With the economy contracting, in the first three quarters of 2017, the trade deficit narrowed further driven by import compression and the current account balance sharply improved because of a temporary increase in SACU receipts.
Policy discussions
Discussions focused on the policies to manage the ongoing adjustment process and preserve macroeconomic stability by: (i) implementing credible fiscal adjustment plans to contain public debt dynamics and support long-term growth; (ii) managing macro-financial risks from a large and interconnected financial sector; and (iii) advancing structural reforms to leverage the growth benefits from the ongoing demographic transition and reduce unemployment and income inequality.
Leveraging the Demographic Transition
Structural impediments are keeping unemployment high and could limit the benefits from the upcoming demographic changes and the capacity to deliver more inclusive growth. Namibia is going through a major demographic transformation with more than 65 percent of the population, or about 3 million people, expected to be in the working age group by 2050. Experience in other countries shows that similar transitions may boost potential growth but, if not managed properly, lead to long-term stagnation, inequities, and less inclusive growth. The potential benefits from demographic changes in Namibia could be substantial, with per capita income being potentially 25-50 percent higher. Key to a successful transition is the ability to create enough high-productivity jobs. However, this raises potential challenges in Namibia. The country has a low employment elasticity to growth and could be unable to generate enough jobs to reap the benefits of demographic changes even with sustained growth, risking instead rising unemployment. Increasing the elasticity of employment to growth is therefore critical to the country development and to deliver more inclusive growth. Analysis shows that, compared to other countries, structural factors limit the capacity of the Namibian economy to create new jobs including: (i) low education outcomes, particularly for higher education skills; (ii) weaknesses in the business environment, including for starting businesses and obtaining labor permits; (iii) wage dynamics in excess of productivity trends; and, (iv) employment still concentrated in less dynamic economic sectors (e.g., agriculture).
The authorities’ strategy of supporting infrastructure investment and providing incentives to labor-intensive sectors has had limited impact, and new initiatives are planned. The recent increase in public investment has supported domestic demand, but has so far failed to crowd in non-mining private investment. Despite high social spending, health and education attainments remain relatively poor compared to other upper-middle income countries. In addition, programs to support employment and tax incentive schemes have had limited impact on employment and export diversification. In addition, the authorities have recently issued a new national development plan (NDP5) and, with the Harambee Prosperity Plan, they have prioritized the implementation of high impact policies in the infrastructure, education and social sectors.
Policies targeted at improving the entrance in the labor market and the business environment could boost job creation and help reap the benefits of demographic changes. Considering the tight fiscal constraints, reforms in two areas could potentially improve employment dynamics:
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Human capital and skill mismatches. Improving educational attainment, especially for higher education, would reduce skill mismatches in the labor market and boost the capacity to absorb new workers. This requires improving both access and quality of secondary and higher education, and strengthening technical and vocational training programs to better align skills to job needs. Strengthening the existing programs to acquire on-the-job training would facilitate the transition from school to work.
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Wage dynamics and business conditions. Reducing the gap between wage and productivity dynamics (e.g., containing public wages) has the potential to boost the elasticity of employment to growth. Moreover, streamlining business regulations (e.g., starting businesses, registering property and land) and the functioning of the labor market (e.g., increased labor permits for skilled workers, efficient dispute resolution processes) would contribute to reduce unemployment. Reforms in these areas might also boost development in labor-intensive sectors, e.g., manufacturing, further improving employment absorption.
Annex I. External Sector Assessment
In 2016, Namibia’s external position was substantially weaker than suggested by fundamentals, mostly because of large one-off events linked to the construction of new mines. During the first three quarters of 2017, the trade balance sharply improved as the construction of large mines came to an end and imports declined, while mining exports began increasing. These developments are permanent in nature and will likely lead to a change in the assessment of Namibia’s external position to moderately weaker than suggested by fundamentals. Given the expected decline in SACU receipts, and a still large fiscal deficit, further fiscal adjustment, as recommended by staff, would help bring the external position broadly in line with fundamentals.
Recent Trends
Namibia’s current account (CA) and net international investment position (NIIP) deteriorated further in 2016. Since 2006, the CA has been deteriorating, turning from positive to negative, until reaching a deficit of 14.1 percent in 2016. This trend is largely attributable to a surge in imports as a share of GDP during the global financial crisis, and a subsequent expansionary fiscal stance and the construction of new mines. The trade balance followed a similar trend, but in 2016 it took a different direction and improved due to both higher exports (from the recovery in the global diamond markets, and higher production from some new mines) and lower imports (as the construction of new mines came to an end and the economy sharply deteriorated). However, an abrupt decline in SACU receipts and larger income and service deficits offset the improvement in the trade balance in 2016, leaving the current account deficit substantially unchanged compared to 2015. A savings and investment decomposition suggests that the main driver of the CA deterioration has been the decline in the public balance resulting from an expansionary fiscal stance. At the same time, the NIIP has been deteriorating since 2009 and in 2016, the net foreign position turned negative to -14½ percent of GDP (1 percent of GDP in 2015). In general, the deterioration in the NIIP is attributed to the sharp increase in external liabilities from both the government and nonbank corporates.
The CA deficit is mostly financed with FDI and other investments, while portfolio investments have generally registered net outflows. In the early 2000s, the net portfolio investment was positive due to large investments abroad by non-bank financial institutions, mostly the public pension fund. However, the issuance of Eurobonds in 2011 and 2015 generated large offsetting portfolio inflows. At the same time, in 2015 FDI increased while other investments fell as loans from parent mining companies were transformed into equity. Apart from these temporary changes, in 2016, financial flows returned to the composition observed pre-2015. The gross external financing requirements have continuously increased to about 32 percent of GDP, with about half corresponding to short term debt.
The Namibian dollar is pegged at par to the South African rand and developments in the real exchange rate largely follow the rand. Namibia’s real effective exchange rate (REER) has experienced large fluctuations over the past decade. Between 2010-2015, it depreciated by 30 percent, but appreciated by 20 percent thereafter. In June 2017, the REER returned to its ten-year average, although it depreciated by about 5 percent in the second half of the year.
The stock of international reserves has fluctuated around 10-15 percent of GDP over the past ten years. At end 2016 reserves stood at 14.7 percent of GDP (3.7 months of projected imports), reflecting an increase in 2015 due to the issuance of the Eurobond and some swap operations by the BoN. In November 2017, reserves further increased to about 4.1 months of imports, reflecting the disbursement of an AfDB budget support loan and an improving current account.
Conclusions
Namibia’s current account deteriorated over the past decade, but is expected to improve in 2017 and, over time, stabilize at a deficit of about 6 percent of GDP. Despite the expected improvement, international reserves coverage is below adequate levels and is projected to decline over the coming years. However, the implementation of the advised fiscal consolidation would help curb domestic demand and reduce the external imbalance, bringing the CA account better in line with fundamentals, while increasing international reserves to adequate levels (under staff’s reform scenario, the current account deficit would stabilize at a deficit of about 2 percent of GDP, largely due to the lower imports from fiscal consolidation, and international reserves would reach 20 percent of GDP by the end of the projection).
Annex V. Containing Public Wage Bill Dynamics: Policies and Benefits
With several countries embarking on fiscal consolidation efforts, the public wage bill has come under increasing scrutiny as it accounts for a substantial portion of total public spending and, over the past decade, has increased in many countries. Evidence shows that SACU countries, and especially Namibia, have some of the highest public wage bills in the world and that public sector salaries are well above those in the private sector. The impact of such wage premium is likely to raise workers’ reservation wages, appreciate the real exchange rate, and reduce the economy’s ability to absorb foreign shocks. Moreover, except for South Africa, the public sector premium in SACU countries falls along the income distribution, which might exacerbate the brain drain for highly skilled labor.
SACU countries have some of the highest public wage bills in the world. Looking at 2016 worldwide data, on average countries spend about 8 percent of GDP on public wages, with European countries being on the higher side and Asian countries on the lower side, and wage costs increasing with countries’ income levels. In sub-Saharan Africa, East African countries record the lowest wage bill while Southern African countries, particularly SACU countries, register much higher wage spending (about 14 percent on average). Public wages also absorb a significant share of budget revenue. Countries worldwide spend on average about a 1/3 of their revenues in wages, with the share increasing to 35 percent in subSaharan African countries, and further rising to 40 percent in Southern Africa and 45 percent in SACU countries.
Within SACU and small-middle income countries, Namibia has large and fast-growing public wage costs. In FY 16/17, public wage costs for central government employees reached 16.4 percent of GDP (42 percent of primary spending), almost 5 percentage points of GDP higher than in FY12/13. They absorbed about 55 percent of tax revenue, 10 percentage points of GDP higher than in FY12/13 and 80 percent of its domestic revenue (excluding SACU) on its wage bill. Notwithstanding the already high spending, the public wage spending bill is expected to further increase and reach about 17 percent of GDP in FY17/18.
The rapidly rising public wage bill in Namibia is largely the result of fast-increasing public sector salaries. Using government’s payroll data, staff estimate that about 2/3 of the increase in the wage bill over the period FY12/13-16/17 reflected wage increases, while new hires only accounted for a third of the increase. More specifically, over the period FY12/13-16/17, on average, government wages increased in real terms by about 7 percent per year, well above the average inflation rate of 5.2 percent, while the number of employees increased by about 4 percent per year. Although the annual increase in real wages seems to be moderating over time, the increase remains extremely high when compared to the limited growth registered over the same period in total factor productivity (TFP) for the whole economy (about 0.5 percent).
Yet, the high wage bill does not translate into better public services. The elevated wage bill in Namibia reflects relatively high spending in health and education compared to other middle-high income countries and countries in the region (as a share of GDP). However, the higher spending in these sectors does not always deliver better outcomes. Key health and education outcomes in Namibia (e.g., maternal and child mortality, availability of hospital beds and physicians, pupil-teacher ratio, expected years of schooling) are substantially below the standards prevailing in middle-high income countries, although better than in countries in the region. This suggests that there is room to improve the efficiency of public spending in health and education and make savings, without affecting the quality or access to these services.
However, rising salaries have led to public sector workers being paid more than similar workers in the private sector, in some cases by a wide margin. Using traditional Mincer equations (see Appendix), staff estimate that in all SACU countries, public workers have a premium compared to private workers with similar characteristics. The estimated premia are about 10 percent in South Africa, to 15 percent in Namibia, 40 percent in Swaziland, and 50 percent in Lesotho and Botswana. It is worth noticing that these premia are lower-bound estimates as they do not account for public workers’ greater job stability, and non-cash benefits commonly used in most SACU countries.
Except for South Africa, public sector wage premia are particularly high for low-skilled workers, contributing to possible brain drain in BLNS countries. A typical argument made in the region to justify high salaries is the need to address shortages of doctors and teachers, which force governments to pay higher wages for these professionals to avoid losing them to South Africa (which on average pays higher wages as the country is more developed). To assess the validity of this argument, staff ran quantile regressions of the Mincer equation for each country (see technical note) and the results show quite the contrary. The public premium is very high for low skilled workers and falls along the income distribution. Differently from BLNS, however, in South Africa the premium tends to increase along the income distribution. Taken together these results might explain the scarcity of skilled labor in the BLNS, as these workers might be tempted to work in South Africa where their abilities are better rewarded.
Containing the public wage bill is critical for fiscal adjustment and could correct macroeconomic imbalances with positive effects on long-term growth and employment. Empirical evidence for low and middle income countries suggests that wage increases above productivity gains are associated with higher unemployment rates. In the case of Namibia, staff’s analysis suggests that public sector’s wage dynamics, and most likely private sector wage increases, have widely exceeded changes in labor productivity, which tend to be associated with high unemployment. Moreover, empirical evidence for small-middle income countries shows that creating public jobs does not necessarily reduce unemployment and, in some cases, may increase it by creating pressures on the labor market. Accordingly, controlling Namibia’s public wage dynamics would bring wage increases closer to productivity trends, thus potentially boosting long-term growth and reducing unemployment.
Reducing the public wage bill and controlling salary dynamics require a combination of short and medium-term measures. Short-term measures are needed to correct the expected increase in the wage bill under current policies and start containing real salary dynamics. However, cross-country experience suggests that short-term measures are not sustainable, and tend to distort wage and employment structures. Therefore, more permanent policies are needed to preserve initial gains and contain dynamics over time.
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Short-term measures. Experience from other countries suggests that several short-term measures are effective in bringing the wage bill under control, including maintaining salary increases below inflation trends and suspending automatic salary increase, e.g., “notch” increases for workers not yet at the highest point-value of their pay grade; introducing temporary hiring rules to reduce public employment (e.g., retirement replacement ratios); and reducing temporary and contractual positions as feasible.
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Medium-term measures. Over the medium term, there is considerable scope to improve the wage bill management. Specifically, it is important to link pay to some indicator of performance, and align job requirements with compensation while ensuring public and private sector compensation for workers with similar skills is comparable. In addition, strengthening human resource management (e.g., review presence of ghost workers), and improving wage bill controls (e.g., through biometric technologies, enhanced controls for the hiring of low-skilled workers) could deliver long-term savings. Finally, comprehensive organizational and functional reviews of ministries, departments, and agencies can produce tangible savings over the medium term by identifying areas of overlap or duplication.
Controlling the wage bill dynamics and real salary dynamics is important not only for fiscal reasons but also for their positive macroeconomic effects. The rapid rise in real wages tends to increase worker’s reservation wages, appreciate the real exchange rate and reduce the economy’s competitiveness and ability to absorb foreign shocks. For these reasons, the increases in real wages that were observed in the past five years are not sustainable from a macroeconomic point of view and are introducing a whole range of economic distortions. Thus, better linking pay dynamics to productivity and ensuring similar compensation for public and private workers with comparable skills would help bring the economy on a more sustainable development path.
Annex VI. Mobilizing Tax Revenue in Namibia: Challenges and Reforms
Improving domestic revenue mobilization is critical to the government’s fiscal adjustment plans and the country’s future economic development. The tax revenue-to-GDP ratio in Namibia (29.2 percent in FY16/17) is relatively high compared to peers, but about a third of such revenues are shared receipts from the Southern African Customs Union (SACU). Instead, domestic tax revenues over the last four years only averaged about 19 percent of GDP, somewhat less than the average in emergency market economies and other small middle income African countries. Combined with narrowed tax bases (see below), this signals some room to improve domestic revenue and collection efficiency. In addition to relatively low domestic revenue, the current dependency on volatile SACU revenue exposes the budget to significant shocks. The dependency also poses significant risks as SACU revenues are expected to remain low over the next years as growth in South Africa, the main contributor to the revenue pool, is expected to remain sluggish. Moreover, these revenues will likely decline over the long-term as trade liberalization in the region deepens.
Reforms to broaden the tax base and avoid base erosion would greatly strengthen the efficiency of the Namibia’s tax system and improve domestic revenue.
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The tax base could be broadened by eliminating special tax regimes under the corporate tax, removing some VAT zero-rating provisions, and making foreign investment income of Namibian residents taxable. Preferential corporate tax rates and inefficient tax allowances create separated tax regimes with different effective tax rates. The different effective rates can be exploited by shifting taxable profits and deductions across entities to minimize the tax liability. Moreover, the VAT tax base could be broadened by removing some unnecessary zero-rating of certain goods and services (e.g., residential property, residential utilities, fuel products, telecommunications). Finally, many residents have bank accounts and investments abroad that produce income that is currently not taxable in Namibia.
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There is room to curtail a variety of tax base erosion opportunities and strengthen the integrity of the tax system. These include, for example, ring-fencing business losses (i.e. curtailing the possibility to offset losses and profits across different types of businesses); avoiding to treat construction workers as self-employed (rather than employees); eliminating exemptions for real property companies from capital gains taxation; and, finally, introducing earnings stripping rules to limit deductibility of interest expense as currently there is no limit.
Despite progress in some areas, there remains significant room to improve key tax administration functions. The most recent assessment of tax administration in Namibia took place in 2016 through the Tax Administration Diagnostic Assessment Tool (TADAT). The TADAT assessment identified a number of weaknesses in basic functions compared to international good practices. These include: inadequate data integrity and an inaccurate taxpayer register – critical to managing return filing, payment and the management of tax arrears; absence of documented processes and procedures; a lack of service delivery standards; and, limited control over taxpayer compliance.
Creating and reaping the benefits of a semi-autonomous revenue authority can take time and, in the process, significant operational improvements are needed. The authorities are moving ahead with the creation of a semi-autonomous revenue authority, planned to be operative in 2019. This is a positive step, but it does not eliminate the need for immediate operational improvements. Specifically, in the near term, it is important to develop further the capacity to conduct in-house audits for large taxpayers, design a specific strategy to manage medium-sized taxpayers and introduce a presumptive regime for smaller ones. Authorities should also avoid new tax amnesties on tax arrears that, particularly in the absence of a strong administration, are likely to reduce tax compliance.
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President Akufo-Addo advocates for increased trade & investment cooperation with Germany
President of the Republic of Ghana, Nana Addo Dankwa Akufo-Addo, says notwithstanding the excellent relations that exist between Ghana and Germany, Ghana has decided to turn our back on the old Ghanaian economy, which has been dependent on the production and export of raw materials, and also dependent on aid.
According to President Akufo-Addo, “we want our relations with Germany to be characterised by an increase in trade and investment co-operation.”
The President explained that an increase in trade and investment co-operation between the two countries is the only way to put Ghanaian products at the high end of the value chain in the global market place, and, thereby, create jobs for the teeming masses of Ghanaians, particularly the youth.
President Akufo-Addo made this known on Tuesday, 28th February, 2017, when he delivered the keynote address at the German-Ghanaian Economic Forum, organized by the German Chamber of Commerce, and the Konrad Adenauer Foundation.
Expressing his delight that German Development Co-operation is now being aligned with his government’s vision of moving Ghana Beyond Aid, President Akufo-Addo added that his administration has implemented measures aimed at attracting investment, domestic and foreign, into Ghana, as well as stimulating growth of the Ghanaian private sector.
“We have introduced a monetary policy that is stabilising the currency and reducing significantly the cost of borrowing; and have initiated a raft of tax cuts that is bringing relief to and encouraging businesses,” he said.
These interventions, the President noted, have ensured that the fiscal deficit, which stood at 9.5% at the end of 2016, has been reduced to 5.6% at the end of 2017, and is projected to go down to 4.5% in 2018.
Additionally, he stated that inflation has declined from 15.6% at the end of 2016 to 10.3% at the end of January this year; the economy has grown from 3.6% in 2016, to 7.9% in 2017, and, this year, is estimated to grow at 8.3%, which would make it the fastest growing economy in the world.
President Akufo-Addo indicated further that Ghanaian industry was undergoing a spectacular revival, a decline in interest rates, a more stable cedi, and, overall, “our macro-economy is growing stronger.”
These measures, he stressed, have been put in place to build the most business-friendly economy in Africa, and create jobs and prosperity for all Ghanaians.
Additionally, he told the gathering that his Government has taken specific measures which will lead the country and its economy into the new digital age.
These include the introduction of an e-business registration system, a paperless port clearance system, a digital addressing system, a mobile interoperability system, and a national identification card system, all of which are designed to formalise the Ghanaian economy, reduce the cost of doing business, and facilitate interaction between businesses and their clients, particularly in a technology-driven era, where connectivity through digital services is an important element in achieving competitiveness.
“I am, thus, notifying the German Business community, to take advantage of the growing business-friendly climate in the country to invest in Ghana,” he said.
The President continued, “Our flagship policies of ‘One District, One Factory’, ‘One Village, One Dam’, and the ‘Programme for Planting for Food and Jobs’ map out areas of opportunity, which I commend to you, as I do areas in the development of renewable energy and ICT growth. We are particularly keen to receive German investment in the area of renewable energy, for reasons that are self-evident.”
Addressing the challenge of the country’s infrastructural deficit, he told the gathering that his government is embarking on an aggressive public private partnership programme to attract investment in the development of both the country’s road and railway infrastructure.
“We are hopeful that, with solid private sector participation, we can develop a modern railway network with strong production centre linkages and with the potential to connect us to our neighbours to the north, i.e. Burkina Faso, to the west, i.e. Cote d’Ivoire, and to the east, i.e. Togo. We believe that this is an area where German and European technology and expertise would be very welcome,” he said.
President Akufo-Addo was confident that Ghana is on the cusp of a new, bold beginning, which will repudiate the recent culture of failure.
“We are determined to lift our country out of the doldrums. We want to use all the blessings that the Almighty has bestowed on us to bring progress and prosperity to our people, in our time. The Black Star is poised to shine and shine again, for, truly, the project is Ghana Beyond Aid,” he added.
“Africa must build value-added, industrialised economies” – President Akufo-Addo
President Nana Addo Dankwa Akufo-Addo says that Africa must build value-added, industrialised economies with modernised agriculture, which takes full advantage of the digital revolution, if she is to create wealth and prosperity for her peoples.
Describing Africa as “a rich continent, if not the richest”, President Akufo-Addo indicated that Africa has the world’s second fastest economic growth rates, the world’s fastest-growing region for foreign direct investment, and is in possession of nearly 30 percent of the earth’s remaining mineral resources, with a young, vibrant population.
“Indeed, six of the world’s ten fastest growing economies in 2018 are in Africa. And yet, the masses of the African peoples remain poor, when we have no reason to be poor,” he added.
Thus, in order to create prosperity for the African peoples, President Akufo-Addo indicated that “our first priority must be to change the structures of the economies on the continent, which are dependent largely on the production and export of raw materials. It is this reliance on raw material exports that feeds our dependence on foreign aid, and subjects us to the politics of the West.”
The willingness of many African youths to cross the Sahara desert on foot and drown in the Mediterranean Sea, in a desperate bid to reach the mirage of a better life in Europe, he explained, should serve as a wakeup call for governments on the continent.
“Africa needs to transform stagnant, jobless economies, built on the export of raw materials and unrefined goods, to value-added economies that provide jobs, to build strong middle-class societies and lift the masses of our people out of dire poverty. We can only do so if we participate in the global market place on the basis not of the exports of raw materials, but on the basis of things we make,” he added.
The continent’s second priority, he said, should be to increase trade and investment co-operation, and not aid, as it is one of the ways healthy economic relations can be developed between Africa and Germany, and, indeed, with the rest of the world.
“With Africa’s population set to reach some 2 billion people in 20 years’ time, there are immense opportunities to bring prosperity to Africa, and to Germany too, with hard work, enterprise and creativity. I urge German organisations and companies present to take advantage of this, and enhance their trade relations with Africa,” the President said.
He continued, “The time to deepen German-African trade and investment is now. We must generate investments in agro-industry, the energy and power sectors, and infrastructural development of Africa, capable of producing positive outcomes for the private sectors, especially small and medium-scale enterprises (SMEs), of Germany and Africa.”
Thirdly, President Akufo-Addo urged for co-operation between Germany and Africa in ensuring the promotion of transparent, and inclusive policy and decision-making processes at local, national, regional, continental and global levels.
“Fourthly, in order for us to build an Africa that meets the aspirations of the African peoples and opens up opportunities for all, especially its youth, we must also prioritise our budgetary arrangements to ensure that funds are available to strengthen key institutions of state, such as the Legislature, Judiciary, and fiscal institutions,” he said.
He continued, “It is important that we promote and develop a culture of accountable governance, free of corruption, whereby these institutions of state see themselves as independent public entities serving the wider public interest, not the temporary conveniences of governments of the day. We have a responsibility to make our countries attractive to our young people. They should feel they have a worthwhile future, if they stay and help build their nations.”
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Egypt’s Trade, Industry Minister meets Nigerian counterpart to discuss further cooperation
Nigeria seeks to strengthen cooperation with Egypt in industry, energy and capacity building
Minister of Trade and Industry Tarek Kabil met on 28 February 2018 with Aisha Abubakar, the Nigerian minister of state for industry, trade and investment, who is currently visiting Cairo, where they discussed means of enhancing mutual economic cooperation in various fields.
“Deepening economic ties between Egypt and Nigeria is key to pursuing Africa’s business interests and improving its status on the global trade map, both being major economies in the continent,” Kabil stressed.
Egypt, he said, will be participating in next week’s preparatory meeting of African trade ministers in the Rwandan capital Kigali to resume the Continental Free Trade Area (CFTA) talks, which aims at creating a single African market for goods and services, hence, boosting intra-Africa trade.
The minister noted that African countries, whose total population stands at more than one billion, aim at achieving a Gross Domestic Production (GDP) worth $3 trillion.
The minister asserted the importance of coordinating stances of the African countries to reach common understandings to ensure flow of trade and investment among them.
He also emphasized possible industrial integration between Egypt and Nigeria, with the aim of exporting to the Economic Community of West African States (ECOWAS), which includes 15 countries.
“There will be close coordination between the trade ministries in both countries to form the Egyptian-Nigerian Business Council,” Kabil added.
Abubakr, for her part, affirmed her country’s keenness to cooperate with Egypt especially in the fields of industry, energy and capacity building.
With inputs from Egypt Today.
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tralac’s Daily News Selection
The Trade Development Forum began this morning in Kampala: twitter updates @TradeMarkEastA; hashtag #TDF2018
Call for abstracts: Corruption and the challenge of economic transformation in southern Africa
South Africa trade data: January deficit of R27.66 billion (SARS)
The South African Revenue Service has released trade statistics for January 2018 recording a trade balance deficit of R27.66bn. The R27.66bn trade balance deficit for January 2018 is attributable to exports of R80.51bn and imports of R108.17bn. Exports decreased from December 2017 to January 2018 by R23.52bn (22.6%) while imports increased by R19.45bn (21.9%). Profiled trade highlights by world zone: (i) Africa trade balance surplus of R9 303 million – this is a deterioration of R8 238 million in comparison to the R17 541 million surplus recorded in December 2017; (ii) Asia trade balance deficit of R24 710 million – this is a deterioration of R19 776 million in comparison to the R4 934 million deficit recorded in December 2017.
tralac’s John Stuart: Openness to trade makes South Africa vulnerable to global shifts (Business Day)
The sectors that are the targets of industrial policy are also lacking in their ability to create jobs at the rate required by the economy. On aggregate, the industrial sectors targeted by the Department of Trade and Industry’s industrial policy action plan are becoming more skills intensive, which means they will not be able to absorb unemployed low-and middle-skilled workers even if they grow. This tendency may be acceptable in Europe, where population growth is relatively static and education quality is high, but it is different in SA. It appears our industrial policy is misdirected if it is intended primarily to create the jobs that the economy so desperately needs.
Nigeria’s Office of Trade Negotiations launches annual Trade Policy Report (ThisDay)
One of the main highlights of the report is the statistics, which shall be used to monitor, assess and re-negotiate Nigeria’s trading relationship with counterparts. NATPOR statistics indicates that trade activities (import and export) employed over 14% of the Nigerian workforce, equivalent of 10.8 million people. It also notes that trade accounts for 18% of GDP, second only to agriculture (which accounts for 29.1% of the GDP). However, the overall value of Nigerian trade between 2014 and 2015 decreased by approximately 7.4 billion (from about 23.7 billion in 2014, to 16.3 billion in 2015). In terms of percentage, this is a decrease of about 18.5% in trade value between 2014 and 2015. The decrease in 2015 reflected the recession in economic activities due to the sharp decline in oil receipts. There was a slight increase in 2016. Stronger more positive performance is expected with Q4 figure in 2017.
NATPOR also showed that trade statistics for the three quarters of 2017, both in export and import, South Africa remained Nigeria’s major trading partner in Africa. Within ECOWAS, Côte d’Ivoire assumed the top position in terms of Nigeria’s imports from ECOWAS, while Togo maintained top position in terms of Nigeria’s exports to ECOWAS, in the reported three quarters of 2017. Outside Africa, Europe remains Nigeria’s major regional trading partner (both in Export and Import) through the three reported quarters of 2017, followed by Asia. Globally, India and the United States are Nigeria’s two top major trading partners in export through the 3 quarters of 2017, while China and Belgium are Nigeria’s two top trading partners in import through the 3 quarters of 2017. [Full text of FMITI press release (pdf)]
Vera Songwe’s meeting with African ambassadors: AfCFTA, migration, illicit financial flows (UNECA)
Ms Songwe opened the meeting with an overview of the work done by the ECA in the past three months in implementing its work programme for the biennium 2016-2017. She provided the Ambassadors with some important updates on the ongoing UN system-wide management reforms and other matters relevant to the work of the Secretariat. The ECA Chief and the Ambassadors discussed the forthcoming historic signing of the Continental Free Trade Area in Kigali in March and the work the ECA continues to do in supporting the AUC and member States in the AfCFTA negotiations. Member States, like Ghana, were concerned that it seemed like the private sector was not heavily involved as would be expected to make sure they benefited and entered trade deals that would be benefit the continent and its people once the AfCFTA was implemented. Ms Songwe urged the Ambassadors to encourage their countries to sign-up to global tax transparency and other relevant legislation to stop the bleeding and to ensure that money and assets siphoned out of the continent illicitly can be brought back once tracked successfully.
Standard Bank’s Vinod Madhavan: Digitisation will overcome African trade barriers (EA Business Week)
In a globally generalised growth environment Africa’s demand for trade finance is only likely to increase. This means that 2018 is likely to see Africa’s bank-intermediated trade finance deficit significantly exceed the AfDB’s estimation of a c. $100m shortfall. Given these numbers, using digitisation to increase the efficiency and reduce the cost of trade will be essential if Africa is to – quickly leverage the full potential of this historically unique instance of synchronised global growth. In particular, access to trade finance remains a challenge for Africa’s small and medium-sized enterprises. Developing effective SME financing able to support the rapid expansion of intra-African trade remains critical to both growth as well as social and political stability.
Trade finance in Africa is currently heavily paper-based and siloed both within and between nations. For a while now African governments have been encouraging digitisation as a way of boosting domestic and global trade in markets that lack traditional domestic and cross-border trade infrastructure. For example, the tea industry in Kenya has adopted a platform that brings buyers and sellers together. Other similar digital platforms in Kenya, Ghana and Tanzania provide services to businesses in the bulk oil importation space. What is immediately obvious is that Africa is being transformed by digitisation on three levels, namely; through the digitisation of the physical supply, the financial supply and also via the documents chain. [The author is Group Head of Trade for Standard Bank Group]
Turkey’s Africa initiative sees six-fold rise in trade with continent (Daily Sabah)
Economic relations have been diversified with a “win-win” approach. In this period, Turkey signed 45 commercial and economic cooperation agreements with the African countries, increasing the number of agreements for the reciprocal protection of investments from six to 26. While Turkish direct investments in Africa were $100m in 2003, they reached $6.5bn in 2017. Turkish entrepreneurs provided employment to 78,000 people throughout the continent and the volume of the projects carried out by the Turkish contracting companies exceeded $55bn. The number of continental embassies rose from 12 in 2003 to 41 in 2017, when the African Expansion Policy was initiated. Turkish Airlines’ flight traffic reached 52 destinations in 33 countries on the continent. Recep Tayyip Erdoğan has paid more than 30 visits to 28 African countries as both prime minister and president in the last 10 years. Foreign Economic Relations Board established business councils with 42 African countries. [Turkish-Algerian Business Forum: Erdogan says Turkish-Algerian trade exchange to hit $10bn]
High costs slow journey to export Uganda’s beef (Daily Monitor)
Exorbitant cost of electricity, poor quality of cows and lack of adequate places to seclude (quarantine) sick animals from the healthy ones have made it difficult for a factory commissioned about three years ago to export processed, packaged and branded beef to the rest of the world, Daily Monitor has learnt. Egypt-Uganda Food Security, a modern slaughterhouse commissioned in August 2015 by President Museveni is yet to export any value-added beef despite his remarks then that the country has come of age and as a result it is now in position to export processed and branded beef products. Ideally, commercial operations should have hit high gear by now, but as a result of challenges, most of which are down to the government failure to come clean on its promises, the management of the modern abattoir has found it hard to immediately hit the ground running as earlier anticipated.
Zambia: Minister of Finance’s statement on the state of the economy (MoF)
I will now clarify the position of Cabinet and the Ministry on the restructuring of debt. This issue is unfortunately being misinterpreted that Government is anticipating challenges in servicing its debt. As announced in the 2018 budget address, the Government has commenced preparations to address the repayment of its Eurobonds through the operationalization of a sinking fund. Part of the process involves addressing liquidity risks at the time of paying/refinancing of the Eurobonds. As part of prudent risk management, the Government decided to reposition some flows falling due during the period of the Eurobonds, by engaging some creditors that may be open to pushing some flows this period forward. We are not contemplating any stock re-profiling but just the flows that fall due in the period of the repayments. China being a natural first creditor and accounting for 28% of our debt was a natural creditor to have a discussion with.
May I emphasize that Zambia does not intend to and will not default on its obligations. Only creditors that will be amenable to the proposal will be engaged and this will be on the basis of willingness. As part of the broader strategy, the Government has since put in place a team of officers from the Bank of Zambia, Ministry of Finance and Ministry of Justice to undertake work that will determine exactly what form of strategy will be adopted for the repayment/redemption of Eurobonds. The work will be completed by the end of the 1st quarter 2018. [Statement by Minister of Finance, Margaret Mwanakatwe] [S&P maintains Zambia’s stable outlook rating: MoF statement]
South Africa: Poultry producers vow to tackle immoral dumping, incorrect packaging (IOL)
The South African poultry industry on Tuesday met to find lasting solutions to the thorny issues of import tariffs, free trade agreements, immoral dumping and the mis-labelling of packaging. The South African poultry industry is faced with cheap imports from the United States, Brazil and the EU, and with the additional devastation wreaked by the avian flu epidemic. Advocacy group, Fair Play, said that this comprises immoral dumping, and made a recommendation that imports be reduced by as much as 50% while calling for the zero VAT rating of South African poultry products. Another appeal by producers was that the playing field be levelled for everyone including importers, and for the same rules of production and packaging to be applied across the board. The Department of Trade and Industry presented a report that was being tabled simultaneously to the Parliamentary Portfolio Committee giving an update from the poultry task team.
Climate resilience in Africa: the role of cooperation around transboundary waters (World Bank)
This report draws on a substantial body of empirical evidence from five major basins in Africa - including the Nile, Zambezi, Limpopo, Lake Chad, Niger basins - to support the critical role of transboundary cooperation on water resources management to building systemic resilience to climate change in Africa. The case studies underlying this report show that appropriately planned transboundary cooperation can improve the resilience of economies, livelihoods, and ecosystems in Africa. Specifically, the case studies show that...: Extract (pdf): Over 90% of Africa’s surface water is in transboundary basins and requires transboundary cooperation to manage optimally. In addition to its surface water, Africa has many transboundary aquifers, underlying over 40% of the continent. Some form of cooperation exists for most river basins (although much less for shared aquifers), but cooperation is inevitably complicated by a range of technical, economic, financial, political, and environmental challenges. Options for building resilience to climate change will be considerably smaller if limited to actions undertaken by individual countries only and run the risk of counter-productive investments when viewed at the regional scale.
Conference on Fiscal Management of Mining and Petroleum in West Africa: remarks by IMF Deputy Managing Director, Carla Grasso (IMF, GoG)
Too often, it seems that having natural resources makes very little difference to countries in terms of achieving better developmental outcomes. In some particularly extreme cases, natural resources might even make the situation worse if, for example, these resources lead to violent conflicts or foster corruption. We have also been reminded in recent years that commodity prices are highly cyclical and volatile. For countries in the region that are still dependent on revenue from the mining or petroleum sector, this has led to significant fiscal pressures. There are no simple answers on how to escape the so-called Resource Curse. [UNU-WIDER Blog by Alan R Roe: Information asymmetries in extractive industries – what can be done?]
Today’s Quick Links: FairTrade and the Commonwealth: A five-point plan for prosperity, sustainability and fairness (pdf) UNFPA posts its Demographic Dividend in West and Central Africa: 2017 Progress Report GIEWS Southern Africa update: Erratic rains, intense dry January period lowers 2018 cereal production prospects 2018 ECOSOC Operational Activities for Development Segment: documentation; summary of speech by UN SG IMF Blog: China’s thrift, and what to do about it World Bank Blog: Bank ownership – trends and implications |
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South Africa Merchandise Trade Statistics for January 2018
South Africa’s trade deficit hits record high
South Africa’s trade balance shifted to a R27.7 billion deficit in January of 2018, compared to a downwardly revised R15.31 billion surplus in the previous month, and well below market expectations of a R5.0 billion deficit. It was the highest trade deficit on record.
Exports declined 22.6 percent month-over-month to R80.5 billion in January, mainly due to decreases in precious metals and stones (-34 percent); mineral products (-21 percent); and vehicles and transport equipment (-47 percent). The most important export partners were: China (9.5 percent of total exports); the US (7.0 percent); Germany (5.9 percent); India (5.3 percent) and Japan (5.0 percent).
Imports increased 18.3 percent month-over-month to R108.2 billion, with significant increases in original equipment components (139 percent); precious metals and stones (137 percent); and base metals (56 percent). Main import partners were: China (20.4 percent of total imports); Germany (9.5 percent); Saudi Arabia (6.8 percent); the US (5.0 percent) and India (4.2 percent).
Excluding trade with neighboring Botswana, Lesotho, Namibia and Swaziland (BLNS), the country posted a trade deficit of R33.8 billion in January, swinging from a R7.5 billion deficit in December 2017.
The South African Revenue Service (SARS) today releases trade statistics for January 2018 recording a trade balance deficit of R27.66 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).
The year-to-date (01 January to 31 January 2018) trade balance deficit of R27.66 billion is a deterioration on the deficit for the comparable period in 2017 of R11.28 billion. Exports year-on-year grew by 0.5% whilst imports for the same period showed an increase of 18.3%.
Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The R27.66 billion trade balance deficit for January 2018 is attributable to exports of R80.51 billion and imports of R108.17 billion. Exports decreased from December 2017 to January 2018 by R23.52 billion (22.6%) and imports increased from December 2017 to January 2018 by R19.45 billion (21.9%).
On a year-on-year basis, the R27.66 billion trade balance deficit for January 2018 is a deterioration from the deficit recorded in January 2017 of R11.28 billion. Exports of R80.51 billion are 0.5% more than the exports recorded in January 2017 of R80.14 billion. Imports of R108.17 billion are 18.3% more than the imports recorded in January 2017 of R91.41 billion.
December 2017’s trade balance surplus was revised downwards by R0.41 billion from the previous month’s preliminary surplus of R15.72 billion to a revised surplus of R15.31 billion as a result of ongoing Vouchers of Correction (VOC’s).
Trade highlights by category
The main month-on-month export movements (R’ million) |
||
Section:
|
Including BLNS:
|
|
Precious Metals & Stones
|
-R6 667
|
-34%
|
Mineral Products
|
-R5 907
|
-21%
|
Vehicles & Transport Equipment
|
-R5 023
|
-47%
|
Machinery & Electronics
|
-R1 610
|
-21%
|
Prepared Foodstuff
|
-R1 195
|
-27%
|
Total
|
-R20 402
|
87%
|
Total Movement |
-R23 517 |
100% |
The main month-on-month import movements (R’ million) |
||
Section:
|
Including BLNS:
|
|
Original Equipment Components
|
+R4 628
|
+139%
|
Mineral Products
|
+R3 497
|
+21%
|
Machinery & Electronics
|
+R2 206
|
+10%
|
Base Metals
|
+R2 008
|
+56%
|
Chemical Products
|
+R1 441
|
+15%
|
Plastics & Rubber
|
+R1 269
|
+32%
|
Precious Metals & Stones
|
+R1 204
|
+137%
|
Textiles
|
+R1 015
|
+39%
|
Total
|
+R17 268
|
89%
|
Total Movement |
+R19 454 |
100% |
Trade highlights by world zone
The world zone results from December 2017 (revised) to January 2018 are given below.
Africa:
Trade Balance surplus: R9 303 million – this is a deterioration of R8 238 million in comparison to the R17 541 million surplus recorded in December 2017.
America:
Trade Balance deficit: R2 229 million – this is a deterioration of R1 952 million in comparison to the R 277 million deficit recorded in December 2017.
Asia:
Trade Balance deficit: R24 710 million – this is a deterioration of R19 776 million in comparison to the R4 934 million deficit recorded in December 2017.
Europe:
Trade Balance deficit: R15 817 million – this is a deterioration of R11 412 million in comparison to the R4 405 million deficit recorded in December 2017.
Oceania:
Trade Balance deficit: R1 054 million – this is a deterioration of R 264 million in comparison to the R 790 million deficit recorded in December 2017.
Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The trade data excluding BLNS for January 2018 recorded a trade balance deficit of R33.84 billion. This was a result of exports of R71.42 billion and imports of R105.26 billion.
Exports decreased from December 2017 to January 2018 by R21.70 billion (23.3%) and imports increased from December 2017 to January 2018 by R19.25 billion (22.4%).
The cumulative deficit for 2018 is R33.84 billion compared to R17.72 billion deficit in 2017.
Trade highlights by category
The main month-on-month export movements (R’ million) |
||
Section:
|
Excluding BLNS:
|
|
Precious Metals & Stones
|
-R6 087
|
-32%
|
Mineral Products
|
-R5 792
|
-22%
|
Vehicles & Transport Equipment
|
-R4 993
|
-51%
|
Machinery & Electronics
|
-R1 546
|
-25%
|
Prepared Foodstuff
|
-R 929
|
-30%
|
Total
|
-R19 347
|
89%
|
Total Movement |
-R21 702 |
100% |
The main month-on-month import movements (R’ million) |
||
Section:
|
Excluding BLNS:
|
|
Original Equipment Components
|
+R4 628
|
+139%
|
Mineral Products
|
+R3 484
|
+20%
|
Machinery & Electronics
|
+R2 151
|
+10%
|
Base Metals
|
+R1 985
|
+56%
|
Chemical Products
|
+R1 672
|
+18%
|
Plastics & Rubber
|
+R1 257
|
+32%
|
Textiles
|
+R 969
|
+42%
|
Total
|
+R16 146
|
84%
|
Total Movement |
+R19 255 |
100% |
Trade highlights by world zone
The world zone results for Africa excluding BLNS from December 2017 (Revised) to January 2018 are given below.
Africa:
Trade Balance surplus: R3 129 million – this is a deterioration of R6 224 million in comparison to the R9 353 million surplus recorded in December 2017.
Botswana, Lesotho, Namibia and Swaziland (Only)
Trade statistics with the BLNS for January 2018 recorded a trade balance surplus of R6.17 billion. This was a result of exports of R9.08 billion and imports of R2.91 billion.
Exports decreased from December 2017 to January 2018 by R1.81 billion (16.7%) and imports increased from December 2017 to January 2018 by R0.20 billion (7.4%).
The cumulative surplus for 2018 is R6.17 billion compared to R6.44 billion in 2017.
Trade Highlights by Category
The main month-on-month export movements (R’ million) |
||
Section:
|
BLNS:
|
|
Precious Metals & Stones
|
-R 581
|
- 93%
|
Prepared Foodstuff
|
-R 266
|
- 19%
|
Base Metals
|
-R 124
|
- 19%
|
Textiles
|
-R 115
|
- 23%
|
Mineral Products
|
-R 114
|
- 7%
|
Miscellaneous Manufactured Articles
|
-R 103
|
- 34%
|
Plastics & Rubber
|
-R 87
|
- 19%
|
Footwear & Accessories
|
-R 81
|
-43%
|
Total
|
-R1 471
|
81%
|
Total Movement |
-R1 815 |
100% |
The main month-on-month import movements (R’ million) |
||
Section:
|
BLNS:
|
|
Precious Metals & Stones
|
+R 429
|
+144%
|
Machinery & Electronics
|
+R 55
|
+ 35%
|
Textiles
|
+R 46
|
+ 14%
|
Live Animals
|
+R 44
|
+ 16%
|
Prepared Foodstuff
|
-R 156
|
- 32%
|
Chemical Products
|
-R 231
|
- 31%
|
Total
|
+R 187
|
94%
|
Total Movement |
+R 199 |
100% |
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Nigeria launches 2017 Annual Trade Policy Report: Key messages and highlights
Launch statement by Dr. Okechukwu E. Enelamah, Honourable Minister for Industry, Trade and Investment
Good afternoon and thank you all for coming to the launch of this First Edition of the “Nigerian Annual Trade Report” (NATPOR).
There is a degree of excitement that we are now at this point. The NATPOR is the expression of the firm commitment by the Federal Government of Nigeria to ensure that, in principle and in practice, trade policy and associated policies, particularly investment, serve as drivers for modernization, diversification, growth, development and job creation.
This report underlines the significant role of trade, for growth and job creation, in the Nigerian economy. As the facts show in the statistics jointly produced by the National Bureau of Statistics (NBS) and the Nigerian Office for Trade Negotiations (NOTN), in the period under review (third quarter of 2017), Trade activities (import and export) employed over 14% of the Nigerian workforce, equivalent of 10.8 million people.
Trade accounts for 18% of GDP, second only to agriculture (which accounts for 29.1% of the GDP). However, the overall value of Nigerian trade between 2014 and 2015 decreased by approximately 7.4 billion (from about 23.7 billion in 2014, to 16.3 billion in 2015). In terms of percentage, this is a decrease of about 18.5% in trade value between 2014 and 2015. The decrease in 2015 reflected the recession in economic activities due to the sharp decline in oil receipts. There was a slight increase in 2016. Stronger more positive performance is expected with Q4 figure in 2017.
This is why the theme of this first edition of the NATPOR is: “Growth, Modernization and Job Creation”.
This first edition of the Nigerian Annual Trade Policy Report, which is being launched today, shall be a policy tool to:
-
Communicate Nigeria’s priorities in trade policy, signaling national commitments to the global economy and our trading counterparts;
-
Assess, re-organize and manage Nigeria’s Trade Relationships; and,
-
Ensure that our trade policy is geared to contributing to GDP, modernizing the Nigerian economy, enhancing welfare and, creating jobs.
In this first edition of the Report, there are several highlights:
First, there is a statement of Nigeria’s direction of travel in trade policy and associated negotiations. The Report identifies the priorities in Nigeria’s trade policy, and our use of trade policy as an instrument for structural transformation for diversification, modernization, construction of regional and global value chains, welfare enhancement, job creation. Gradually, working in close coordination with the Industrial Policy and Competitiveness Advisory Council, we shall phase out export of primary products to which value has not been added;
Second, there is strategic focus in this first edition on Switzerland, as a country with which Nigeria is building strategic trade and economic relations. Switzerland is a country from which many useful lessons can be learned, from economic organization, to its world class apprenticeship and skills development model, to its high-technology and business models. Federal Councillor Johann Schneider-Amman, my counterpart and Swiss Economy Minister, has contributed a Note to Readers in the Chapter dedicated to Nigeria’s Strategic Focus. Each year, we shall invite friends of Nigeria that Nigeria has in Strategic Focus to contribute Articles for the Readership.
Third, the NATPOR provides a stewardship account of the efforts and accounts of the NOTN, from its establishment on 10th May, 2017, by the decision of the Federal Executive Council. The establishment of the Nigerian Office for Trade Negotiations (NOTN) was a conscious and strategic choice by the FGN to undertake important domestic systemic reforms and use trade as an engine to modernize, grow the Nigerian economy and create jobs. In its less than 1-year of existence, the NOTN is building a solid track record of accomplishment towards the growth of Nigeria’s economy. There are concrete achievements.
Last year, we signed Trade and Investment Cooperation Declarations that point to how, and define the template for how Nigeria shall move to update and modernize its Trade and Investment Agreements. In November, I signed with the US Commerce Secretary an Instrument for “Commercial and Investment Policy Dialogue”. In December 2017, I signed a Joint Declaration on Economic Cooperation with the European Free Trade Association (EFTA; Iceland, Norway, Switzerland, Lichtenstein).
This month, in Addis, the NOTN led Chief Negotiators in the African Union (AU) to conclude the negotiations for the establishment of the African Continental Free Trade Area (AfCFTA).
In November last year, the NOTN organized in Nigeria the hosting of the High-Level Policy and Private Sector Trade and Investment Facilitation Forum on the theme “Facilitating Trade and Investment for Development”, along with the WTO Friends of Investment for Development (FIFD. The outcome document was “The Abuja Statement – Deepening Africa’s Integration in the Global Economy Through Trade and Investment Facilitation for Development”. This document is now the multilateral reference point for global action on Investment Facilitation.
The NOTN is preparing the Draft Law and training professionals for the establishment of a Trade Remedy Infrastructure to safeguard the Nigerian economy from unfair trading practices that are injurious to the domestic economy.
A domestic reform agenda for improving trade integration in ECOWAS is the subject of consultations, at this time.
Fourth, a Chapter is dedicated to Trade Statistics. This Chapter was prepared jointly by the NOTN and the National Bureau of Statistics (NBS). These trade statistics shall be used to monitor, assess and re-negotiate Nigeria’s trading relationship with counterparts. The trade trend over the last four (4) years has been less than desired. We are just getting to grips with this, as this Report shows.
Trade activities (import and export) employed over 14% of the Nigerian workforce, equivalent of 10.8 million people. Trade accounts for 18% of GDP, second only to agriculture (which accounts for 29.1% of the GDP). However, the overall value of Nigerian trade between 2014 and 2015 decreased by approximately 7.4 billion (from about 23.7 billion in 2014, to 16.3 billion in 2015). In terms of percentage, this is a decrease of about 18.5% in trade value between 2014 and 2015. The decrease in 2015 reflected the recession in economic activities due to the sharp decline in oil receipts. There was a slight increase in 2016. Stronger more positive performance is expected with Q4 figure in 2017.
The trade statistics show that for the three quarters of 2017, both in export and import, South Africa remained Nigeria’s major trading partner in Africa. Within ECOWAS, Côte d’Ivoire assumed the top position in terms of Nigeria’s imports from ECOWAS, while Togo maintained top position in terms of Nigeria’s exports to ECOWAS, in the reported three quarters of 2017. Outside Africa, Europe remains Nigeria’s major regional trading partner (both in Export and Import) through the three (3) reported quarters of 2017, followed by Asia. Globally, India and the United States are Nigeria’s two top major trading partners in export through the 3 quarters of 2017, while China and Belgium are Nigeria’s two top trading partners in import through the 3 quarters of 2017.
The Trade Statistics Chapter is a first. The statistics shall be updated quarterly for careful monitoring, analysis and negotiating adjustments. But even now, there are key lessons that we are drawing. Nigeria must be more innovative, more enterprising and more aggressive in the use of trade, investment, technology and the abundant intellectual property of creative Nigerians to grow the economy, enhance welfare and diversify the Nigerian economy away from primary commodities.
We must negotiate better than we have done so far, so that investors who seek market access in Nigeria, must link their investments to industrial activities to enable creation of regional and global value chains. We must be more creative in making trade and investment count for growth, diversification, modernization and job creation in the Nigerian economy.
Going forward, access to Nigeria’s markets must no longer be for free. No free market access! Investors who seek market access in Nigeria to sell their goods and services, must invest and connect to our industrial and manufacturing activities.
Fifth, the Report previews our work on trade for 2018. In 2018, the goals and priorities of Nigeria’s trade relationships is to dynamically scale up action to push for trade and investment facilitation for growth, development and job creation, as well as use trade, investment and associated areas to accelerate growth, modernize and diversify the economy and expand employment opportunities for approximately 2 million Nigerians entering the labour market, annually.
In 2018, it is expected that the AfCFTA will be adopted and the Single Market for Trade in Goods and Services launched. We shall invest time and effort in the implementation and work hard to connect the market opportunities from the AfCFTA to industrial activity in Nigeria. The objective is to create value chains that connect regionally and globally, bolted into Nigerian producers of goods, service providers and industry. The intended outcome is to grow the domestic market and also connect it, profitably, to regional, continental and global markets. In preparation for the historic and unprecedented AfCFTA, there shall be a Nigeria-wide Sensitization Workshop on the AfCFTA Agreement, so that and given particular attention to sensitizing Nigerian businesses and corporations to take advantage of the new opportunities and market access that the CFTA will herald.
In 2018, attention shall be accorded to deepening regional integration in ECOWAS. The NOTN will focus on engaging with other Member States to drive much-needed reforms needed to deliver on the economic integration agenda of ECOWAS based on the sovereign dynamics of ECOWAS Member States, as well as preparing the ECOWAS sub-region to maximize the benefits of the AfCFTA.
In 2018, Nigeria will negotiate strategic relations with notable trading partners using agreed 21st century templates for Nigeria’s Trade Agreements.
In 2018, the establishment of a rules-based trade remedy infrastructure is an urgent priority. The NOTN shall be working closely with King and Spalding one of the leading global trade law firms to this end.
In 2018, the NOTN shall finalize the formulation of the Economic Diversification Index (EDI). The EDI is being developed as a statistical measure that shall enable greater rigour and precision in ascertaining by what degree the economy is being diversified away from oil receipts. This index is being worked on and finalized by joint efforts of the NOTN and NBS. This, again, shows the critical importance of trade measures in the diversification of the Nigerian economy.
To achieve these goals, the NOTN is investing in intensive training of trade negotiators and trade statisticians. We are training them at world class levels. This is a major priority this year.
Conclusion
As the Number One economy in Africa, Nigeria shall do what is required to grow the Nigerian economy and use trade, investment and technology as engines of growth, while contributing to mutually profitable business relationships, and prosperity in a rules-based global economy.
This report is an invitation to Nigeria’s trading partners and businesses to join hands with the Government in the reconstruction, modernization and growth of the Nigerian economy.
As Minister for Industry, Trade and Investment of the Federal Republic of Nigeria, I am honoured to launch this maiden edition of the Nigerian Annual Trade Policy Report (NATPOR), which shall be published annually.
I congratulate the Nigerian Office for Trade Negotiations (NOTN) that produced this report and which shall produce it annually.
Thank you.
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CFTA, migration & illicit financial flows discussed in Songwe’s meeting with African Ambassadors
Economic Commission for Africa’s Executive Secretary, Vera Songwe, on Tuesday met with African Ambassadors in Ethiopia for their 19th quarterly briefing which touched on a number of issues affecting the continent and the work of the ECA in supporting the continent’s quest for economic and structural transformation.
Ms. Songwe opened the meeting with an overview of the work done by the ECA in the past three months in implementing its work programme for the biennium 2016-2017.
She provided the Ambassadors with some important updates on the ongoing United Nations system-wide management reforms and other matters relevant to the work of the Secretariat.
The ECA Chief and the Ambassadors discussed the forthcoming historic signing of the Continental Free Trade Area in Kigali, Rwanda, in March and the work the ECA continues to do in supporting the African Union Commission and member States in the CFTA negotiations.
Member States, like Ghana, were concerned that it seemed like the private sector was not heavily involved as would be expected to make sure they benefited and entered trade deals that would be benefit the continent and its people once the CFTA was implemented.
Of particular concern to member States were also issues to do with migration and the need to change the narrative to reflect that African migration was more intra-regional than international, and statistics to record the movement of African people within the continent.
Ms. Songwe, supported by Social Development Policy Division Director, Thoko Ruzvidzo, told the Ambassadors about the High Level Panel on Migration (HLPM) which is chaired by former Liberian President Ellen Johnson Sirleaf.
The HLPM, which seeks to identify and articulate key issues that form the African migration story, challenges and priorities for the continent, is expected to produce a report in April following its work on migration in Africa.
The Ambassadors were also briefed about consultations on the Global Compact on Safe, Orderly and Regular Migration. They urged the ECA to work closely with its partners, the AUC and the African Development Bank (AfDB), to find ways through which Africa can stop illicit financial flows that are costing the continent an estimated $80 billion annually.
Ms. Songwe urged the Ambassadors to encourage their countries to sign-up to global tax transparency and other relevant legislation to stop the bleeding and to ensure that money and assets siphoned out of the continent illicitly can be brought back once tracked successfully.
“As much as we talk about illicit financial flows and we make a lot of fuss about it, many of us have not taken basic steps that are needed and required to ensure that the money doesn’t go out,” she said.
“If you don’t close your door and you wake up every day saying your goats have been taken, everybody will say but you didn’t close your door. We have a sort of pretend problem because we have not closed our doors. We should start by saying how many countries are still pending in signing this legislation that says close your doors,” Ms. Songwe said, adding much more has been lost from Africa since the Thabo Mbeki on Illicit Financial Flows in Africa was released in 2015.
Other subjects that came up during the briefing include the Economic Partnership Agreements (EPAs), which are trade and development agreements negotiated between the European Union and the African, Caribbean and Pacific (ACP) partners engaged in regional economic integration processes; Neighbourhood Policy Agreements; the Conference of Ministers which is expected to be held in April; and the UN Peace and Security Council.
The Ambassadors agreed the ECA should continue to support Africa on migration and the EPAs; ensure cohesiveness between Addis Ababa and New York, among other things.
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Regional conference on Corruption and the challenge of economic transformation in southern Africa: Call for abstracts
The UN Economic Commission for Africa (ECA) Sub-regional Office for Southern Africa (SRO-SA), in collaboration with the African Union Southern Africa Regional Office (AU-SARO), are organising a regional conference on Corruption and the Challenge of Economic Transformation in Southern Africa from 4-6 July, 2018.
The conference will bring together academics, high-level government officials from member States, members of the private sector, CSOs, NGOs, anti-corruption institutions, research institutions, invited legislators and members of the judiciary, as well as regional and international organizations.
Not only timely but of imperative necessity, the conference resonates with the declaration of 2018 by the African Union as the year of anti-corruption on the theme; “Winning the Fight against Corruption: A Sustainable Path to Africa’s Transformation.”[1] Although Africa since the 1980s has crafted economic development blueprints like the Lagos Plan of Action and the Final Act of Lagos, the African Alternative Framework to the Structural Adjustment Programme (ALF-SAP), the NEPAD Document, and currently Agenda 2063, bolstered by national development plans in different African countries, the goal of economic transformation remains quite elusive. Issues of policy inconsistency, governance challenges, leadership inertia, and more importantly, corruption have stalled Africa’s efforts at radical economic transformation.
In its varied forms (state capture, grand and petty), there is mounting evidence labeling corruption as the root of the economic hemorrhage in Africa, engendering rent and unproductive behavior in the economy, capital flight, misallocation and misappropriation of scarce resources, missed investment opportunities, retarded growth, deteriorating social services, worsening inequalities and poor governance culture, all of which undermine the goal of economic transformation in Southern Africa and Africa, in general.[2]
However, there is renewed commitment towards the goal of economic transformation in Africa. Backed by the African Union’s Agenda 2063, economic transformation is being progressively adopted by African countries to direct the deployment of factors of production to more productive sectors (industrialization). In this realm, Southern African Development Community (SADC)’s Heads of State and Government endorsed the SADC Industrialization Strategy in 2015 – demonstrating their readiness to spearhead economic transformation in the sub-region.
Whereas economic transformation in Africa requires massive investment in human capital and infrastructure development, Africa’s investment has succumbed to corruption-induced illicit financial flows. Estimates by the AU and the ECA in the 2016 Report of the High Level Panel on Illicit Financial Flows from Africa[3] shows that, illicit financial flows in Africa over the past 50 years exceeds $1 trillion (an amount nearly matching the total ODA received by Africa over the same period). Additionally, approximately $50 billion is lost from Africa annually through illicit financial flows instead of augmenting domestic resource mobilization (DRM) and investment. On account of corruption, the average African growth rate of 5% per year since 2000 to around 2012, remains below the 2-digit growth rate which transformed Asian economies.
Noting the grievous welfare and economic effects of corruption, the United Nations enacted the United Nations Convention Against Corruption (UNCAC). At a regional level, AU has set in motion a number of initiatives meant to combat corruption (African Convention on Preventing and Combating Corruption (AUCPCC), AU Advisory Board on Corruption (AUBC) and the African Charter on Democracy, Elections and Governance (ACDEG)). At sub-regional level, SADC introduced the SADC Protocol against Corruption in 2001 as a way of preventing, identifying, penalizing and stamping out corruption. At national level, nearly all Southern African Member States have established bodies, institutions and legislatures meant to eliminate corruption. Despite the concerted effort, corruption in Southern Africa has continued unabatedly.
A 2017 study on the effectiveness of anti-corruption agencies in Southern Africa conducted by the Open Society Initiative for Southern Africa (OSISA)[4] noted that corruption in Southern Africa obstructs transparency in governments’ revenues and in mining contracts, allows illicit exploitation of minerals and militarization of mining, the smuggling of minerals, political patronage and clientelism, as well as political and electoral corruption. Transparency International’s Perception Index of 2016 shows that Southern African countries have dropped in their corruption rankings. Against this background, average growth for SADC has continued to fall in the recent past (2.3% in 2015 and 1.4% in 2016). Also, the manufacturing sector which is tipped to be the engine behind economic transformation in the SADC region has been sliding since 2010 (4% in 2010 and 2.6% in 2016). This evidence confirms that endemic corruption in Southern Africa is linked to the poor showing of the economy thus sweeping and radical measures to arrest corruption are highly necessary.
In this anti-corruption year and reflecting on the need to transform economies in Southern Africa, it is unavoidable to pose a number of questions; what forms and dimensions does corruption take in Southern Africa? What are the major drivers and agencies of corruption in the region? How has corruption affected the economy (domestic private investment, foreign direct investment, state revenue, capital formation, and aid flows)? How are illicit financial flows related to investment and economic growth in SADC? How is poverty related to corruption? What is the role of the legislature and judiciary in curbing corruption? Are current corruption measures capturing all the facets of corruption? What are the powers vested in anticorruption institutions and bodies in Southern Africa and how effective are they? What initiatives have been implemented by anti-corruption bodies and what results are there to share? Is there room to improve the effectiveness of anti-corruption institutions? How is the SADC protocol on corruption being implemented? Why is corruption still on the rampage in Southern Africa? What are the key policy interventions – at the national, regional and international levels – necessary in upscaling the fight against corruption and the role of key stakeholders in it? These and more questions will be addressed at the regional Conference (in the context of Southern Africa) through well formulated and methodologically-sound researches.
Sub-themes
The following sub-themes have been identified:
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Conceptualization and Theoretical Perspectives on corruption and economic transformation;
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Governance, Politics, and corruption and its implications;
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The Economics of Corruption (Corruption, investment, growth, state revenue, capital formation, market trust and confidence, poverty and inequality);
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State institutions (including state owned enterprises and the public service), the private sector (MNCs and SMEs), international actors and Corruption;
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Legal and institutional frameworks and state capacity in combating corruption (anticorruption institutions, horizontal accountability and audit institutions, and their practices);
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Culture, Values and corruption;
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Illicit financial flows: causes, trends, economic links and remedies;
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The role of regional bodies in fighting corruption;
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The future of fighting corruption; and
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Reversing the scourge of corruption in Southern Africa
Submission of Abstracts
Abstracts for the regional conference, not more than two pages maximum, should be submitted not later than 20th March 2018 to the email addresses below. Successful authors of abstracts will be notified by the end of March 2018.
Email: This email address is being protected from spambots. You need JavaScript enabled to view it. and CC: This email address is being protected from spambots. You need JavaScript enabled to view it.
[1] The theme was declared at the AU 30th Assembly of Heads of State and Government held in Addis Ababa, 22-29 January 2018.
[2] ECA, 2016. African Governance Report IV: Measuring Corruption in Africa: The International Dimensions Matter. https://www.tralac.org/news/article/9386-african-governance-report-iv-rethinking-how-we-measure-corruption.html
[3] See Report of the High Level Panel on Illicit Financial Flows from Africa: Track it! Stop it! Get it!, available at https://www.tralac.org/news/article/6951-report-of-the-high-level-panel-on-illicit-financial-flows-from-africa.html
[4] OSISA, 2017. Effectiveness of Anti Corruption Agencies in Southern Africa: Angola, Botswana, DRC, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe. A review by Open Society Initiative for Southern Africa (OSISA).
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Zambia Ministry of Finance: Statement on the economy and on government reforms
Delivered by Margaret Mwanakatwe, MP, Minister of Finance of the Republic of Zambia, in Lusaka on 21 February 2018
I wish to update the nation on the performance of the economy in 2017, the general outlook for 2018, and Government’s reaffirmation of the commitment to continue the implementation of policy and structural reforms aimed at sustaining the macroeconomic stability attained so far. This is in the light of recent observations and speculations on the state of the economy and on government’s engagement with various stakeholders on the economy, both local and foreign.
I take this opportunity to strongly re-affirm that the work on policy, structural, and legal reforms will continue to be implemented with greater vigor.
2017 Economic performance
GDP Growth: Driven largely by positive performance in manufacturing, mining and agriculture sectors, GDP growth continued on a positive trajectory. Despite being positive, preliminary data shows that growth is expected to be lower at 3.7% than the above 4% earlier projected. I will update the nation on growth once the final 2017 assessment is finalised.
Inflation: Inflation was contained within the band of 6-8 percent that was set at the beginning of the year. End-2017 inflation closed at 6.1%, the lowest in over thirty years.
Fiscal Performance: Preliminary numbers show that the fiscal deficit was below the budget target of 7.0% of GDP at 6.1%. This is consistent with the fiscal consolidation policies that the Government embarked on in the year under review.
Monetary policy, and banking and external sectors
Banking sector conditions continued to be sound and satisfactory. Liquidity conditions largely improved with the easing of monetary policy.
A slight reduction in lending rates was recorded at 24.6% as at end 2017 from 29.49 0% in 2016. Lending rates are still prohibitively high and posing challenges for enhanced business activities. The Government will work with the Bank of Zambia (BOZ) to institute targeted measures and engagements with the banking sector to meaningfully start to achieve lower rates in 2018.
The Kwacha remained relatively stable against the major convertible currencies. The Kwacha trade against the US Dollar in 2017 averaged K9.99 per US$. The current account deficit narrowed to US$760.3 million in 2017 from US$1.037 billion in 2016. International foreign reserves in 2017 were recorded at US$2.1 billion.
2018 Economic outlook
Economic performance in 2018 is expected to remain positive supported by a stable macroeconomic environment and implementation of various policy, structural and legal reforms under the Economic Stabilization and Growth Programme (ESGP). Growth is projected to remain positive while inflation is expected to be low and in single-digit while the fiscal deficit will be maintained within budgeted levels.
However, some of the potential risks for 2018 include relatively high lending rates and uncertain weather patterns that may impact negatively on electricity generation and agriculture activities.
Policy, legal and structural reforms
The envisaged positive economic outlook in 2018 and the medium term will be anchored on key reforms being undertaken by Government under the ESGP. These reforms will also support the implementation of the Seventh National Development Plan.
The need to sustain economic and fiscal governance, through maintenance of price stability for sustaining macroeconomic stability and fiscal fitness is paramount and necessary ingredient for growth, employment creation and poverty reduction. In this regard fiscal and monetary policy coordination will continue to be strengthened.
Government will step-up fiscal reforms to ensure fiscal consolidation is fully attained. Government will continue to enhance domestic revenue mobilization and expenditure restraint to attain a 3% of GDP fiscal deficit by the end of the medium term. Key to expenditure restraint is to concentrate on completing ongoing projects as outlined in the ESGP and emphasized by His Excellency the President of the Republic of Zambia Mr. Edgar Chagwa Lungu.
On debt management, the Government will continue to enhance debt management capacities and transparency. In this regard, the Government will prioritize the slowing down of debt accumulation and address perceptions around debt numbers by strengthening institutional and legal framework that will boost transparency in debt contraction. To this end, Government will be re-energising the engagement of stakeholders that are cardinal to improving debt dynamics and related economic fundamentals to support these reforms. Government is also working on improvement of Public financial management laws.
In addition, Government has developed a Medium-Term Debt Strategy while regular debt sustainability analysis will be undertaken.
Regarding the programme with the IMF, the nation may wish to note that we started engaging with the IMF on the basis of the ESGP approved by Cabinet in 2017. The ESGP is being strictly implemented with much of the milestones achieved. We are committed to continue the implementation at all levels of Government. In this regard, we will continue to engage the IMF on a similar basis with respect to debt management.
The government is developing a financing profile that is aimed at addressing our economic development aspirations without compromising debt sustainability, in an effort to bring the debt levels to moderate risk of debt distress over the medium term from high risk of debt distress. Once our new strategy has been completed, I will be engaging the IMF to obtain their concurrence.
I will now clarify the position of Cabinet and the Ministry on the restructuring of debt. This issue is unfortunately being misinterpreted that Government is anticipating challenges in servicing its debt. As announced in the 2018 budget address, the Government has commenced preparations to address the repayment of its Eurobonds through the operationalization of a sinking fund. Part of the process involves addressing liquidity risks at the time of paying/refinancing of the Eurobonds. As part of prudent risk management, the Government decided to reposition some flows falling due during the period of the Eurobonds, by engaging some creditors that may be open to pushing some flows this period forward. We are not contemplating any stock re-profiling but just the flows that fall due in the period of the repayments. China being a natural first creditor and accounting for 28% of our debt was a natural creditor to have a discussion with.
May I emphasize that Zambia does not intend to and will not default on its obligations. Only creditors that will be amenable to the proposal will be engaged and this will be on the basis of willingness. As part of the broader strategy, the Government has since put in place a team of officers from the Bank of Zambia, Ministry of Finance and Ministry of Justice to undertake work that will determine exactly what form of strategy will be adopted for the repayment/redemption of Eurobonds. The work will be completed by the end of the 1st quarter 2018.
Other major policy reforms that must continue are in agriculture and energy. In the agriculture sector Government is committed to resolving the teething challenges of the implementation of the e-voucher. Further, the e-voucher has given us an opportunity that will allow us to have a benchmark for graduating of farmers in future. In the energy sector, reforms in the both fuel and electricity sub-sectors, will continue in 2018 and beyond. These include full migration to cost reflective prices and sustenance thereafter, Government disengagement from importation of finished petroleum and comingled products. These will help anchor the fiscal and ensure efficiency in service delivery thereby enhancing economic performance.
Structural reforms
The implementation of measures to strengthen tax revenue will commence in earnest in 2018. The Treasury has developed a monitoring framework to ensure early finalization and implementation of the National land titling programme, installation of fiscal registers and monitoring system for excise duties in telecommunications.
Other structural reforms include improving business environment and ensuring an affordable and more sustainable pension system. Government will accelerate the development and implementation of legal and institutional framework that will give business greater chance of survival. This will be done through limiting regulatory and administrative burden for MSMEs as contained under the ESGP. In the pension area, a review of national pension and broader social security protection reforms will be carried out.
In order to reposition the State-Owned Enterprises, Government through IDC will continue work on ascertain long term sustainability of these assets. This is with the view to improve the contribution of state owned enterprises to the Treasury as well as country’s development.
The Government will strengthen the PPP function and law as a key measure to augment resource mobilization going forward through private sector engagement.
Legal reforms
Legal reforms form a cornerstone of effective service delivery for any country. In this regard reforms, such as those in the Public Financial Management will continue. These include the Zambia Public Procurement Act (ZPPA), Insurance Bill, Bank of Zambia Bill, Deposit Protection and Pensions and Social Security bill, planning and budgeting, loans and Guarantee (Authorization) Act.
Government will ensure the enactment of the new Public Financial Management Act during the current sitting of Parliament in 2018.
Procurement reforms will continue to control wastage and overpricing. The amendment of the law will be undertaken to introduce reference pricing, expert estimates for works and services and enhance preferential contracting for locals.
Information provision to the public
In order to improve information flows, the Ministry of Finance will be working out measures to periodically disseminate information on economic performance on a predictable basis and undertake appropriate stakeholder engagements.
Conclusion
As a democratically elected Government, we owe it first to the Zambian people to tell them the truth not just about the debt government contracts on their behalf, but also about the state of the economy in general. Transparency in the management of public finances will therefore be key for us to win both the public trust, confidence of international financiers trading in government instruments and investors.
May I take this opportunity to thank His Excellency the President of the Republic of Zambia, Mr. Edgar Chagwa Lungu for his trust through the mandate given to me to steer the Ministry of Finance’s work in delivering service to the people of Zambia and to build on the successes of my predecessor Honourable Felix Mutati, MP. I wish to commit myself to His Excellency’s call for me to deliver the mandate without letting down the people of Zambia. Fiscal sustainability for a prosperous Zambia will be my guiding principle as I take up this work. Together, we will succeed.
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Digitisation will overcome African trade barriers
Digitally integrating Africa’s higher risk trade transaction ecosystem into a global economy returning to growth offers Africa a unique opportunity to drive inclusive and sustainable development.
Standard Bank’s achievements in leveraging digitization to support the growth, efficiency and reach of African trade is built upon a unique understanding of the broader landscape of challenge and risk that defines the scale of the opportunity presented by trade to transform African growth.
With broad-based growth expected across 120 world economies this year, 2018 is currently presenting potential for a globally synchronized return to growth. Significantly this growth is, for the first time in decades, expected to occur across both mature economies such as the United States, Germany and Japan – as well as emerging economies such as Mexico, Brazil, India and China.
Africa is no exception. The African Development Bank (AfDB), for instance, is predicting the average growth rate across 54 African markets to reach 4.1% in 2018. This represents a 30-basis point increase over 2017’s estimated average growth rate.
Following a decade of low growth and poor commodity prices, optimism – and some green shoots – are emerging on the continent. From Nigeria to Mozambique, Ghana and Zambia, improved commodity prices are combining with new global growth opportunities to drive positive emerging market sentiment. At the same time political stability appears to be returning to Kenya and other leading African economies. Even growth-challenged South Africa is currently experiencing a bout of optimism as political events point to the prospect of improved policy certainty.
In short, if the risks of doing business in and with Africa can be managed, and global growth and some of the consumption variables turn favourable for the continent, Africa’s chances of benefitting from this generalised return to growth in 2018 are strong.
In a globally generalised growth environment Africa’s demand for trade finance is only likely to increase. This means that 2018 is likely to see Africa’s bank-intermediated trade finance deficit significantly exceed the AfDB’s estimation of a c. USD 100m shortfall. Given these numbers, using digitisation to increase the efficiency and reduce the cost of trade will be essential if Africa is to – quickly leverage the full potential of this historically unique instance of synchronised global growth.
In particular, access to trade finance remains a challenge for Africa’s small and medium-sized enterprises (SMEs).
Developing effective SME financing able to support the rapid expansion of intra-African trade remains critical to both growth as well as social and political stability.
Trade finance in Africa is currently heavily paper-based and siloed both within and between nations. For a while now African governments have been encouraging digitisation as a way of boosting domestic and global trade in markets that lack traditional domestic and cross-border trade infrastructure. For example, the tea industry in Kenya has adopted a platform that brings buyers and sellers together. Other similar digital platforms in Kenya, Ghana and Tanzania provide services to businesses in the bulk oil importation space.
What is immediately obvious is that Africa is being transformed by digitisation on three levels, namely; through the digitisation of the physical supply, the financial supply and also via the documents chain. Standard Bank has been most directly involved in digitising the financial supply chain for some time now. For example, the bank has worked with regulators supporting price discovery and risk management in the tea industry in Kenya. Standard Bank has also been working hard to digitise the documents chains, including proof of concept tests using blockchain to digitize bills of lading, for example.
Developing digital solutions that simplify and broaden access to trade finance amongst Africa’s SME segments in key markets is a strategic focus for the bank over the next 12 to 18 months.
Supporting trade in Africa also means working with clients to manage multiple categories of risk, including; counterparty credit risk, country risk, FX risk and operational risk. A key element in this is helping clients match responses to real rather than perceived risk – by partnering with FinTech firms operating trade contingent and asset risk distribution services, for example.
Standard Bank provides support and strategic guidance to regional organisations working to reduce trade barriers, speed up the clearing and release of goods, increase the predictability of landing costs, and support compliance – so as to minimise the disruption and costs of legitimate trade. Leading examples include Standard Bank’s work with the Tripartite Free Trade Area which is working to promote a Cape-to-Cairo regional economic block. Developing the digital platforms for organisations of this nature to accomplish their work on the continent is a key area in which banks can support the expansion of trade in and between African markets.
In short, through collaboration and partnership across Africa, Standard Bank is developing the digital tools to support the efficiency and effectiveness of intra-African trade. This process will reduce the costs and promote the expansion of trade while realising the benefits of trade within and amongst African countries – and between Africa and a world economy returning to growth.
Vinod Madhavan is Group Head of Trade for Standard Bank Group.
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Featured trade policy process: Towards an EAC Regional Ports Development Strategy – MEFMI posts an EOI
Ghanaian stakeholders agree on committee to address concerns on Africa’s AfCFTA (TWN-Africa)
Various stakeholders in Ghana have raised concerns with the quality of the processes, the content and the speed of negotiations of proposed Africa’s Continental Free Trade Area and agreed on a seven-member ad hoc committee, to contribute to improving the process defects as well as the content in relation to addressing Ghana’s developmental challenges. The committee comprises the Ministry of Trade and Industry, Ghana Trades Union Congress, Integrated Social Development Centre, Centre for Regional Integration in Africa, Private Enterprise Foundation (the umbrella body of private sector players in Ghana), TWN-Africa and the Institute of Financial and Economic Journalists, Ghana. The national consultative seminar, jointly organised by TWN-Africa and The Ministry of Trade and Industry, took place on 22 February in Accra.
Commenting on the process, Mr Ken Quartey, former chairperson of the Ghana National Poultry Farmers Associations, said ‘the timing and constraining nature of the schedule of the negotiations would not allow quality and proper consultation at the national level’. Professor S.K.B Asante of the Centre for Regional Integration in Africa, making comments on the AfCFTA and Africa’s integration, underscored the need for capacity building of stakeholders on regional integration issues. He also underscored the imperatives of addressing Africa’s productive capacity deficit and the building of trade infrastructure, without which the AfCFTA would not be transformational.
EALA oversight visit: Bribery, red tape still dog trade on Central Corridor (New Times)
Long distance truck drivers have appealed to the East African Legislative Assembly to help advocate for total removal of corrupt officials as well as unnecessary bureaucratic tendencies by officials along the principal Central Corridor route, especially in Tanzania and Burundi. The truck drivers made their concerns known while interacting with members of the regional Assembly who were recently conducting an on-spot assessment of EAC organs, institutions and facilities on the Central Corridor, from February 12 to 23. But one of the most revealing moments was on their arrival at the OSBP at the Kobero-Kabanga border between Tanzania and Burundi where they held a meeting with truck drivers. Mussa Mabati, the head of the Burundian truck drivers association, urged his colleagues to speak their minds out, openly.
African Parliament to discuss curbing illicit firearm trade (Xinhua)
The Pan-African Parliament will this week host a regional seminar with the Parliamentary Forum on Small Arms and Light Weapons in Johannesburg to curb the illicit trade in firearms in Africa. The seminar (2-3 March) is meant to increase parliamentary engagement, understanding and ownership of regional and international arms control instruments. PAP President, Roger Nkodo Dang said there is a need for the continent to fight the illicit trade in firearms in the continent. Many African countries have not ratified the Malabo Protocol which will give PAP legislative powers. “Without full legislative powers, it will be challenging to effectively harmonize and coordinate national and regional efforts and legislations for silencing the guns in Africa by 2020,” he said.
South Africa’s cultural goods exports growing faster than imports (SACO)
A new report which set out to examine the growth and structure of South Africa’s cultural and creative industries trade between 2007 and 2016 has been released by cultural think tank, the South African Cultural Observatory. “In South Africa, cultural goods exports accounted for 0.46% of the country’s total commodity exports in 2016, while cultural goods imports accounted for 0.66% of total commodity imports,” said Prof Jen Snowball, SACO Chief Research Strategist, and co-author of the report with Rhodes University trade expert, Nicolette Cattaneo. Despite a significant slowdown in South Africa’s total cultural goods trade in 2015, in line with slower growth in the economy more broadly, there was evidence of a comfortable recovery in 2016, the report notes. “Cultural goods exports grew faster than cultural goods imports for much of the post-crisis period, reducing the country’s trade imbalance in cultural goods markedly. The Visual Arts and Crafts domain was a significant driver of this trend,” Cattaneo and Snowball said. Extract (pdf):
A number of recommendations follow from these findings, as well as areas for further research. (i) An important priority is the improvement of data collection for CCI trade in both goods and services spheres. This requires coordination between industry groupings, the dti, DAC, the Small Business Development Ministry, SARS and the SARB. Since cultural services trade is likely to grow in relative importance under digitisation, better services trade data for the CCI sector at an appropriate level of disaggregation is particularly important. (ii) Raise the profile of the CCI sector in trade negotiations within Africa and elsewhere; consult industry groupings to explore what the CCI sector wants out of international trade and cooperation agreements.
Somalia: 2017 Article IV Consultation (IMF)
Addressing Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regulatory issues is critical to supporting remittance flows and external financial linkages for Somalia. Remittances make up nearly 40% of household income, and the closure of some corresponding accounts has increased costs of transactions over the past several years (see Figure). Overall, however, costs remain contained and inflows averaged over $1.3bn per year during 2015-2017. The authorities have made progress on AML/CFT regulations and supervision over the past few years. Despite progress that has been achieved, important gaps remain, which the authorities are committed to addressing. [Figure 1: Ample remittances and grants finance a large trade deficit (2014-2017)]
Nigeria: Gross Domestic Product Report – Q4 and Full Year 2017 (NBS)
The nation’s GDP grew in Q4 2017 by 1.92% (year-on-year) in real terms, maintaining its positive growth since the emergence of the economy from recession in Q2 2017. This growth is compared to a contraction of –1.73% recorded in Q4 2016 and a growth of 1.40% recorded in Q 2017. Quarter on quarter, real GDP growth was 4.29%. The year 2017 recorded a real annual growth rate of 0.83% higher by 2.42% than –1.58% recorded in 2016.
Nigeria’s National Industrial Policy and Competitiveness Advisory Council: a review (The Cable)
The Trade and Markets sub-committee has begun discussions with the Digital Bridge Institute on partnering with the private sector to develop and operate a pilot ICT Cluster at the Digital Bridge Institute in Oshodi. The Trade and Markets committee has also put in place, a mechanism to address key sectoral issues to improve private sector involvement in the agro-allied, cotton, garment and textile, and heavy metal sectors. In the agro-allied sector, the committee is leveraging the Special Economic Zone in Lekki to facilitate investment in agro-allied processing such as cassava, oil palm, etc. In the CTG and heavy metal sector, the sub-committee is working with Ministry of Industry Trade and Investment to address policy issues in the value chain. [NASS, Executive to review international trade treaties – Omishore]
Namibia to review unified African air transport market (The Namibian)
Government will next month host a workshop to review the Single African Air Transport Marketing agreement, which the country has not yet signed. Namibia is one of the AU member states which has not yet signed the commitment, despite showing interest in having a unified African air transport market. [Cape Town airport enjoys surge in travellers; Ethiopian Airlines set to increase flights to Madagascar]
Zambia urges mines to start moving 30% of cargo by rail (Reuters)
Mining companies in Zambia, Africa’s No. 2 copper producer, should immediately start transporting 30% of their cargo by rail despite their concerns about inadequate capacity, the government said on Tuesday. Zambia in January introduced a new law compelling mining companies and other bulk cargo handlers to transport at least 30% of their freight by rail as it looks to bolster the sector. However, the Zambia Chamber of Mines said on Monday that Zambia was not ready to handle that amount of cargo and the potential impact on the mining industry had not been properly considered.
Namibia: Jooste targets SoE boards (The Namibian)
The public enterprises ministry has proposed a vast array of measures to bring sanity to the way state-owned enterprises are run, among them making boards accountable for losses. Minister Leon Jooste yesterday said the new plans for 2018 were aimed at compelling board members of state-owned enterprises and executives to take responsibility and ownership, and “to equally embrace the consequences for failures”. As such, Jooste told an annual stakeholders’ meeting in Windhoek that SOE boards would take the blame if cases of reckless trading or gross negligence are established. Board members would be held responsible collectively or individually, and there would be unpleasant consequences, he added. [Related: Govt spent N$12b on SoEs last year]
New book highlights how safe trade solutions help poorest countries (WTO)
The book, Driving safe trade solutions worldwide (pdf), highlights projects the STDF has implemented since 2004 to assist some of the poorest countries. These include projects aimed at helping women shrimp farmers in Bangladesh, ginger cooperatives in Nepal, cabbage producers in Senegal and flower sector workers in Uganda boost revenues and support their families. Other projects have helped farmers to use lower-risk pesticides on tropical crops across Africa, Latin America and Southeast Asia and access new markets. The 25 stories in the book show how STDF projects and project preparation grants work in practice in food safety, animal and plant health, and cross-cutting SPS areas, with significant results.
The impact of standards on developing country exports (pdf, K4D)
This ten-day rapid review provides an annotated bibliography of empirical literature on the relationship between standards and developing country trade. The review has two objectives: (i) to present the state of the evidence on sectors in which standards are net barriers to developing country exports and sectors in which standards are net catalysts to developing country exports; and (ii) to assess the strength of this evidence and identify gaps. The focus of the review is public, voluntary standards as specified in the Terms of Reference.
Today’s Quick Links: Adesina urges America to support African agriculture as a business Zambia will not import or allow any Genetically Modified foods Kenya: Sugar imports drop 43% on huge stocks bought duty-free Tanzania: Minister orders milk import reassessment Ghana’s IMF bailout ends December 2018 says finance minister Pathways to economic diversification in Central Africa: UNECA Issues Paper on operationalization of the Douala Consensus (pdf) New growth models in a changing global landscape: Christine Lagarde speech Nigeria: FG seeks Chinese bank’s support for infrastructure funding UNCTAD: Keep an eye on China’s innovations in development finance |
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Bribery, red tape still dog trade on Central Corridor
Long distance truck drivers have appealed to the East African Legislative Assembly (EALA) to help advocate for total removal of corrupt officials as well as unnecessary bureaucratic tendencies by officials along the principal Central Corridor route, especially in Tanzania and Burundi.
The truck drivers made their concerns known while interacting with members of the regional Assembly who were recently conducting an on-spot assessment of EAC organs, institutions and facilities along the Central Corridor, from February 12 to 23.
The MPs first heard concerns, including congestion and delays in clearing goods, cited while interacting with stakeholders at the Dar es Salaam Port in Tanzania as well as when they travelled further inland by road to the Vigwaza Weigh Bridge, some 80 kilometres from Dar es Salaam.
But one of the most revealing moments was on their arrival at the one stop border post (OSBP) at the Kobero (Burundi)-Kabanga (Tanzania) border between Tanzania and Burundi where they held a meeting with truck drivers.
Mussa Mabati, the head of the Burundian truck drivers association, urged his colleagues to speak their minds out, openly.
Josephat Masandupwe, a Tanzanian, decried delays at the border crossing which he said cost him a lot of money, unnecessarily, when he should spend less than an hour to get through customs.
Masandupwe said: “I have been here for four days already and I know colleagues who have made six days. The delay here is just too much. The longer I stay here, the more I spend unnecessarily, and suffer unexpected costs yet I have all my papers in good order.”
A clearing agent at the border claimed that they had experienced “network problems” which would be rectified before long.
Hussein Abdu Butoyi, a Burundian truck driver, told lawmakers that he does not understand why, for example, after being inspected and cleared at the Vigwaza Weigh Bridge, a transit goods truck from Dar has to endure more stops further on in different areas up to Kahama.
“On these other roadblocks the police tell us that we have excess loads but when we show them the clearance papers from Vigwaza they just refuse to look at them. We would prefer to go through only two weigh bridges, at Vigwaza and Nyakahura,” Butoyi said.
For trucks to proceed, drivers claimed they often have to pay unnecessary bribes. This kind of corruption, they reported, is more rampant on the Tanzanian section of the central corridor. According to David Nambajimana, drivers also dread the Tanzanian section because in case of road accidents, consignments get stolen as there is no police protection.
Shedding further light on issues, Mabati noted that corruption is more rampant on the Tanzanian section, with revenue authority officials often devising ways to get bribes. In Burundi, he said, corrupt officials will also cause delays seeking bribes.
At some point, MP Ali Ibrahim Fatuma (Kenya) asked if drivers had any positive things to say about developments on the central corridor. In response, Mabati said that they were, first of all, “very happy to be given a rare opportunity” for their voice to be heard at a higher level – by the EALA. One of the positives, he said, was that the number of weigh bridges had reduced from seven to three in the vast Tanzanian territory where trucks pass before reaching Rwanda or Burundi.
“I am an elderly driver who has been here long enough. In the past, we never had such a platform to express ourselves. Drivers are happy the weighbridges reduced to just three. The presence of police officers on the road also reduced,” Mabati said.
‘Harmonise EAC framework’
The truckers also appeal for harmony in regional laws and transport regulations so as to ease trade.
Mabati said: “We would like to request that there be harmony such that what is in Tanzania is what is in Burundi, in Rwanda and elsewhere in the region. In Rwanda, you find that drivers are cleared very fast but here when we are delayed we suffer in so many ways, including paying for food and accommodation. We want a harmonised EAC framework for all truck drivers. The law and regulations must be the same everywhere.”
The Assembly passed several Acts, including one on elimination of NTBs, to facilitate effective implementation of the EAC Customs Union Protocol and lawmakers inspected OSBPs along the corridor so as to, among others, assess challenges met in their implementation and how they can help address issues.
The Customs Union, in force since 2005, is regarded as the first regional integration milestone and critical foundation of the EAC. It means EAC Partner States have agreed to establish free trade – or zero duty imposed – on goods and services amongst themselves and agreed on a common external tariff, whereby imports from countries outside the region are subjected to the same tariff when sold to any Partner State.
MP Muhia Wanjiku (Kenya), who led the central corridor EALA delegation, told the truck drivers at the Kobero meeting that “our trip is not a waste of time” as issues will be looked into and steps taken to improve the situation.
She said: “We appreciate your frank views, the negatives and the positives. Such inputs help us build a stronger EAC.”
More than 80 per cent of Rwanda’s import and export cargo goes through the central corridor.
For two weeks, EALA members – in two teams, one on the central corridor starting from Zanzibar, and the other up north starting from Mombasa, Kenya – traversed the central and the northern corridors and concluded their field tour on February 23.
The Assembly shall consider a joint report of both teams in the House, for debate and adoption before forwarding it to the EAC Council of Ministers, the central decision-making and governing Organ of the Community, for action.
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Ghanaian stakeholders agree on Ad hoc Committee to address concerns on Africa’s Continental Free Trade Area
Various stakeholders in Ghana have raised concerns with the quality of the processes, the content and the speed of negotiations of proposed Africa’s Continental Free Trade Area (AfCFTA) and agreed on a seven-member Ad hoc Committee, to contribute to improving the process defects as well as the content in relation to addressing Ghana’s developmental challenges.
The Ad hoc Committee comprises the Ministry of Trade and Industry (MOTI), Ghana Trades Union Congress, Integrated Social Development Centre (ISODEC), Centre for Regional Integration in Africa (CRIA), Private Enterprise Foundation (PEF); that is the umbrella body of private sector players in Ghana, Third World Network-Africa (TWN-Africa) and the Institute of Financial and Economic Journalists (IFEJ), Ghana.
The national consultative seminar, jointly organised by Third World Network-Africa (TWN-Africa) and The Ministry of Trade and Industry, took place on 22nd February 2018 in Accra, Ghana. It brought together a range of stakeholders such as Ghana’s Parliamentary Select Committee on Trade and Industry, Ghana National Chamber of Commerce and Industry, members of the Ghana National Poultry Farmers Association, Private Enterprise Foundation, Ghana Shippers Authority, Trades Unions, Customs Division of the Ghana Revenue Authority, youth groups, academia, women groups, other non-governmental organisations and the media to deliberate on the proposed trade pact.
It was an intervention aimed at kick-starting a broader conversation on the AfCFTA and the reality confronting the Ghanaian economy. It also sought to update stakeholders on the state of the Negotiations and agree on follow-up mechanisms with the Ministry of Trade and Industry aimed at enriching Ghana’s position on the AfCFTA.
The AfCFTA is scheduled for consideration and signing by African political leaders at an Extra-Ordinary Heads of State Summit in Kigali, Rwanda on 21st March 2018 following consensus among Member States on a Framework Agreement as well as Protocol on Trade in Goods and Protocol on Trade in Services.
One of the main concerns stakeholders raised was the lack of information on the proposed trade pact at the national level even to the point of the negotiations where the Heads of State are expected to meet, consider and sign off the Agreement. Also, the continuous marginalization of key stakeholders, who will be instrumental in crystalising the eventual AfCFTA, was raised. These, concerns, according to the stakeholders, are compounded by the rushed nature of the timeline that would not ensure proper and quality consultation. They also indicated that an improved and participatory process adds its own autonomous legitimacy to the whole trade pact.
Commenting on the process, Mr. Ken Quartey, a former Chairperson of the Ghana National Poultry Farmers Associations, said ‘the timing and constraining nature of the schedule of the negotiations would not allow quality and proper consultation at the national level’.
Professor S.K.B Asante of the Centre for Regional Integration in Africa and an academic, making comments on the AfCFTA and Africa’s Integration, underscored the need for capacity building of stakeholders on regional integration issues. He also underscored the imperatives of addressing Africa’s productive capacity deficit and the building of trade infrastructure, without which the AfCFTA would not be transformational. According to him market integration/tariffs harmonisation alone without productive abilities and right trade infrastructure would not be beneficial to Ghana and the continent as a whole.
Professor Asante’s point was corroborated by other stakeholders who reiterated the imperative of prioritising the issues of domestic productivity in Ghana and in most African countries in the AfCFTA discussions especially by addressing the real sector concerns of domestic producers as well as interconnections between sectors.
The Team from the Ministry of Trade and Industry was led by Ghana’s Chief Trade Negotiator, Mr Anthony Nyame Baafi.
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New book highlights how safe trade solutions help the poorest countries
Today’s global trade landscape is changing. Higher levels of competition mean consumers worldwide are demanding safer food. Across continents, climate change is adding to the problem of pests and diseases that are threatening animal and plant health, putting agricultural production and the environment at risk. Governments are also raising the bar on safety for food and agricultural imports.
In turn, sanitary and phytosanitary (SPS) gaps in many developing countries block exports. For small-scale farmers, producers and traders, meeting international food safety, animal and plant health standards clears the path to the global marketplace.
A new book by the Standards and Trade Development Facility (STDF) features 25 stories showing how good practice in food safety, animal and plant health has helped small-scale farmers and processors in developing countries trade more easily and improve their livelihoods. The book was unveiled at a STDF Policy Committee meeting held at the World Organisation for Animal Health (OIE) on 23 February.
The STDF is a global partnership that supports developing countries in building their capacity to implement international sanitary and phytosanitary (SPS) standards as a means to improve their working practices and increase access to agricultural markets.
The book, “Driving safe trade solutions worldwide”, highlights projects the STDF has implemented since 2004 to assist some of the poorest countries. These include projects aimed at helping women shrimp farmers in Bangladesh, ginger cooperatives in Nepal, cabbage producers in Senegal and flower sector workers in Uganda boost revenues and support their families. Other projects have helped farmers to use lower-risk pesticides on tropical crops across Africa, Latin America and Southeast Asia and access new markets.
The 25 stories in the book show how STDF projects and project preparation grants work in practice in food safety, animal and plant health, and cross-cutting SPS areas, with significant results.
Across Africa, Asia-Pacific and Latin America and the Caribbean, the STDF has helped to set up partnerships across the public and private sector, connecting government agencies to small businesses. It has championed the latest technical know-how and built up people’s skills across agricultural value chains, mobilizing over US$ 25 million to scale up projects and further the reach of innovative models.
The book showcases that when more people benefit from trade, it not only gives a boost to the economy, it drives up incomes in poor areas, promotes domestic food security, protects the environment, improves public health and empowers women.
Established by the Food and Agriculture Organization of the United Nations (FAO), the World Bank, the World Health Organization (WHO), the World Organisation for Animal Health (OIE) and the WTO, the STDF is financed by voluntary contributions. The WTO provides the Secretariat and manages the STDF Fund.
Adesina urges America to support African agriculture as a business
“I do not seek aid for Africa. I seek investments in Africa” – Akinwumi Adesina, AfDB President
The President of the African Development Bank, Dr. Akinwumi Adesina, has made a strong case for increased American and global investments to help unlock Africa’s agriculture potential.
He made the remarks as the Distinguished Guest Speaker, at the USDA’s 94th Agriculture Outlook Forum in Virginia on Thursday, on the theme The Roots of Prosperity.
According to Adesina, “For too long, Agriculture has been associated with what I call the three Ps – pain, penury, and poverty. The fact though is that agriculture is a huge wealth-creating sector that is primed to unleash new economic opportunities that will lift hundreds of millions of people out of poverty.”
Participants at the Forum included the Secretary of Agriculture, Sonny Perdue; Deputy Secretary of Agriculture, Stephen Censky; President of the World Food Prize Foundation, Kenneth Quinn; Chief Economist of the U.S. Department of Agriculture (USDA), Robert Johansson; Deputy Chief Economist, Warren Preston; and several top level government officials and private sector operators.
Adesina appealed to the US private sector to fundamentally change the way it views African agriculture.
“Think about it, the size of the food and agriculture market in Africa will rise to US$1 trillion by 2030. This is the time for US agri-businesses to invest in Africa,” he said.
“And for good reason: Think of a continent where McKinsey projects household consumption is expected to reach nearly $2.1 trillion and business-to-business expenditure will reach $3.5 trillion by 2025. Think of a continent brimming with 840 million youth, the youngest population in the world, by 2050.”
The U.S government was urged to be at the forefront of efforts to encourage fertilizer and seed companies, manufacturers of tractors and equipment, irrigation and ICT farm analytics to ramp up their investments on the continent.
“As the nation that first inspired me and then welcomed me with open arms, permit me to say that I am here to seek a partnership with America: a genuine partnership to help transform agriculture in Africa, and by so doing unlock the full potential of agriculture in Africa, unleash the creation of wealth that will lift millions out of poverty in Africa, while creating wealth and jobs back home right here in America,” the 2017 World Food Prize Laureate told the Forum.
“We are launching the Africa Investment Forum, as a 100% transactional platform, to leverage global pension funds and other institutional investors to invest in Africa in Johannesburg, South Africa from November 7-9.”
The World Bank, International Finance Corporation, the Inter-American Development Bank, the European Bank for Reconstruction and Development, the Asian Infrastructure Investment Bank and the Islamic Development Bank, are partnering with the African Investment Forum to de-risk private sector investments.
The African Development Bank is also pioneering the establishment of Staple Crop Processing Zones in 10 African countries, that are expected to transform rural economies into zones of economic prosperity and save African economies billions of dollars in much need foreign reserves.
“We must now turn the rural areas from zones of economic misery to zones of economic prosperity. This requires a total transformation of the agriculture sector. At the core of this must be rapid agricultural industrialization. We must not just focus on primary production but on the development of agricultural value chains,” Adesina added. “That way, Africa will turn from being at the bottom to the top of global value chains.”
In his keynote address U.S. Secretary of Agriculture, Sonny Perdue, said the U.S. Administration has removed more restrictive regulations to agriculture than any other administration. “Our goal is to dismantle restrictions that have eroded agricultural business opportunities.’’
“Agriculture feeds prosperity and accounts for 20 cents of every dollar. As global prosperity grows, it in turn fuels the demand for more nutritious food and business opportunities,’’ he added.
In his concluding remarks, Adesina informed participants about a new $1 billion initiative, Technologies for African Agricultural Transformation (TAAT) to unlock Africa’s huge potential in the savannahs.
Expressing strong optimism that the future millionaires and billionaires of Africa will come from agriculture, Adesina said:
“Together, let our roots of prosperity grow downwards and bear fruit upwards. As we do, rural Africa and rural America will brim with new life, much like I witnessed in Indiana, during my time as a graduate student in America. Then, we will have changed the 3 ‘Ps’ to – Prosperity, Prosperity and Prosperity!”