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Tax body, civil society join hands to fight illicit financial flows
Civil society organisations have joined the campaign to end illegal financial flows in the country and Africa in general.
The “Stop the Bleeding” campaign seeks to end illicit financial flows by multinationals, which are draining Rwanda’s economy and that of the continent, and is being supported by the tax body, according to the organisers.
According to Pascal, Bizimana Ruganintwali, the Rwanda Revenue Authority (RRA) deputy commissioner general and commissioner for corporate services, the tax body supports all efforts geared at crackdown on those involved in illegal movements of money to protect Rwanda from fraudsters.
“RRA will never relent it its efforts to apprehend multinationals or individuals involved in illegal financial activities designed to deplete Rwanda of its resources,” Ruganintwali said.
He was speaking at the launch of the drive last week in Kigali.
Spearheaded by Action Aid Rwanda, Governance for Africa and Tax Justice Network Africa and the taxman, the campaign is being conducted under the theme, “Tackling illicit financial flows; the Rwandan perspective.” Illicit financial flows are unauthorised movements of money or capital from one country to another.
“We understand how serious this challenge has become, especially for economies like Rwanda, that are looking to increase domestic revenues to support long-term investments,” Ruganintwali said.
He added that stopping unauthorised outflows, especially those arising from smuggling, trade misinvoicing, transfer pricing and other forms of aggressive tax planning is critical for, not only Rwanda, but also the African continent.
Billions lost annually
Angello Musinguzi, a tax expert at KPMG Rwanda, said emerging economies like Rwanda are losing a lot of money due to weak and incomplete transfer pricing mechanisms. He added that the bulk of illicit money flows is channeled through international tax havens.
“Therefore, governments must be careful when giving incentives to investors, but also ensure that revenue authorities institute strong transfer pricing units to help detect and deter illicit financial flows,” he noted.
It is estimated that Rwanda loses about $243 million annually through tax incentives and other trade related activities, while the region is losing almost $2.1 billion annually through illegal outflows.
About $80 billion leaves Africa each year through illicit outflows. As a percentage of GDP, illicit outflows in Africa are the highest globally, with multinational corporations as lead contributors, a situation that undermines the contribution of foreign direct investment and aid.
Jason Rosario Braganza, the deputy executive director of Tax Justice Network Africa, said tax incentives that are not well monitored can be a gateway to illicit financial flows if not well analysed. James Butare, the head of programmes and policy at ActionAid Rwanda, called on governments to be transparent and resolute when dealing with illegal financial flows.
“It is unfortunate that we still lose resources this way. We must, therefore, work together to reverse the situation to help preserve the continent’s resources,” he said.
According to Butare, it is important to conduct continuous public awareness about illegal financial activities as this will help address the matter more efficiently.
“We need to look at illicit financial flows as anti-development agents that curtail the ability to capture domestic resources,” Butare said.
The official added that it requires concerted action from governments and the public to fix the problem.
Safeguards
Speaking at the event, Fred Karemera, the head of investments and tax incentives at Rwanda Development Board (RDB), said the agency has put in place strong mechanisms to monitor what is given as incentives against benefits.
“We ensure that what we give as incentives does not deprive the country of its resources for private and public investment,” he said.
Rwanda attracted investments worth $1.675 billion in 2017, according to latest figures from RDB.
More about the campaign
The ‘Stop the Bleeding’ campaign was first launched in June 2015 to create awareness among the public on the impact of illegitimate capital outflows on the continent’s development initiatives.
It aims at mobilising citizens to demand for measures geared at curbing illicit flows as recommended by the Mbeki-led High Level Panel, which African governments have already adopted.
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The growing importance of gas in the Africa energy mix
The 3rd Africa Gas Forum took place on Monday, 19th February 2018 at the Sandton Convention Centre in Johannesburg, South Africa and is aligned as an official side event of the annual African Energy Indaba (AEI).
Africa’s oil and gas potential will grow significantly over the next two decades, driven by population growth, urbanization and the emergence of a wealthier middle class on the continent. Africa is endowed with natural resources that are changing the global energy landscape with six of the top 10 global discoveries in the oil and gas sector in 2013 being made in Africa.
In the past, economic and political uncertainty coupled with fluctuating energy prices and weak infrastructure hampering growth, but in recent years the commodities boom and increased investment in energy infrastructure have seen a resurgence of growth.
There is no doubt that Africa remains open for exploration by oil and gas companies. Although finding oil and gas in Africa can still be low cost, it needs financial investment and long-term commitment. African governments that can manage the business and regulatory processes have a better chance of attracting this investment.
The potential is evident, but today’s leading oil and gas executives in Africa must stay on top of emerging challenges and opportunities to remain competitive in the surging industry.
The Africa Gas Forum has been created to ensure a balance between country specific opportunities as well as common issues that affect the whole region such as exploration activity, licensing rounds, development plans and the move to gas, new tax regimes, regional infrastructure projects, pipelines, LNG terminals, security, local content initiatives, investment requirements and other key upcoming projects.
Latest market trends
With African economic growth in 2018 making a recovery after a difficult year, developments in gas has seen West Africa’s gas sector become extremely active in 2018 from Senegal to Angola. While large gas discoveries in Mozambique, Kenya and Tanzania, has ignited a gas surge on the east coast, developing these discoveries and their concomitant infrastructure requires foreign and, or private investment that will be expensive and require a long-term commitment. The emergence of Shale Gas, and with the commissioning of the Strategic Environmental Assessment of Shale Gas by the South African Government, leads the way for Shale Gas exploration on the continent.
At the end of 2016, Africa is reported to have had proven natural gas reserves of 503.3 Tcf (trillion cubic feet), indicating an increase of around 1% in total gas reserves on the continent. Though, ninety percent of African gas production continues to come from Algeria, Nigeria, Egypt and Libya.
The development of gas pipelines, floating liquefied natural gas (FLNG) platforms and major gas field projects, have seen the governments in the Gulf of Guinea and across West Africa amplify their efforts to secure gas supply, in order to enhance domestic power generation, and expand their revenues away from crude oil. However, in order to encourage gas infrastructure investment across the region, it has become necessary as well to deregulate the gas market.
Natural gas is considered the most environmentally friendly fossil fuel, and is broadly regarded as a bridging fuel to a low-carbon future. The natural gas supply chain involves field treatment, and the moving of natural gas liquids depends on many factors including the composition of the produced hydrocarbon stream, proximity to end users, market conditions, and available infrastructure.
Natural gas is an adaptable fuel and supplies 22% of the energy used worldwide. It makes up nearly a quarter of electricity generation, plays a crucial role as a feedstock for industry, has fewer emissions of most types of air pollutants and carbon dioxide, and still produces an equal amount of energy.
The International Energy Agency (IEA) asserts that in meeting the world future energy demands, the lead is taken by natural gas whereby the demand for gas will grow faster than oil and coal at 1.6% per year over the next 5 years. This growth will be stimulated by low prices, ample supply, and its role in reducing air pollution and other emissions.
With the global natural gas market growing, driven by the availability of shale gas and the increase in the liquefied natural gas (LNG) trade the stage is set for gas to become the world’s primary energy source towards 2050, and the last of the fossil fuels to experience peak demand. Gas can play a central role in supporting energy security alongside variable renewables during the transition. However new markets need connecting with hundreds of thousands of kilometres of pipelines. LNG provides a viable route to monetize large gas reserves in remote locations such as Sub-Saharan Africa which have no significant markets nearby, and only limited connectivity to existing demand centres (DNV-GL, 2017).
The world could foresee in the near future a shift toward gas-based economies with companies exploring cost-effective solutions to create value from flared gas, and assessing the various technologies to transport gas from remote offshore fields. This increased growth in natural gas use will result in more investment in both the short and long term across the supply chain of natural gas.
Currently it is the only fossil fuel that will preserve its share in the energy mix of the coming decades by improving its carbon footprint by curtailing methane emissions and improving the economics of large-scale carbon capture and storage (CCS) for gas-fuelled power generation. This can only be achieved if supported by policies to reduce air pollution and greenhouse gas emissions.
Independent power producers (IPPs) are constantly surveying the African market for entry opportunities. Many of them offer gas-fired power solutions, and this parallels with the expected overall growth agenda for a lower carbon future as gas is expected to be used as a bridging fuel as the world moves to more renewable alternatives. The hope is that additional gas usage could result in reduced flaring on the continent with additional facilities providing alternative uses for the gas.
According to DNV-GL (2017), digitalisation and automation in the industry is set to make a significant contribution to cut costs and enhance safety. Technology and innovation obviously present a great growth opportunity for industry players in Africa, and the Africa Gas Forum was set to unpack this low carbon option addressing the challenges that face the African market with dynamic information sharing and interesting solution-driven debates.
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tralac’s Daily News Selection
Diarise: East Africa Trade Development Forum (28 February - 1 March, Kampala)
African Trade Policy Centre (ATPC) Steering Committee: tracking AfCFTA implementation (UNECA)
The 3rd Steering Committee Meeting of the African Trade Policy Centre under its current 2016-2020 programme cycle took place in Marrakesh (14-15 February), hosted by the Arab Maghreb Union. ATPC Coordinator, Mr David Luke, gave an overview of the Centre’s activities during 2017 with additional details provided by the Centre’s team members. As part of the 2018 work programme, the Centre presented its new monitoring tool for tracking AfCFTA implementation throughout the continent and impact on enterprise and business expansion and development. The quality of the Centre’s research, policy advisory services, capacity building and training activities encompassing both intra-African and Africa’s external trade was commended. It was noted that the Centre’s new monitoring tool will be useful in generating data and evidence on the impact of the AfCFTA since implementation must now be driven by the private sector as it responds to the 2.5 trillion in market opportunities made possible by the agreement.
The economy of illicit trade in West Africa (OECD)
This report is a first step towards building a qualitative understanding of the way illicit or criminal activities interact with the economy, security and development of West African states. Going beyond a traditional analysis of illicit financial flows, which typically emphasises the scale of monetary flows, the report examines the nature of 13 overlapping, and oftentimes mutually reinforcing, criminal and illicit economies, with a view to identify their resulting financial flows and development linkages. In taking this approach, this report identifies the networks and drivers that allow these criminal economies to thrive, with a particular emphasis on the actors and incentives behind them. As a conclusion to this work, this report proposes a series of policy considerations to assist countries to prioritise and focus their responses to reduce the development impacts of IFFs.
Ken Ofori-Atta: Fiscal deficit remains major challenge for attaining ECOWAS single currency (Ghanaweb)
The Minister for Finance, Ken Ofori-Atta has observed that public debt and fiscal deficit remain major challenges hindering the Economic Community of West African States to meet the convergence criteria of a single currency. Addressing key stakeholders at the Second Meeting of the ECOWAS Ministerial Committee of the Presidential Taskforce on the ECOWAS Single Currency in Accra, on Monday, Mr Ofori-Atta, who is the Chairperson of the Ministerial Committee, said the implementation of the activities of the Roadmap required financial, human and material resources to execute the final roadmap. The Finance Minister said the journey to the successful establishment of ECOWAS single currency by 2020 required commitment and unwavering political support from all stakeholders and member countries.
Morocco’s accession to ECOWAS: Building bridges or rocking the boat? (ECDPM)
Though discussions are still ongoing, the issue raises numerous questions. Is geography no longer a determinant for African countries’ memberships of RECs? Does this put into question the AU’s architecture of the eight recognised RECs, especially with Tunisia requesting membership of COMESA? And in trade terms, how will a Continental Free Trade Area alter these interests and discussions? [The authors: Bruce Byiers, Tasnim Abderrahim] [ECOWAS Commission research process: Economic relations (trade and investment) between Morocco and selected ECOWAS member countries (Nigeria, Ghana, Cote d’Ivoire, Senegal, Mali, Togo)]
Nigeria: New platform for 48-hour cargo clearance coming (The Nation)
The Nigeria Customs Service, Tin Can Island Command, is set to introduce a new electronic information system, to ensure that cargoes are cleared from the port within 48 hours. According to the command, Time Release Studies will comprise data and electronic information that will enable stakeholders track the movement of their Single Goods Declaration forms from the date of submission to when the cargo exited the Customs system.
South Africa’s SONA debate: speech by Minister of Economic Development, Ebrahim Patel (EDD)
In the next 12 months, to get SA ready for the 4th Industrial revolution, we will: (i) Develop a skills framework for the new jobs of the future and a social plan to address the disruptions to labour markets and workplaces that flow from new technologies; (ii) Invest in R&D to create the intellectual property base for our economy to benefit from the potential of these new technologies and provide funding for venture-capital projects involving the new technologies; (iii) Bring down the cost of data through the competition market inquiry into data services, expand infrastructure through finalising release of new spectrum, complete digital migration and conclude key policies, including for entry of cross-border e-commerce in SA. To drive this process and promote the wider partnership we need in society, we will work through the Digital Industrial Revolution Commission and through the office of the Speaker, we are arranging a session to brief Parliament on work undertaken on the implications of the 4th Industrial revolution. [Speech by Ms Joan Fubbs, chairperson portfolio committee on Trade and Industry)
South Africa port and rail group, Transnet, is out to conquer the continent (Bloomberg)
Transnet has drawn up a list of 18 African nations where it wants to do business and is targeting at least five transactions this year, said Petrus Fusi, general manager for cross-border strategy. The state-owned company is also looking for opportunities in the Middle East, India and South Asia and wants to boost revenue by more than half to R100bn ($8.6bn), group executive for strategy Khaya Ngema said in the same interview. [NPC Economy Series: Energy paper, pdf]
Malancha Chakrabarty: India’s feeble stakes in Africa (DNA India)
Although the figure seems appreciable, it is important to note that India’s FDI flows to Africa are concentrated in Mauritius, a tax haven. From 2008 to 2016, Indian FDI outflows to Mauritius totalled $47.6bn. Only $5bn went to the rest of Africa, which represents only 2% of global Indian FDI outflows. A large share of Indian FDI to Mauritius is round-tripped back to India, which means that the actual volume of Indian investment in Africa is much less than reported in the media. Thus, for an accurate picture of Indian investments in Africa, Mauritius has been excluded from the analysis.
Secondly, Indian investments in Africa are highly concentrated geographically. With a share of 63% and 22%, East and North African regions attract most of the investments from India (see Figure 2). Table 1 shows that the top 10 recipients account for over 90% of Indian FDI flows to Africa. With a share of about 52.9%, Mozambique tops the list. But its top position is largely due to ONGC Videsh’s investment in the Rovuma gas field, which accounts for about 99% of Indian investments in Mozambique. Thirdly, Indian outward investment in Africa is concentrated within a few large firms. Although about 597 Indian companies invested in Africa over 2008-16, the top 11 companies account for about 80% of the total Indian investment flows. [The author is Associate Fellow, Observer Research Foundation]
India: Suresh Prabhu says 40% of GDP to come from exports by 2025 (Financial Express)
Addressing the Maharashtra global investor summit, Prabhu said “exports is the driving force of our growth strategy. We are coming out with a comprehensive strategy to increase the share of global trade to 40 per cent of GDP, which is likely to touch USD 5 trillion.” Of the $5 trillion GDP expected to be achieved by 2025, he expects $3 trillion to come from the services sector, while $1 trillion each to come from the manufacturing and agriculture sectors. The minister also urged the business community to come up with a proper business plan to increase exports. According to the Federation of Indian Export Organisation, the current share of exports in GDP is only 18-19%. Prabhu informed that government has called a meeting of all state ministers to discuss on the export strategy. Currently just four states-Maharashtra, Tamil Nadu, Gujarat and Karnataka contribute almost 70 per cent of exports.
Expanding productive capacity: lessons learned from graduating Least Developed Countries (CDP)
The note develops an analytical framework (pdf) for expanding productive capacities for sustainable development that highlights the need for integrated policies across five broad policy areas: (i) development governance; (ii) social policy; (iii) macroeconomic and financial policies; (iv) industrial and sectoral policies; and (v) international support. It also emphasizes the need for different national strategies and tailored international support due to the diversity of LDCs. In this regard, the note identifies three different pathways towards graduation and highlights for each pathway key policy lessons for effectively expanding productive capacity.
Mustafizur Rahman: Graduating out of LDC group with momentum (CPD)
Bangladesh is well-poised to be considered for graduation from the LDC group at the next review of the UN’s Committee for Development Policy in March 2018. As may be recalled, to be eligible for graduation the thresholds for at least two of the three graduation criteria (Human Asset Index, Economic Vulnerability Index and per capita Gross National Income) need to be attained. While a number of LDCs, including from South Asia (Nepal and Bhutan), are expected to be considered for graduation, Bangladesh is likely to have the unique distinction of attaining (and surpassing) the thresholds for all the three graduation criteria by the time the CDP convenes its meeting. This, no doubt, is indicative of the strength of the Bangladesh economy, and lays a good foundation for going forward towards the final graduation out of the LDCs in 2024 following the two successive triennial reviews by the CDP in 2021 and 2024.
Policies, institutions, development praxis and incentives will need to be geared towards Bangladesh’s graduation with momentum. Since there is a six-year period between the time Bangladesh will be considered for graduation (in 2018) and when she will finally graduate out of the LDC group (in 2024), Bangladesh will need to pursue a well-crafted graduation strategy during the time between these two key milestones. Review of experience of some of the graduating and graduated LDCs indicates that while some LDCs have been successful in graduating with momentum by taking appropriate preparations, in case of some of the other LDCs graduation had to be even deferred because of continuing susceptibility to challenges and vulnerabilities. [Fahmida Khatun: Bangladesh prepares for graduation]
Collective action is key to defending trade, Geneva Dialogue hears (UNCTAD)
Pascal Lamy of the Jacques Delors Institute and a former director general of the WTO said the threat of a “trade offensive” from the United States was more “bark than bite”. He said that it was is clear that US President Donald Trump viewed trade arrangements as unfair to the United States. As a consequence, he said, its new approach was to quit or change the rules in its favour. Mr Lamy saw this as leading to three outcomes: from a weakening of the WTO’s rule-upholding capacity, through “a return to GATT” (the forerunner of the WTO) with “shallow discipline” on trade rules, to a WTO “minus the United States”. Mr Lamy said the view of the multilateral trading system as a win-win scenario favoured by the United States in the past had been replaced with the view that it was a zero-sum game. He said that there was a possibility that there was indeed unfairness in the system that needed to be addressed but, in his view, quitting the system rather than reforming it was not the right way forward. [Reuters: WTO should prepare for life without US, ex-chief Lamy says]
Is the Indian government expecting a spike in trade disputes? (Livemint)
With rise in protectionism in developed countries, India has increased its allocation for international trade disputes four-fold in its budget presented by finance minister Arun Jaitley earlier this month. The Rs1.2 crore provision for expenditure in 2018-19 against Rs30 lakh a year ago is mostly for paying the lawyers who need to be engaged to represent India’s case at the WTO), a commerce ministry official said, speaking under the condition of anonymity. India has so far launched 23 trade disputes at the WTO against other countries, while it is a respondent in 24 such cases. While India and the US have been strategic partners, both countries are fighting out on several issues at the WTO dispute settlement mechanism. [India, 37 others seek WTO dispute body’s aid to fill up Appellate Body vacancies]
Australia may be engaging in ‘free trade’ but it’s becoming more protectionist too (The Conversation)
The federal government may be aggressively negotiating free trade agreements, but in other ways it is restricting trade. The government has been giving itself extensive new anti-dumping powers, targeting steel and aluminium markets in particular. There was a nearly two-fold increase in anti-dumping investigations in Australia in 2017. According to the Productivity Commission, these protectionist measures “raise costs to consumers and reduce competitive pressures, leading to less efficient resource use in the country levying the protection”. The Productivity Commission estimates that for every A$1 increase in tariff revenue, economic activity in Australia falls by A$0.64. The commission also says that for “every year that higher tariffs prevailed, GDP would be lower by over one per cent”. Thus, “a household that spends A$2,500 a fortnight on goods and services would be worse off by A$100 a fortnight”.
Today’s Quick Links: Southern Africa: regional maize supply and market outlook update Full SADC electoral calendar as five countries prepare for polls in 2018 WCO support for Ethiopia, Zimbabwe Ghana’s John Azumah appointed Secretary General of ECOWAS Parliament Association of Ghana Industries: Overhaul tax exemption regime to save domestic industries Another front opens: crisis along the Nigeria/Cameroon border Australia-Mauritius Research and Innovation Forum: update UNCTAD Toolbox: delivering results |
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Third African Trade Policy Centre Steering Committee Meeting takes place in Marrakesh
The 3rd Steering Committee Meeting (SCM) of the African Trade Policy Centre (ATPC) under its current 2016-2020 programme cycle took place in Marrakesh, Morocco from 14-15 February hosted by the Arab Maghreb Union (AMU).
The Steering Committee is an essential part of the ATPC’s governance and is made up of key stakeholders including the African Union Commission (AUC), African Development Bank (AfDB), Regional Economic Communities (RECs), ECA Sub Regional Offices, collaborating institutions, civil society and private sector representatives. The AUC and Global Affairs Canada respectively serve as chair and vice chair of the Steering Committee.
The purpose of the meeting was to review ATPC 2017 annual report and financial statement, 2018 work programme and indicative budget, and the Centre’s Performance Management Framework (PMF) that has been developed to ensure systematic tracking of the impact of the Centre’s activities and outputs.
Mr. Taïeb Baccouche, Secretary-General of the Arab Maghreb Union, in his welcome address, expressed appreciation for the instrumental role that ATPC is playing in contributing to the promotion of the intra African trade through its research and related activities. In particular, he highlighted ATPC’s technical support to the African Union Commission (AUC) in the African Continental Free Trade Area (AfCFTA) negotiations.
He further noted that Africa’s industrial development and structural transformation depend on the success of continental trade integration. This in turn is crucial for generating employment particularly for the youth and reducing poverty. He thanked the Centre and ECA’s North Africa Sub Regional Office for the technical assistance provided to UMA to support its programme for boosting intra-African trade.
For his part, Mr. Stephen Duval, First Secretary, Global Affairs Canada reiterated the importance Canada attaches to Africa’s trade integration agenda including efforts to boost intra African trade. He thanked the Centre for the progress made in putting in place a performance management framework to report more systematically on its results.
Mr. Merah Nadir, representing the Commissioner for Trade and Industry of the AUC, underscored the key role of the Centre in providing support to the AfCFTA negotiations. He noted that it will be critical to scale up this support during the implementation of the agreement as well as in the 2nd phase of the negotiations.
The ATPC Coordinator, Mr. David Luke, gave an overview of the Centre’s activities during 2017 with additional details provided by the Centre’s team members. As part of the 2018 work programme, the Centre presented its new monitoring tool for tracking AfCFTA implementation throughout the continent and impact on enterprise and business expansion and development.
The quality of the Centre’s research, policy advisory services, capacity building and training activities encompassing both intra-African and Africa’s external trade was commended. It was noted that the Centre’s new monitoring tool will be useful in generating data and evidence on the impact of the AfCFTA since implementation must now be driven by the private sector as it responds to the 2.5 trillion in market opportunities made possible by the agreement.
It was also recommended that the Centre should strengthen and build upon its partnerships with ECA’s sub-regional offices. Another key recommendation is for the Centre to continue to operate under a framework that allows for flexibility to respond to request for technical support from member states and RECs and emerging trade developments.
In his closing remarks, Mr. Stephen Karingi, officer in charge of the Regional Integration Trade Division noted that the Centre’s work on the AfCFTA is in line with ECA’s emerging strategy to serve as a think tank not only for Africa’s policy makers but also for African business. He reiterated ECA’s appreciation to Global Affairs Canada for its support to the Centre and assured the meeting that its recommendations will be transmitted to ECA’s top management.
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Illicit financial flows: The economy of illicit trade in West Africa
The negative impact of illicit financial flows (IFFs) on progress towards development goals increasingly features on international political agendas. There is now a consensus that resolving the problem of IFFs requires responding to underlying development challenges, and tackling all parts of the problem in source, transit and destination countries.
Drawing on collaboration with the African Development Bank (AfDB), the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), the New Partnership for Africa’s Development (NEPAD) and the World Bank, this report examines the nature of thirteen overlapping, and often times mutually reinforcing, criminal and illicit economies, with a view to identify their underlying development linkages and resulting financial flows.
The report goes beyond traditional efforts to measure illicit financial flows (focusing solely on financial losses) and takes the first step towards building a qualitative understanding of the way in which illicit or criminal activities might interact with the economy, security and development of a region particularly susceptible to IFFs. In taking this approach, this report identifies the networks and drivers that allow these criminal economies to thrive, with a particular emphasis on the actors and incentives behind them.
This report further proposes a framework that offers an opportunity for policy makers (national governments, regional actors and international partners) to prioritise their policy responses, and to address the development conditions and resulting impacts of IFFs.
West Africa: Regional context and susceptibility to criminal economies*
Economy and trade
Like the rest of the world, West Africa has seen a surge in global trade flows over the last decade, mostly driven by natural-resource extraction. West Africa’s proportional contribution to global imports and exports appears to be falling, while the rest of Africa’ share has remained constant or increased. Illicit activity, criminal economies and the diversion of legitimate trade flows outside of the formal economy could explain West Africa’s relatively poor performance.
The establishment of ECOWAS in 1975 created a free-trade area. This was followed in 1994 by the creation of the West African Economic and Monetary Union (also known as Union Économique et Monétaire Ouest Africaine [UEMOA]). Eight countries within the UEMOA (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo) share a common currency (the West African CFA franc), as well as common customs capacity. In terms of economic structure, UEMOA countries are heterogeneous. Although most depend on agriculture, services, and oil and mineral extraction as their primary economic drivers, only a few member countries have developed sizeable manufacturing industries. Mali, Niger and Burkina Faso are landlocked, while all other member countries have access to the sea. Cabo Verde – a small-island economy – has the highest GDP per capita, although Nigeria has by far the largest economy overall. The economies of ECOWAS countries have been growing quickly in the last 50 years. GDP grew from USD 50 billion to nearly USD 300 billion in real terms between 1966 and 2014, while the region as a whole achieved 4-5% growth rates per year over the same period.
Connections to the hydrocarbon-dominant economies of North Africa and the Maghreb have a significant impact on economic realities, as they create economic opportunities for goods, services, income and employment. For centuries, North African ports were global trade gateways to the Sahel countries and countries further south, with trade routes facilitated by nomadic groups spanning the Sahara. This northward pull was reinforced by the discovery of vast hydrocarbon reservoirs in Algeria and Libya; their boom economies and need for labour pushed the migration patterns from all the countries of sub-Saharan Africa northwards.
The major evolution in trade patterns is relatively recent. Since 2009, over 90% of global trade has been moved by sea, 70% of it as container-based cargo. Significant investment in port infrastructure has considerably eased the region’s integration into global trade. Key ports have become strategic points controlling the bulk of trade in the region. This makes it easier and cheaper to extract natural resources from the mineral-rich Mano River and West African coastal regions, which boast plentiful deposits of base metals and precious metals, minerals and phosphates, as well as flora and fauna. In the last decade, this global trend has triggered a rise in the volume of trade through West Africa, largely driven by the growth in demand from Asia.
Most trade for ECOWAS countries takes place outside of the region. The European Union has traditionally been the primary trading partner with West Africa, both for imports and exports. Côte d’Ivoire, Ghana and Nigeria account for 80% of West Africa’s exports – mainly comprising fuel and food products – to the European Union. West Africa’s imports from the European Union consist of fuels, food products, machinery, chemicals and pharmaceutical products. In February 2014, the European Union and ECOWAS signed a new Economic Partnership Agreement that would grant West African states long-term access to the European market without being subjected to tariffs or quotas.
Over the past decade, Chinese exports to ECOWAS countries have expanded more than tenfold. The People’s Republic of China (hereafter China) is now the largest national exporter to ECOWAS. In Ghana, for example, imports from China account for around 20% of total imports.
The bulk of counterfeit and substandard goods brought into West Africa is concealed within legitimate trade flows into the region. Limited state resources, endemic corruption within port authorities and a lack of capacity to physically inspect most containers provide an environment conducive to contraband shipments. Control of imports and product quality in the marketplace is also limited.
From a global perspective, West Africa remains a relatively small market and a relatively complex operating environment. OECD estimates of the prevalence of counterfeit goods based on customs-seizure data suggest a global increase, but no reliable regional figures exist. Anecdotally, the perception is that both substandard and counterfeit goods are highly prevalent in West Africa, and that the problem has grown.
The seizure data indicate that China is the main source country of fake and counterfeit goods (including foodstuffs, pharmaceuticals, and a wide variety of consumer and fake luxury goods) heading to West Africa and the United Arab Emirates. China serve as transit points to West African markets. West African countries have also served as transit points to other countries on the continent.
With their economies so heavily driven by external exports, the ability of regional governments to fund development strategies depends on their capacity to capture a fair share of the export wealth generated by minerals and other resources. In the report Track it! Stop it! Get it! Illicit Financial Flows from Africa, the High Level Panel (HLP) on Illicit Financial Flows from Africa made three key points: African governments are unable or unwilling to successfully negotiate resource-extraction contracts that are fair and favourable in the long term; private companies investing in the region combine legal, illegal and borderline activities to limit taxation; and the international financial system provides loopholes and jurisdictions in which capital resources and revenues can be diverted.
The Africa Progress Panel (2013) has suggested that African governments lack the resources necessary to effectively assess the tax liabilities of overseas organisations. As a result, these organisations may be able to engage in tax evasion or aggressive tax avoidance. When countries have attempted to reform the taxation system against the interests of powerful corporations, these corporations have used their position to rail against such moves. Tax is also evaded through misinvoicing, typically for intangible goods or services (e.g. intergroup loans, intellectual-property taxes, procurement costs, and expert or management fees). Misinvoicing practices have been used in multiple ways, e.g. to pay bribes and reduce profit margins.
Trade within the ECOWAS zone is limited, with 10-15% of total exports going to regional markets. From 2015, ECOWAS adopted common tariffs against the outside world, and established a customs union featuring free trade between the member states and a common trade policy that overrides national law. The common external tariff for consumer goods is set at 20%; the external tariff for specific goods boosting economic development is set at 30%. Individual member states do, however, maintain the option to institute import bans and quotas, and to set taxes. Hence, the customs union is still not fully realised.
All countries in the region have sizeable informal economies. An estimated 40-80% of economic activity takes place outside of the formal banking sector. In 2012, the ECA argued that informal cross-border trade constituted on average 43% of GDP; case studies in West Africa and the Horn of Africa show that informal cross-border trade vastly exceeds reported bilateral trade. The ECA study also noted that in some – albeit unnamed – African countries, informal regional trade flows may constitute up to 90% of official trade movement.
The ECA defines informal cross-border trade as the movement of legitimately produced goods and services that avoid custom controls and/or pass through official channels. They use illegal practices such as under-invoicing (reporting a lower quantity, weight or value of goods to incur lower tariffs) and misclassification (falsifying the description of goods so they appear to be goods attracting a lower tariff). The ECA posited three categories of informal cross-border trade.
Categories of Informal Cross Border Trade
Category A |
Category B |
Category C |
Informal (unregistered) traders or firms operating entirely outside the formal economy |
Formal (registered) firms fully evading trade-related regulations and duties (e.g. avoiding official border-crossing posts) |
Formal (registered) firms partially evading trade-related regulations and duties by resorting to illegal practices (e.g. under-invoicing) |
Source: ECA (2012)
Continually fragmented policies on taxation, quotas, tariffs and currency control have meant that cross-border illicit trade has flourished within the ECOWAS zone. Mbaye (2014) argued that in West Africa, “… documented intra-regional trade is small but smuggling is pervasive, despite regional integration schemes intended to promote official trade.” The assessment further argued that “[c]ross border trade involves a complex interplay of formal and informal operators and practices” and “[e]thnic and religious networks play a large role in organizing the informal sector, resulting in a set of shadow institutions that in some respects are more effective and powerful than official institutions”.
Informal trade of this sort, however, should be distinguished from criminal cross-border trafficking. Faleye (2014) asserts that “there is clear distinction between criminals involved in the trafficking of illegal goods, such as guns, which are a direct threat to national security and informal cross-border traders who buy and sell ‘legal goods’ including contraband commodity goods, such as clothes, which contribute to the wellbeing of the masses of the society.”
In the Sahel and West Africa, active networks of informal cross-border trade have facilitated the growth of more damaging criminal cross-border trafficking. Local border populations – who depend on, protect and sustain smuggling networks – do not distinguish between commodities with varying degrees of illegality. This has implications for those seeking to combat illicit trade. Strengthening lengthy and porous borders requires overcoming the entrenched nature and legitimacy of cross-border informal trade, and accounting for the livelihoods associated with it. Most of the goods available in this region are smuggled commodities; in fact, the communities provide services for traffickers. Successful smugglers and traffickers are seldom stigmatised, and may be lauded by communities where informal trade is the rule, rather than the exception. As seaborne trade has increasingly superseded the need for land-based trade, smuggling and trafficking of increasingly high-value illicit commodities have penetrated the informal economy. Some analysts have argued that the distinction between informal and formal economies is less valid, and that the economy should instead be understood as a series of social networks based around kith and kin.
Most transactions in the informal economy – including those supporting illegal activities – are paid in cash or through informal financing mechanisms. Financial services in the ECOWAS region are available to a small segment of the population: access to finance averages only 20%, ranging from 6% in Sierra Leone to 51% of the adult population in Cabo Verde. Similarly, a large proportion of remittances – which are among the largest contributors to domestic income in most West African economies – travel outside of the formal banking system. For example, surveys in Burkina Faso and Senegal revealed that over 60% of the receiving households used informal channels for cross-border remittances, affecting the capacity of the region’s governments to benefit from taxation. At the same time, senders are paying a disproportionate cost for their transactions, owing to two major challenges: the high rates of informality (particularly within the continent) and a regulatory environment favouring monopolies.
As a result, the costs of transactions between the formal and the informal economy are high, and borne by those who are least able to absorb them. Members of Africa’s diaspora pay a 12% fee to send USD 200; that is almost double the global average, and significantly higher than the pledge made by United Nations (UN) member states in the context of the 2030 Agenda for Sustainable Development to bring the cost down to 3%. In effect, it means that Africans are paying a “super tax” on their remittances. Moreover, despite the principles of free movement of goods and people, and the creation of ECOWAS as a free-trade zone, transactions within West Africa itself incur some of the highest charge structures in the world.
* Extract from Chapter 2. Download the full report on the OECD website.
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South Africa port and rail group is out to conquer the continent
South Africa’s national port and freight-rail operator is hunting for deals across the continent, from Senegal to Zimbabwe.
Transnet SOC Ltd. has drawn up a list of 18 African nations where it wants to do business and is targeting at least five transactions this year, said Petrus Fusi, general manager for cross-border strategy. The state-owned company is also looking for opportunities in the Middle East, India and South Asia and wants to boost revenue by more than half to 100 billion rand ($8.6 billion), group executive for strategy Khaya Ngema said in the same interview.
Transnet is seeking to expand outside its struggling home economy as well as diversify beyond its traditional business of bulk commodities. The company, which already operates in other African countries including Mozambique and Botswana, set aside 20 billion rand for acquisitions and could get as much as 25 percent of its revenue from outside South Africa within six years, Chief Executive Officer Siyabonga Gama said in 2016.
“We want to move the company from a 60 billion rand company to a 100 billion rand company in the next three to four years,” Ngema said Thursday in Bulawayo, Zimbabwe’s second-largest city.
The company has several deals already in the works, including the purchases of stakes in a car terminal and multipurpose terminal at the port of Maputo, in Mozambique, which have been approved by its board and await ministerial approval, Fusi said.
In Zimbabwe, the company and a South African-based consortium of Zimbabwean investors residing abroad won a contract to recapitalize the struggling National Railways of Zimbabwe. The idea is that the partnership develops into a long-term joint venture between Transnet and NRZ, Fusi said.
Other potential African projects include:
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In Zambia, Transnet signed a memorandum of understanding to lease rolling stock to Zambia Railways, and aims to have the transaction concluded by July.
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In Kenya, the company will seek to operate the first three berths at the port of Lamu, which is being built by a Chinese company.
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In Benin, Transnet is in talks about a long-term relationship with the state terminal company and is in the process of appointing transaction advisers.
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In Nigeria, the company is part of a larger consortium that includes General Electric Co. that is negotiating a 30-year concession to overhaul and operate about 3,500 kilometers (2,200 miles) of railway.
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Transnet has submitted expressions of interest for railway lines in Ghana.
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In Senegal, it’s looking at a project to rehabilitate a railway line from Dakar to a new iron-ore mine.
Elsewhere in the world, the company has plans for a trip to Saudi Arabia within the next couple of months and is also looking in Oman, in addition to India and Indonesia.
“The Middle East presents huge opportunities for infrastructure development, in particular rail,” said Fusi.
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Minister Ebrahim Patel: Debate on State of the Nation Address 2018
SONA Debate 2018: Speech by Minister of Economic Development, Ebrahim Patel, at the Joint Sitting of Parliament
On Friday night, President Ramaphosa set out a broad and inspiring vision for the economy that prioritises jobs, young people and economic inclusion.
There is a new mood of optimism and buoyancy in the country. In the weeks and months ahead, we must build on that optimism and translate it into more employment, a stronger economy and deeper transformation.
There are positive signs of a confidence boost in the run-up to SONA:
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Five weeks ago, the competition authorities approved a transaction that will see Old Mutual reversing its decision of twenty years ago to make London its global headquarters and, subject to final shareholder approval, the company will ‘come back home’, use the JSE for its primary stock exchange listing, make Joburg the global headquarters for its biggest businesses, bring high-level finance jobs from London to SA, commit to a new fund of R500 million for developing small businesses, ensure no jobs are lost as a result of this homecoming and take its BEE shareholding levels to the best- in-class in the industry.
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One month ago, a foreign investor committed to government and the regulators to invest at least R6 billion to modernise the local Caltex refinery and increase the ownership stake of South Africans in the business if its bid to buy the Chevron/Caltex local business is approved.
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A few weeks ago in Davos, the CEO of Coca-Cola briefed us on steps they are taking to implement their commitment to localise more of their shareholding by selling 30% of equity in the local operations to black South Africans, including workers and to maintain current employment levels for a five-year period; and the CEO of ABInBev, another large investor, committed to speed up opportunities for black farmers in the company’s barley and hops supply-chain
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On the morning of SONA, Japan’s Isuzu Motors announced their decision to take 100% ownership of an assembly plant in the Eastern Cape while Chinese car maker BAIC reached the halfway-mark in construction of the first new light-manufacturing assembly plant built in more than 40 years, in Nelson Mandela Bay
These examples show the positive impact of improved business confidence and effective partnerships and the opportunities that smart investors see in the local market.
Jobs remain our number one priority. There are currently 16,2 million South Africans working. Last year the pace of job creation was particularly slow: while 100 000 new jobs were created, this lags behind the much larger number of young people who leave school and university and need to find economic opportunities. That is our challenge. Unemployment leaves enormous human resources out of the economy, millions of young, potentially productive South Africans who want to build this country. Rising inequality is damaging to the economy and toxic to social cohesion.
To address this, President Ramaphosa’s SONA speech sets a vision on inclusive growth, employment and bold transformation and also the ‘how to’: namely
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by fixing institutions that are broken or have become sources of corruption;
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building partnerships with the private sector, organised labour and communities; and
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actually implementing our plans, the National Development Plan and the jobs drivers, getting things done.
To achieve this vision of SONA we must work differently. It requires renewal within the state.
In the year ahead, to drive job creation and radical economic transformation, we will focus on expanding our infrastructure, deepening industrialisation, greater economic inclusion, promotion of innovation and stepped-up African regional integration. Our macro-economic policy framework will promote faster, more inclusive growth and give priority to job creation.
We will implement sector-plans that unlocks the jobs drivers in the economy, namely sectors with the opportunity to expand GDP and create employment.
In the past year, government invested more than R1 billion each working day in new infrastructure such as schools, clinics, power-stations, roads and new universities.
The country moved from an electricity shortage just two years ago, to a surplus today, which provides an excellent base to bring energy to the homes of more South Africans and attract investors who need energy for their production processes.
In the next 14 months, the nation will invest more than R300 billion as we turn the country into a construction site, and
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build between 100 and 150 new schools
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increase the number of tertiary student accommodation beds by over 10 000
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increase the supply of energy by more than 1 000 megawatts, which includes green energy, and connect close to a million more residents to electricity in their homes
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lay 600 kms of new transmission lines to bring electricity to marginalised communities
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build more than 100 000 new houses
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complete 20 health facilities including a new hospital
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accelerate water infrastructure
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assemble 480 new locomotives and 15 000 new taxis here locally, using South African labour, and
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expand fibre-optic cables and link more citizens to high-speed internet access.
Economic infrastructure, including tourism infrastructure, will be prioritised. The team that President Ramaphosa spoke of – to fast-track new projects – will also help finalise a longer-term project pipeline and Budget processes are being reviewed to address the multi-year cycles of spending in infrastructure.
To fund more economic infrastructure and industrialisation, we will engage the financial sector to help unlock fresh resources and the first meeting will take place within three weeks, part of the preparatory discussion on an investment pact.
While we need to raise more funding, we must also ensure that no rand of public money is diverted to corrupt purposes or fraudulent tenders. Corruption costs us in the form of lower growth, fewer jobs, less localisation (when we buy locomotives from Spain), fewer houses or classrooms that are built. State-owned corporations like Eskom, Prasa, Transnet and Denel have been the focus of a number of serious allegations.
To root out corruption, government will ensure that key infrastructure-linked projects are reviewed and Cabinet receives reports on actions by law-enforcement agencies to recover monies improperly paid out and implicated officials are charged. Last year the PICC and the IDC already started work on the economic cost of corruption and measures to address these and with the strong focus of the SONA on stamping out corruption and state capture, we will do more to combat this cancer in the economy.
The fraud in the accounts of Steinhoff resulted in damage to the savings of workers and reputations of corporations. It points to the serious deficiencies in the work of company auditors and comes hot on the heels of questionable conduct by KPMG, McKinsey and other private sector companies in the state-capture project; as well as widespread collusion and price-fixing in many industries. The Competition Act has been amended to make corporate collusion a criminal offense for which people may go to jail.
Our country needs a renewal in both the public and private sectors to address the corrosive effects of unethical business practices. Government will step up the review of appropriate guidelines and actions and we call on the private sector and professional standards bodies to do the same.
To transform the construction industry, five of the top 7 construction companies will complete partnership agreements to ensure entry of black South Africans in the sector and expand turnover of black-owned construction firms. Murray & Roberts has sold its construction operations to a black-owned company. New agreements between industry players, to expand the annual turnover of seven black-owned construction companies to roughly R7 billion a year within seven years, is currently being considered by the Competition Tribunal.
To support economic inclusion – people-centred, radical socio-economic transformation – government is taking steps to boost youth entrepreneurs and black industrialists, address high levels of economic concentration, establish a national minimum wage for workers together with strengthened collective bargaining and broad-based empowerment. These efforts are intended to build greater levels of social solidarity within the country, to address the deep levels of inequality and to provide an economic underpinning to the vision of a nation united. They are steps to achieve the Freedom Charter goal that the people shall share in the country’s wealth.
The Competition Amendment Bill was published on 1 December last year and will be brought to parliament this year. The Bill expands the mandate and the powers of the competition authorities to address high levels of economic concentration in South Africa – so that we build an economy for all in which young entrepreneurs and black South Africans are not locked out of opportunity. Provisions addressing abuse of dominance by large corporations have been drafted, so that small businesses are nurtured. Protections on employment have been enhanced, to support workers during mergers. Cabinet approved the Bill for public consultation and we are in discussion with key stakeholders.
The National Minimum Wage to be introduced on 1 May this year that Honourable Mthembu spoke about, will not only lift millions of working families out of poverty and promote economic inclusion, it will also be a wage and spending boost to the economy, stimulating aggregate demand. If we want to capture the economic benefits of that boost, we must encourage retailers to stock locally-made products and consumers to buy Proudly South African products. We have written to representatives of the largest retailers this morning to invite them to meet with us to discuss ways in which we can increase the range of locally-made goods on our shop shelves.
Mr President, youth enterprise and opportunity will be promoted through public and private-sector initiatives. Our focus will be on 4 main areas: skills, exposure to work, jobs and entrepreneurial opportunities.
In addition to new investment in higher education which will be announced on Wednesday, over the next 12 months
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The IDC and sefa will commit R1,3 billion for youth-empowered enterprises so that we unlock the potential of young entrepreneurs
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The Youth Employment Services – the YES programme – of the private sector will recruit the first intake of youth interns and we have been assured it will be scaled up actively over the next three years.
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Government will publicise these financing and intern opportunities for young people through a roadshow through all nine provinces and following discussions at Nedlac, we will release information on the impact of the Youth Employment Accord and further actions to be taken, during Youth Month.
Black industrialists will be supported actively in productive enterprises, so that we move away from a model that relies simply on black South Africans owning 5% or 10% in an existing enterprise. This emphasis on building new productive capacity and linking this with our transformation vision, is critical. To support this, funding of R30 billion is available over the next three years through DFIs and government departments and we will integrate efforts of the public sector, SOCs and the private sector.
In the year ahead, government will open discussions with business and labour on measures to promote greater worker ownership of shares in enterprises and inclusion of workers on the boards of companies, so that we build our own inclusive South African economic model and deepen the partnership in the economy. Complementing this will be our efforts to promote township and rural enterprises and restructure the economy to promote its performance and competitiveness.
In the Mining sector, we will move away from the standoff between government and the industry and forge a new cooperation that focusses on greater local processing of minerals and deeper transformation of the sector, particularly aimed at giving workers a stake in the industry. We will work closely with communities, workers and companies as we finalise the Mining Charter. Proposals for a sovereign wealth fund will be worked on in the period ahead.
Industrial expansion is vital – government will launch a new auto sector scheme this year focusing on jobs and localisation of component manufacturing and greater efforts to expand labour-intensive industries such as clothing and textiles, agriculture and agro-processing. Trade with the rest of Africa already accounts for more than a quarter-million direct jobs in SA. We will use a combination of the proposed Free Trade Area (FTA), investment and cross-border infrastructure facilities to deepen our economic relations with neighbours.
To support innovation, government will finalise a country strategy on the 4th industrial revolution and expand partnerships with the private sector, universities and research institutions.
Technology is changing economies and societies in deep and fundamental ways. Retail processes are being automated that will impact on jobs in shops and banks, more distance learning may increasingly replace classroom teaching, medical technologies will change the way in which health problems are diagnosed and treatment is delivered, smart robots will change factories, driverless cars will impact on urban transport. At the base of this is the developments in artificial intelligence and the use of big data.
These technologies will be disruptive at the workplace and in society, yes they can create new digital divides in and between countries but they also provide enormous potential benefits and properly steered, we can harness technology to our developmental goals and in the service of our people. We should not focus on building a 20th century economy when competitors are building the economy of the future. The digital economy will be a key driver of the 4th Industrial Revolution and thus bringing data costs down will be a priority in the year ahead.
In the next 12 months, to get SA ready for the 4th Industrial revolution, we will
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Develop a skills framework for the new jobs of the future and a social plan to address the disruptions to labour markets and workplaces that flow from new technologies
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Invest in R&D to create the intellectual property base for our economy to benefit from the potential of these new technologies and provide funding for venture-capital projects involving the new technologies
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Bring down the cost of data through the competition market inquiry into data services, expand infrastructure through finalising release of new spectrum, complete digital migration and conclude key policies, including for entry of cross-border e-commerce in SA.
To drive this process and promote the wider partnership we need in society, we will work through the Digital Industrial Revolution Commission and through the office of the Speaker, we are arranging a session to brief Parliament on work undertaken on the implications of the 4th Industrial revolution.
Honourable Members, I have outlined some of the steps that we will take to give effect to the vision of the SONA. These efforts will reignite confidence and growth and will boost investment. They are an essential part of our growth plan and will also help SA’s sovereign rating so that we move from sub-investment rating to a country that is ready to work, ready to do business, ready for investment.
Two key things will define the approach of government.
The first is synergy and integration. Our interventions will have limited impact if they are simply a series of separate actions. We therefore plan for the different actions, on youth, the 4th industrial revolution, infrastructure, industrial expansion, all to be combined and integrated.
The second is partnership. We will actively involve the private sector and workers through their unions in the economic renewal plans.
The Summit on Jobs and the Conference with investors are key forums for building that partnership. Some Opposition speakers have criticised this as too many Summits and Conferences, that we do not have any plans, that Summits are not enough to fix South Africa. I think the concrete plans we highlighted in this debate – on de-concentration of the economy, on infrastructure, on industrialisation, on the 4th industrial revolution, on implementing the NDP – is a powerful reply to that criticism. We will convene the Summits and hold the meetings with social partners because we want to do things differently – to draw people in to become part of the solution, to mobilise resources that those outside government can bring, because the challenges we face require that all South Africans are part of the solution, that Thuma Mina becomes widely subscribed as a call to national service by all those who love their country, black and white, young and old, urban and rural.
In this spirit, we will work closely with social partners on a broader accord to underpin the economic recovery. Successful social partnership requires trust-building. Trust between South Africans. Trust between business and labour. Trust between citizens and government.
Development is not about government doing everything: it is to give our people the freedom to bloom; to unleash and let the talents of South Africans shine, to equip the young with skills so they can shape the economy, to protect the vulnerable, to create conditions for decent work opportunities to be created on scale.
In this year that we celebrate 100 years since Madiba’s birth, I am reminded that in 2007, Madiba was given the International Labour Organisation’s inaugural Decent Work Prize. ILO Director General Juan Somavia, when handing over the prize, said:
“If any person embodies the values of decent work, it is President Mandela. As a lawyer, an activist, a prisoner, a politician and a statesman, Nelson Mandela has lived the ideals of the ILO – through his lifelong pursuit of dialogue, understanding, fairness, social justice and above all, dignity.”
These ideals and values are what the ANC-led government will be giving effect to in the year ahead.
Thank you.
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Collective action is key to defending trade, Geneva Dialogue hears
Challenges to the multilateral trading system can be met by collective institutions like UNCTAD defending trade’s power to pull more people out of poverty.
The time has come to defend the rules-based multilateral trading system as a force for creating inclusive prosperity, UNCTAD Secretary-General Mukhisa Kituyi said at a United Nations meeting of leading international figures in Geneva on Monday.
In a call for “realpolitik”, speakers including Valerie Amos, Director of SOAS, University of London, said that the UN must remain a place where the international community pursues the 2030 Agenda for Sustainable Development.
The event was held against the background of anxiety that the United States is taking steps to undermine the World Trade Organization (WTO), pursue protectionism and spark a trade war with China and others.
If the multilateral trading system stalls, the fear is, the development aspirations of poorer and smaller countries will be scuppered.
Power vacuum
“This is an issue of courage,” said Ms. Amos, a former UN Under-Secretary-General for Humanitarian Affairs, and a former international development minister of the United Kingdom.
“There is an opportunity for countries to fill the power vacuum left by the United States, but countries must find the courage do it.”
The meeting also addressed the failure to reach a deal at the World Trade Organization’s 11th Ministerial Conference in Buenos Aires, in December, the lack of clarity in the trade settlement between the European Union and the United Kingdom after Brexit and other shadows being cast across the multilateral trading system that risk affecting the development agenda.
Pascal Lamy of the Jacques Delors Institute and a former director general of the WTO said the threat of a “trade offensive” from the United States was more “bark than bite”.
He said that it was is clear that US President Donald Trump viewed trade arrangements as unfair to the United States. As a consequence, he said, its new approach was to quit or change the rules in its favour.
Mr. Lamy saw this as leading to three outcomes: from a weakening of the WTO’s rule-upholding capacity, through “a return to GATT” (the forerunner of the WTO) with “shallow discipline” on trade rules, to a WTO “minus the United States”.
Mr. Lamy said the view of the multilateral trading system as a win-win scenario favoured by the United States in the past had been replaced with the view that it was a zero-sum game. He said that there was a possibility that there was indeed unfairness in the system that needed to be addressed but, in his view, quitting the system rather than reforming it was not the right way forward.
Ms. Amos said: “Countries always play the multilateral trading system for their own ends: the question is the extent to which we allow certain countries to lead us down a cul-de-sac.”
Shock to the system
She said the degree of coherence needed to deliver the Sustainable Development Goals, which are the bedrock of the 2030 Agenda for Sustainable Development, can be met by the multilateral trading system and UN bodies with convening power like UNCTAD.
“The trade policy environment is not conducive to delivering the Sustainable Development Goals,” Anabel Gonzalez, a former trade minister of Costa Rica and senior World Bank official, said. The US “repositioning” on trade, and technological change, were a “shock to the system,” she added.
But, Ms. Gonzalez said, there was also “positive energy” coming from some quarters, such as China’s One Belt One Road Initiative, continued interest in the Trans-Pacific Partnership, and Africa’s Continental Free Trade Area – due to be finalized in March.
“Can we harness this energy in a way that will not fragment the system?” she asked.
The discussion, moderated by Jeff Koinange, Kenyan journalist and talk show host on Citizen TV and a former Africa correspondent for CNN, was held as part of UNCTAD’s Geneva Dialogue series of informal conversations with leaders on important trade and development topics.
On Brexit, speakers agreed that the United Kingdom faces significant challenges.
Daunting tasks
“The 52/48% vote (for Brexit) was not just about trade and that’s important to remember,” Ms. Amos said. “From the perspective of people who voted to leave, there were very good reasons for Brexit. That’s important for politicians to remember.”
Mr. Lamy added: “Brexiters are entitled to believe they can remove an egg from an omelette without pain, but I don’t agree. There will be a lot of pain in the UK-EU political system with about 90% of the egg still to be removed.”
Dr. Kituyi called Brexit a “daunting task” because the UK will have to “retool itself” for a new set of trade relationships.
On China, Mr. Lamy said a “frank conversation” was needed about its relationship with United States.
“The elephant in the room is China,” he said, because the multilateral trading system was designed before its economic rise in the last 20 years.
“Is it a poor country with many rich or a rich country with many poor?” he asked.
Ms. Gonzalez said: “I don’t think they’ll be a full-fledged trade war between the US and China but there is friction in the system.”
Concluding, the panellists said that the trading system was upheld by collective decision-making and its ability to bring prosperity to developing countries would ensure its preeminent role in development.
“Multilateralism is morphing from a Westphalian system to something I call ‘poly-governance’ built from coalitions with shared goals,” Mr. Lamy said.
Ms. Amos said that “Collective action is key. There is enormous power when you work together.”
Ending on a hopeful note, Dr. Kituyi said the world was not as bad as seemed.
“We will be able to move past this turbulence and to a world driven by inclusive trade.”
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tralac’s Daily News Selection
Rwanda maintains tough stance on used clothes (New Times)
However, in an interview, Vincent Munyeshyaka, Trade and Industry Minister maintained that despite the consequences of being locked out of AGOA, Rwanda has to make a choice between continued importation of used clothes and developing the local textile and shoe industries and is keen on the latter. “Rwanda’s stand has not changed,” Munyeshyaka said, adding, “we want to build domestic textile industry, we want to promote Made-in-Rwanda and close the trade deficit gap by reducing importation of goods which we can locally produce such as clothes and shoes.”
Robert Opirah, Head of Trade and Investment department at the ministry of Trade said the U.S’ current stand contradicts what AGOA stands for let alone what was agreed upon in 2015 when the second AGOA legislation was passed in Washington. “In 2015 everyone left Washington with a common AGOA response strategy that they would take advantage of the facilitation to grow domestic industries and serve that market. In facilitating the growth of local textile and shoe industries we are doing exactly what was agreed on and they (U.S) are saying ‘no you can’t. We will keep serving you with our second-hand clothes. You can’t grow you industries’. It beats my understanding,” Opirah said.
Inaugural Biennial Report to the AU Assembly on implementing the June 2014 Malabo Declaration (NEPAD)
In this Report, 23 performance categories and 43 indicators have been defined, for the seven thematic areas of performance aligned to the commitments to evaluate country performance in achieving agricultural growth and transformation goals in Africa. This has been done through a continent wide consultation process. The report aims at strengthening national and regional institutional capacity for agriculture data generation and knowledge management which will, not only support improved evidence based planning, implementation, monitoring and evaluation, and learning; but also set basis and paths for triggering continental actions programmes to collectively drive agriculture transformation in Africa. Extract (pdf): Highlights on intra-African trade for agriculture commodities and services (risks and opportunities).
The trade blocks (ECOWAS, COMESA, EAC, SADC and UMA) have developed institutional mechanisms that have facilitated and promoted trade of agricultural commodities in the continent. This has been through various measures such as harmonization of policies and regulations, promotion of free movement of goods and people, among others. As a result, the continent is on track on the trade facilitation Index.
The volume of intra-African agricultural trade has increased by 14.9% between 2015 and 2016 compared to the 2017 milestone 20% to be on-track for tripling intra-African trade by 2025. This has been possible because of the contribution of: 42% in Western Africa from the high contribution of 92% in Senegal; and 16% increase in Northern Africa. A decrease of 15% is observed in Southern Africa, and of 3% decrease in East Africa. This suggests that there are still several challenges that need to be addressed to promote agricultural trade. Climatic variability is an example of such challenges due to its effect on agricultural production. For instance, agriculture output in southern Africa decreased by almost 30% in 2015 due to the dry spells caused by the El Nino which partly explain the observed reduction in agricultural trade.
Major constraints on national and regional food marketing and trade include...: Tackling these constraints calls for facing up to two broad categories of challenges: (i) prioritizing and filling the deficit in hard and soft market and trade infrastructure, and (ii) tackling the policy and institutional deficiencies to strengthen intra-regional and inter-regional market integration and trade facilitation. Moreover, there is a challenge of linking the agriculture, industrialization and trade policy and investment planning processes. Upgrading intra-African food and agricultural trade out of informality is a major challenge on the way forward.
In particular, it is vital to note that the continent and all the regions (Eastern, Southern and West Africa) that reported on the domestic food price volatility indicator are on-track. There were twenty (25) countries out of the forty seven (47) that are on track which implies that the continent and the regions are still very susceptible to price shocks. This situation is likely to exacerbate the challenges of food insecurity in the continent. This is a worrisome situation and it requires the continent to work tirelessly to minimize domestic food price volatility.
From RECs to a CFTA: strategic tools to assist negotiators and agricultural policy design in Africa (UNCTAD)
This report seeks to enhance knowledge among policymakers, experts and private sector stakeholders on essential policies and measures for establishing the CFTA and boost regional supply chains in not only agricultural commodities but also processed food products. This has been done through network analysis, which allows visualizing which country has competitive advantage over others in each trade agreement or regional context, as well as highlight overlapping regional agreements and identify trade hubs within Africa. The report (pdf) then carries out a specific analysis of agricultural products identified in the Abuja declaration and in other literature sources as being of interest. Around 80% of all intra-African trade flows through RECs and 20% flows outside trade agreements. Based on trade volumes, five countries play central roles in mobilizing the intra-African trade – Algeria, Côte d’Ivoire, Egypt, Nigeria, and South Africa – being responsible for 67% of all intra-African traded volumes in 2015. However, the network analysis indicated that four countries in Africa represent central players in trade networks in the continent, namely South Africa, Côte d’Ivoire, Kenya and Morocco
Kenya: Fish exports earn more than imports (Business Daily)
Kenya earned much more from fish exports in the last three years than it paid for imports despite rising volumes shipped in and an outcry over foreign sea food flooding the local market. The country earned Sh8.5 billion from selling abroad, which was higher than the Sh4.03 billion paid for imports in the period under review, according to official figures. Export volumes in the last three years stood at 16,429 tonnes compared with 40,991 tonnes imported in the same period. The government says Kenya will continue importing fish to meet the widening deficit, due to dwindling stocks both in the aquatic and marine space. Kenya has an annual deficit of 800,000 tonnes, which is filled through imports.
Zimtrade, Botswana Investment and Trade Centre sign MOU (The Herald)
Speaking after the signing, ZimTrade acting CEO, Norman Savado, implored business people to take advantage of their proximity to Botswana and to make use of the Bilateral Trade Agreement between the two countries as well as the favourable trade preferences offered by the Sadc Trade Protocol. According to Trade Map, trade between our two countries fell 40,39% between 2012 and 2016. “We exported just over $29m to Botswana in 2016 - a far cry from the potential that is there - and Botswana’s imports from Zimbabwe constitute 0,35% of the country’s total import bill which is also insignificant.” To assist in tapping into the market, ZimTrade conducted a market survey from 5-16 February. Findings from the survey will be disseminated in March 2018.
Namibian commercial bank begins Renminbi trading to ease business transactions (China Daily)
Bank Windhoek, a Namibian commercial bank, on Monday commenced the trading of the Chinese currency renminbi or yuan notes (CNY) countrywide as part of efforts to boost business transactions with the Chinese community. Bank Windhoek which offers a wide range of financial services and products, including personal, corporate, electronic and international banking services, via a network of 50 branches, will accept denominations of 10, 20, 50 and 100 CNY at its branches.
Report on the implementation of the investment policy review of Mauritius (UNCTAD)
The island nation now aspires to graduate to the next level of development and become a high-income economy by 2030. To do so, it would have to overcome persisting challenges to its sustainable development, which include rising income inequality, stagnant productivity, a fragile small and medium-sized enterprise segment, as well as a downward FDI trend since 2013. The Government wants to prevent a “middle-income trap” and leverage the country’s strong educational and infrastructure advantages to become a regional hub for investment and services to the African continent, enhance its role and the digital sector, develop the ocean economy and further move up the value chain in traditional industries. To this end, in 2017, the Government requested UNCTAD’s assistance in the preparation of a report on the implementation of the IPR recommendations, and in the realization of sustainable development and its Vision 2030.
Kenya: Investors seek to put billions in 100 economic zones (Business Daily)
Local and foreign investors are seeking licences to put up 100 Special Economic Zones across the country. Industrialisation secretary Adan Mohamed said the applications are being scrutinised with priority given to those eyeing use of locally produced raw materials to process products for export. During a one-day forum convened by projects and infrastructure specialist firm, IKM Advocates and the International Projects Finance Association, Mr Mohamed said only quality SEZ investments that can generate sustainable jobs, impart employable skills and create wealth for local communities through purchase of locally produced raw materials will benefit.
Conference on Taxation and SDGs: conference statement (IMF)
Subject to resource availability, the Platform intends to undertake or continue work in a range of areas, including: (i) Strengthening international tax cooperation. As the international tax environment is changing rapidly, there is a high demand for action by the Platform, which is well placed to facilitate feedback between standard setting, capacity building and technical assistance in the sphere of international tax. To respond to this demand, Partners will further increase coordination and cooperation at the global and country levels. Guidance for developing countries (e.g., through the various Toolkits that the Platform has produced, and continues to work on, to help developing countries in high priority areas of international taxation) will provide a basis for some of this work. The Platform will also support developing countries to analyze and articulate their views on important international tax issues which will feed back into the international forums and standard setting processes. [Conference www]
Global Infrastructure Connectivity Alliance: presentations from the Paris conference
Nearly 150 attendees working in infrastructure connectivity-related sectors gathered in Paris, 25–26 January, for the first GICA Annual Meeting. Co-organized by the Global Infrastructure Connectivity Alliance, the World Bank, and the OECD, the event brought together policy makers and practitioners participating in the GICA to discuss the state of play in global connectivity, innovative practices and the outlook for connectivity. The event provided an opportunity for GICA members to share their latest research and findings and define new areas of cooperation based on identified gaps.
Today’s Quick Links: IMF deadlock makes Zambia’s bonds the worst in emerging markets Zambia to get loans directly from China Fitch: IMF programmes in Africa and the implications for creditworthiness Namibia to consult before subscribing to SAATM Week 1 of Legislators’ EAC Tour goes down East African Court of Justice dismisses appeal over EAC states signing EPA dispute Greater Horn of Africa: climate outlook update Congo, Gabon reaffirm commitment to sub-regional integration Nigeria CAADP workshop: stakeholders advocate improvement in agric policy implementation A small setback for intensive agriculture in Africa India’s duty-free tariff preference scheme for Least Developed Countries: handbook (pdf) US House of Representatives passes renewal of GSP tariff preferences for developing nations through 2020 Adam Sneyd: Science, politics and the quest to secure Africa’s sustainable food future |
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Rwanda maintains tough stance on used clothes
The U.S has made a fresh call for the East African Community not to phase out imported used clothes and leather products locally known as “Chagua”, but Rwanda says the U.S should not shift goals on what was agreed by the parties in 2015 when the African Growth and Opportunity Act (AGOA) pact was renewed.
Genesis
In 2015, the East African Community (EAC) Heads of State adopted a three-year gradual process to phase out the importation of second-hand clothes and footwear to promote textile, apparel and leather industries in the region and instead focus on evolving domestic industries.
This move, was deemed to make EAC textile and leather factories self-sufficient to serve the local and international markets, including AGOA market which had kept the window wide open for African exports into the American market same year.
Despite Kenya rescinding on the decision at a later stage, Rwanda, Uganda and Tanzania have remained “solid” on their stance to phase-out second hand clothing.
The government of Rwanda deliberated on a strategy to develop the textiles, apparel and leather industrial sectors and a blueprint was consequently designed on how to implement such a strategy.
A draft 2017-2019 strategy for the transformation of textiles, apparel and leather industrial sectors aim to increase the quality and quantity of textile, apparel and leather for both local and foreign markets.
Rwanda’s strategy estimated that, if everything is implemented, this could create 25,655 jobs, increase exports to $ 43 million and decrease imports to $ 33 million by 2019 (from $124 million in 2015). The impact on trade balance will result in savings of $ 76 million over the 3-years period.
As a result, in 2016 Rwanda increased taxes on used clothes from $0.2 to $2.5 per kilogramme, while taxes on used shoes increased from $0.2 to $3 per kilogramme.
In the 2017/18 Budget estimates, the Government also eased taxes on inputs under the Made-in-Rwanda initiative, which is expected to facilitate growth of the local textile industry.
However, during a teleconference last week, Harry Sullivan, the U.S. Bureau of African Affairs Acting Director for Economic and Regional Affairs told The New Times that the regional move to reduce on the importation of second-hand textile and leather products from the U.S. and other countries “will not” help the region achieve its primary target of rebuilding local textile sector – which had started booming in the early 1980 and 90s.
“While we understand the East African Community’s desire to build a domestic textile sector, we firmly believe that the EAC’s ban on imports of used clothing will not help achieve that,” Sullivan said.
“First, it’s job-destroying. The proposed ban will hurt an estimated 300 thousand men and women that work in the used clothing business all across the East African Community and it will also negatively impact at least 40,000 U.S. jobs in the used clothing sector in the United States,” he added.
On the proposed phase-out of second-hand clothes, Sullivan argues that the move would “limit” EAC citizens of variety in choice.
He questions whether the consumers of used clothing will be able to afford the new apparel being made in the EAC market.
He added that rather than banning imported used clothing, the most effective domestic growth strategy for the local fashion and apparel industry would be to build its brands and markets for the growing middle class, which prefers to buy new apparel in shopping malls and other places anyway.
EAC Heads of State are expected to meet this week in Kampala to adopt what would-be the final resolution on AGOA from which the U.S. will base on to make the next move, according to Sullivan.
He says that what the U.S expects from leaders of Rwanda, Tanzania, and Uganda is to do two things.
“One is to decrease their tariffs to their pre-2016 levels, and the second thing we’re asking is to commit that aside from health or sanitary reasons, not to phase out the import of used clothing.”
“So we’ve communicated that, we believe very effectively, to all levels of the three governments. The trade ministers met last Friday; I don’t have a read-out on what their discussions were. I believe the result of that meeting will determine how we proceed.”
The move to phase-out the importation second hand clothing has put Rwanda, Uganda and Tanzania’s eligibility to trade with the U.S. under review.
The review could see the three countries lose duty-free access to the American market under the AGOA, despite U.S. being only the third highest exporter of Second hand clothing to Rwanda in 2017, according to Rwanda Revenue Authority.
China, Belgium come top of the U.S in the first and second positions, respectively.
However, in an interview, Vincent Munyeshyaka, Trade and Industry Minister maintained that despite the consequences of being locked out of AGOA, Rwanda has to make a choice between continued importation of used clothes and developing the local textile and shoe industries and is keen on the latter.
“Rwanda’s stand has not changed,” Munyeshyaka said, adding, “we want to build domestic textile industry, we want to promote Made-in-Rwanda and close the trade deficit gap by reducing importation of goods which we can locally produce such as clothes and shoes.”
Under AGOA, US waiver tariffs applies to selected 6,000 African products, including textile and leather.
The U.S says it’s up to the African businesses to take advantage of that, to research the market in the United States, to find out what American consumer preferences are in whatever business they are involved in, and then to build businesses from there, according to Sullivan
Robert Opirah, Head of Trade and Investment department at the ministry of Trade said the U.S’ current stand contradicts what AGOA stands for let alone what was agreed upon in 2015 when the second AGOA legislation was passed in Washington.
“In 2015 everyone left Washington with a common AGOA response strategy that they would take advantage of the facilitation to grow domestic industries and serve that market. In facilitating the growth of local textile and shoe industries we are doing exactly what was agreed on and they (U.S) are saying ‘no you can’t. We will keep serving you with our second-hand clothes. You can’t grow you industries’. It beats my understanding,” Opirah said.
According to Opirah, EAC was looking at the AGOA as one way that would facilitate the growth of a local sufficient textile and leather industry instead of refraining it.
“We are not banning imported second-hand clothing, we are just reducing on the importation as we develop our own textile and shoe industries and we thought the AGOA window would be another way to facilitate our growth.
Frankly speaking, imports are really dwindling our reserves. Any opportunity that cuts down on import bills we are happy to consider it,” he said.
Since 2016, Rwanda has seen significant growth in textile and shoes industry. Currently 11 factories dealing in textile and apparel plus seven dealing in shoe sector are operational in Rwanda, “yet we didn’t have more than 3 in total of these factories before then, Opirah added.
According to Opirah, Rwanda had a “painful” trade deficit of about a billion dollars in 2016.
During the year 2016, Rwanda exported goods worth $1.2 million through AGOA window while commodities worth $771,000 were exported through Generalized System of Preferences (GSP) to the U.S.
In total, commodities totaling to $25 million were exported from Rwanda to the U.S.
On the other hand Rwanda imported an overwhelming $73 million worth of goods from the U.S in the same year 2016, most of them being capital goods and medicines, according to the ministry of Trade.
Besides reducing trade deficit, Opirah is optimistic that the growth of local textile and shoe-making industries and the entire value-chain will create more jobs than those occupied by second-hand dealers in the country.
Opirah, however, is confident that there will be negotiations between the U.S and the three EAC member states to find “a common ground on which everyone is to win.”
Meanwhile, Olivier Nduhungirehe, the State Minister for Foreign Affairs, Cooperation and East African Community also affirmed the EAC Heads of State stand on used clothes remains.
He added that the U.S was offered a number of options to consider as the EAC implements its plans.
“We are not banning second-hand clothes. Our offers to the U.S were to look into the rule of origin for the used clothing (because most of them are not actually made in the U.S), ensure maximum hygiene precautions, not import underwear, leggings and similar outfits,” Nduhungirehe said.
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Platform Partners’ Statement at the closing of the conference on taxation and SDGs
Major international organizations – including the IMF, OECD, UN and World Bank Group – on 14 February 2018 called on governments from around the world to strengthen and increase the effectiveness of their tax systems to generate the domestic resources needed to meet the Sustainable Development Goals (SDGs) and promote inclusive economic growth.
During a three-day conference at UN headquarters on “Taxation and the SDGs”, ministers and deputy ministers of finance, tax authorities, and senior representatives from civil society, private sector, academia, regional and global organizations debated the key directions needed for tax policy and administration to meet the SDGs by 2030.
The conference, organized by the Platform for Collaboration on Tax (PCT), provided a unique opportunity to discuss the role of tax in ending poverty, protecting the planet and ensuring prosperity for all, including: how to mobilize domestic resources for development; tax policies to support sustainable economic growth, investment and trade; the social dimensions of taxation (income and gender inequality, human development); as well as capacity development and international tax cooperation.
The conference aimed to provide guidance to countries and other stakeholders on how to better target tax efforts to achieve broader development goals. Insights from the conference will help inform and shape the future work of the PCT members and partners, including the IMF, OECD, UN and World Bank.
Platform Partners’ Statement
New York, 16 February 2018
The Platform and its role
The Sustainable Development Goals (SDGs) set ambitious targets for all countries, to end all forms of poverty, fight inequalities and tackle climate change, while ensuring that no one is left behind. Achieving these goals requires enormous financial resources. The Addis Ababa Action Agenda recognizes that much of the increased public financing to reach these goals will have to be generated domestically. Taxation has a key role to play in financing the SDGs. At the same time, an era of unprecedented international cooperation on tax is underway with the implementation of Automatic Exchange of Information, the Base Erosion and Profit Shifting project, and the strengthening of the United Nations Committee of Experts on International Cooperation in Tax Matters – all creating new opportunities for the enhanced participation of developing countries in international tax policy discussions and institutions, but also new challenges to fully realizing the benefits of international cooperation on tax.
It is in this context that the Platform for Collaboration on Tax was formed. The Platform Partners, International Monetary Fund (IMF), Organization for Economic Co-operation and Development (OECD), United Nations (UN) and the World Bank (WB), have each worked for many decades to support their member countries to effectively mobilize tax revenues – from the most economically advanced to the poorest. In this new era of increased international cooperation, however, there are opportunities for deeper collaborative work through the Platform. The partner organizations bring together their own mandates and expertise, and their convening power to engage in and stimulate research, and together through the Platform lead the debate and action on the broad role of taxation in achieving the SDGs.
Subject to resource availability, the Platform intends to undertake or continue work in a range of areas, including:
1. Strengthening international tax cooperation
As the international tax environment is changing rapidly, there is a high demand for action by the Platform, which is well placed to facilitate feedback between standard setting, capacity building and technical assistance in the sphere of international tax.
To respond to this demand, Partners will further increase coordination and cooperation at the global and country levels. Guidance for developing countries (e.g., through the various Toolkits that the Platform has produced, and continues to work on, to help developing countries in high priority areas of international taxation) will provide a basis for some of this work. The Platform will also support developing countries to analyze and articulate their views on important international tax issues which will feed back into the international forums and standard setting processes.
2. Building Institutions through Medium Term Revenue Strategies
In their 2016 report “Enhancing the Effectiveness of External Support in Building Tax Capacity in Developing Countries,” the Platform Partners advocated for “Medium Term Revenue Strategies” (MTRS) – a new approach to support countries in reforming their tax systems. These are intended to facilitate a country driven process to develop multi-year, holistic and realistic plans for revenue policy, legal and administrative reforms consistent with the countries’ development goals, and to enhance the ability of their tax systems to achieve strong, robust growth and wider social objectives. They are envisaged as part of the country’s institution building process, as broad stakeholder engagement in MTRS development can help shape the relationship between citizens and their governments. This approach is in the initial stages of its implementation, with the Platform playing a significant role in a first wave of countries in 2018. Aiming to reach the full potential of this approach, Partners will foster an inclusive process of collaboration and information sharing, as well as encourage stronger leadership from the country governments, and broad societal engagement.
3. Promoting partnerships and stakeholder engagement
SDG 17 emphasizes the importance of partnerships and international support in realizing the SDGs, including in tax. The Platform is just one form of partnership that is needed to make progress on this goal at the global and country level. As this conference has demonstrated, achieving the SDG’s requires actions from all stakeholders. The Platform’s success depends on its ability to foster wider relationships, including through convening governments, regional tax organizations, civil society and the business sector.
This conference is the beginning of a process of regular, structured dialogue with the full range of stakeholders.
The following box includes a list of immediate and concrete actions related to the above three areas, which additional resources permitting, the Platform intends to undertake or continue:
PLATFORM ACTIONS TO TAKE THE TAX AGENDA FORWARD
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On a regular basis, working with others including the Addis Tax Initiative, we will help to give a comprehensive picture of the total effort of international, regional and bilateral partners in supporting developing countries on tax matters.
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We will integrate, and aim for the highest possible standards of transparency in the provision of information about our capacity development activities in developing countries through the Platform website.
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On international tax we will scale-up our joint work to support developing countries to address tax transparency and base erosion and profit shifting, including on treaties.
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Working together with other stakeholders, we will seek to provide coherent and consistent international tax policy advice.
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We will complete the Platform Toolkits to help countries address challenges in international taxation, and launch an expanded outreach program to support the development and use of the Toolkits. We will respond to additional concerns raised by countries with analytical work, recommendations and guidance.
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We will provide, in mid-2018, an update to the G20 on tax certainty and developing countries.
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We will analyze and report on the spillovers and opportunities from changes in the international tax environment on and for developing countries.
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We will work together to support the development of country-led MTRSs, including through the involvement of bilateral partners, and report on outcomes. We will align our support according to the plans set out by governments.
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We will help developing countries access the knowledge, experience and good practices in tax administration, starting with the use of technology, working with the Forum on Tax Administration, regional tax organizations and other partners.
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We will support the participation of developing countries in tax policy discussions at international fora.
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We will launch a multi-year Tax and SDGs Program, that will include components on taxation and health, education, gender, inequality, environment, and infrastructure.
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We will establish a regular dialogue between the Platform and stakeholders – most importantly developing country governments.
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We will review current practice, and provide guidance and recommendations, on the tax treatment of ODA funded goods and services.
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To help deliver this agenda we will seek to secure donor funding for the expanded work program, supported by a strengthened Platform Secretariat.
Taxation and the SDGs
As this conference has shown, tax structures affect society and the economy in many ways beyond a narrow financing focus: equality, in its many dimensions, impacting investment and growth; empowerment of women; sustainability of the environment; extraction of natural resources; and many other concerns central to the achievement of the SDGs. While the Platform Partners already work on all these topics, through analysis, standard setting, and technical assistance to member countries, there is scope for further work.
Delivering the Platform’s Agenda
This conference has offered the opportunity for stakeholders to suggest other topics on which the Platform could work and other ways in which it could foster cooperation. Taking these suggestions into account, the Platform will produce a forward agenda of the issues raised by this conference, and identify areas where further work is possible, either by the Platform, or by Platform Partners individually or in collaboration with others.
These proposed actions could make a significant contribution that would reflect the important role of taxation in achieving the SDGs. These actions can only be delivered if resources are made available. We gratefully acknowledge the contributions from the Governments of Luxembourg, Switzerland, and the United Kingdom, and the commitment from the Government of Japan. Taking the Platform to the next level of ambition will require a new injection of resources, not least to increase the capacity of its Secretariat.
The Platform looks forward to working with all stakeholders to deliver this agenda, through continued support to country-led MTRSs, information sharing, on-the-ground cooperation, enhanced dialogue with stakeholders, further focus and guidance on international tax challenges and initiatives that will ensure a greater participation of developing countries in international tax policy discussions and institutions.
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Kenya: Fish exports earn more than imports
Kenya earned much more from fish exports in the last three years than it paid for imports despite rising volumes shipped in and an outcry over foreign sea food flooding the local market.
The country earned Sh8.5 billion from selling abroad, which was higher than the Sh4.03 billion paid for imports in the period under review, according to official figures.
Export volumes in the last three years stood at 16,429 tonnes compared with 40,991 tonnes imported in the same period.
“The earnings from exports were higher compared to imports because of the high value that Kenya’s fish earned in the world market,” says the Department of Fisheries.
Kenya mainly imports frozen tilapia, frozen mackerels, sardines, prawns and salmons among others.
The country exports frozen Nile Perch, tuna, octopus, frozen whole tilapia and lobsters caught in the lakes and the Indian Ocean notably to the EU.
Fishmongers have been complaining of an increase in cheap imports mainly from China, which they say affect sales as they cannot compete with the local catch, which are expensive.
The government says Kenya will continue importing fish to meet the widening deficit, due to dwindling stocks both in the aquatic and marine space. Kenya has an annual deficit of 800,000 tonnes, which is filled through imports.
Lake Victoria, traditionally a major source of fish in the country, is currently suffering from depleted stocks. The stocks have been dwindling because of the use of wrong fishing gear and overfishing.
The government is taking corrective measure such as restocking of the lake and curbing illegal fishing.
Kenya’s per capita consumption of fish has gone up to seven kilos from two kilos in 2008.
The country is yet to attain the full potential in fishing at the Indian Ocean.
Under the Exclusive Economic Zones, Kenyan fishermen are allowed to fish up to 200 nautical miles from the shores but they are operating short of five nautical miles for lack of appropriate fishing gear to explore the deep sea waters.
Kenya has a large exclusive fishing zone with potential to produce 300,000 tonnes of fish annually estimated at about Sh75 billion. However, it is yet to optimally utilise the opportunity.
This has given room to developed nations with advanced gears to explore Kenya’s fishing potential. Illegal fishermen are also using the opportunity to exploit Kenya’s resources.
Court dismisses appeal over EAC partner states signing EPA dispute
The Appellate Division dismissed an Appeal filed by one Castro Pius from the United Republic of Tanzania, whose application seeking an injunction to stop the Partner States which had not signed the Economic Partnership Agreement (EPA) not to sign the same and those who had signed, to stop them from carrying out any further procedures and processes.
On 6th July 2017, the First Instance Division declined to grant the orders as sought by the Applicant which led the Applicant to the Appellate Division for appeal.
Court in its order said that, before the session resumed it received a communication from the Appellant between him and his hotel to the effect that his agent was indisposed and will not be able to take up the hotel booking and that the copy of the communication be made available to the Appeals desk (Court) with the view that they can set another sitting day. That the Doctor’s letter granting five (5) days bed rest was also attached.
Court further said that, with the attention of the Counsels for the Respondents on the said communication, all Counsel took a common position was not in a sense a proper communication for adjournment as it was not addressed to Court, neither was it copied to the Respondents. That they accordingly asked that the Appeal be dismissed under Rule 1(2) of the EACJ Rules of Procedure.
In its order also said that, “We are persuaded by the Respondents argument that the Appellant’s conduct in seeking to communicate through the hotel is disrespectful attitude conduct in this Court as it amounts to the abuse to the Court process,” Justice Ringera read. “We are convinced that the Appellants conduct also manifests disrespect in the appeal,” Court said. “We accordingly grant the prayers of the Respondents and order that this Appeal be dismissed and costs awarded to the Respondents who attended Court today.” These were Representative of the Attorneys General from the Republics of Kenya, Rwanda, Uganda and the Secretary General of the East African Community present in Court.
The Court also said that the matter was fixed today for scheduling and all the Parties were duly notified, but when the Court convened, the Appellant was absent and so was the Attorneys General of the Republic of Burundi, South Sudan and United Republic of Tanzania. However, the Court had received an official communication from Burundi of their inability to appear.
The Respondents’ earlier arguments also were that, failure by the Appellant to address the adjournment request to the Court was un procedural and inappropriate hence taking Court for granted and disrespectful. Further Counsels for the Respondents argued that failure by the Appellant to officially communicate to the Court and to the Individual States his request for adjournment shows lack of interest in the Appeal hence asked Court to dismiss it. Hence the appeal was dismissed.
Present in Court to receive the Ruling were the Representatives of the 2nd Respondent (Kenya) represented by Mr. Kepha Onyiso Senior, Principal State Counsel, with Ms. Jenifer Gitiri, Senior State Counsel, Mr. Karemera George with Ms. Kabibi Specioza both Senior State Attorneys 3rd Respondent (Rwanda), Mr. Elisha Bafirawara, Principal State Attorney with Ms. Cheptoris Sylvia state Attorney & Akello Suzan Apita bothe State Attorneys for the 6th Respondent (Uganda) and the 7th Respondent Secretary General represented by Ms. Florence Ochago Principal Legal Officer with Mr. Denis Kibirige Principal Legislative Draftsman. The Republics of Burundi (1st Respondent), South Sudan (4th Respondent) and the United Republic of Tanzania (5th Respondent) were not represented in Court.
The order of the Court was read by Hon. Justice Aaron Ringera with other Honourable Justices of the Appellate Division in open Court.
Brief on the previous ruling of the Court
The Court stated that in view of the decision of the 18th Summit of Heads of States held in Dar-es-Salaam on 20th May 2017 stating that the remaining Partner States that had not signed the EPA were not in a position to do so pending clarification of the issues they had identified in the Agreement. That it appears that there is no harm to the Applicant if the injunctive order sought is not granted.
The Court went ahead and said that the Applicant failed to clarify the alleged procedures and processes had to be restrained in regard to Partner States which had already signed the Agreement that is Rwanda and Kenya, Kenya having even ratified it.
The Court also added that as far as the status of the EPA process is concerned, negotiations on the Agreement were finished in October 2014 and the same was initialled by all EAC Partner States at the time and thereafter, the signing of the EPA was considered by the Sectoral Council on Trade, Industry, Finance and Investment, which directed the Secretary General of the Community (the 7th respondent) to liaise with the EU in order to organize the signing ceremony of the EPA.
The Court further declined to grant the order sought by the Applicant, directing the Secretary General (7th Respondent) to withdraw forthwith from any negotiations initiated with the EU in view of the 17th Extra-ordinary Summit decision aforesaid until a final decision on the Reference is delivered. The Court said that, the EPA negotiations were concluded in October 2014 and therefore, such an order cannot be granted as the negotiation phase is now closed.
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tralac’s Daily News Selection
From RECs to a Continental FTA: Strategic tools to assist negotiators and agricultural policy design in Africa (UNCTAD)
The establishment of the Continental Free Trade Area (CFTA) is gaining speed, with the African Union (AU) aiming to get the CFTA agreement in place by 2018. If fully implemented, the CFTA could increase intra-African trade significantly and promote structural transformation by providing a lever to industrial development in African economies. In this context, this report (pdf) seeks to enhance knowledge among policymakers, experts and private sector stakeholders on essential policies and measures for establishing the CFTA and boost regional supply chains in not only agricultural commodities but also processed food products.
Around 80 per cent of all intra-African trade flows through Regional Economic Communities (RECs) and 20 per cent flows outside trade agreements. Based on trade volumes, five countries play central roles in mobilizing the intra-African trade – Algeria, Côte d’Ivoire, Egypt, Nigeria, and South Africa – being responsible for 67 per cent of all intra-African traded volumes in 2015. However, the network analysis indicated that four countries in Africa represent central players in trade networks in the continent, namely South Africa, Côte d’Ivoire, Kenya and Morocco. As a result, these countries benefit from more diversified trade flows and higher proportion of intermediate and value-added products than their neighbors.
Ashly Hope: The AfCFTA is not just about the tariffs (tralac)
Trade governance in the 21st century is not just about the tariffs. Goods, services and investment are all deeply integrated, and the regulatory environment in trading countries has a significant effect on how both goods and services are traded. The lack of visibility of non-tariff barriers also perhaps means that their reduction and elimination may be more politically feasible to achieve for some members than the reduction of tariffs in very sensitive areas. While ultimately significant (90%) tariff reduction may be the goal, if tariffs on sensitive goods can give political cover for the reduction in other barriers to trade, it is likely that the net welfare gain will be higher than a scenario in which tariffs are considered to be the only game in town. If AfCFTA members treat one another not with suspicion, but act in a spirit of cooperation, the reductions of non-tariff barriers to trading on the continent could be the real advantage the AfCFTA brings to intra-African cooperation. However, eliminating unnecessary non-tariff barriers and harmonising or aligning regulations require a deeper, more nuanced kind of cooperation. Let’s hope AfCFTA members are up for the challenge. [The author is tralac Research Coordinator, trade in services and regulation]
José Graziano da Silva: Achieving zero hunger in Africa is possible
Next week in Khartoum, the UN FAO is convening the 30th Regional Conference for Africa, where African ministers and other stakeholders will meet to review the achievements, challenges and priorities regarding the sustainable development of agriculture and food systems. It is encouraging that some parts of the continent have made significant progress, but challenges remain for all. The 2017 edition of the State of Food Security and Nutrition in the World report points out that the number of undernourished people in Sub-Saharan Africa in 2016 was about 224 million, an increase of 24 million compared to the previous year. This means that 23% of the population in Sub-Saharan Africa, almost one out of four African people, was undernourished.
However, compared with the percentage of undernourishment registered in 2000 - 28% - the numbers still show a relative decrease. The increase in hunger in Sub-Saharan Africa in 2016 is directly linked to conflicts and the impacts of climate change, such as the prolonged drought that affected the rural areas of many countries. Low levels of productivity, weak value chains and high levels of vulnerability to crises have also contributed to negatively affecting food and agriculture systems and rural livelihoods, especially in relation to the poorest people. [List of documents]
Carlos Lopes: ZLEC - les Africains inventent une arme commerciale pour résister aux puissances qui les exploitent
EALA lawmakers impressed by ease of movement on Dar-Dodoma trade route (New Times)
Members of the East African Legislative Assembly currently conducting an on-spot assessment of EAC organs, institutions and facilities on the Central Corridor, Thursday said they were impressed by the progress to ease movement from the Tanzanian port city of Dar es Salaam to Dodoma. The lawmakers who had toured the Vigwaza Weighbridge located 80 kilometers from Dar es Salaam on Wednesday, later paid a courtesy call to the Tanzania Ministry of Foreign Affairs and East Africa Cooperation in Dodoma, where they addressed a press conference. Fatuma Ndangiza (Rwanda) told The New Times that compared to the many issues in the past, she too concurs with her colleagues that things on the route have “really improved.” MP Maryam Ussi Yahya (Tanzania) told The New Times that despite the notable improvements “NTBs (non-tariff barriers cannot be eliminated completely” as new ones keep coming up. According to Ussi, the issue of congestion at Dar port is a particular bother but the good news is that the Tanzanian government plans to revamp the port and make it an issue of the past. [UNCTAD workshop: Supporting the shift towards sustainable freight transport in the Central Corridor (27-28 February, Dar es Salaam)
Kenya: Building of Lamu port three months behind schedule (Business Daily)
Kenya is running three months behind official schedule in its effort to build East and Central Africa’s largest port at Lamu. Officials say the first of the 32 berths will be ready in June, three months after its initial timeline of March. So far, the first berth of the Lamu Port South Sudan Ethiopia Transport (Lapsset) Corridor Project in Kililana, Lamu West is only 42% complete, officials have said. Transport PS Paul Maringa and Lapsset director- general Silvester Kasuku however told journalists during a tour of the port site on Thursday that the national government is committed to ensuring a speedy construction of the entire Sh2.5 trillion project.
NEPC, LCCI move to ease Nigeria’s export within ECOWAS (Punch)
The Nigerian Export Promotion Council, Lagos Chamber of Commerce and Industry and regulatory agencies in the export sector such as the Nigeria Customs Service, the National Agency for Food and Drug Administration and Control have formed a committee with the aim of facilitating movement of Nigerian goods through markets in the Economic Community of West African States. During the inauguration of the committee tagged ‘Nigeria ECOWAS Export Development’, the stakeholders noted that the West African sub-region was a huge market with huge potential for growth if well harnessed by member states. [ECOWAS trade: LCCI laments lack of global outlook]
Rwanda: Gatete calls for innovative partnerships between govt and development partners (New Times)
Rwanda’s transformational agenda requires innovative partnerships engaging all stakeholders, according to the Minister for Finance and Economic Planning, Claver Gatete. He said this while opening the 14th Development Partners retreat in Rubavu District on Thursday. The minister said this with respect to delivering on the targets in the National Strategy for Transformation and Vision 2050. He emphasised the important role the private sector is playing as an engine of economic growth and urged development partners to move beyond traditional financing and consider new and innovative ways to finance the private sector. The minister’s message was echoed by both co-chairs of the Development Partners Group.
Zimbabwe revises visa regime in bid to boost tourism (The Chronicle)
The government of Zimbabwe has announced a revised visa regime which will see 29 countries being moved from Category C to Category B (visa on arrival) as the country moves in to improve travel facilitation and unlock the potential of the tourism industry. Announcing the development during the National Tourism Strategy Workshop held in Victoria Falls, Department of Immigration Principal Director Mr Clement Masango said the changes are with immediate effect and are part of government efforts to improve travel facilitation and unlock the potential of the tourism industry. [Zim sees business confidence rise: Optimism index leaps to 5.8 level]
Hearing on rethinking the use of traditional antitrust enforcement tools in multi-sided markets (pdf, OECD)
In June 2017, the OECD Competition Committee held a Hearing that looked at whether the tools traditionally used to define markets, to assess market power and efficiencies, and to assess the effects of exclusionary conduct and vertical restraints, remain sufficient to address those questions in the context of multi-sided markets. It then invited practical methodological proposals from a range of expert economists from agencies, academia, and private practice on how these tools might need to be re-designed or re-interpreted in order to equip competition agencies with the analytical tools they require when analysing multi-sided markets.
Governments should make better use of energy taxation to address climate change (OECD)
Taxing Energy Use 2018 describes patterns of energy taxation in 42 OECD and G20 countries (representing approximately 80% of global energy use), by fuels and sectors over the 2012-2015 period. New data shows that energy taxes remain poorly aligned with the negative side effects of energy use. Taxes provide only limited incentives to reduce energy use, improve energy efficiency and drive a shift towards less harmful forms of energy. Emissions trading systems, which are not discussed in this publication, but are included in the OECD’s Effective Carbon Rates, are having little impact on this broad picture. “Comparing taxes between 2012 and 2015 yields a disconcerting result,” said OECD Secretary-General Angel Gurría. “Efforts have been made, or are underway, in several jurisdictions to apply the ‘polluter-pays’ principle, but on the whole progress towards the more effective use of taxes to cut harmful emissions is slow and piecemeal. Governments should do more and better.” In 2015, outside of road transport, 81% of emissions were untaxed, according to the report. Tax rates were below the low-end estimate of climate costs (EUR 30/tCO2) for 97% of emissions. [Taxing Energy Use 2018: South Africa (pdf)]
Senators introduce bill to help businesses with trade complaints (The Hill)
Sens. Gary Peters (D-Mich.) and Richard Burr (R-N.C.) are teaming up on legislation that would help businesses that typically lack enough resources to file cases against alleged trade violators. The permanent task force would fall under the the International Trade Administration at Commerce, and would be tasked with identifying and investigating trade violations such as dumping and recommending investigations with a focus on smaller businesses. “Smaller companies with limited resources may not have the ability to identify trade violations, or worse, they fear retaliation from governments in foreign markets where they sell their products,” Peters said. [Underfunding the State Department could hurt US exports — and US companies]
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From RECs to a Continental FTA: Strategic tools to assist negotiators and agricultural policy design in Africa
The establishment of the Continental Free Trade Area (CFTA) is gaining speed, with the African Union (AU) aiming to get the CFTA agreement in place by 2018. If fully implemented, the CFTA could increase intra-African trade significantly and promote structural transformation by providing a lever to industrial development in African economies.
In this context, this report seeks to enhance knowledge among policymakers, experts and private sector stakeholders on essential policies and measures for establishing the CFTA and boost regional supply chains in not only agricultural commodities but also processed food products. This has been done through network analysis, which allows visualizing which country has competitive advantage over others in each trade agreement or regional context, as well as highlight overlapping regional agreements and identify trade hubs within Africa. The report then carries out a specific analysis of agricultural products identified in the Abuja declaration and in other literature sources as being of interest.
The ultimate purpose of this work is to inform African policy-makers with strategic tools to assist trade negotiations and agricultural policy design. Its focus is on the eight Regional Economic Communities that exist in Africa, as they do not only constitute key building blocks for economic integration, but are also important actors working in collaboration with the AU in ensuring peace and stability in their regions.
Around 80 per cent of all intra-African trade flows through Regional Economic Communities (RECs) and 20 per cent flows outside trade agreements. Based on trade volumes, five countries play central roles in mobilizing the intra-African trade – Algeria, Côte d’Ivoire, Egypt, Nigeria, and South Africa – being responsible for 67 per cent of all intra-African traded volumes in 2015. However, the network analysis indicated that four countries in Africa represent central players in trade networks in the continent, namely South Africa, Côte d’Ivoire, Kenya and Morocco. As a result, these countries benefit from more diversified trade flows and higher proportion of intermediate and value-added products than their neighbors. As a result, their experience could serve as pathways to development outcomes due to their pivotal role on connecting trade channels among SADC, CEN-SAD, COMESA, EAC, IGAD, UMA and ECOWAS. Among them, South Africa is a central player on establishing the CFTA because the country is not only responsible for the largest traded volumes in Africa (i.e. about 45 per cent of all intra-Africa exports) but also is a major commercial hub. South Africa has direct trade with 96 per cent of the intra-African network (53 countries out of 54 AU’s member states).
Many producers based in African countries fall short to compete in domestic and regional markets due to many challenges such as the lack of infrastructure and supporting processes that leads to high unit cost (e.g. fresh poultry produce in Mozambique versus frozen poultry from Brazil). In addition, there is substantial and thriving informal trade in the region, which means that intra-African trade is in fact likely to be significantly higher than official statistics suggest, having direct implications for fiscal revenue of governments in the region.
The Declaration of the Abuja Food Security Summit named a number of strategic agricultural products for Africa (e.g. rice, maize, legumes, cotton, palm oil, beef, dairy products, poultry, and fisheries), which were analyzed in this study. Adding to those, this report also identified seven additional promising agricultural commodity chains based on economic, social, environmental and regional integration criterion (e.g. avocados, cashew nuts, floriculture, onions and shallots, pineapples, potato, and tea). A priority assessment indicated that those products carry large development potential in regional value chains in Africa. Among them, tea and potato present the highest potential for local development and the knowledge about their regional supply chains can guide decision-making on establishing a CFTA.
Despite farming being the primary source of food and income in the region and providing up to 60 per cent of all jobs on the continent, the share of agricultural commodities in intra-regional trade is less 30 per cent. Meeting the standards required for integrating into global value chains will be a gradual process. In the interim, gains can be made from integration of regional value chains. Since agriculture accounts for 25 per cent of African GDP, developing regional value chains for strategic agricultural commodities is essential to CFTA’s success, as they can help exploit economies of scale, lower production and marketing costs. Better agriculture directly correlates to improved livelihoods, given the sectors importance as a job-creator in Africa.
To maximize the opportunities offered by RECs in agriculture, it is necessary to deal with the overlapping memberships that hinder harmonization and standardization, as well as the enforcement of rules of origin. Looking exclusively at the strategic commodities 32 per cent of all traded volumes flow through channels in which trade partners present two or three overlapping memberships. Unless a good dispute settlement mechanism exists, some disputes can threaten the continued operation of RECs and hinder the CFTA’s success.
The establishment of the CFTA will require all African countries to further develop their internal capacity to refine their regional trade policies and ensure that they are able to benefit from these various trade opportunities. To do this, they will need to strengthen their internal negotiations with key stakeholders to ensure that national policies and trade negotiation strategies reflect their interests. This will require regional trade policies that are inclusive, gender sensitive and well-articulated by their national trade negotiators. In this context, strategic tools (e.g. network analysis and value chain assessment) can assist these trade negotiations and be used to benchmark integration process of RECs into CFTA.
This report is a product of UNCTAD, prepared as part of the project on “Strengthening capacities of African countries in boosting intra-Africa trade”. Alessandro Sanches-Pereira from the Research Group on Bioenergy (GBio) at São Paulo University (USP) prepared this report under the guidance of Henrique Pacini and Malick Kane from the UNCTAD secretariat, under the supervision of Bonapas Onguglo.
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US-African trade: Creating common ground amidst policy uncertainty?
As the US Administration moves forward with a trade policy for Africa and African leaders work toward regional harmonisation, common ground may be emerging focused on market opportunity, a balanced approach to the rule of law, and support for regional trade.
The future of trade and development policy has become a topic of intense debate in the US, UK, and around the world. Amidst significant uncertainty surrounding the direction trade policy will take under the US Trump Administration, common questions are surfacing. Who benefits from trade? What is the best response to shifting markets? How can trade agreements be better designed to respond to current challenges and opportunities? These questions are currently arising in the context of US engagement in the North American Free Trade Agreement (NAFTA), withdrawal from the Trans-Pacific Partnership (TPP), and participation in the World Trade Organization (WTO); yet stakeholders in emerging markets, including sub-Saharan Africa, have repeatedly flagged the same questions.
To date, the new US administration has publicly released little information regarding its approach to trade and development with African nations, although recent statements from US Trade Representative (USTR) Robert Lighthizer suggest that bilateral trade negotiations may be an element of future US-African trade policy. More generally, the Trade Policy Agenda for 2017, an annual report that sets US trade goals, highlighted four priority areas that will impact all US trade policy: (1) defending US national sovereignty, (2) strict enforcement of US trade laws, (3) leveraging all tools to open trade for US businesses and protect intellectual property (IP), and (4) negotiating new and better trade deals around the world.[1] These focus areas are broad and somewhat unclear, but the current policy gap does present an opportunity to answer the question of how the administration should approach trade and investment in Africa.
The New Markets Lab, a trade and development centre focusing on the intersections of law, economic development, and social good, has examined exactly this question. As this article will argue, there are several interconnected areas that are essential to better addressing issues of trade and development for both the African continent and the US. These include policies that focus on emerging market potential, a balanced approach to the rule of law, and prioritisation of regional harmonisation and integration. Focusing on these areas would not only help address the challenges of harnessing the potential for trade and development, but would also point to a way forward in US-African relations based on economic potential and shared priorities.
Opportunities, challenges, and emerging market potential
Without question, Africa’s markets hold significant potential, which key US officials, including President Tump, have highlighted.[2] African policy leaders, such as President of the African Development Bank Akinwumi Adesina, have also stressed the dynamic nature of Africa’s markets, including the development possible in the agricultural sector, an industry that is expected to grow to US$ one trillion by 2030.[3] Overall, Africa’s average growth rate hovered at around 2.6 percent in 2017,[4] but many countries (including Côte d’Ivoire, Ethiopia, Kenya, Mali, Rwanda, Senegal, and Tanzania) far surpassed this average with growth rates over 5 percent.[5] While many attribute this trend to natural resources and foreign direct investment, there is more to the story. As a recent Brookings report highlighted, Africa is breaking the mould with a new model for economic development, leapfrogging traditional patterns of industrialisation through growth in sectors such as horticulture, tourism, and services.[6] For the US, this signals significant new markets for US investment, goods, and services. For African nations, it shows the tremendous possibility the future holds, particularly if economies can diversify beyond commodities and harness the potential for youth employment.
Other issues currently under discussion globally, such as digital trade, are also particularly promising for two-way market growth. E-commerce is starting to permeate almost every sector because of its ability to connect small businesses with a large consumer base. Still, transactional and logistical challenges remain. Recognising e-commerce’s ability to spur economic growth, leaders are beginning to address some of these issues. Among the more substantive outcomes of the WTO’s Eleventh Ministerial Conference was a joint statement by 70 WTO members to start “exploratory work” in e-commerce. Getting the rules right for this emerging sector could unlock considerable development potential in both the US and sub-Saharan Africa.
Trade policy tools
For nearly twenty years, US trade with sub-Saharan Africa has been facilitated mainly through trade preference programs, namely the US Generalized System of Preferences (GSP) and African Growth and Opportunity Act (AGOA), which provide preferential and duty-free treatment on thousands of products entering the US market. The Trump Administration has signalled that these programs will remain a priority, and there is strong evidence that continued support for trade preference programs aligns with the broader US trade strategy. AGOA, which expires in 2025, will likely remain a cornerstone in US-African relations. However, GSP, the foundation on which AGOA is built, expired at the end of 2017, which could undermine AGOA’s benefits if not quickly reinstated.
Trade preference programs have proven to be beneficial trade policy tools, particularly for emerging sectors and small businesses in both the US and African economies.[7] Preference programs also support participation in global supply chains and can contribute to improved security worldwide. Through their eligibility criteria, the trade preference programs help strengthen the rule of law, including in the areas of human rights, labour, and the business enabling environment.[8] Yet, preference programs could use a refresh with changes in certain aspects of the programs, such as statutory prohibitions on product coverage that have limited market development in sectors such as manufacturing and agriculture.
The latest AGOA bill also calls for a segue to two-way trade. The pressure to transition to bilateral trade mechanisms is also echoed in the current US administration’s statements, and USTR Lighthizer’s recent remarks underscore this trend. Europe’s trade relationship with sub-Saharan Africa is now based largely on reciprocal trade agreements, a shift many in the US government have noted. The US currently has no bilateral free trade agreements with sub-Saharan Africa and only a handful of bilateral investment treaties (BITs) with African nations. Other instruments, such as Trade and Investment Framework Agreements (TIFAs), have been used to deepen engagement with individual countries and regional blocs. More recently, the US concluded a Cooperation Agreement with the East African Community (EAC) focused on trade facilitation, sanitary and phytosanitary measures (SPS), and technical barriers to trade (TBT), which was designed to improve the implementation of key rules and take advantage of opportunities for market growth.[9] These models could point the way towards more balanced bilateral trade going forward.
African leaders are also discussing what trade will look like post-AGOA, and regional integration initiatives have taken centre stage. The most comprehensive regional plan is one to form a Continental Free Trade Area (CFTA), with the first phase of negotiations expected to be finalised in March 2018. The proposed CFTA would connect over one billion individuals across 54 nations with a combined GDP of $US 3.4 trillion. The CFTA builds upon existing regional trade agreements (RTAs), including the Tripartite Free Trade Area (TFTA) which brings together three of Africa’s largest trading blocs – the EAC, the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC). The scale of these trade areas demonstrates the market potential inherent in regional harmonisation. The TFTA, representing just a portion of the proposed CFTA, covers an area nearly twice the size of the US.[10]
The enabling environment for trade and development
New and better trade deals – whether bilateral, regional, or multilateral – must include rules for making the market work. Along with infrastructure, the laws, regulations, and policies that underpin trade are perhaps one of the most important aspects of the global economy. Non-tariff issues often present the most significant hurdles to market growth, and weak legal institutions are extremely costly, in particular because they cannot ensure effective enforcement of economic rights and obligations.[11] One way of thinking about the rules of the system is in terms of “building blocks” for trade, which include, among others, trade facilitation, standards, and sector-specific regulatory measures that pave the way for trade and development. These building blocks exist within various trade agreements, ranging from the US-EAC Cooperation Agreement to the recent WTO Trade Facilitation Agreement (TFA). Many of Africa’s RTAs also cover areas like infrastructure and agricultural inputs that will be essential to market growth and diversification. Putting in place the right building blocks for trade is essential, as it creates a more predictable and transparent enabling environment for businesses, which reduces risk and helps expand market potential. When such rules are crafted, deliberated, and applied in a way that integrates the needs of those who are most economically vulnerable, they can have the greatest impact on economic development.
Regional harmonisation
Efforts to harmonise trade rules across Africa signal a new era for the rule of law, driven from within Africa itself. As African nations continue to streamline and coordinate laws and regulations, regional trade agreements will only become more important. Harmonisation of trade rules makes it easier to move goods and services around the continent, and supporting Africa’s efforts to promote regional integration would ensure that the US stays connected with African trading partners as significant economic opportunity unfolds. Regional integration has myriad benefits for trade across multiple sectors. Harmonised rules shorten wait times in customs, make it easier for countries to take advantage of trade benefits (including trade preference programs like AGOA), strengthen systems for standards and food safety, and make processes for registration and licensing more transparent. When properly implemented, they can help countless businesses and entrepreneurs take full advantage of trade.
Improved rules that are designed to facilitate cross-border trade have both economic and social impacts. Economically, integrated regulatory systems are the key to larger markets that can attract investment and create jobs. The rules of the market can also play a pivotal role in helping integrate small farmers into market systems, thus providing them with more diverse opportunities for improving incomes and livelihoods. Harmonised rules stand to provide the greatest benefits to some of the most vulnerable market stakeholders, such as the many women who currently trade informally. At a more macro level, supporting intra-African trade could help reduce the continent’s dependence on foreign aid, a progression supported by successive US administrations and one some African leaders view as crucial to advancing their development agenda. However, targeted economic assistance will continue to play a role as markets develop.
A new US-African trade partnership?
Although the US has yet to develop a clear policy on trade and development in Africa, there are some concrete steps policymakers should take that would move from the zero-sum trade of the past toward a shared vision that strengthens economic opportunity for the US and African nations, promotes wider economic development on the continent, and encourages a more balanced approach to rule of law.
Both the US and African nations would benefit from a cooperative approach to trade and development that spans sectors with market potential. Emerging industries such as services and e-commerce encourage innovation and entrepreneurship in both the US and Africa, and traditionally important sectors like agriculture and manufacturing should remain priorities as well. The investment climate (and rules of the market), along with capacity to trade, will continue to be key factors affecting market growth. To start, a well-articulated and balanced US-African policy is needed that can help stakeholders on both sides get a better picture of how to move forward. This should include clear support for using trade preference programs and economic aid to unlock market transformation, complete with necessary modifications to these programs. If bilateral trade agreements are part of the future, we will need a new model that could address current market potential, reinforce Africa’s integration efforts, and approach market rules in a manner that would be feasible to implement and enforce.
Trade and development ultimately rest upon how the rules of the market are crafted and applied. Similar questions surround trade in both the US and Africa, and one way to address them could be through the legal and regulatory systems that govern the market. Across the board, this means promoting transparency in rulemaking and participatory governance, principles that are enshrined in most trade agreements and could be better implemented, as well as providing individuals with channels for better understanding the system and participating in shaping market rules. The US should also get behind Africa’s plans for regional harmonisation as a true partner. Not only does the momentum within Africa toward continent-wide harmonisation exemplify the staggering potential of the market, it is a refreshing new approach to rule of law, trade, and development, which holds great promise for success.
Katrin Kuhlmann is President and Founder, New Markets Lab.
This article is published under Bridges Africa, Volume 7 - Number 1, by the ICTSD.
[1] United States Trade Representative. “The President’s 2017 Trade Agenda.” 1 March 2017.
[2] Kuo, Lily. “Here’s What President Trump Got Right in His Much Ridiculed Africa Speech.” Quartz Africa, 23 September 2017.
[3] African Business Magazine. “‘Africa Must Start by Treating Agriculture as a Business,’ says AfDB President.” African Business Magazine, 9 May 2017.
[4] Coulibaly, Brahima and Christina Golubski, eds. Foresight Africa: Top Priorities for the Continent in 2018. Washington, DC: Brookings, 2018.
[5] The World Bank. “Economic Growth in Africa is on the Upswing Following a Sharp Slowdown.” 19 April 2017.
[6] Page, John. “Rethinking Africa’s Structural Transformation: The Rise of New Industries.” Brookings, 11 January 2018.
[7] New Markets Lab. “A Strategy for Trade and Development (White Paper).” June 2017.
[8] Ibid.
[9] Office of the United States Trade Representative. “US and East African Community Join to Increase Trade Competitiveness and Deepen Economic Ties.” February 2015.
[10] Juma, Calestous and Francis Mangeni. “The Benefits of Africa's New Free Trade Area.” Belfer Center for Science and International Affairs, 11 June 2015.
[11] Kuhlmann, Katrin. “Reframing Trade and Development: Building Markets through Legal and Regulatory Reform.” ICTSD and WEF, November 2015.
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EALA lawmakers impressed by ease of movement on Dar-Dodoma trade route
Members of the East African Legislative Assembly (EALA) currently conducting an on-spot assessment of EAC organs, institutions and facilities on the Central Corridor, Thursday said they were impressed by the progress to ease movement from the Tanzanian port city of Dar es Salaam to Dodoma.
The lawmakers who had toured the Vigwaza Weighbridge located 80 kilometers from Dar es Salaam on Wednesday, later paid a courtesy call to the Tanzania Ministry of Foreign Affairs and East Africa Cooperation in Dodoma, where they addressed a press conference.
“So far, we are very impressed by what is happening on the Central Corridor,” said the head of delegation, Muhia Wanjiku (Kenya).
The Vigwaza weighbridge was constructed in 2014 as part of the one stop inspection station facility in Tanzania to ease movement along the trade route.
The facility is meant to help reduce transit cargo travel time and enhance road safety by providing rest zones for drivers up to 12 hours a day and is among the three similar stations constructed under the East Africa Trade and Transport Facilitation Project (EATTFP).
Previously, there were seven weigh bridges along the central corridor. These were reduced to three after enactment of the EAC Vehicle Axle Load Control Act, 2013 by EALA.
Fatuma Ndangiza (Rwanda) told The New Times that compared to the many issues in the past, she too concurs with her colleagues that things on the route have “really improved.”
Ndangiza said: “There is no doubt that from the distance we have covered so far, the improvement is big. Even the cases of theft at Dar port reduced.
There is great improvement but, of course our wish is that it is sustainable such that people, be it regular travellers or traders, continue to benefit”.
MP Maryam Ussi Yahya (Tanzania) told The New Times that despite the notable improvements “NTBs (non-tariff barriers cannot be eliminated completely” as new ones keep coming up.
According to Ussi, the issue of congestion at Dar port is a particular bother but the good news is that the Tanzanian government plans to revamp the port and make it an issue of the past.
“This issue of course won’t be a permanent one since very soon once construction is finished, say in the next five years, congestion will ease,” she said.
“Drivers at Vigwaza Weighbridge also informed us that even though there was no congestion when we were there, sometimes they see long queues. They want separate lines for passenger buses and heavy trucks and this is something we are going to report too”.
More than 80 percent of Rwanda’s import and export cargo goes through the central corridor.
Lawmakers on Monday begun an onsite assessment of both the Central and the Northern corridors with two teams deployed on each. The team on the Central corridor kick-started it’s tour in Zanzibar while the one up north started in Mombasa, Kenya.
The lawmakers of the newly sworn in fourth Assembly will traverse the region taking notes and will eventually meet up in Kigali on February 24 to compare notes and wrap up their field trip.
From Dodoma, the MPs headed to Kahama through Singida.
They hope to cross into neighbouring Burundi on Friday after touring the Isaka Dry Port facility in Kahama.
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30th Session of the FAO Regional Conference for Africa
Sustainable development of agriculture and food systems in Africa
Improving the means of production and the creation of decent and attractive employment for youth
The 30th FAO Regional Conference for Africa will be held at the Friendship Hall from 19 to 23 February 2018.
Jointly hosted by the Government of Sudan and the Food and Agriculture Organization of the United Nations (FAO), the Conference is expected to be attended by ministers and other high-level delegates from FAO Member States, partners, representatives of Civil Society Organizations in Africa, and the media.
The Conference begins with a Senior Officers’ Meeting from 19 to 21 February 2018, followed by a Ministerial Plenary Session on 22 and 23 February 2018. The inaugural ceremony of the Ministerial Session will take place on 22 February 2018. There will also be Thematic Side Events on 21 February 2018.
Senior Officers’ Meeting
The Conference will begin with a Senior Officers’ Meeting with the following regional and global policy and regulatory matters for discussion:
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State of Food and Agriculture in Africa: Future Prospects and Emerging Issues
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Climate Change and its impact on the work and activities of FAO: Building resilience to address extreme vulnerability of Africa’s agriculture and rural livelihoods
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Leveraging Youth Employment Opportunities in Agriculture and Rural Sectors in Africa
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Mainstreaming Biodiversity across Agriculture, Fisheries and Forestry
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Outcomes of the Committee on World Food Security (CFS) and follow up actions at regional and country level
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Progress made on the Global Action Programme on Food Security and Nutrition in Small Island Developing States and on FAO’s Inter-Regional Initiative on SIDS: Case of Atlantic and Indian Ocean SIDS
In addition, the Meeting will also discuss the Work Programme, Budget, Decentralization process, the multi-year programme of work of the Regional Conference, and other matters.
Ministerial Round Table
The Ministerial Round Table on 22 to 23 February 2018 will address i) the SDG 2030 Agenda: Delivering Sustainable Agriculture Growth and Rural Transformation in Africa and ii) Zero Hunger. A session will be held to commemorate the 40th Anniversary of FAO country Representations, and finally a session will provide an opportunity for synthesis of main findings and recommendations.
Side Events
The side events on 21 February 2018 cover the following:
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FAO Strategic Programmes
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Renewing Commitment to the Africa Solidarity Trust Fund (ASTF)
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Responding to crisis in the Lake Chad region – partnerships for resilient livelihoods
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Migration and rural development
The regional consultation of Civil Society Organizations, preceding the Conference, took place on 22 to 23 January 2018 in Khartoum.
The full List of Documents for the Conference is available here.
State of Food and Agriculture in Africa: Future Prospects and Emerging Issues
The prevalence of undernourishment has seen little improvement since 2010 and the most recent estimates suggest a rise. The worsening situation is due to adverse climatic conditions, conflict and a difficult global economic environment. Looking forward, rapid population growth will add to the challenge of meeting the Sustainable Development Goal (SDG) 2 in Sub-Saharan Africa in the coming decades. Food production would need to increase considerably to meet rising demand, while climate change will exacerbate existing challenges. Addressing the root causes of migration and improving earning opportunities in rural areas is essential to fighting hunger and malnutrition.
At the same time, population and income growth, as well as migration, offer opportunities for the growth of domestic agriculture and agribusiness if farmers and entrepreneurs can respond to demand growth and shifts in consumer tastes. Exploiting opportunities will require investment in research and development to support sustainable intensification and investment in public goods that facilitate private investment across the entire value chain. Raising agriculture expenditure is important while the prioritizing of spending is just as important. An enabling regulatory environment will foster private investments and, combined with strategic public investments, will improve the functioning of markets and facilitate trade.
Population growth, migration, urbanization and income growth: Rrising and changing food demand
Some of the greatest challenges to eliminating poverty and hunger facing Sub-Saharan Africa derive from the rapid population growth and the changing demographic structure that the continent will face over the next decades. Between now and 2050 the population in the region will grow from 969 million in 2015 to 2 168 million in 2050.
The rise in population and growth in GDP per capita will drive significant growth in demand for agricultural products. In response, the agricultural output would need to more than double by 2050 to meet increasing demand. Overall the agriculture and agribusiness markets are estimated to grow from USD 313 billion today to about USD 1 trillion in 2030.
Demographic shifts, structural transformation and rural out-migration and urbanization are leading to changes in food systems in the region, and pose new challenges to traditional means of improving food security and nutrition. Migration is inherent to structural transformation and part of the process of development. However, rural-urban migration is not the only reality and most of the migration in Sub-Saharan Africa is rural-rural.
Not only will demand for food expand significantly, but, with rising incomes, lifestyle changes and greater female participation in the workforce, also the composition of diets will change substantially. There will be a disproportionate rise in consumption of non-grain products, such as fruit, vegetables, meat, fish, eggs, milk, and edible oils, compared with coarse grains, root crops and legumes.
There will also be a significant shift in the type and quality of products demanded. For example, premium rice makes up 30 percent of total rice consumption in rural areas, but 70 percent in urban areas. In addition, there will also emerge a greater reliance on processed foods that provide convenience through easy transport, storage and preparation. The demand for packaged food is also growing.
This growth and change in demand is also an opportunity for the continent. Evidence shows that although the balance of trade in agricultural products has worsened for Sub-Saharan Africa, domestic production has met most of the increase in demand over the past 50-60 years. On average, only about 10 percent of food consumed on the continent is imported, although that figure is on the rise and is much higher for some countries. The transformation of the food system provides opportunities to farmers and agribusiness to expand and diversify their activities (see section IV). Taking advantage of the coming opportunities will be particularly important for 330 million youth who will join the labour force in the next 15 years.
For example, migration can translate into reduced pressure on local labour markets and increased wages in agriculture, while remittances can relax liquidity constraints and provide insurance in case of shocks. In the longer term, migrants' remittances and diaspora investments, as well as acquired skills, knowledge and social network can have a profound impact on rural areas in terms of food security, nutrition and investments in agriculture and non-agricultural activities.
However, there are also challenges inherent in the transformation. Smallholder farmers, and in particular women farmers, face constraints in access to finance, markets and transport, as well as barriers created by standards on quality, traceability and certification. As a result, they may struggle to participate in the emerging integrated value chains and will need support if they are to benefit fully from emerging opportunities. Greater emphasis on a post-farmgate sector that is growing in importance is needed to ensure food safety, help reduce waste and increase profits along the value chain.
In addition, while the consumption of more nutritious foods, such as fruit, vegetables, wholegrains and seafood, has increased worldwide in recent decades, there has been a parallel, and more rapid, increase in the consumption of highly processed foods, such as sugar-sweetened beverages and processed meat. One implication is that policy-makers should consider the need to ensure the quality of people’s diets and to prevent malnutrition in all its forms.
The success of meeting rising demand will depend on the availability of new land and the intensification of farming in the region as well as the capacity to make the required investments in the post-production value chain. Raising yields will include increased use of fertilizer, water, pesticides, drugs, new crop varieties and animal breeds and innovative agriculture practices. However, expanding land use and intensification also comes at a high cost to society and to the environment. Overfishing, soil degradation, and higher greenhouse gasses aggravating the threat of climate change are some of those costs.
The sustainable increase in production requires answering some difficult questions, such as: how to produce more on land already cultivated without encroaching on forests, how to build efficient value chains, how to reduce post-harvest losses and waste, and how to mitigate and adapt to changing climatic patterns? The climate change impacts on Sub-Saharan agriculture are, in some cases and regions, large and negative.
Throughout the supply chain, substantial improvements in resource-use efficiency and gains in resource conservation must be achieved to meet growing and changing food demand, and halt and reverse environmental degradation. In addition, in rainfed systems, which account for 95 percent of farmland in Sub-Saharan Africa, expansion of irrigation and better management of rainwater and soil moisture is key to raising productivity and reducing yield losses during dry spells and periods of variable rainfall.
Moreover, there is the need to recognize the interrelations between migration, food security and agriculture and rural development. Migration can contribute to the achievement of the SDGs, only if it is safe and regular, and not a necessity. However, migration in the region is primarily caused by poverty, food insecurity and lack of employment and livelihood opportunities. It is vital to improve evidence on rural migration patterns, drivers and impacts and to strengthen policy coherence between migration, food security and agricultural and rural development policies, including towards the adoption and implementation of the Global Compact on Migration at the regional and national level.
Raising agricultural productivity for sustainable growth
Population and income growth will require that agricultural output in sub-Saharan Africa would need to more than double by 2050. Over the past decades, such output growth was achieved mostly through an expansion of land under cultivation, while yields remain low. However, today land is scarce and about 91 percent of the remaining unused but arable land is located in only 6 to 9 Sub-Saharan African countries, and in four of these surplus land is under forest cover.
Agricultural output growth in the coming years will require a change from a strategy based on area expansion to one based on investment in activities, notably research and development (R&D) and extension, which enhance total factor productivity (TFP) growth. Overall TFP is lagging in the region although it appears to have improved in some countries in recent years.
International research can spill over, and international organizations such as the International Institute of Tropical Agriculture (IITA) and the Africa Rice Centre (WARDA) produce important new technologies. However, there is room for strengthening relationships with the Consultative Group on International Agricultural Research (CGIAR) and other international partners through, for example, greater South-South Cooperation.
National agricultural research and development capability is essential to adapt new technologies to local conditions and to promote locally relevant crops and livestock that otherwise receive little attention. Agricultural expenditure on R&D grew by only 0.6 percent in 1980-1990 and -0.5 percent in 1990-2000, but then rose strongly between 2000 and 2014, from USD 1.7billion to USD 2.5 billion (in 2011 Purchasing Power Parity prices). However, three-quarters of this growth occurred in Ethiopia, Ghana, Nigeria, South Africa and Uganda.
Despite rising expenditures on agriculture, the New Partnership for Africa's Development (NEPAD) target of agricultural R&D expenditure of 1 percent of agricultural GDP is reached in only very few countries. Stronger collaboration among African national agricultural research systems through joint research programmes and regional centres of excellence is one approach to leverage public expenditures.
Growth of private research, notably in the seed industry, is occurring in some countries. Private companies have been particularly active and successful in introducing maize hybrids. However, small markets, a difficult business environment, including competition with government corporations and weak intellectual property rights, among other constraints, are hindering private sector investment in R&D. Private research, outside of South Africa, is still limited and the public sector must take the lead in R&D, especially in areas of market failure.
New technologies are essential, but do not blossom without complementary investments. For example, adoption rates of improved seed for all varieties except for rice have risen significantly since 2000, yet yields remain low. This is because there has not been a concomitant increase in use and adoption of inputs such as fertilizer and improved crop management. Fertilizer use in Sub-Saharan Africa is low, with average consumption in 2009-2012 at 14 to 9.7 kg/ha in the Common Market for Eastern and Southern Africa (COMESA), 20.2 kg/ha in the Southern African Development Community (SADC), and 11.5 kg/ha in the Economic Community of West African States (ECOWAS) (excluding South Africa and Mauritius), compared to 159 kg/ha in Latin America and 396 kg/ha in Asia.
The adoption of modern inputs depends on their profitability, which is enhanced through investments in extension, roads, communications, electricity and irrigation. Poor infrastructure reduces competitiveness. A comparative analysis of fertilizer costs in several Sub-Saharan African countries and Thailand concluded that improvements in domestic transportation systems would generate the single largest fertilizer price reduction in the African countries.
In addition, increased investment in irrigation can raise land productivity and improve stability of yields. The rising uncertainties that climate change brings, especially for rainfed agriculture, make such investment more urgent.
There are very substantial challenges facing Sub-Saharan Africa in achieving sustained productivity growth. Achieving the Comprehensive Africa Agriculture Development Programme (CAADP) target of 10 percent of public expenditure to agriculture is an important step in addressing those challenges. However, many countries fall below this threshold. At the same time, it is just as important to prioritize public investments effectively.
An innovative approach to leveraging public investments are public-private partnerships (PPPs) that bring together business, governments and civil society. They are relatively new in agriculture but have the potential to modernize the sector and contribute to sustainable and inclusive agricultural development. However, PPPs are complex, involve high transaction costs and are best suited for situations of market failure. A robust institutional and regulatory framework is critical in attracting private investment for infrastructure projects.
It is also essential to formulate public policies and programmes, and to exchange approaches, tools, best practices and lessons learned on harnessing the contribution of migrants and displaced people to all dimensions of sustainable development.
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tralac’s Daily News Selection
How Kenya’s famous roses almost missed Valentines Day – a stimulating twitter thread, by @MatinaStevis, of her Wall Street Journal article posted yesterday:
“First things first: for those of you who didn’t know (ie most?) Kenya is a global flower powerhouse. Fourth biggest exporter in the world of cut blooms – third in roses, by value. See some great graphs in our story.”
African Integrated High Speed Railway Network: NEPAD retreat to review technical and financial proposals (12-16 February, Johannesburg)
ODI workshop: How ‘smart’ trade policy can help Africa industrialise (22 February, London)
UNCTAD workshop: Supporting the shift towards sustainable freight transport in the Northern Corridor (2 March, Mombasa)
Profiled article (from the latest Bridges Africa edition What way forward for Africa at the WTO?): Judith Fessehaie: How can the CFTA help Africa respond to its economic transformation imperative? Services and e-commerce contribute a rising share of trade in value added. However, not all services are created equal. Research by ICTSD finds that the most important contribution to structural transformation and the SDGs comes from backbone services, namely infrastructural services. Africa’s exports of goods-related services such as freight and forwarding and aftermarket services have recorded a 9% per year growth between 2011 and 2016. Although this is good news, because the latter are closely associated to production and exports, other services exports have fallen during the same period. African value added producers need faster-growing backbone services. While services liberalisation can play an important role in unleashing the development potential of the services sector, complementing it with pro-competitive domestic regulations is essential in order to lower prices, increase product quality and variety, promote new entry, and widen access. At the technical level, this may require the CFTA negotiators to move beyond their confidence zone with regards to trade in services, for example with a negative list approach, and competition. African policy-makers could consider a complementary approach by combining services liberalisation with regulatory convergence (if possible), investment, and capacity building in services sectors that are essential for industrial development.
Dakar conference on factoring: Afreximbank urges use of factoring to expand regional value chains (Afreximbank)
Ms Kanayo Awani, managing director of Afreximbank’s Intra-African Trade Initiative, said on Wednesday at the opening of the two-day regional conference on factoring that, in spite of the potential upside, Africa’s SMEs continued to face difficulties in accessing finance. Ms Awani, who is also Chairperson of FCI’s Africa Chapter, noted that in other regions, such enterprises accounted for the largest shares of trade finance transactions concluded through factoring, noting that in Europe, for instance, factoring represented 10.4% of GDP at 1.5 trillion Euros. Ms Awani said Africa only accounted for 1% of global factoring transactions adding that the low volumes of factoring in Africa was largely attributable to lack of information and awareness. Peter Mulroy, Secretary General of FCI, said that despite the low factoring level in Africa, the continent had achieved important milestones that could help develop it further in the years to come. [Downloads available]
Three East Africa states in US crosshairs over mitumba ban (Business Daily)
East African nations that are en-route to stopping importation of used clothes may soon pay a price for it following the US State Department’s announcement that Washington will impose trade penalties in retaliation to what they see as a blockage of free trade. Harry Sullivan, the acting head of the economic and regional affairs unit in the department’s Africa Bureau, said Rwanda, Tanzania and Uganda have until next week’s meeting of their leaders to reverse the decision or face the penalties. “I believe the results of the meeting next week will determine how we proceed,” Mr Sullivan said in a conference call with reporters. “While we understand the East African Community’s desire to build a domestic textile sector, we firmly believe the EAC ban on imports of used clothing will not achieve that.” [Full text of the State Department briefing]
Katrin Kuhlmann commentary on US-African trade: creating common ground amidst policy uncertainty?
Kenya: Cargo scanners give KRA Sh131m more daily at the ports (Business Daily)
Commissioner-general John Njiraini also attributed the growth in daily revenue flows at the Customs to “benchmarking of cargo values to address undervaluation” and “stricter application of cargo auction processes”. “Customs recorded overall growth of 7.7%, with non-oil collections, which account for about 70% of revenue growing at 8.1%,” Mr Njiraini, whose second three-year expires on March 3, said in a statement. “Customs performance, however, continued to be adversely impacted by sluggish import growth with container volumes in H (first half) recording marginal growth of 2.8% compared to growth of 4.9% in H1 of FY (financial year) 2016-17 (which ended last June).” The Scanner Integration Project, which connects all readers at border entry points to a command centre at Time Tower, has been largely funded by the Chinese government.
Malawi now seeks to import natural gas from Tanzania (IPPMedia)
Tanzania’s Minister for Energy, Medard Kalemani, said in Dar es Salaam yesterday after a meeting with a high-profile Malawian delegation led by his ministerial counterpart that the government was ready to consider the request in the name of maintaining good relations with the neighbouring country. Kalemani said the two countries are also set to discuss collective efforts towards developing the Songwe River Basin for different uses of mutual benefit to both nations, including power generation. The Malawian delegation was led by the country’s Minister for Natural Resources, Energy and Minerals, Aggrey Masi, and also included Malawi’s Minister of Industries, Trade and Tourism, Henry Mussa. Masi said his country is in need of reliable electricity and has been struggling to address this challenge.
Malawi: IMF discussions, statement
Malawi is recovering from two years of drought. Economic growth in the range of 3-5% is expected in 2018, followed by a rise to 6-7% over the medium term. Growth will be supported by enhanced infrastructure investment and social services as well as an improved business environment, which will boost confidence and unlock the economy’s potential for higher, more broad-based, and resilient growth and employment. Inflation at end-2018 is expected to reach 9% before gradually converging to around 5% over the medium term.
Republic of the Congo launches its iGuide to highlight investment opportunities (UNECA)
The iGuide for the Republic of the Congo is the first in a series supported by the UNECA. The IPS is also concluding work with local officials on the iGuides for Malawi, Nigeria and Zambia. These three online platforms are expected to be launched in the first quarter of the year 2018. The project was initiated at the request of the Republic of the Congo through the Investment Promotion Agency (API) of the Republic of the Congo. Information on the platform is grouped in seven chapters around the themes of business set-up, labour, production factors, land, taxes, investor rights and growth sectors and opportunities.
Zimbabwe, Botswana strike diamonds deal (The Herald)
Zimbabwe is on the brink of clinching a deal with Botswana to start processing its diamonds at the world renowned Diamond Trading Company. Speaking during a tour of DTC in Gaborone yesterday, President Mnangagwa said talks were at an advanced stage for the two countries to seal the agreement. He said the arrangement is part of a broader policy to come up with a diamond policy for Zimbabwe. ”In Zimbabwe, yes we have diamonds, but we do not really have a diamond policy. We are now crafting the policy, discussing with Botswana, Namibia and Angola to assist us in formulating a diamond policy for Zimbabwe. But currently, there is discussion between my Minister of Mines and the young man here (Botswana’s Minister of Mines) so that we bring our diamonds from Zimbabwe to be processed here,” he said. [Zimbabwe: Pre-clearance of commercial cargo now mandatory]
Justin Sandefur: The World Bank’s misleading defense of the Doing Business Index (CGD)
Last week, CGD published a response to our analysis by Shanta Devarajan, senior director for Development Economics at the World Bank, and also a member of CGD’s Advisory Group. He concluded that our analysis was “neither enlightening nor useful.” Read it for yourself, but my quick summary of Shanta’s reply is: (i) Rankings are relative, so yes they change due to others’ actions; (ii) The methodological changes are purposeful improvements, not flaws; (iii) India has genuinely reformed. I accept all three points. Nevertheless, Shanta’s response - cleverly titled “Wrong Criticisms of Doing Business” - does not actually say we’re wrong. It doesn’t address the core substantive flaws in Doing Business discussed in our first post or, in my view, rebut the core technical claim we made: that changes over time in Doing Business rankings rely on apples to oranges comparisons, and that using a consistent methodology shows much smaller changes in the ranking for both Chile and India over time. [Related: CSIS debate (22 February) Fifteen years of Doing Business: opportunities for future directions]
IFAD member states call for increased focus on poorest in rural areas
The 41st Governing Council of the International Fund for Agricultural Development concluded yesterday with a call from leaders to build stronger institutions and to improve capacity in rural areas to overcome fragility. A growing number of people around the world, approximately 1.6 billion, are living in fragile situations. During the two-day annual event, IFAD Member State representatives discussed how rural areas are increasingly affected and shaped by global issues such as climate change, conflict, weak institutions, emerging technologies and limited natural resources.
For example, kicking off the final day of the meeting, Olusegun Obasanjo, the former President of Nigeria, talked about the growing threat posed by climate change. “For us in Africa climate change is no longer an abstract concept, it is our reality,” he said. As an example, he pointed to the current crisis in Cape Town, South Africa where the water supply in a city of about four million people is predicted to run dry by June. ”If drought can affect such a city, one can only imagine the impact of drought on the rural areas. Frequent and extreme weather events continue to have negative effects on rural livelihoods, especially in Africa where agriculture is the mainstay of rural economies.” [Event documentation, J.J. Messner: Defining and measuring state fragility]
Without firm action on gender equality, women’s empowerment, world may miss development targets (UN)
“This is an urgent signal for action, and the report recommends the directions to follow,” Phumzile Mlambo-Ngcuka, the Executive Director of UN Women, said on the launch of the new report, Turning promises into action: Gender Equality in the 2030 Agenda for Sustainable Development. Turning promises into action makes in-depth case studies in the Colombia, Nigeria, Pakistan, South Africa, United States and Uruguay, looking at what is necessary to achieve the 2030 Agenda. Focusing on unpaid care work and ending violence against women, the comprehensive report examines all 17 SDGs and how deeply intertwined the different dimensions of well-being and deprivation are in impacting the lives of women and girls.
Tax and the UN Sustainable Development Goals (ICC)
The ICC has released a position paper on tax and the UN SDGs to mark the First Global Conference of the Platform for Collaboration on Tax, which began yesterday in New York. A key misconception, detailed in the ICC paper, is that development could be entirely funded by ‘cracking down’ on tax practices such as base erosion and profit shifting, which ICC is working with other partners to address. Rather, the most important source of revenue for funding the SDGs is economic growth, and here tax policy can play a pivotal role. Here are five Global Goals where effective tax policies can facilitate economic growth and fuel progress towards sustainable development:
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How can the CFTA help Africa respond to its economic transformation imperative?
Despite the substantial growth of their economies over the last decades, many African countries are still struggling to transition to higher value-added economic activities. In a global trade context marked by substantial challenges, how can the CFTA support Africa’s structural transformation?
Notwithstanding the spectacular economic growth registered in the 2000s, economic transformation has eluded most African countries. Yet, Africa’s progress in achieving the Sustainable Development Goals (SDGs) impinges on changes in the structure of the continent’s economies. In today’s complex economic and trade environment, setting in motion such a transformation process is no easy task, and doing so will require Africa to address at least three central global challenges: the crisis of the multilateral trading system, declining commodity prices, and the restructuring of global value chains (GVCs).
The crisis of the multilateral trading system means that Africa’s priority issues are unlikely to be addressed in the short-term at the multilateral level. At the WTO’s Eleventh Ministerial Conference (MC11) last December, the lack of political will to reach a compromise resulted in nothing to show on core priority issues for Africa and lest developed countries (LDCs), namely agriculture, special and differential treatment, and fisheries. Looking ahead, there is no roadmap to continue advancing development issues in these negotiations, and the largest players are now focusing on whether and how to revive multilateral negotiations rather than addressing LDCs- or Africa-specific issues. One of the most significant outcomes of MC11 has been that discussions on e-commerce, investment facilitation, domestic regulations and MSMEs will continue notwithstanding the concerns and opposition of most LDCs and African countries. With these rather grim prospects for substantial outcomes at the multilateral level, most countries will pursue their trade objectives through plurilateral, regional, and possibly mega-regional initiatives, to which Africa is largely not party to.
At the same time, the commodity price boom is coming to an end. As a result, Africa’s current account deficit rose from -3.4 percent of GDP in 2013 to an estimated -7 percent in 2016. Between 2011 and 2016, Africa’s merchandise exports dropped by 11 percent per year, services exports by 6 percent and inward FDI dropped from 3.1 percent of GDP to 2.7 percent of GDP. These trends reflect the continued vulnerability of African economies to commodity price fluctuations, a persistent problem in the continent’s history.
Finally, participation and upgrading in GVCs are becoming increasingly difficult because the structure of GVCs is changing. Services value added make up approximately 50 percent of world trade in value added, and cross-border e-commerce is expected to account for 30 percent of all global business to consumer transactions by 2020. Yet, services competitiveness and e-commerce are two areas where Africa lags behind other regions. Since the 2008 global economic crisis, lead firms have been consolidating their supply chains in favour of larger suppliers. Research by ICTSD studying GVCs in the apparel sector finds that global buyers expect suppliers to move into pre- and post-production tasks and meet increasingly stringent private standards, including voluntary sustainability standards.[1] As lead times and labour costs in China rise, an increasing number of buyers are shifting to regional suppliers. In 2016, more than two thirds of European exports and more than half of Asian exports were regional. African producers have struggled to insert themselves in these highly competitive regional value chains in Europe, Asia, and Central/North America. For example, IKEA, the world’s largest home-furnishing retailer, sources from about 1,220 suppliers in 55 countries, with only one major supplier country in Africa.
In this context, the CFTA offers a strategy to open new markets for African producers, which is particularly important in light of preference erosion in traditional markets. If negotiated and implemented successfully, such a continent-wide integration project can promote economic diversification away from commodities; unlock firm productivity through greater scale economies, agglomeration effects, and increased competition; and embed trade-related reforms in areas such as services, regulations, and trade facilitation to make African businesses more competitive in regional and global value chains.
Regional value chains for economic transformation
Regional value chains (RVCs) can help African value-added producers to enter and upgrade in export markets. African businesses can find it easier to enter regional markets characterised by similar consumer taste, less sophisticated marketing and distribution channels, less stringent standards, and fewer information asymmetries. In 2016, intra-African trade accounted for only 18 percent of African exports, but one third of exports of manufactured goods. Between 1998 and 2014, intra-African trade accounted for 57 percent of export growth for capital goods, 51 percent for processed foods, 46 percent for consumer goods, and 44 percent for processed industrial supplies.
RVCs tap into fast-growing demand driven by urbanisation and the rise of the African middle class. It is estimated that the continent’s middle class will reach 1.1 billion people (42 percent of total population) in 2060, pulling demand for higher value-added goods and services. Some studies suggest, for example, that the rise of the middle class in Eastern and Southern Africa could drive a seven-fold growth in the consumption of high-value processed foods by 2040. African-based companies like Tiger Brands (South Africa), BIDCO (Kenya), Blue Skies (Ghana), and Camlait (Cameroon) are responding to the challenge by capitalizing on their market knowledge and established supplier and distribution networks. The rise and expansion of SMEs across the continent has been noteworthy too, in particular in processing and distribution of staple goods and dairy products, as well as in beer brewing. RVCs can also be important platforms to supply global markets, although this requires countries to develop complementary capabilities in the manufacturing of intermediary products, assembly, and logistics.
Opening up and deepening regional markets
Intra-African trade has grown, but this is largely reflective of trade in final goods from larger economies such as South Africa, Nigeria, and Kenya to their respective regional economic communities (RECs). However, building RVCs structured around growing intra-regional trade in intermediate products can deliver win-win outcomes across the continent. For example, in the Southern African apparel RVC, South African firms have invested in Lesotho and Swaziland, and Mauritian firms in Madagascar, to supply South African clothing retail chains.[2] Compared to firms supplying overseas markets, firms supplying regional markets have moved into more complex and profitable products and tasks. In Eastern Africa, agro-processing firms traditionally supplying EU supermarket chains have entered the supply chain of regional supermarket chains. In doing so, they diversified markets, reduced exposure to global market volatility, and successfully re-negotiated price and payment conditions with EU buyers.
Political will to create larger, competitive markets is essential to create real market access for established businesses and new entrants. Across most African RECs, at least four elements stand in the way of real market access in trade in goods: non-tarrif barriers (NTBs), cumbersome border procedures, complex rules of origin (RoO), and anti-competitive practices by incumbents. Research shows that while a CFTA that would only address tariff elimination would enhance intra-African trade, even more significant growth in exports and welfare would accrue from NTBs’ elimination and trade facilitation.[3] Trade facilitation would have a significant impact on both the value and level of sophistication of intra-African trade. On RoO, the CFTA process can draw key lessons from the RoO regimes applied in existing RECs. Compared to COMESA, the product-specific RoO regime implemented in SADC has proved restrictive and costly for the private sector, especially SMEs, without necessarily being more effective in preventing trade deflection.[4] TFTA negotiators have opted for the SADC approach, which is likely to hamper competitive sourcing strategies from businesses and strain the negotiating capacity of smaller economies. Finally, African domestic markets tend to be small and favour high industry concentration and dominant firms. Regional cartels have been operating in fertilisers, cement, and sugar, among others. Abuse of market power harms manufacturers operating downstream or upstream the value chain, deters new entrants, and discourages investment in better processes and products by incumbent firms. The CFTA could establish an effective continent-wide mechanism to address cross-border anti-competitive practices as well as enshrine reforms and build capacity at domestic level on competition policy.
Making the most of the CFTA
African governments have adopted a comprehensive approach to the CFTA, for example by including competition policies on the negotiating agenda and by making it part of the broader Boosting Intra-African Trade (BIAT) Action Plan. Below are some policy recommendations to ensure that the CFTA promotes RVCs and economic transformation.
Ensuring a comprehensive and ambitious approach to negotiations
Coordination failures have been a well-known constraint to Africa’s industrialisation. African businesses need access to complementary markets and resources to be able to compete in RVCs and GVCs. Trade negotiators often sequence and pace negotiations based on technical considerations which do not correspond to the priorities of the private sector. Real market access for businesses should be unhindered by, among others, NTBs and unnecessarily restrictive RoO. Regional institutions on competition policies should overcome weak or absent institutions in most countries, and should address not only issues related to mergers and acquisitions, but also abuse of dominant positions, again with a potential priority focus on key sectors.
Services and e-commerce contribute a rising share of trade in value added. However, not all services are created equal. Research by ICTSD finds that the most important contribution to structural transformation and the SDGs comes from backbone services, namely infrastructural services. Africa’s exports of goods-related services such as freight and forwarding and aftermarket services have recorded a 9 percent per year growth between 2011 and 2016. Although this is good news, because the latter are closely associated to production and exports, other services exports have fallen during the same period. African value added producers need faster-growing backbone services. While services liberalisation can play an important role in unleashing the development potential of the services sector, complementing it with pro-competitive domestic regulations is essential in order to lower prices, increase product quality and variety, promote new entry, and widen access. At the technical level, this may require the CFTA negotiators to move beyond their confidence zone with regards to trade in services, for example with a negative list approach, and competition. African policy-makers could consider a complementary approach by combining services liberalisation with regulatory convergence (if possible), investment, and capacity building in services sectors that are essential for industrial development.
Governments should also leverage the CFTA to develop a continental approach to e-commerce which suits the development needs of Africa, based on the mandate of Agenda 2063, namely to bridge the digital divide and build an integrated e-economy that aims, among other objectives, to increase broadband penetration by 10 percent and broadband connectivity by 20 percent by 2018, use information and communication technologies (ICT) for education, and provide venture capital to young ICT entrepreneurs and innovators.
Tapping into lead firms
African lead firms are driving the development of RVCs across the region. Policy-makers should engage with lead firms to maximise their contribution to regional value chains and industrial development across borders. Policy-makers in home countries, such as South Africa and Nigeria, can provide incentives to their lead firms to invest across borders in productive and trade capacity. Home and host countries can also partner with lead firms to promote supplier and skills development across the region. Finally, development finance institutions in the largest African economies and at the regional level should be given an explicit mandate to develop productive cross-border investment.
Domestic policies to complement the CFTA
At the domestic level, building RVCs requires effective industrial and agricultural policies backed up by strong political leadership, as well as a competent bureaucracy that is responsive to the private sector’s needs but also independent from it, cutting across ministries responsible for investment, skills, infrastructure, and heavily focused on implementation and monitoring. Implementation and monitoring are often the weakest elements in African policy-making, and yet they are critical to ensure institutional learning and adjustment.
Some policies likely to impact on RVCs are best implemented at the sub-national level, such as cluster development, technical and vocational education and training, and supplier development programmes in partnership with industry. For example, urban development policies can have a major impact on production and export competitiveness. African cities are home to one third of the continent’s total population, but account for 80 percent of its GDP.[5] This is where one finds the most productive firms, skilled workforce, dynamic entrepreneurship, and key institutions. Policy-makers thus need to seize the opportunities offered by the CFTA and RVCs also though more local economic policies, as well as regional corridors such as West Africa’s Growth Ring.
Gender mainstreaming needs purposive policies
The CFTA will have gender-differentiated welfare impacts, which will vary, across countries.[6] Research by ICTSD shows that domestic policies to increase women’s access to resources matter, but also that gender equality is critical for upgrading into value chains because of the critical role women play in some of them. Examples such as tea plucking in Kenya and Sri Lanka, fish processing in Cambodia, and production supervision in the apparel industry in Myanmar are cases in point. CFTA negotiators should find innovative approaches to support trade and gender equality.
Judith Fessehaie is Manager, Trade and Development Programme, ICTSD.
This article is published under Bridges Africa, Volume 7 - Number 1, by the ICTSD.
[1] See Morris, Mike, Justin Barnes, and Moshe Kao. Global Value Chains, Sustainable Development, and the Apparel Industry in Lesotho. Geneva: ICTSD, 2016; Staritz, Cornelia, Leonhard Plank, and Mike Morris. 2016. Global Value Chains, Industrial Policy, and Sustainable Development – Ethiopia’s Apparel Export Sector. Geneva: ICTSD, 2016. Samah El-Shahat and Violante di Canossa. Opportunities for sustainable development in global value chains: A case study of Myanmar garment sector. Geneva: ICTSD, 2018 (forthcoming).
[2] Morris, Mike and Cornelia Staritz. “Industrialization Trajectories in Madagascar’s Export Apparel Industry: Ownership, Embeddedness, Markets, and Upgrading.” World Development 56, issue C (2014); Morris, Mike, Justin Barnes, and Moshe Kao. Op. cit.
[3] Depetris Chauvin, Nicolas, Ramos, Priscila, and Guido Porto. “Trade, Growth, and Welfare Impacts of the CFTA in Africa.” 2016; Karingi, Stephen, and Simon Mevel. “Deepening Regional Integration in Africa: A Computable General Equilibrium Assessment of the Establishment of a Continental Free Trade Area followed by a Continental Customs Union.” Paper presented at the 15th Global Trade Analysis Project Conference, Geneva, June 2012.
[4] Paul Brenton, Frank Flatters, Paul Kalenga. Rules of Origin and SADC: The Case for Change in the Mid Term Review of the Trade Protocol. Africa Region Working Paper Series No.83. World Bank, 2005; Peter Draper, Cynthia Chikura, Heinrich Krogman. Can rules of origin in sub-Saharan Africa be harmonised? A political economy exploration. German Development Institute Discussion paper 1/2016.
[5] UN-Habitat. The State of African Cities 2010: Governance, inequality and urban land markets. Nairobi, Kenya: United Nations Human Settlements Programme, 2010.
[6] Depetris Chauvin, Nicolas, Ramos, Priscila, and Guido Porto. Op.cit.