Search News Results
tralac’s Daily News Selection
Bilateral talks between Kenya and Tanzania to resolve existing non tariff barriers and enhance trade entered their 3rd day today. The Kenyan delegation is led by Dr Kiptoo while Prof Ole Gabriel leads Tanzania’s delegation.
Featured tweet, @CelestinMonga: 73% of the African Union’s budget funded from outside the continent. About 30 its 55 Members default either partially or completely on average, annually. Talking about independence, credibility and dignity? Lot of work ahead for all of us.
30th Ordinary Session of the AU Assembly concludes: summary of decisions (AU)
On the African Continental Free Trade Area, the Assembly decides to hold an Extraordinary Summit on 21 March 2018, preceded by an Extraordinary Session of the Executive Council on 19 March 2018 in Kigali, Rwanda, to consider the CFTA Legal instruments and sign the Agreement Establishing the African Continental Free Trade Area and requested the AU Commission to convene an Extraordinary session of the STC on Justice and Legal Affairs to consider the said instruments prior to the Summit. The Assembly also adopted a protocol to the Treaty Establishing the African Economic Community relating to Free Movement of Persons, Rights of Residence and Right of Establishment and its Draft Implementation Roadmap. [Egypt will chair the African Union’s 2019 Summit]
AU launches Africa Agriculture Transformation Scorecard: revolutionary new tool to drive agricultural productivity and development (AU)
The AATS, the first of its kind in Africa, captures the continent’s agricultural progress based on a pan-African data collection exercise led by the AUC’s Department of Rural Economy and Agriculture, NEPAD Agency and RECs, in collaboration with technical and development partners. Countries were assessed on the seven commitments in the Malabo declaration, across 43 indicators. The report reveals that only 20 of the 47 Member States that reported are on track towards achieving the commitments set out in the Malabo Declaration. Rwanda leads the top 10 best performers with a score of 6.1, followed by Mali (5.6), Morocco (5.5), Ethiopia (5.3), Togo (4.9), Malawi (4.9), Kenya (4.8), Mauritania (4.8), Burundi (4.7), and Uganda (4.5). The report sets the 2017 benchmark at 3.94 out of 10 as the minimum score for a country to be considered on track towards achieving the Malabo commitments by 2025. Regionally, East Africa performed best with a score of 4.2, followed by Southern Africa with a score of 4.02.
African Globalizers Report 2017: African firms taking the world stage (Konfidants)
This report is the first in a series of studies designed to understand the global journeys and global potential of African firms. How can Africa produce its own global giants? And why are they important to Africa’s global emergence? This maiden report focuses on 30 companies with $118.6bn in combined revenue. It provides a first-hand big picture view – a snapshot – of the geographical reach of African firms in global markets. While future reports will delve into other metrices like the foreign assets, employment and sales of African Globalizers, this maiden edition (pdf) is deliberately focused on geographical reach – first as a conversation starter, and second as a baseline mapping exercise to enrich the conversation. The report focuses on four main questions: Who are the African Globalizers? Which global regions are they expanding into? What are the prospects of these firms growing into Africa’s global giants? What should be done to create a more a diverse group of globalizers from all parts of the continent?
Namibia has harmful tax system – EU (The Namibian)
According to the Outcome of Proceedings for the Council of the European Union dated 5 December 2017, Namibia is not a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes. Additionally, the outcome of proceedings says Namibia has not signed and ratified the OECD multilateral convention on mutual administrative assistance, as amended, and also did not implement the basic tax erosion and profit shiftings (Beps) minimum standards. The EU said Namibia did not commit to addressing the above issues by 31 December 2019, neither did it commit to amending or abolishing the harmful preferential tax regimes by 31 December 2018. Finance minister Calle Schlettwein yesterday confirmed the reasons for the blacklisting, but defended the notion that the country has a harmful preferential tax system.
Ghana-EU hold inception meeting on interim Economic Partnership Agreement (EU)
The first meeting of the EPA Committee under the Interim Economic Partnership Agreement between Ghana and the EU was held in Accra, Ghana on 24 January 2018. Extract from communique (pdf): The Parties agreed to set up an appropriate mechanism of monitoring of the implementation of the iEPA. The Parties agreed to start negotiating the procedures relating to a reciprocal Protocol on Rules of Origin of the Ghana-EU iEPA. The EPA Committee provisionally endorsed the transposition of the tariff nomenclature in HS 2017. The parties agreed to start reviewing the liberalization schedule. The Parties agreed to continue to exchange papers with the proposal of each Party on these matters with the view of finding an agreement on those issues during a technical meeting which would take place in July 2018 in Brussels.
Group trains 10,000 small trade women from EAC on cross-border laws (Business Daily)
More than 10,000 small-scale women traders engaged in cross-border business in the EAC have been trained on laws governing trade among the member countries. The women drawn from Kenya, Tanzania, Burundi, Rwanda, Uganda Ethiopia and Eritrea have been trained on various areas including taxation laws and common market protocol. Eastern African Sub Regional Support Initiative For Advancement of Women (EASSI) project coordinator, Ms Ruth Warutere, said the women were also being sensitised on using official border posts while crossing the border. She said the organisation also helps the women traders get a certificate of origin, which exempts them from paying taxes of goods worth 2000 dollars. The organisation’s project officer, Manisurah Aheebwa, urged the East African member states to harmonise laws which don’t favour women in cross-border business. Ms Aheebwa said the traders from individual member states were facing complicated laws when doing business in neighbouring country due to absence of common market laws. [‘Mitumba’ traders linked to rising HIV spread]
@achiengca: Congratulations @KenTrade in partnership with the World Bank group will roll out free internet connectivity along key border posts. This is in an effort to drive the country’s regional and global competitiveness. Malaba, Busia, Namanga, Isibania, Taveta, (JKIA) and Kilindini.
Kenya to boost trade with Djibouti (HIVISASA)
“We want to explore an agreement, to work closely with Djibouti in the livestock sector. Using the window offered by Djibouti, we can improve our access to the Middle East markets,” President Kenyatta said. President Guelleh saw collaboration in the livestock area also helping Kenya to accelerate development of its leather industry — a key plank in the manufacturing segment of the Big Four agenda.
Nigeria: Minister inaugurates tomato monitoring team (The Nation)
Hajia Aisha Abubakar, the Minister of State, Industry, Trade and Investment, on Monday inaugurated a tomato monitoring team to oversee the implementation of government policy to boost production of fresh tomato fruits. The team comprises Ministries of Industry, Trade and Investment; Finance; Agriculture; Raw Material Research and Development Council; Customs, CBN, NAFDAC and NARICT. Abubakar added that the private sector comprised MAN, Dangote Tomato Processing Limited, Erisco Food Industries Limited, Savannah Integrated Farms, GB Food, Tomato Jo’s and Springfield Tomato Processing Companies. According to her, the terms of reference of the team include to monitor the implementation of the policy and importation of tomato products and derivatives. She said the team would link research and development with the industry and will advocate for the growth and development of tomato industry.
Ghana: COCOBOD eyes Chinese market (GhanaWeb)
The Ghana Cocoa Board (Cocobod) is vigorously exploring prospects in the Chinese market for the country’s premium cocoa products, for which reason meetings have been ongoing between the two sides. Cocobod also plans to make a good showing at the maiden China International Import Exposition to be held in Shanghai, 5-10 November. [GEPA expects $250m from cashew export in 2018]
‘The interests of Egypt, Sudan and Ethiopia are one,’ President Sisi says after tripartite summit in Addis Ababa (Ahram)
Immediately after the end of the summit, Egypt’s Foreign Minister Sameh Shoukry said in press statements that the leaders of Egypt, Ethiopia and Sudan agreed on resolving all disagreements on the technical issues on the Ethiopian dam within one month. “There are no mediators in the Renaissance Dam negotiations” Shoukry added. The meeting between El-Sisi, Al-Bashir and Ethiopian PM Hailemariam Desalegn, which came on the sidelines of the AU summit, aimed at breaking the deadlock in negotiations over disputes on the impact of the GERD on downstream countries. Ethiopia and Sudan have not accepted the results of a report issued in March 2017 by a European consultancy firm on the potential impact of the dam on downstream countries, which concluded that the speed of construction could negatively affect Egypt’s water share.
$89bn lost in underuse of European Union free trade agreements, report shows (UNCTAD)
The full potential of European Union FTAs remains untapped to the tune of almost 72bn euros ($89bn), UNCTAD and the National Board of Trade Sweden say in a new report (pdf). This is the amount that European exporters overpaid because they did not take full advantage of the reduced tariffs offered by the FTAs that the EU as a bloc has signed with a variety of both developed and developing countries. “This report challenges some enduring myths on preference utilization in free trade agreements,” UNCTAD Secretary-General Mukhisa Kituyi and Anna Stellinger, Director-General of the National Board of Trade Sweden, write in the preface to the report. “For example, it is commonly believed that FTAs, in general, are not used to a high degree.” However, empirical data presented in the report indicates that companies in the EU mostly take advantage of FTAs with other countries but also that border-related aspects of their implementation might in some cases be more cumbersome than the provisions of the FTAs themselves.
The digital transformation and the transformation of international trade (ICTSD)
To facilitate the analysis of the role that trade agreements play or might play, this paper suggests a classification of the modes in which trade is conducted as it progressively shifts into the digital or digitally facilitated realm. It also identifies the areas where resistance has been encountered, categorises the nature of the measures that have been introduced, and reviews the approaches taken by the major digital economy players in framing regulations for digital and digitally enabled trade in the regional trade agreements in which they are engaged.
Towards a framework of standards on cross-border e-commerce (WCO)
The WCO E-Commerce Sub-Groups held face-to-face meetings at the WCO headquarters in Brussels (23-25 January). In his opening remarks, Mr. Luc De Blieck, WCO Deputy Director of Procedures and Facilitation Sub-Directorate noted that dynamic developments in the international supply chain driven by cross-border e-commerce and associated challenges required a new harmonized approach to ensure the speedy delivery of parcels across borders while ensuring compliance with all regulatory requirements including safety and security and revenue collection. He then invited delegates to work collaboratively in order to develop international standards on cross-border E-Commerce, as mandated by the WCO Policy Commission at its December 2017 session.
India Economic Survey 2018: State-wise exports included for the first time (Business Standard)
The Economic Survey 2018 stated that for the “first time in India’s history”, data on the international exports of states has been dwelt upon in the Survey. Such data indicates a strong correlation between export performance and states’ standard of living. “States that export internationally and trade with other states were found to be richer. Such correlation is stronger between prosperity and international trade,” it added. It has pointed out that five states - Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana account for 70% of the country’s exports. Talking about services exports, it stated that although world trade volume of goods and services is projected to accelerate this year, “enhanced global uncertainty, protectionism and stricter migration rules would be key factors in shaping India’s services exports”.
Related News
30th Ordinary Session of the AU Assembly concludes with remarkable decisions on 3 flagship projects of Agenda 2063
A summary of key decisions
The 30th Ordinary Session of the African Union (AU) Summit, holding on the theme, ‘Winning the Fight Against Corruption: A Sustainable Path to Africa’s Transformation’, ended on 29 January 2018, at the AU headquarters in Addis Ababa, Ethiopia, with the adoption of key decisions by the Assembly of Heads of State and Government.
The following is a summary of decisions made by the Assembly. Full decisions will be posted on the AU website due course.
The realisation of a Single African Air Transport Market is vital to the achievement of the long-term vision of an integrated, prosperous and peaceful Africa under the AU Agenda 2063; that it will bring about the enhanced connectivity across the continent leading to sustainable development of the aviation and tourism industry with immense contribution to economic growth, job creation, prosperity and integration of Africa.
It is against that backdrop the Assembly adopted the Decision on the Establishment of a Single African Air Transport Market (SAATM). Twenty-three (23) Member States have declared their Solemn Commitment to the immediate implementation of the Yamoussoukro Decision towards establishment of a Single African Air Transport so far.
On the African Continental Free Trade Area (CFTA), the Assembly decides to hold an Extraordinary Summit on 21 March 2018, preceded by an Extraordianary Session of the Executive Council on 19 March 2018 in Kigali, Rwanda, to consider the CFTA Legal instruments and sign the Agreement Establishing the African Continental Free Trade Area and requested the AU Commission to convene an Extraordinary session of the STC on Justice and Legal Affairs to consider the said instruments prior to the Summit.
The Assembly also adopted a protocol to the Treaty Establishing the African Economic Community relating to Free Movement of Persons, Rights of Residence and Right of Establishment and its Draft Implementation Roadmap.
On Financing the Union, the Assembly decided that the membership of the Committee of Ministers of Finance should be expanded from ten (10) to fifteen (15) members based on the principles of equitable geographical distribution and rotation. In this regard, the Committee will be called the Committee of Fifteen Ministers of Finance.
On the Report of the Leader of the African Union High-Level Committee on Libya, the Assembly expressed once again its deep concern over the persistent political impasse and the security situation in Libya, which perpetuates the suffering of the Libyan people, undermines the legal institutions of the country and poses a challenge to security and stability in neighbouring countries and in the entire region.
The Assembly requested the African Union Commission to re-launch the efforts of the Contact Group on Libya, in close cooperation with the United Nations, in order to pool the efforts of the international community on the issue and support the efforts of the African Union High-Level Committee on Libya and expressed once again, its appreciation to H.E. Mr Denis Sassou Nguesso, President of the Republic of Congo, Leader of the African Union High-Level Committee on Libya, to the African Union Special Representative, H.E. Mr Jakaya Kikwete, as well as to neighbouring countries, for the efforts made towards achieving lasting peace in Libya.
On the Report of the Peace and Security Council on its Activities and the State of Peace and Security in Africa, the Assembly welcomed the signing, on 21 December 2017, by the South Sudanese stakeholders of an Agreement of Cessation of Hostilities, Protection of Civilians and Humanitarian Access, and commended IGAD for leading the High Level Revitalization Forum, which presents a unique opportunity for the implementation of the Agreement for the Resolution of the Conflict in South Sudan (ARCSS), in line with the Communique of the 720th meeting of the PSC, held at ministerial level, in New York, on 20 September 2017.
The Assembly expressed deep concern over the repeated violations of the Agreement by the parties, resulting in further deterioration of the already dire humanitarian situation caused by the ongoing conflict, and demand all warring parties to immediately put an end to all military actions and comply scrupulously with their commitments, as contained in the Agreement of 21 December 2017.
On the Implementation of the Assembly Decision on the Institutional Reform of the African Union, the Assembly reiterated the commitment to the reform and renewal of the Union as part of the effort to ensure delivery of Agenda 2063 as an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in international arena. The Assembly decided that the Reform Troika shall be expanded to the Bureau of the Assembly and will collaborate with President Kagame in his capacity as Lead on the AU Institutional Reform process.
On the African Leaders for Nutrition (ALN) Initiative, the Assembly reaffirmed commitment to end hunger by 2025 through strengthening development policies as an effective investment in the human capital of our countries; and recommited to end child stunting by reducing stunting to 10% and underweight to 5% by 2025 and in particular, focusing on the first 1000 Days as the only window of opportunity during which permanent and irreversible physical and mental damage would be avoided.
Appointments were declared during the Assembly Summit for the following positions:
-
Amal Mahmoud Ammar (Egypt) as Member of the African Union Advisory Board on Corruption for a two (2)-year term.
-
NZINZI Pierre Dominique (Gabon) as President of the Pan African University (PAU) Council for a three (3)-year term.
-
The Vice President of the PAU Council will be elected at the 33rd Ordinary Session of the Executive Council scheduled for June/July 2018.
The Assembly deliberated on the issue of peace and security on the continent. The Assembly appointed the 10 members of the Peace and Security Council of the African Union for a two-year term as follows:
- Equatorial Guinea Central Region
- Gabon Central Region
- Djibouti Eastern Region
- Rwanda Eastern Region
- Morocco Northern Region
- Angola Southern Region
- Zimbabwe Southern Region
- Liberia Western Region
- Sierra Leone Western Region
- Togo Western Region
The Assembly welcomed the appointment of former Algerian Foreign Minister and former AU Commissioner for Peace and Security Amb. Ramtane Lamamra as the AU High Representative for Silencing the Guns and called upon Member States, the RECs/RMs, the UN and all partners, to extend their cooperation and support his activities in assisting Africa and its people to silence the guns in Africa by the year 2020.
The Assembly further stresses the urgent need for the AU to mobilize funding in support of the activities of the High Representative to enable him carry out his mandate, particularly galvanizing efforts of all stakeholders to scale up activities in the implementation of the AU Master Roadmap.
With regard to the New Partnership for Africa’s Development (NEPAD), the Assembly reaffirmed the continued relevance and uniqueness of accelerating the implementation of Agenda 2063 and, the vehicle to enhance multi-sectoral and integrated approach to deliver transformative results as enshrined in the NEPAD Programme and the role that the NEPAD Agency plays and that will be reinforced in the proposed transition of the NEPAD Agency into the African Union Development Agency.
On the Implementation of the Solemn Declaration on Gender Equality in Africa (SDGEA), the Assembly called Member States to implement all the commitments made in the SDGEA, and the AU Commission to accelerate the alignment of its policies, programmes and reporting tools for gender equality with Agenda 2063.
On the Report of the African Peer Review Mechanism (APRM), the Assembly congratulated H.E. Idriss Itno Deby, President of the Republic of Chad.for his election as the new Chairperson of the APR Forum, and commended H.E President Uhuru Kenyatta for his sterling leadership of the Mechanism, including its Revitalisation, during his tenure as the Chairperson of the APR Forum. The Assembly further reiterated that the APRM remains the premier homegrown, African good governance tool conceived in 2003 and voluntarily acceded to by thirty-six (36) Member States, more than half of whom twenty-one (21) have under gone the review.
On Fast Tracking CAADP-Malabo Commitments for Accelerating Agriculture Transformation in Africa through Biennial Review Mechanism and Africa Agricultural Transformation Scorecard (AATS), the Assembly commended the positive response of Member States in conducting self assessments, inclusive validation process and providing information for the preparation of the inaugural report to the Assembly of the African Union on the progress in achieving our common goals on agricultural transformation in Africa; while noting challenges faced by members states in collecting and compiling quality data to report progress on all goals and targets set in the commitments of the Malabo Declaration.
The Assembly called all Member States of the African Union, to mobilize adequate technical and financial resources in supporting agricultural data systems, monitoring and evaluation systems and strengthen mutual accountability structures to trigger evidence-based planning for agriculture transformation.
On Outcomes of COP23/CMP13 and Africa’s Engagements at the Global Climate Change Conference at COP24/CMP14, the Assembly urged developed country Parties to scale up of the current levels of climate finance, through agreement among Parties on concrete pathways and accounting methodologies for achieving of the collective goal by developed countries to mobilize USD 100 billion a year by 2020 and beyond, while striking a balance in the allocation of financial resources between adaptation and mitigation as a trust-building effort in the negotiations, and including a significant increase in grant-based support for adaptation and adequate support for capacity building and technology transfer, and stressed the importance of initiating substantive negotiations, immediately and prior to completion of the Paris Work Programme, on the long-term finance goal for the post-2025 period, so as to ensure scaled up, additional and predictable levels of public finance to implement developing countries ambitious nationally determined contributions.
The Assembly further urged the Parties and the COP23 and COP24 Presidencies to expedite action on consultations involving specific needs and special circumstances of Africa, as mandated by COP22 to urgently reach consensus for support to the African populace especially the most vulnerable communities (women, youth and children) to benefit from the implementation of the Paris Agreement.
The Assembly saluted the diligence of the Members of the Committee of the African Heads of State and Government on Climate Change (CAHOSCC) for the commendable political directive and guidance they provided that has concretised Africa’s solidarity and pan-Africanism at the negotiations and contributed to the adoption of the Paris Agreement on Climate Change as a result of strong, unity and united voice.
On the dates and Venue of the 31st Ordinary Session of the Assembly of the African Union, the Assembly confirmed that the dates of the Thirty-First Ordinary Session of the Assembly which will be held June/July 2018 in Nouakchott.
Closing remarks by the new Chairperson of the African Union, H.E. Mr. Paul Kagame
Addis Ababa, 29 January 2018
I would like to thank everyone for a successful summit, and welcome, once again, the new Heads of State and Government, participating for the first time, and wish them success in their work.
We had the opportunity before the summit to hold a conclusive and positive reform meeting, and we will continue consulting as the process unfolds.
Our time here together is a most precious moment on our annual calendar. We must therefore get the most out of our Summits. We have to start on schedule, and focus on the most important priorities. Let’s work together to do even better next time.
As we go forward, I would encourage closer collaboration with Africa’s private sector on the Union’s key initiatives. The business community is always eager to get involved, and more importantly, they are critical partners in creating opportunities and building the prosperity our continent needs.
Finally, an issue that deserves more of our attention is conservation. I wish to thank former President Benjamin Mkapa for highlighting this matter and, in his own right, continuing to champion it.
Africans need to take the lead, in partnership with like-minded global organisations, in the conservation agenda on our continent, because it affects all of us directly.
Driving conservation will allow us to get the most out of our continent’s assets, contribute to better management of our agriculture and tourism sectors, and support efforts to mitigate climate change.
As announced yesterday, we are on the cusp of creating a Continental Free Trade Area. We look forward to welcoming all of you to the summit on this issue in Kigali in the third week of March.
Once again, I thank the African Union Commission, starting with the Chairperson of the Commission, and the Secretariat, and all Commissioners, for organising this Summit as well as they have done.
I also want to thank you all for your contributions and your commitment to the ideals of the African Union. I wish everyone safe travels as you make your way back home.
I thank you very much.
Related News
African Globalizers Report 2017: African firms taking the world stage
Over the past two decades, an impressive group of homegrown African companies have been expanding beyond the shores of Africa, and taking on global markets. This report – by Konfidants – is the first ever attempt to map the global journeys and global ambitions of African companies.
Overview
Africa’s expected emergence as a global powerhouse will, among other things, require the continent to create its own global giants – the ‘African Samsung’, the ‘African GE’, the ‘African Toyota’. Yet, despite a decade of “Africa rising” and the advent of fast-growing big African corporations, there is still no African company in the Fortune Global 500. However, this could change within a decade – thanks to the emergence of an extraordinary group of African companies that are increasingly taking the world stage. They are the African Globalizers.
This report – by analysts and scholars at Konfidants – is the first in a series of studies designed to understand the global journeys and global potential of African firms. How can Africa produce its own global giants? And why are they important to Africa’s global emergence?
This maiden report focuses on 30 companies with $118.6 billion in combined revenue. It provides a first-hand big picture view – a snapshot – of the geographical reach of African firms in global markets. While future reports will delve into other metrices like the foreign assets, employment and sales of African Globalizers, this maiden edition is deliberately focused on geographical reach – first as a conversation starter, and second as a baseline mapping exercise to enrich the conversation. The report focuses on four main questions: Who are the African Globalizers? Which global regions are they expanding into? What are the prospects of these firms growing into Africa’s global giants? What should be done to create a more a diverse group of globalizers from all parts of the continent?
To be included in the study, a company is required to be headquartered in Africa and have trans-continental footprint – it should have at least two operational subsidiaries (or at least 50% holding in two foreign entities) in another global region other than Africa. There are obviously more than 30 such African globalizers; the 30 firms should thus be seen as a representative, but by no means an exhaustive list.
The Good News
The study has both good news and bad news for the continent. The good news is that African firms are indeed very active in global markets. The 30 African companies profiled have between them over 200 operations or major investment holdings in all major global regions – not just in other emerging markets, but in every advanced market on the planet: Europe, North America and Australia.
South Africa’s Datatec operates in more than 60 countries across 5 continents, and Aspen Pharmacare, the largest pharmaceutical in the southern hemisphere, makes 69% of its revenues from outside the continent. In fact, the globalizers have more operations or holdings in advanced markets (113) than in emerging markets (97). This is remarkable because historically, emerging market companies tend to first expand into other emerging markets before venturing into more advanced markets. The trajectory of global expansion by African firms thus deviates from the conventional models of global expansion by other emerging market firms – from China and India for example.
Crucially, this trajectory is indication that African firms may be far more sophisticated than usually perceived.
The Bad News
The bad news is that outside of South Africa there are very few globalizers from the rest of the continent. 22 of the 30 firms are South African. A few North African firms – like OCP of Morocco, Cevital of Algeria, and Elsewedy of Egypt - have noteworthy footprints in the Middle East, Asia and beyond. And while there exist other non-South African globalizers not covered in the report, major African Globalizers are indeed a rarity especially in the rest of Sub-Saharan Africa.
This raises questions: Why are there few globalizers outside of South Africa? What can be done to improve the situation? How do we use the experiences of South African globalizers to inspire globalizers to emerge from other parts of the continent? Addressing these and other related questions will remain the essential focus of the 2018 and subsequent editions of the African Globalizers reports. The rest of this maiden 2017 report will highlight the key findings and attempt to make sense of the numbers.
But first and foremost, why is any of this important? Why is it important for African companies to globalize?
Much has been said about the emergence of homegrown African multinationals in recent times. For good reason, the discussion is mainly focused on their regional expansion within the continent – especially its impacts on intra-Africa investments and cross-border trade.
But there is another dimension to the African multinational story that recieves less attention – the global dimension. There are several reasons why it matters.
First, Africa needs its own global giants – its own champions and brands on the world stage. Having more African companies expanding beyond the continent is the only way to birth Africa’s global giants. For all emerging markets, the rise of global giants is both a driver and marker of a region’s global competitiveness. Lenovo and Bharti Airtel respectively drive China and India’s global competitiveness in ways African nations should envy and desire.
Second, local companies need to look beyond the continent because growth markets within Africa are still limited despite a growing middle class. In spite of impressive economic growth during the last decade, African economies are not growing and lifting populations fast enough into the middle class to support the growth ambitions of the continent’s companies. The true size of the continent’s stable middle class is less than 10% of the adult population.
Third, competing in global markets is one of the best ways for African firms to acquire world-class technical capabilities and the managerial dynamism required to remain regionally and globally competitive.
Fourth, diversification through global operations is a way for African firms to better mitigate their risks and continue to grow. At some stage in a company’s evolution, local or regional diversification isn’t enough. Companies will need to invest beyond the continent to better withstand shocks and risks that are too closely correlated with African economies such as commodity cycles.
But globalizing comes with risks. When companies are insufficiently prepared for global expansion, venturing into unfamiliar territory outside of the home region could spell doom. Even highly capable global players have suffered casualties while diving deep into distant regions. To succeed in distant regions, emerging African global players must define a unique selling point, develop criteria for partnerships, understand local regulatory and policy environment, and not underestimate even small local incumbent firms.
This report was prepared by Michael Kottoh, Aaron Baneseh, Ahomka Mills-Robertson, Emmanuel Dadzie, Steven Odarteifio, Jacqueline Chimhanzi, and Francis M. Mulangu. Konfidants is a diversified international Advisory Firm supporting companies, governments and international organizations to achieve impact across Africa and other global regions.
Related News
AU launches Africa Agriculture Transformation Scorecard (AATS) – a revolutionary new tool to drive agricultural productivity and development
Five countries awarded for best performance in accelerating agricultural transformation
The African Union on Monday, 29 January 2018 launched the Africa Agriculture Transformation Scorecard (AATS) and presented the Inaugural Biennial Review Report on the implementation of the June 2014 Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods.
H.E. Hailemariam Desalegn, Ethiopian Prime Minister and AU Leader of the Comprehensive Africa Agriculture Development Programme (CAADP), presented the AATS and Biennial Review Report to the AU Assembly of Heads of State and Government in Addis Ababa.
The AATS, the first of its kind in Africa, captures the continent’s agricultural progress based on a pan-African data collection exercise led by the African Union Commission’s Department of Rural Economy and Agriculture (DREA), NEPAD Agency and Regional Economic Communities in collaboration with technical and development partners. Countries were assessed on the seven commitments in the Malabo declaration, across 43 indicators.
The AATS tracks progress in commitments made by AU Heads of State and Government through CAADP and the Malabo Declaration to increase prosperity and improve livelihoods by transforming agriculture. The indicators chosen to track the performance categories were defined on the basis of the strategic objectives derived from the Malabo Declaration.
The report reveals that only 20 of the 47 Member States that reported are on track towards achieving the commitments set out in the Malabo Declaration. Rwanda leads the top 10 best performers with a score of 6.1, followed by Mali (5.6), Morocco (5.5), Ethiopia (5.3), Togo (4.9), Malawi (4.9), Kenya (4.8), Mauritania (4.8), Burundi (4.7), and Uganda (4.5).
The report sets the 2017 benchmark at 3.94 out of 10 as the minimum score for a country to be considered on track towards achieving the Malabo commitments by 2025. Regionally, East Africa performed best with a score of 4.2, followed by Southern Africa with a score of 4.02.
Meanwhile, AUC Deputy Chairperson, H.E. Kwesi Quartey presented awards to the best performing countries in accelerating agricultural transformation on the continent. Best performance based on the overall score to achieve the Malabo Declaration goals and targets by 2025 was scooped by Rwanda, with Mali as runner up and Morocco, second runner up.
Based on the Theme of the 2017 Biennial Report “Highlight on Intra-African Trade of agriculture commodities and services: Risks and Opportunities,” the award was scooped by Lesotho with a score of 5.2, scoring the best on Malabo Commitment 5 on Intra-African Trade of Agricultural goods and services aggregating performance on (i) the value of goods and services traded with other AU Member States, (ii) the facilities to improve trade with other AU Member States and (iii) the stability of prices of food commodities for 2015.
Botswana won the award with a score of 8.7, for recording the best performance in Facilitating Intra-African Trade of Agricultural goods and services aggregating performance on (i) physical infrastructure, (ii) information and communication technologies, (iii) border administration, (iv) bilateral trade related agreement with other AU member states and (v) immigration facilitation.
In the Malabo Declaration, AU Member States committed to report, on a biennial basis, the progress in achieving the 7 commitments of the Declaration with the first report presented at the 30th AU Assembly of Heads of State and Government.
Preceding this “Inaugural Biennial Report on the Implementation of the June 2014 Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared prosperity and improved Livelihoods” was the meeting of the 2nd Ordinary Session of the Specialized Technical Committee on Agriculture, Rural Development, Water and Environment that endorsed it in October 2017, in Addis Ababa, Ethiopia.
In 2017, the AUC conducted and facilitated 6 training sessions respectively in West (in French and English), East, Central, Southern and North Africa regions, with 156 national experts trained including CAADP Focal Persons, Monitoring and Evaluation Specialists and Statisticians from Ministries of Agriculture and other line ministries.
Fifty one (51) AU Member States participated in the training and familiarized themselves with the Malabo Declaration, targets and indicators, and the biennial review reporting format, which has further embedded the culture of mutual accountability in Africa.
AUC Commissioner for Rural Economy and Agriculture, H.E. Josefa Sacko, congratulated the countries for their efforts in implementing the Malabo Declaration Commitments and said the AATS would help in sharing lessons and best practices as well as aid countries on what priorities need critical attention.
Some of the key recommendations from the report are for African countries to increase investment and finance in agriculture; to improve access for men and women engaged in agriculture to financial and advisory services; and to improve data collection systems.
Implementation of the Malabo Declaration: The 2017 Progress Report to the AU Assembly
The African Union Assembly of Heads of State and Government adopted the Comprehensive Africa Agricultural Development Programme (CAADP) in 2003 in Maputo, Mozambique as the Flagship Programme of the African Union for agriculture and food security. The Maputo Declaration on CAADP sets broad targets of 6 percent annual growth in agricultural GDP, and allocation of at least 10 percent of public expenditures to the agricultural sector.
From 2003 to 2013, CAADP implementation demonstrated that Africa had well-crafted, home-grown framework guiding policies, strategies and actions for agricultural development and transformation. This was instrumental in raising the profile of agriculture to the centre of development agenda at national, regional and global levels. It also facilitated mobilisation and alignment of multi-stakeholders partnerships and investments around national agriculture and food security investment plans (NAIPs) that have been developed through the CAADP process. In 2013, after a decade of implementation, demand for more clarity was expressed by AU Member States and stakeholders in terms of further elaboration and refinement of the CAADP targets, and assessment of technical efficacies and political feasibilities for success in agricultural transformation. In addition, there was a need to move from planning to effective implementation for results and impact in changing people’s lives because most of the NAIPs were not fully implemented. This underperformance was due to various reasons such as inadequate funding, no appropriate institutions and policies, low leadership capacity, weak mutual accountability system and culture, among others.
This is why, AU Heads of State and Government adopted the Declaration on Accelerated Agricultural Growth and Transformation in June 2014 in Malabo, Equatorial Guinea. The Malabo Declaration sets the Africa 2025 Vision for Agriculture which is implemented within the Framework of CAADP as a vehicle to implement and achieve the First Ten Year Implementation Plan of Africa’s Agenda 2063.
Among other commitments, the leaders committed to Mutual Accountability to Results and Actions by conducting a biennial Agricultural Review Process that involves tracking, monitoring and reporting on implementation progress in achieving the provisions of the Malabo Declaration. This Commitment translates, this time, a stronger political will for AU Leaders to effectively achieve Agricultural Growth and Transformation on the Continent by 2025 for improved livelihoods and shared prosperity for African citizens.
Therefore, the African Union Commission and the NEPAD Agency together with the Regional Economic Communities (RECs) and Member States, in collaboration with partners designed for the first time ever a Biennial Reporting Mechanism, established a pool of technical experts, helped strengthen the culture of mutual accountability, and developed the “Inaugural Biennial Report on the Implementation of the Malabo Declaration”.
The seven (7) Malabo Commitments were translated into seven (7) thematic areas of performance: (i) Re-committing to the Principles and Values of the CAADP Process; (ii) Enhancing investment finance in agriculture; (iii) Ending Hunger in Africa by 2025; (iv) Reducing poverty by half, by 2025, through inclusive agricultural growth and transformation; (v) Boosting intra-African trade in agricultural commodities and services; (vi) Enhancing resilience of ivelihoods and production systems to climate variability and other related risks; and (vii) Strengthening mutual accountability to actions and results.
In this Report, twenty-two (23) performance categories and forty three (43) indicators have been defined, for the seven (7) 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.
Highlights on intra-African trade for agriculture commodities and services
Risks and Opportunities
Meeting the Malabo commitments implies that further development of agriculture markets and trade in agricultural inputs and outputs will continue to play a pivotal role, because it is mostly through markets that farm producers will gain greater access to productivity-enhancing inputs and equipment; that farmers and agro-food processors will have more opportunities to earn income from their products; that investors, including farmers, will see opportunities to invest in additional production, processing and marketing capacities.
Despite the impressive GDP growth experienced in recent years, Africa has remained a marginal player in world trade. The continent's shares in world exports (2.8% on average) and imports have fallen significantly over 1970-2010. In addition to losing shares in the global markets, Africa trades relatively little with itself. Official intra-African trade was just 11% of the continent's total trade in 2012, compared to 54% in developing Asia; 32% in developed America, and 66% in Europe. Also Intra-African trade performance is of particular concern as, in the face of abundant endowment in unexploited suitable resources (e.g. land and water) for agriculture, the continent depends, at levels of 87% to 90%, on extra-African sources for all its imports of food and agricultural products. As a result, Africa has faced a food and agricultural import bill averaging US$ 69.5 billion over 2010-2012, rising by 15% per year faster than intra-African trade (12%) to reach some US$ 78 billion in 2012.
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: High transport costs resulting from poor infrastructure and inadequate transport policies; Important post-harvest losses due to poor storage infrastructure and processing facilities; Unclear/unpredictable trade policies and regimes; Ineffective implementation of regional trade agreements; Lack of harmonized standards, rules and regulations; Restrictive customs/crossborder procedures; Poor stakeholder information on markets, policies and regulations; and Limited access to efficient and affordable value-chain and trade finance.
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.
Related News
Africa opens its skies as AU gathers leaders for Summit
Newly Elected Chairperson of the African Union, H.E. Paul Kagame, President of Rwanda on Monday, 29 January 2018 officially launched the first phase of the Single African Air Transport Market (SAATM) championed by 23 African countries at the Headquarters of the AU, a historic and a vital milestone towards the continental effort to start the implementation of the 1999 Yamoussoukro Decision.
Also speaking at the launch, the Chairperson of Africa’s Premier Institution – the African Union Commission, H.E. Mr. Moussa Faki Mahamat, who has personally taken an active role in the Market since he took the reins of the Commission reported to African leaders, who are in the Ethiopian city of Addis for the 30th African Union Summit, on the progress achieved in the implementation of the Assembly declarations regarding the establishment of a Single African Air Transport Market and recommendations of the Commission.
“In order to make good on the Solemn Commitment, the concerned Member States have addressed provisions in their bilateral air service agreements (BASAs) to ensure compliance with the Yamoussoukro Decision (YD),” the Chairperson stated.
“In that regard, the Institutional and Regulatory Texts of the Yamoussoukro Decision which are considered essential for the single market to function effectively have been adopted. The Commission has also drafted guidelines for the negotiation of air service agreement with third countries and a human resource development fund (HRDF) has been established and placed under the management of the African Civil Aviation Commission (AFCAC),” the Chairperson further explained.
The Chairperson concluded his report by recommending to the Assembly to decide to establish a Single African Air Transport Market (SAATM) for African Airlines within the framework of the African Union (AU) Agenda 2063 and urging countries who have not yet committed to the solemn commitment, to do so.
The Commissioner for Infrastructure and Energy, Dr. Amani Abou-Zeid earlier stated the Single African Air Transport Market will spur more opportunities to promote trade, cross-border investments in the production and service industries, including tourism resulting in the creation of additional jobs.
Following the launch at the opening of the 30th African Union Summit, the Chairpersons of the African Union and the African Union Commission headed to the official ribbon-cutting and the unveiling of the commemorative plaque, where Heads of States, partners and guests were invited.
H.E. President Paul Kagame nominated H.E. President Faure Essozimna Gnassingbé Eyadéma of Togo as Champion of the Single African Air Transport Market (SAATM).
The Chairperson took the time to acknowledge the support of various partners, staff of the Commission and individuals who helped contribute to the launch of the Market.
The audience also had the chance to visit the aviation exhibition billed “SAATM: Flying the AU Agenda 2063 for an integrated, peaceful and prosperous Africa”.
Fighting corruption is the new focus of African leaders at the 30th African Union Summit. The leaders are also expected to deliberate on a number of issues, including institutional reforms of the AU, continental free trade and the state of peace and security on the continent.
The AU Assembly was preceded by meetings of the Permanent Representatives Committee on 22 and 23 January 2018, as well as the meeting of the Executive Council on 25 to 26 January 2018.
African Union, Member States and aviation industry advocate for joint stance on Single African Air
The Commissioner for Economic Affairs Professor Victor Harrison expressed optimism about improvement in air connectivity in Africa with the launch of a Single African Air Transport Market that took place on the margins of the 30th AU Summit at the AU headquarters in Addis Ababa, Ethiopia.
Commissioner Harrison made the remarks while addressing the High-Level Ministerial Meeting on the Future of the Single African Air Transport Market (SAATM) on 27 January 2018, prior to the launch of the SAATM.
The SAATM is amongst the first twelve AU Agenda 2063 flagship projects to be formally launched. He acknowledged and appreciated the contribution of the stakeholders who have made the project successful as it is a historic course following a long and winding road since the adoption of the Yamoussoukro Decision in November 1999.
He concluded his speech by urging all stakeholder to start mobilizing all levers of implementation so that they can start producing results.
Mr. Ambachew Mekonnen, Minister of Transport of the Federal Democratic Republic of Ethiopia in his opening remarks commended the African Union on the work they have put in to ensure Africa’s integration with the opening of the African sky to allow easy, quick, cheap movement in the continent. He also expressed Ethiopia’s commitment to enhance the Single African Air Transport Market.
The Ethiopian minister underlined that “the launch of the Single Africa Air Transport Market will have a huge impact on tourism potentials of rapidly growing economies and foster intra-regional cooperation in the continent.”
The High Level Ministerial meeting comprised of a panel discussion featuring Member State representatives and top airline executives officers including the vice president of the International Air Transport Association (IATA), Raphael Kuuchi, the International Civil Aviation Organization (ICAO) council president, Dr. Olumuyiwa Bernard Aliu, Chief Executive Officer of Ethiopian Airlines, Mr. Tewolde GebreMariam and top executive of Boeing, Airbus and Embraer.
The discussions focused on issues around the benefits of SAATM to the travelers, required regulatory institutional frameworks on safety and key strategic solutions for the sustainable opalization and financing of a successful single Africa air transport market.
Background
The Declaration on the establishment of a Single African Air Transport Market, as a flagship project of the AU Agenda 2063, was adopted by the African Union (AU) Assembly in January 2015. Immediately thereafter, eleven (11) AU Member States declared their Solemn Commitment to establish a Single African Air Transport Market through full implementation of the Yamoussoukro Decision of 1999 that provides for full liberalization of market access between African States, free exercise of traffic rights, elimination of restrictions on ownership and full liberalization of frequencies, fares and capacities.
To date, the number of Member States that have adhered to the Solemn Commitment has reached twenty-three (23), namely: Benin, Botswana, Burkina Faso, Cabo Verde, Congo, Cote d’Ivoire, Egypt, Ethiopia, Gabon, Ghana, Guinea, Kenya, Liberia, Mali, Mozambique, Niger, Nigeria, Rwanda, Sierra Leone, South Africa, Swaziland, Togo and Zimbabwe.
The Single African Air Transport Market was launched on January 29, 2018. As the first of the 12 AU Agenda 2063 flagship projects to be launched, the implementation of SAATM will pave the way for other flagship projects as the African Passport and enabling the Free Movement of People and the Continental Free Trade Area (CFTA).
Download: pdf The Single African Air Transport Market Brochure (1.95 MB)
Related News
Ghana and European Union holds inception meeting on interim Economic Partnership Agreement (iEPA)
The first meeting of the EPA Committee under the Interim Economic Partnership Agreement (iEPA) between Ghana and the EU was held in Accra, Ghana on 24 January 2018.
The meeting was attended by representatives from Ghana’s Ministry of Finance, Trade and Industry, Foreign Affairs, ECOWAS, EU member states and some private sector organisations.
The EPA provides duty-free and quota-free access to all Ghana’s exports, agricultural or manufactured, to the EU market, while Ghana will gradually and partially liberalize imports from the EU. As such, the EPA will protect existing jobs in the export sector and aims at bringing more investment to Ghana and to create new jobs.
During the meeting, the Parties reaffirmed their commitment to the iEPA as a mechanism for dialogue and partnership, as well as a tool to boost trade and investment and foster development.
Ambassador William Hanna, Head of the EU in Ghana and Ghana’s Deputy Minister of Trade and Industry, Mr. Robert Ahumka-Lindsay both delivered speeches at the opening of the meeting.
A joint communiqué was issued after the meeting.
Opening Speech by the EU Ambassador at the 1st Ghana-EU EPA Committee
This first joint Ghana-EU EPA committee, is one of the first binding requirements of the interim agreement that has been in place since 15 December 2016. I am glad that this meeting has materialised just one year after the agreement – ratified first by the Parliament of Ghana and then by the European Parliament entered into force.
This is not just a technical meeting. Today’s meeting marks a concrete step in the implementation of the agreement, because the steering committee is the decision body for all matters related to implementation. The organisation of this committee bears witness to Ghana’s commitment towards the agreement and illustrates the ever-stronger and special ties between Ghana and the European Union in the area of Trade and Investment.
The European Union remains Ghana’s most important and reliable trade partner with over 2,3 billion euros of export to the EU in 2016 and 4,6 billion euros of foreign direct investment (in stock).
The iEPA has all the ingredients to support Ghana’s home grown Beyond Aid strategy. It is designed to encourage more investment, a more favourable business climate and a more competitive private sector. This also means becoming a trade partner that applies trade agreements based on reciprocity. Ours is not an unequal partnership, but one between equals, with commitments undertaken on both sides. The progressive liberalisation of your market is a key element of your strategy of industrialisation because it will provide cheaper inputs to your industry, for example machinery. And cheaper imports mean cheaper exports and a more competitive Ghana.
The iEPA is a bilateral trade and development agreement, tailor made for the Ghanaian market structure and geared towards increased competitiveness, more added value for traditional exports and growth of non-traditional exports.
A few months ago, the European Union lifted the ban on five Ghanaian plant exports to the EU Market. Ghanaian farmers are now able to export all plant commodities to the EU market completely duty-free and quota-free. This was a good example of the European Union and Ghana working together to ensure that the country meets the highest quality standards, so that exports may resume and jobs can be created for young farmers in Ghana.
In the same way the EU is working closely with Ghana to further diversify and expand Ghana’s production and export capacity, particularly in the agriculture sector, where Ghana has so much potential and where there is the highest unemployment. Next week we will be signing new Financing Agreements giving important concrete support in this sector.
The EPA committee today will adopt rules of procedure, to ensure that the iEPA or the ‘market access offer’ is readable to all, to ministries, to private sector, to civil society, so that they all understand what changes are coming and when.
Indeed smoothing the effects of time and predictability are the strengths of the agreement and I am pleased to see that the EPA committee intends to secure decisions on both fronts.
The EU has experience in implementing the EPA, and one of the points of the agenda is experience sharing and presenting what is being done in Cote d’Ivoire, but also in the West Africa region. We can all benefit from sharing best practices.
The agenda will also address the issue of monitoring so that Ghana and the EU jointly define today how we will assess in the years to come the economic, social and trade impact of the implementation of the agreement. Earlier studies have shown that EPA should be beneficial to Ghana, and we need to continue monitoring the agreement to ensure that these predictions are fulfilled, and if any unforeseen problems arise we can address them.
Another issue to be addressed is the rules of origin. In order to tackle all these issues, an annual work plan for the year to come will help reaching a common approach in view of the next major step, the liberalisation of tariffs.
But before going to the next steps let me congratulate Ghana for adopting its EPA implementation strategy last year.
The strategy is comprehensive and the 3 strategic pillars are relevant and complementary.
I would like to take this importunity to invite the ministry to communicate more about this important document:
Communicating to ECOWAS, to other ministries, to donors, to the private sector, is crucial so they can take the right investment decisions. It is also critical to engage with civil society to assess the socio-economic impact of the agreement: the iEPA is impacting several sectors including trade, but also agriculture, finance, fisheries and actors still need to become more aware of the national EPA strategy.
Beyond communication, the strategy requires an institutional set up to steer the iEPA. The national steering committee which I understand, is still under development, will have the heavy task of not only implementing coordinating and monitoring the EPA strategy but also to muster political will from all the involved ministries.
To conclude, this committee marks a key step towards the implementation of the iEPA.
Ghana, together with its neighbour Cote d’Ivoire, the two middle income countries, are leaders. They are showing the way for West Africa, showing how the iEPA works and what concrete results it can yield in terms of trade, investment and competitiveness. Others will follow.
After several years in this country I am still surprised when people in Ghana come up to me and say Ghana cannot compete. That is not what I see, and it’s not what I believe.
Ghana is competing today. It is already exporting products of the highest quality to our most competitive single European market, a market of 500 million consumers. By implementing the EPA, Ghana, along with Cote d’ivoire is today competing in the Premier League. That is your rightful place.
Europe today already buys your high quality produce, and we want to buy more. And if you add value to your produce here in Ghana, by processing it, you do not face higher tariffs. With the EU it’s 100% free access. So we encourage you to add value to production and create jobs and wealth here in Ghana.
Of course the competition with other exporting countries is tougher in the Premier League, but that is where the rewards are greatest.
The rules of the game are clearly defined in the EPA, and this EPA steering committee will ensure fair competition and that the playing field remains level.
So my message this morning is: Go for it, Ghana! Have confidence in your ability to compete. You already have great players and you can produce more winners.
On these opening remarks, I wish you fruitful discussions during this busy day,
Many thanks for your attention.
Related News
$89 billion lost in underuse of European Union free trade agreements, report shows
Importers and exporters make use of the free trade agreements that the EU has signed with other countries – but not as much as they could.
The full potential of European Union free trade agreements (FTAs) remains untapped to the tune of almost 72 billion euros ($89 billion), UNCTAD and the National Board of Trade Sweden say in a new report.
This is the amount that European exporters overpaid because they did not take full advantage of the reduced tariffs offered by the FTAs that the EU as a bloc has signed with a variety of both developed and developing countries.
As governments hurry to negotiate or review FTAs it is important to understand if businesses are fully using the agreements, argues the report, which is the first to use the concept of utilization rates to systematically analyse FTAs entered into by the EU.
“This report challenges some enduring myths on preference utilization in free trade agreements,” UNCTAD Secretary-General Mukhisa Kituyi and Anna Stellinger, Director-General of the National Board of Trade Sweden, write in the preface to the report. “For example, it is commonly believed that FTAs, in general, are not used to a high degree.”
However, empirical data presented in the report indicates that companies in the EU mostly take advantage of FTAs with other countries but also that border-related aspects of their implementation might in some cases be more cumbersome than the provisions of the FTAs themselves.
Untapped Potential
The report concludes that, while some potential in the agreements remains untapped, companies are for the most part making use of them.
“The EU’s exporters use the agreements for 67% of their exports to countries with which FTAs exist,” co-author Stefano Inama of UNCTAD said.
“But we can also note that the EU’s importers use the free trade agreements to an even greater extent. In 90% of cases where tariff reductions can be used, they are,” co-author Jonas Kasteng of Sweden said.
Higher Prices
A large proportion of this under-utilization is in exports from the EU to major free trade partners such as Switzerland and the Republic of Korea, while the biggest share of unused tariff reductions to the EU is in imports from Switzerland, Turkey, South Korea and Mexico. This hits imports to a value of 10.5 billion euros ($12.9 billion).
In total – if all free trade agreements are considered – the EU’s importers forfeit 600 million euros ($742 million) in reduced tariffs every year. This ultimately means higher prices for the manufacturing industry and for consumers.
Since 1975, UNCTAD has used a “utilization rate” criteria to monitor the use of trade preferences granted to developing countries under the Generalized System of Preferences (GSP).
The concept of utilization rates can be used by policymakers in developing countries to effectively monitor south-south FTAs, for example African policymakers that are currently negotiating the Continental Free Trade Agreement.
Complex Rules of Origin
The authors of the report said it analyses the use of the EU’s free trade agreements “in reality” and not merely what is available in the agreements on paper.
“This is important as the EU is one of the most active negotiators of FTAs at the global level with a variety of developing countries and most recently least developed countries, and because EU companies have favourable trade conditions – including through reduced tariffs – thanks to these FTAs,” Mr. Kasteng said.
Mr. Inama added: “Still, many companies report that they have difficulties taking advantage of the preferential tariffs in the FTAs, which often has to do with the fact that the rules on proving a product’s origin – a requirement for reduced tariffs – are complex.”
The link between low utilization and rules of origin will be further explored in future publications by UNCTAD and the National Board of Trade Sweden.
With the support of UNCTAD, least developed countries have already used of the concept of utilization rates to argue their case for better rules of origin during World Trade Organization negotiations at its ministerial meeting in Nairobi, Kenya, in 2016.
The authors of this report are Jonas Kasteng, National Board of Trade Sweden, and Stefano Inama, UNCTAD. The findings, interpretations and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the United Nations or its officails or Member States.
Related News
Group trains 10,000 small trade women from EAC on cross-border laws
More than 10,000 small-scale women traders engaged in cross-border business in the East African Community (EAC) have been trained on laws governing trade among the member countries.
The women drawn from Kenya, Tanzania, Burundi, Rwanda, Uganda, Ethiopia and Eritrea have been trained on various areas including taxation laws and common market protocol.
Speaking at Green Park Hotel in Taveta, Taita-Taveta County on Monday, Eastern African Sub Regional Support Initiative For Advancement of Women (EASSI) project coordinator Ms Ruth Warutere said the women were also being sensitised on using official border posts while crossing the border.
“Some of them were using illegal routes to escape custom charges. They did not know that it is cheaper than using these escape routes,” Ms Warutere said.
Goods stolen
She said some businesswomen at the border had complained that their goods were being stolen by rogue bodaboda operators and thieves along the border.
“Some women did not know that it would be more expensive to use these routes because they pay more transport charges that when they use the border points,” she said.
She said the organisation also helps the women traders get a certificate of origin, which exempts them from paying taxes of goods worth 2000 dollars.
“Some traders don’t know about this and other opportunities. We normally train them on such opportunities and laws governing each trade,” she said.
On the other hand, the organisation’s project officer, Manisurah Aheebwa, urged the East African member states to harmonise laws which don’t favour women in cross-border business.
Complicated laws
Ms Aheebwa said the traders from individual member states were facing complicated laws when doing business in neighbouring country due to absence of common market laws.
“Traders from Uganda complain that they are not allowed to buy agricultural products from individual farmers in Kenya. On the contrary, Kenyan traders purchase the same products from individual farmers in Uganda,” she said.
At the same time, women traders at the Taveta/Holili border complained that their interests were not catered for in other countries making it hard to do business in Tanzania.
They cited harassment by Tanzanian customs officials especially along the Taveta/Holili border.
The traders say the harassment goes against the spirit of integration and free movement of goods and services in the region.
“The ease of cross border trade in the neighbouring country has remained to be a dream. We fear using the official border points because some of the officers at the border impose unnecessary fees yet we are small scale traders,” said Bibiana Malia.
Bribery
Ms Malia said some of the officers confiscate their goods and demand bribe.
She also complained that while their Tanzanian counterparts were being allowed to freely trade in Kenya, they were not allowed to freely move in Tanzania.
“It is very unfair because for them they don’t even pay any tax and some of them own shops in Taveta. For us we cannot even own a small stall in Tanzania,” they said.
Holili OCS Issac Munuo urged the traders to follow the laid down procedures when doing their business.
He said some of the traders who complained of harassment were found breaking the law.
“If you follow the law you will not be harassed. I urge you to follow the law of each country because if you do you’ll not be at war with government officers,” he said.
Related News
tralac’s Daily News Selection
Calestous Juma and Francis Mangeni: African Regional Economic Integration (Belfer Center)
This paper provides an alternative explanation of the emergence and evolution of regional economic integration by focusing on institutional innovation. The paper is divided into five sections. The first section provides background analysis of the forces that shaped Africa’s early efforts to search for new approaches for economic transformation. This is followed by an elaboration of the theoretical basis for understanding how Africa sought new models of economic order from the post-World War II chaos. The section builds on the theoretical foundations outlined to explain the behavior of systems that operate far from equilibrium and under conditions of uncertainty. Section 3 explores how the far-from-equilibrium dynamics led to the emergence of a variety of novel institutional arrangements aimed at governing regional integration. Section 4 explains how Africa has charted its own novel approach that combines the strengthening of state capacity with the expansion of complex economic networks to foster economic integration. Here we outline how Africa’s emerging regional integration approaches radically differ from those adopted in other regions. The last section examines Africa’s long-run economic outlook, with emphasis on a 50-year vision that is guided by the need for inclusive growth and sustainable development transitions.
The report covers the 10 partner countries: Argentina, Costa Rica, Côte d’Ivoire, the Dominican Republic, Ghana, Kyrgyzstan, Nepal, Rwanda, South Africa and Thailand. The report shows that labour migration has a relatively limited impact in terms of native-born workers’ labour market outcomes, economic growth and public finance in the ten partner countries. This implies that perceptions of possible negative effects of immigrants are often unjustified. But it also means that most countries of destination do not sufficiently leverage the human capital and expertise that immigrants bring. Public policies can play a key role in enhancing immigrants’ contribution to their host countries’ development. Extract:
The estimated contribution of immigrants to GDP ranges from about 1% in Ghana to 19% in Côte d’Ivoire, with an average of 7% across the 10 countries studied. The contribution of immigrants to value added exceeds their population share in employment in five countries: Côte d’Ivoire, the Dominican Republic, Kyrgyzstan, Nepal and Rwanda. In countries where this is not the case, differences are small. Overall, immigration is unlikely to depress GDP per capita. The analysis of how immigrants affect the fiscal balance and the quality of public services in developing countries shows that immigrants help increase overall public revenues. However, the increase may not be always sufficient to offset the public expenditures they generate. This is the case in two countries, Kyrgyzstan and Nepal, where the deficit is less than 1% of GDP. In the other countries studied, the net direct fiscal impact of immigrants is positive but below 1% of GDP. Overall, immigrants’ net fiscal contribution tends to be positive but limited. [ISS: Will Africa allow the free movement of people?]
AU Summit updates:
(i) CFTA updates from @AUTradeIndustry: The AU Department of Trade and Industry and the AfroChampions Initiative’s Executive Committee will create a high-level platform for regular dialogue on the CFTA. The two organizations also want to launch a vast mobilization campaign in favour of the CFTA, targeting both governments and the general public in Africa.
(ii) President Kagame’s acceptance speech on taking over as new AU chair. Africa’s defining challenge is to create a pathway to prosperity for our people, especially young people. Elsewhere, this has been achieved through industrialisation. But the growth trajectory that transformed Asia is not necessarily any longer a viable option for Africa, simply because we waited too long to act. Technology has evolved so rapidly in recent years, that Africa’s window to follow that strategy is narrowing much more rapidly than previously understood. We are running out of time, and we must act now to save Africa from permanent deprivation. Scale is essential. We must create a single continental market, integrate our infrastructure, and infuse our economies with technology. No country or region can manage on its own. We have to be functional, and we have to stay together.
(iii) Guterres lauds strong AU-UN partnership, outlines areas for more cooperation. Spotlighting these and other initiatives as key examples of the successful work the two organizations are carrying out across the continent, Mr Guterres said this partnership could be further strengthened in five key areas: addressing corruption; cooperation in peace and security; inclusive and sustainable development; climate change; and international migration. Combatting the “far-reaching and devastating” impact of corruption, tax evasion and illicit financial flows, a main theme of this year’s AU Summit, “requires an unimpeachable commitment to transparency and accountability,” he said, commending the decision to highlight this scourge, and offering the strong support of the UN. He also welcomed the designation of 2018 as African Anti-Corruption Year.
(iv) Single African Air Transport Market Initiative: IATA commentary. The International Air Transport Association says effective implementation of the Single African Air Transport Market Initiative would boost the economy of Africa by creating 155,000 jobs with an annual GDP of $1.3bn. The Vice President, International Air Transport Association in Africa, Mr. Raphael Kuuchi, stated this in a statement issued on Sunday. “Enhanced connectivity will stimulate demand, improve the competitiveness of the African airline industry, and make air travel more accessible. In turn, this will enable higher volumes of trade, expanded tourism and growing commerce between African nations and with the rest of the world.” [Association of African Airlines hails Single Air Transport Market, How Africa’s open skies treaty will short-change Nigerian airlines]
(v) AU Peace and Security Council communiqué: Towards a comprehensive approach to combatting the transnational threat of terrorism in Africa
West Africa should learn better trade and integration from its great ancient empires (The Conversation)
The union has relied on agreements and announcements to meet its integration goals. But they aren’t enough. ECOWAS needs to operate beyond the office and paper agreements. It needs to establish physical operations at border points. Leaders have lessons to learn from history – both ancient and recent. Our latest study shows that policymakers concerned with deepening integration in ECOWAS should look back in time to regional trade institutions in West Africa.
Starting today in Dakar: Regional Forum on ECOWAS Quality Infrastructure (ECOWAS)
Under the aegis of the Ministry of Industry and Small and Medium Industry of Senegal, ECOQUAF will gather about 300 participants, including representatives of the 15 members of ECOWAS and Mauritania, Morocco, Tunisia, regional and international quality institutions, technical and financial partners and national, regional and international civil society organizations. Debates will be organized around the following topics: development and implementation of quality policies, financing quality infrastructure, major challenges of the main components of the quality infrastructure, and promotion of quality.
Ethiopia: Second International Agro-Industry Investment Forum (UNIDO)
AIFE 2018 (5-8 March, Addis Ababa) aims to mobilize private investment in light manufacturing, with a particular focus on sectors with high growth potential, namely agro-processing, textiles and garments, and leather and leather products, as well as related sectors such as packaging and renewable energy. The Forum will present specific investment opportunities and investment incentive regimes, as well as facilitate business linkages through a series of networking activities – including B2B and B2G meetings, an exhibition for national and international companies and a field visit to an industrial park
Global cassava coalition wants support for cassava transformation in Africa (Africa Science News)
Ahead of the international conference on cassava, the Global Cassava Partnership for the 21st Century (GCP21) has called on policy makers, donors and the international community to support all efforts that will bring about cassava transformation in Africa. Presenting the upcoming conference on cassava to donors and the international community in Cotonou on Thursday, Dr Claude Fauquet, Director of GCP21 said, “despite the key role cassava is playing in Africa’s food security, its productivity had remained low (about 9 tons per hectare), keeping the growers in the trap of poverty. When compared to Asia, cassava productivity in that continent is more than 21 tons per ha—a situation that gives Asia competitive advantage in global cassava trade.”
Mozambique: Exports from Tete reach more than 18bn meticais (Club of Mozambique)
Tete province earned more than 18.8 billion meticais in 2017 from the export of various products, particularly coal, electricity, tobacco, maize, cotton, fish (tilapia and kapenta), wood and maize flour, reports AIM cited by O País. According to Tete Provincial Director of Industry and Commerce, João Feliciano, most of the products were exported to South Africa, Germany, Turkey, Argentina, Belgium, Singapore, Portugal and Romania. According to Feliciano, the figure represents a growth of 10% compared to 2016, an increase influenced by the rise in the volume of exports of tobacco, wood and fish from the Cahora Bassa reservoir.
South Africa: China’s thriving special economic zones show way forward for SA (Business Day)
One consequence of the current set-up is that the SEZs are not drawing in as much investment as they could. SA ought to tinker, as the Chinese do; not be too ideologically tied to one particular model. The country must find the way that works. If SA made it easy for the private sector to participate and it did not participate, the country could then conclude that it had got something wrong. But if private enterprise is locked out, surely SA is stretching the state too much? This is too much for the government to do alone. Even the Chinese have realised this. A new partnership on SEZs could see them flourish, expand and meet real needs. Surely, if the Chinese were prepared to give it a go, SA could as well? [The author, Tumelo Chipfupa, is a founding partner of Cova Advisory]
South Africa: Competition Act changes will create conflict (Fin24)
The proposed amendments to the Competition Act could face opposition from other parts of government and invite an onslaught of challenges from companies that find themselves subject to the powerful new market inquiry mechanism. Overzealous competition law can neuter industrial policy, warned Garth Strachan, deputy director-general: industrial development policy at the department of trade and industry. “If we get it wrong, we may fall prey to competition or free market fundamentalism,” he said at a panel discussion on the amendments Economic Development Minister Ebrahim Patel released in December. Strachan complained about the way competition concerns already constrained government’s attempts at drawing up industrial policy. [Willemien Viljoen: Competition policy as an instrument for economic transformation – a careful balancing act]
Today’s Quick Links: Burundi to host 2018 COMESA Summit South Africa’s Lesetja Kganyago: Fintech is a central banker’s friend International Customs Day 2018: message from the World Customs Organization Mozambique, Zimbabwe strengthen customs cooperation Crude oil projected to trade within $60-$70/bbl range in 2018 War on blood diamond trade loses its lustre in age of digital smuggling |
Related News
African Union announces partnership with the AfroChampions Initiative
Ambitious dialogue to start with the private sector on CFTA
The African Union has announced a strategic partnership with the AfroChampions Initiative to promote the African Continental Free Trade Area (CFTA). This partnership will give the African Union the opportunity to sensitize African entrepreneurs on the expected benefits of the CFTA while enabling them to leverage the AfroChampions platform to bring forward proposals and ideas to inform the implementation of the CFTA.
For His Excellency Mr Albert Muchanga, Commissioner for Trade and Industry, “This is a pioneering step for the African Union. We need the CFTA to be successful and for that, it must perfectly reflect the economic realities of the continent. By sharing the reflections of its members and their ‘on-the-ground’ experience, the AfroChampions Initiative will allow us to develop more relevant approaches on many technical subjects – especially with regards to common customs tariffs, facilitation of intra-African trade and free movement of workers, goods and capital.”
The AU Department of Trade and Industry and the AfroChampions Initiative’s Executive Committee are also working on the appointment of Private Sector Ambassadors for the CFTA to support a wider advocacy campaign on the CFTA targeting both African governments and civil society. These ambassadors, to be chosen amongst most recognised figures of the African business community, will be invited to explain how the CFTA can positively transform the continent.
“I support the African Union’s strategy of collaborating with the civil society to strengthen its economic policy,” said Aliko Dangote President/Chief Executive, Dangote Group and Chair of the Afrochampions Club. “We have a clear vision of our roadmap to make CFTA a game changer for Africans,” he added.
The AfroChampions Initiative and the Ambassadors have just started to prepare CFTA sensitization meetings which will take place in major African economic hubs and as a first step of the advocacy campaign. Private Sectors ambassadors will be announced on the occasion of the CFTA signing ceremony, to be hosted in Kigali, Rwanda, on March 21st.
The partnership between the African Union and the AfroChampions initiative is expected to continue beyond the signature of the CFTA Agreement, in order to accompany the effective implementation of the CFTA and its technical and protocols in different regions of the continent by 2020.
About the CFTA
The main objectives of the Continental FTA (CFTA) are to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Customs Union. It will also expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation and instruments across the RECs and across Africa in general.
The CFTA is also expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources. Under the leadership of the CFTA Champion, Mr Mahamadou Issoufou, President of the Republic of Niger, the CFTA agreement has been finalised by African Ministers for Trade on December 4, 2017. It is expected to be signed and ratified by African states throughout 2018, while discussions will continue on protocol and implementation processes until 2020.
About the AfroChampions Initiative
The AfroChampions Initiative is a set of innovative public-private partnerships and flagship programs designed to galvanize African resources and institutions to support the emergence and success of African private sector multinational champions in the regional and global spheres.
The Initiative, driven by the AfroChampions Organization, was founded by the advisory firm Konfidants; and is Co-Chaired by President Thabo Mbeki and Mr. Aliko Dangote, President and CEO of Dangote Group. The Initiative is headquartered in Accra, Ghana, and works with regional and global partners and governments, with the support of other corporate and institutional partners including ADS Group, the Djondo Fellowship, Olusegun Obasanjo Presidential Library and Thabo Mbeki Foundation.
As a strategic platform within the Initiative, the AfroChampions Club, Chaired by Mr Aliko Dangote, seeks to work with African governments to support policies and public-sector innovations that drive African economic integration, regional economic clusters and value chains.
Related News
NEPAD Heads of State and Government Orientation Committee: Working towards Africa’s transformation
“What brings us together on this day is the common goal of working for the transformation of Africa,” H.E Macky Sall, President of the Republic of Senegal and Chairperson of the NEPAD HSGOC, stated during the opening session in Addis Ababa, Ethiopia.
The NEPAD Heads of State and Government Orientation Committee (HSGOC) held its 36th Session on 27 January 2018. In his opening statement, H.E Moussa Faki Mahamat, Chairperson of African Union Commission, highlighted the fact that NEPAD now works in 52 of the 55 African countries.
The Chairperson of the HSGOC welcomed H.E Emmerson Mnangagwa, President of the Republic of Zimbabwe. President Mnangagwa expressed gratitude to the African Union and its bodies including the NEPAD Agency for their continued support to Zimbabwe. He also remarked that, “Zimbabwe is ready for business with the rest of the continent.”
H.E. Macky Sall stated that NEPAD is a true realisation of the vision of its founding fathers in realising the goals of Agenda 2063.
“Areas that need more focus and investment include infrastructure and energy. These must remain priorities for NEPAD, as well as the rural electrification fund that must become a reality. The process of agricultural transformation and growth of 6 per cent per year also remains a priority. The dream of our founding fathers has become a reality in NEPAD under the leadership of Dr Ibrahim Assane Mayaki,” President Sall said.
In his statement, the President of Rwanda, H.E Paul Kagame thanked NEPAD for being forward looking in positioning itself within the African Union even before the current reform was on the agenda. “NEPAD is about the development of our continent – delivering to African citizens. Let us look forward to working together in building a strong organisation for delivery of results on the continent,” President Kagame stated.
The results-based performance report of the NEPAD Agency was presented by the NEPAD Agency’s CEO, Dr Mayaki. During the session, Dr Mayaki gave a presentation on the NEPAD Agency’s Results Based Development Dashboard, which displays the organisation’s results at national, regional and continental levels. He also brought to the fore the application of a territorial approach to development. The dashboard captures the NEPAD Agency’s programmatic results delivery of Agenda 2063.
Also at the session, Executive Secretary of the United Nations Economic Commission for Africa, Dr Vera Songwe stated that the ECA has been a long standing partner of NEPAD, collaborating in various thematic areas.
The Minister of Works and Transport, Hon. Alpheus !Naruseb, on behalf of H.E Mr Hage Geingob, the President of Namibia, formally accepted Namibia into the NEPAD Presidential Infrastructure Championship. The Presidential Infrastructure Champion Initiative was born out of a proposal by President Zuma to accelerate regional infrastructure development through the political championing of projects.
The Heads of State and Government Orientation Committee session also deliberated on the reform of the NEPAD Agency and its governance model.
In the closing session of the HSGOC, President Sall urged delegates to continue to support NEPAD in its efforts to attain Africa's common development goals.
Fast-tracking the implementation of Africa’s Development Agenda
The NEPAD Agency has adopted a results-based approach and aligned its interventions to the First Ten Year Implementation Plan of Agenda 2063 – African Union’s long-term vision and strategic framework for socio-economic transformation of the continent.
Accordingly, the 2017 Annual Report that the Agency has released is results-based, giving an account of the NEPAD Agency’s contribution to Agenda 2063. The results are presented at continental, regional and national levels. To this end, the 2017 report provides some insights into the possible strategic impact areas of the transformed Agency, namely: Wealth Creation, Shared Prosperity, Transformative Capacities and Sustainable Environment.
At continental level, the Agency’s 2017 results in the area of revolution and entrepreneurship include the application of gene drives for eliminating malaria; the application of drone technology for agriculture and food security; and the promotion of micro-grids for expanding Africa’s access to energy. In the area of sustainability and resilience capacity, results include contribution to Africa’s unified position in global conventions on climate change and environmental resilience that was strengthened.
With regards improved health and nutrition services, some of the achievements include a draft treaty for establishing the African Medicines Agency that was prepared to ensure the supply of safe and effective medicines in Africa. Results towards transformed agriculture and food systems include the blueprint that was produced to implement rural development policies in Africa, as well as the Inaugural Biennial Report, which highlights progress made on commitments enshrined in the Malabo Declaration.
The year 2017 marks the end of the strategic plan cycle that spans 2014 to 2017. It also heralds the medium term development plan, 2018-2023, aligned to Agenda 2063’s First Ten Year Implementation Plan. The annual report also comes at a time when preparations are concluding for transforming the NEPAD Agency into the African Union Development Agency, with greater scope for action and capacity.
Related News
African Union Heads of State and Government join forces to combat corruption in the continent
Corruption is undoubtedly the most pressing governance and development challenge that most African countries are confronted with today.
Corruption has debilitating and corrosive effects on progress, stability and development of the continent. It impedes economic growth by discouraging foreign investments, creates distortion in resource allocation and competitive markets, increases the cost of doing business, and reduces the net-value of public spending.
It also reduces the quality of services and public infrastructure and the volume of tax revenues, and encourages the misappropriation and misallocation of scarce resources. In the political realm, it undermines the rule of law, respect for human rights, accountability and transparency and weakens government institutions. This in turn erodes public legitimacy in government and compromises good governance.
The social costs of corruption are also deleterious as it deepens income inequality, poverty and adversely affects good moral values in the society. In general, corruption is a challenge to sustainable economic development, peace and good governance.
It is against this backdrop that the Assembly of Heads of State and Government of the African Union (AU), meeting at their 30th Ordinary Session on 28th January 2018 at the AU Headquarters in Addis Ababa, Ethiopia, have resolved to join efforts to speed up the fight against corruption.
To that effect, they adopted the theme: “Winning the Fight against Corruption: A Sustainable Path to Africa’s Transformation” as the clarion call for the year 2018. During the opening ceremony of the 30th AU Summit today at the AU Conference Center (Mandela Hall), the different African leaders who took the floor acknowledged the fact that African countries, in particular, have shown a growing commitment in tackling the problem of corruption in the past decade.
However they pointed out that more is yet to be done and can be done if strong measures are put in place to curb this societal flaw at all levels. The African leaders in their speeches noted that, many African countries have established national anti-corruption institutions in an effort to tackle the problem. In spite of all these efforts and measures, the spread of corruption has been unrelenting and has remained a major obstacle to the attainment of the continent’s development goals.
The 30th summit of the Heads of State and Government of the African Union, which kicked off in Addis Ababa on 28 January 2018 welcomed and congratulated the newly elected Presidents of Angola, Zimbabwe; Benin; Somalia and Liberia.
The opening ceremony of the summit also saw the election of Rwandan President Paul Kagame as the Union’s Chairperson for the year 2018 as well as the launch of the DotAfrica domain name; the launch of the Single African Air Transport Market and the African Union Kwame Nkrumah Continental award for Scientific Excellence 2017, to the laureates, among others. The event took place in the presence of the Deputy Chairperson of the AUC, H.E. Thomas Kwesi Quartey, AU Organs and Staff as well as the AU Commissioners, the RECs, the Diplomatic corps, and invited guests.
In his opening remarks, the Chairperson of the AU Commission, Moussa Faki Mahamat said the AU will continue in its efforts to foster a united, peaceful and prosperous Africa and promote the dignity of African people.
“Tolerance and reconciliation are required if the African continent is to move forward,” he emphasized, saying that these values are major prerequisites for ’Silencing the Guns by 2020’. “We can no longer stand by at the indescribable cruelty of the violence that belligerents continue to inflict on a population that has suffered far too much for far too long. The time has come to impose sanctions on those impeding peace,” reiterated the AUC Chairperson.
He underscored the need to speed up the reform of the Union as a tool to enhance integration, which is indispensable for development as well as promote peace and justice in the continent. He also urged the Member States to reinforce the fight against Illicit Financial Flows as step to fighting corruption in the continent.
On connecting the African Union to its citizens, Chairperson Moussa Faki stressed that the African Union will establish youth quotas across its institutions, and identify appropriate ways and means to ensure the private sector’s participation. He announced an appointment of a special youth envoy in the near future.
H.E. Antonio Manuel de Oliveira Guterres, Secretary General of the United Nations on his part commended the constructive cooperation between the AU and the UN. He announced that an MoU was signed recently between him and the AUC Chairperson to work closely in the issues of peace and security and the implementation of the Africa Agenda 2063. He also highlighted that the UN Agenda 2030 and the African Continental agenda are mutually complementary. The UN Secretary General reiterated the support of the UN to the AU on all the sustainable development goals.
Mr. Mahmoud Abbas, President of the State of Palestine and Chairman of the Executive Committee of the Palestine Liberation Organization (PLO) promised to join force with the AU in fighting terrorism in the continent. He also expressed the need to reinforce the cooperation ties between Palestine and Africa.
H.E. Ahmed Aboul-Gheit, Secretary General of the League of Arab States thanked the AUC for extending an invitation to him to address the summit. He promised to work closely with the AUC in implementing the development agenda of the continent as well as promote the Afro-Arab cooperation.
Outgoing Chair of the Union, Mr. Alpha Condé, and President of the Republic of Guinea thanked the AU Commission for the support given to him during his mandate. He highlighted some of his achievements during the year 2017. He also informed the Summit that he was able to represent the AU in international fora which led to the appointment of an African at the helm of the WHO among other successful positioning of African candidates in high offices within the continent and abroad.
H.E. Mr. Paul Kagame, President of the Republic of Rwanda and incoming Chairperson of the African Union launched the African Union Theme of the Year 2018: “Winning The Fight Against Corruption: A Sustainable Path To Africa’s Transformation” while H.E. Mr. Muhammadu Buhari, President of the Federal Republic of Nigeria, Champion of the Theme of the Year 2018 launched the theme of the year.
The meeting of African Heads of State and Government will conclude on Monday 29th January 2018 with the adoption of decisions and declarations to guide the work of the African Union all through the year.
Guterres lauds strong AU-UN partnership, outlines areas for more cooperation
Hailing the partnership between Africa and the United Nations as “solid, and grounded on sound principles of human rights and good governance,” Secretary General, Antonio Guterres told leaders gathered in Addis Ababa, Ethiopia, for the African Union Summit, that with Africa in the lead, “we can and will do more” to bolster successful cooperation throughout the continent.
“I stand here on behalf of the United Nations system and reaffirm our strong commitment to the member states and the people of Africa,” Mr. Guterres told the 30th Ordinary Session of the Assembly of the African Union (AU) on Sunday, adding: “I strongly believe Africa is one of the greatest forces for good in our world.”
The UN chief said that in just his first year in office, the Organization has entered a “new era” of partnership with the AU, recalling the holding of the first UN-AU Annual Conference at the summit level, as well as the signing of two landmark framework agreements, respectively on enhanced partnership in peace and security, and, just yesterday, on implementing the 2030 Agenda for Sustainable Development and the African Union's Agenda 2063.
Spotlighting these and other initiatives as key examples of the successful work the two organizations are carrying out across the continent, Mr. Guterres said this partnership could be further strengthened in five key areas: addressing corruption; cooperation in peace and security; inclusive and sustainable development; climate change; and international migration.
Combatting the “far-reaching and devastating” impact of corruption, tax evasion and illicit financial flows, a main theme of this year's AU Summit, “requires an unimpeachable commitment to transparency and accountability,” he said, commending the decision to highlight this scourge, and offering the strong support of the UN. He also welcomed the designation of 2018 as African Anti-Corruption Year.
Specifically on international migration, the UN chief expressed that the global phenomenon not only powers economic growth, reduces inequalities and connects diverse societies but also help ride the demographic waves of population growth and decline
“We must maximize the benefits of orderly migration, while stamping out abuses and prejudice,” he said, highlighting the benefits of the Global Compact for Safe, Orderly and Regular Migration for all countries.
“I urge you to bring your moral leadership and unique experience to this important collective priority for 2018,” added Mr. Guterres.
On the peace and security sector, the UN chief expressed his appreciation to African governments for contributing troops and police to UN peacekeeping operations to help save lives and keep the peace around the world.
He, however, noted that UN peacekeeping is not the solution to all crisis situations, and said that partnership with the African Union and sub-regional organizations can be the means to address the varied contexts which necessitate peacekeeping, including peace enforcement and counter-terrorist operations.
On inclusive and sustainable development, Secretary-General Guterres expressed that the UN 2030 Agenda for Sustainable Development and African Union's Agenda 2063 are mutually reinforcing, and underscored the need to ensure sufficient means of implementation to ensure sustainable development.
But he acknowledged that while poverty elimination is a shared priority across the tow agendas, significant gaps persist, particularly with regard to industrialization, water, energy, infrastructure and the environment. “We must place quality education within the reach of all,” he underscored.
In that context, he urged all UN Member States to uphold their commitments to official development assistance (ODA), outlined in the Addis Ababa Action Agenda on financing for development.
Mr. Guterres also said the international community has a role to play in combating tax evasion, money laundering and the elimination of illicit financial flows that deprive Africa of its essential resources.
The UN chief also stressed that women and young people must lead the development agenda, stressing that: “Women's full participation makes economies stronger and peace processes more successful.”
He said that around the world, there is skepticism about multilateralism. But he strongly believed that moving forward together, “the United Nations and the African Union can show that multilateralism is our best and only hope.”
IATA welcomes Single African Air Transport Market but says effective implementation is key
The International Air Transport Association (IATA) welcomes the launch of the Single African Air Transport Market (SAATM) initiative by the African Union (AU) to open up Africa’s skies and improve intra-African air connectivity.
Enhanced connectivity will stimulate demand, improve the competitiveness of the African airline industry, and make air travel more accessible. In turn, this will enable higher volumes of trade, expanded tourism and growing commerce between African nations and with the rest of the world.
“The SAATM has the potential for remarkable transformation that will build prosperity while connecting the African continent. Every open air service arrangement has boosted traffic, lifted economies and created jobs. And we expect no less in Africa on the back of the SAATM agreement. An IATA survey suggests that if just 12 key African countries opened their markets and increased connectivity an extra 155,000 jobs and US$1.3 billion in annual GDP would be created in those countries,” said Rapahel Kuuchi, IATA’s Vice President for Africa.
One of the main obstacles to the implementation of previous open skies pledges – 1988 Yamoussoukro Declaration and 1999 Yamoussoukro Decision – has been the absence of an underpinning regulatory text. IATA welcomes the AU’s adoption of the regulatory text of the Yamoussoukro Decision (YD) – also the framework for SAATM – which covers competition and consumer protection and dispute settlement as these safeguard the efficient operation of the market.
“Today’s decision is momentous. SAATM is a decisive step towards greater intra-African connectivity and delivers the framework on which to achieve it. Now it’s time to get down to the work of implementation. Greater connectivity will lead to greater prosperity. Governments must act on their commitments, and allow their economies to fly high on the wings of aviation,” Kuuchi concluded.
Background
The Single African Air Transport Market (SAATM) is a flagship project of the African Union Agenda 2063, an initiative of the African Union to create a single unified air transport market in Africa, the liberalization of civil aviation in Africa and as an impetus to the Continent’s economic integration agenda.
The Declaration on the establishment of a Single Africa Air Transport Market, as a flagship project of the AU Agenda 2063 was adopted by the African Union (AU) Assembly in 2015. Eleven AU Member States have made a commitment to implement the Yamoussoukro Decision of 1999 that provides for full liberalization in terms of market access between African States, the free exercise of traffic rights, the elimination of restrictions on ownership and the full liberalization of frequencies, fares and capacities.
The third meeting of the Ministerial Working Group on establishment of the SAATM took place from 5 to 8 December 2017 and a number of activities were agreed to mark the launch of the Single African Air Transport Market. It is envisaged that airlines from the 23 SAATM countries would each be able to put up an exhibition during the launch. The theme of the fair is: “Flying the AU Agenda 2063: for an integrated, peaceful and prosperous Africa”.
To date, the number of Member States that have adhered to the Solemn Commitment has reached twenty-three (23), namely: Benin, Botswana, Burkina Faso, Cabo Verde, Congo, Cote d’Ivoire, Egypt, Ethiopia, Gabon, Ghana, Guinea, Kenya, Liberia, Mali, Mozambique, Niger, Nigeria, Rwanda, Sierra Leone, South Africa, Swaziland, Togo and Zimbabwe.
Related News
OECD Development Centre and ILO call for tapping immigrants’ contribution to foster economic transformation
Developing countries, which host more than one-third of international migrants, need to do more to maximise the economic impact of immigration, the Development Centre of Organisation for Economic Co-operation and Development (OECD) and the International Labour Organization (ILO) said in a joint report presented in Paris on 23 January 2018.
The perception that immigrants cost more than they yield is widespread but rarely relies on empirical evidence. How immigrants contribute to developing countries’ economies shows that negative perceptions are often unjustified. It points out that immigrants are no burden on the economies of host countries, and that in developing countries, their impact on labour markets, economic growth and public finance is generally positive although relatively limited.
“We have found that the limited impact of immigrants could mean that most countries of destination have not been sufficiently leveraging the skills and expertise that immigrants bring. Adequate public policies can plan a key role in enhancing immigrants’ contribution to their host countries’ development,” said OECD Deputy Secretary General Masamichi Kono, as he launched the report at the joint OECD Development Centre-ILO conference.
Using both quantitative and qualitative methods, How immigrants contribute to developing countries’ economies examines empirically the ways immigrants’ presence affects ten economies: Argentina, Costa Rica, Côte d’Ivoire, the Dominican Republic, Ghana, Kyrgyzstan, Nepal, Rwanda, South Africa and Thailand.
According to the findings, immigrants in most of the studied countries display higher labour force participation and employment rates than native-born workers. However the quality of jobs immigrants take remains a concern as they often experience decent work deficits.
The analysis also assesses whether the presence of foreign-born workers benefits or harms the employment opportunities of native-born workers: while the results are variable and highly contextual, the report shows that the overall economic impact of immigration is negligible.
The estimated contribution of immigrants to gross domestic product (GDP) ranges from about 1% in Ghana to 19% in Côte d’Ivoire, with an average of 7% across the ten countries studied. The contribution of immigrants to value added exceeds their population share in employment in five countries: Côte d'Ivoire, the Dominican Republic, Kyrgyzstan, Nepal and Rwanda. In countries where this is not the case, differences are small. Overall, immigration is unlikely to depress GDP per capita.
The analysis of how immigrants affect the fiscal balance and the quality of public services in developing countries shows that immigrants help increase overall public revenues. However, the increase may not be always sufficient to offset the public expenditures they generate. This is the case in two countries, Kyrgyzstan and Nepal, where the deficit is less than 1% of GDP. In the other countries studied, the net direct fiscal impact of immigrants is positive but below 1% of GDP. Overall, immigrants’ net fiscal contribution tends to be positive but limited.
“Any country can maximise the positive impact of immigration by adopting coherent policies aimed to better manage and integrate immigrants so that they can legally invest in and contribute to the economy where they work and live, while staying safe and living fulfilling lives,” said Manuela Tomei, ILO’s Director of Conditions of Work and Employment Programme.
The report illustrates five policy priorities for immigration countries to further enhance the contribution of immigrants to their economy:
-
Adapting migration policies to labour market needs by facilitating entries and providing more legal pathways to labour migrants, so as to increase the share of immigrants with a regular status and formal employment. Closely monitoring labour market indicators coupled with developing consultation mechanisms, in particular with the private sector, can further support migration management systems.
-
Leveraging the impact of immigration on the economy. Destination countries could consider policy interventions aiming to foster the employability of immigrants, encourage their investment by removing the barriers to invest and create businesses, and maximise the fiscal contribution of immigrants through supporting growth of the formal sector or expanding the tax base and contribution payments from the informal one.
-
Protecting migrant rights and fighting discrimination. Public authorities as well as employee and employer organisations in destination countries should prioritise protecting the rights of immigrants and preventing all forms of discrimination and racism.
-
Investing in immigrants’ integration. Policy measures should be put into use from the moment immigrants arrive, especially with the active support of local authorities, so as to foster social cohesion.
-
Better monitoring the economic impact of immigration. It is important that developing countries invest in improving migration-related data collection as well as analyses of immigration’s potential impacts on the economy.
Related News
FAO calls for renewed commitment to get Africa back on track to eliminate hunger
Hunger-fighting initiatives in Africa need to be deepened and broadened to put the continent back on track to eliminating the scourge of undernutrition, FAO Director-General José Graziano da Silva told heads of state and government gathered in Addis Ababa on 27 January 2018 for the African Union (AU) summit.
“Achieving zero hunger in our lifetime is still possible,” Graziano da Silva said. “(It) will require a redoubling of current efforts and a push for political commitment and timely concrete actions such as never seen before.”
He spoke at a high-level event in Addis Ababa to review and renew the 2013 partnership – forged here between the AU, FAO and the Istituto Lula – to end hunger and malnutrition.
Progress towards that goal is not on track, and last year’s FAO report on the State of Food Security and Nutrition in the World reported that civil conflicts and adverse climate trends had led to an increase in the number of hungry people.
That reversal of decades of steady progress in hunger reduction was “extremely worrisome”, Graziano da Silva said, but Brazil’s decade of concerted action to lift millions of people out of poverty and hunger was proof that with conviction progress can be made quickly.
“We are facing a new promising scenario that renews our optimism,” he said, noting UN Secretary-General Antonio Guterres’ robust insistence on fostering peace, the first disbursements of the new Green Climate Fund set up to help countries most affected by climate change, and signs of an improving global economy.
“The majority of undernourished people in Africa live in countries affected by conflict. Hunger is almost twice as high in conflict-affected countries with a protracted crisis. Stronger commitment by governments, the African Union and the United Nations is needed to promote peace, human rights and sustainable development,” Guterres said at Saturday’s meeting.
The road to revival
At the conclusion of the meeting, attendees agreed on a joint communiqué that includes an 11-point action plan for AU Member States to renew their commitment to ending hunger in Africa by 2025. It includes investing in sustainable agriculture and social protection programmes.
Investment in agriculture development is “the single most effective way to provide opportunities for families to generate income and improve nutrition in Africa,” Graziano da Silva said.
Strengthening social protection programmes, especially in rural areas where most of the poor live and where formal social security systems are typically absent, is especially crucial, he said, emphasizing that such programmes can be linked with other productive investments to create “virtuous cycles of local development” that benefit the most vulnerable community members. Public food purchasing from family farmers is an example that has worked in many parts of the world, he noted.
Meeting in Addis Ababa
The high-level meeting of 2013, organized by the AU Commission, FAO and the Lula Institute set up by former Brazilian President Luiz Inácio Lula da Silva, led to the 2014 Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods. The commitment to end hunger and malnutrition by 2025 was a key component of that declaration.
Speaking via video link at Saturday’s meeting, former President of Brazil Lula da Silva said: “Each country’s budget has to be designed placing the poor at its very core to be able to guarantee to them – as something sacred, something biblical – that to have breakfast, lunch and dinner is the most basic right that every human being on Earth must have.”
Former President Olusegun Obasanjo of Nigeria told participants, “We need to put the poor at the highest political level towards African hunger eradication”.
Other participants included the President of Guinea and the African Union, Alpha Condé, the Prime Minister of Ethiopia, Hailermariam Desalegn, and Ministers of Agriculture of Africa and leaders of civil organizations and the private sector.
The AU Commission, together with Ethiopia’s Ministry of Agriculture, organized the meeting with support from FAO and the UN Economic Commission for Africa.
While in Addis Ababa the Director-General will also sign an agreement with the Government of Senegal to open a new FAO Sub-regional Office for West Africa in Dakar.
He also participated in an AU summit side-event led by former President Obasanjo and focusing on the importance of empowering rural women. Graziano da Silva outlined some successful case studies and explained how FAO helps Member States craft policies and programmes to reduce risks and burdens shouldered disproportionately by rural women and girls and to pursue gender equality by fostering improved income and livelihood opportunities.
Related News
tralac’s Daily News Selection
tralac weekly e-Newsletter: Competition policy as an instrument for economic transformation
India invites 50 nations for trade talks: seeks roadmap for WTO dialogue
tralac’s Gerhard Erasmus: When African trade arrangements incorporate WTO disciplines without all member states being WTO members
This tralac Trade Brief takes a look at a feature of African trade arrangements which has given rise to little discussion or concern. The legal instruments underpinning African trade arrangements often incorporate or refer to WTO disciplines (and those of other multilateral bodies) as part of the obligations undertaken by their Member States. This is a feature of most of the Regional Economic Communities. However, in some instances, not all the members have joined the WTO. Examples of African states which are not WTO members are Algeria, Comoros, Equatorial Guinea, Ethiopia, Libya, Sao Tome and Principe, Somalia, Sudan, South Sudan and the Sahrawi Arab Democratic Republic.
Shadow economies around the world: what did we learn over the last 20 years? (IMF)
We undertake an extended discussion of the latest developments about the existing and new estimation methods of the shadow economy. New results on the shadow economy for 158 countries all over the world are presented over 1991 to 2015. Strengths and weaknesses of these methods are assessed and a critical comparison and evaluation of the methods is carried out. The average size of the shadow economy of the 158 countries over 1991 to 2015 is 31.9%. The largest ones are Zimbabwe with 60.6%, and Bolivia with 62.3% of GDP. The lowest ones are Austria with 8.9%, and Switzerland with 7.2%. [Table 18, p.50: Summary statistics of the shadow economy of 158 countries over the period 1991 to 2015]
UN Environment and WTO launch dialogue on healthier environments through trade (WTO)
The two organisations will aim to provide a platform for interested stakeholders from all sectors of society to exchange ideas, showcase successful experiences and improve understanding of how trade can more effectively help bring about inclusive and sustainable development, in line with the Sustainable Development Goals. In this way, the initiative is intended to serve as a springboard for stakeholders around the world to seize the trade, investment and job opportunities resulting from the emerging shift towards more sustainable modes of production and consumption. A high-level event in Geneva later in the year will bring together leaders from the public and private sectors to kick-start this work.
Pathways for Prosperity’s official launch: how can emerging technologies benefit the poorest?
Melinda Gates (co-chair of the Bill & Melinda Gates Foundation), Minister Sri Mulyani Indrawati (minister of finance of Indonesia), and Strive Masiyiwa (founder and executive chairman of Econet), joined forces today to launch Pathways for Prosperity: Commission on Technology and Inclusive Development. The commission will bring together a diverse range of leaders from government, business and academia to provide evidence and analysis, as well as concrete policy recommendations, to help developing countries’ governments navigate this rapidly evolving landscape. The Blavatnik School’s Stefan Dercon, former chief economist of the UK Department for International Development, and Benno Ndulu, former governor of the Central Bank of Tanzania, will lead the commission as its academic directors. [Quartz Africa backgrounder]
Great Lakes Regional Strategic Framework Pillar 2: economic integration, cross border trade, and food and nutrition security (GLRSF)
Extract from the concept note (pdf): Unlike most of Africa’s sub-regions, the GLR suffers cyclical violence that finds its roots mainly in extreme poverty and political conflict. The region has been insecure largely because its constituent units are enmeshed in protracted violent conflicts that spilled over borders, and served as a major impediment to socioeconomic development. International initiatives have attempted to re-establish stability in individual states while also working to support multilateral approaches for regional problem solving. So far these initiatives have yielded very little success. It has become clear that the destiny of the region depends on the quality of efforts of both local and international actors to resurrect functional institutions of political, social and economic governance, regional integration in the sub-region and the commitment to deal with youth unemployment. To break these cycles of violence would require a new holistic approach, which tackles the underlying causes of the conflicts. This new approach entails action at the national, regional and international levels to address legitimate concerns and interests of all the stakeholders in the region. [GLRSF management board meeting: UNCTAD update]
Mauritius-India: Four pillars of the CECPA examined as 3rd round of talks close (GoM)
The Director of Trade Policy, Ministry of Foreign Affairs, Regional Integration and International Trade, Mr N. Boodhoo, underlined that the CECPA will open market access and commercial exchanges for Mauritius and India. Additionally, both delegations examined the prospect of using Mauritius as a hub for Indian companies to reach out to the African continent and of enhancing economic cooperation. Mr Boodhoo highlighted that this third round of discussions was fruitful, particularly with regards to the elaboration of a Joint Study Report, which will be finalised shortly. The next meeting is expected to be held in March 2018 in New Delhi. [Bunkering sector can become an economic pillar for Mauritius, says Minister Gungah]
Britain’s StanChart bails out Zim govt (Zimbabwe Independent)
The Zimbabwean government has committed to paying the $1,2bn arrears to the World Bank by April this year, as the first step towards unlocking fresh funding from multilateral institutions, but still faces a number of hurdles, including a credibility test, before accessing much-needed funds, the Zimbabwe Independent has learnt. The development comes at a time Harare is re-engaging British multinational bank Standard Chartered Plc and other institutions to help raise $1,8bn to clear arrears to international financial institutions for the country to secure $2bn in fresh funding. The clearance of arrears could also result in possible debt treatment by the Paris Club and non-Paris Club bilateral creditors through an IMF financing programme. Officials close to the Lima Plan told the Independent that Zimbabwe will likely present its programme of action at the IMF and World Bank Spring Meetings in Washington, 20-22 April.
Ethiopia: Staff Report for the 2017 Article IV Consultation (IMF)
Growth is expected to stay high in 2017/18, at 8.5 percent, supported by continued recovery from droughts and export expansion as new manufacturing facilities and infrastructure come online – offsetting the potentially dampening impact of restrictive macroeconomic policies. Over the medium term, growth is expected to remain around 8 percent, supported by sustained expansion in exports and investment. The authorities’ policies envisaged under the second Growth and Transformation Plan (GTP II) are expected to underpin domestic private sector development and FDI. The GTP II also envisages allocating significant resources to poverty alleviation and the social safety net, while efforts to strengthen financial inclusion are underway.
Kenya: Govt to raise local revenue to 25% to curb external borrowing (The Star)
Kenya will increase domestic resource mobilisation efforts from 19 to 25% of GDP in the next five years in order to cut on its high public debt. Speaking during the launch of Africa Foresight report compiled by Brookings, African Economic Research Consortium and Kenya Institute for Public Policy Research and Analysis at a Nairobi hotel yesterday, National Treasury cabinet secretary Henry Rotich said the government is going to adopt blended financing to cut external loans. “We are going to intensify domestic revenue collection, seal illicit financial flow gaps and develop investment products for the diaspora population as part of blended finance strategy to minimize reliance on borrowing.” He revealed that the state is in plans to tap into the informal sector to increase its tax bracket.
Kenya: Inter-county trade barriers killing hopes of cheap unga (HIVISASA)
Inter-county trade barriers are ruling out the hopes for cheap flour as numerous levies are passed on to consumers, millers have said. According to millers, counties are charging Sh64 for every bag of maize passing through their jurisdiction hence increasing pressure on the price of the staple. Mombasa-based millers are the worst hit as maize pass through many counties before getting to the port city for milling. Millers said they are working with the Kenya Association of Manufacturers and counties to eliminate the barriers.
China’s rice exports to Africa surge (Reuters)
That rapid growth in sales to African nations is expected to continue in 2018, as buyers there increasingly turn to China as stockpiles are almost depleted in rival supplier Thailand. China in 2017 sold just over 781,000 tonnes of rice to almost 40 African countries including Ivory Coast and Senegal, up from around 74,000 tonnes the year before, data from the General Administration of Customs showed. That accounted for nearly 70% of China’s total shipments of the commodity, versus 19% in 2016. West Africa’s Ivory Coast overtook South Korea to become the top destination for China’s rice in 2017, with total purchases of 309,200 tonnes.
India wants improvement on N$2.3 billion trade with Namibia (New Era)
He said the recorded value of trade, which sometimes reaches $200m annually, could be an understated figure because many goods from India reach Namibia through third countries and vice versa “For example, Namibian rough diamonds arrive in India indirectly and do not get reflected in the bilateral trade figures. The full potential of trade and business ties between our two countries is still to be tapped. There are significant complementarities in the economies of India and Namibia. There is great demand in India for mineral resources with which Namibia is richly endowed.” As part of efforts to expand economic and commercial relations between the two nations, ONGC Videsh Ltd, an Indian company, has made a large investment in Namibia by acquiring a 15% stake in an oil block in Namibia’s offshore – Block 2012A – last year. “This was OVL’s second investment in Namibia. Earlier in 2017, OVL had acquired 30% stake in Namibia’s EPL 37, covering three offshore blocks,” Tuhin noted. India annually sponsors 150 fully-paid scholarships, both long-term and short-term, for training of Namibians in diverse fields.
Pivoting to enhance India’s services exports (Livemint)
Both of India’s key demand areas (mode 1 and mode 4) are unlikely to see any positive momentum in the near future. It’s time to shift gear and focus on mode 2 where enhancing efficiency and boosting services exports depend primarily on domestic measures and not on removing restrictive measures by foreign countries. The fact that reforms in all of these sectors will help national employment goals and benefit domestic consumers as well is, of course, icing on the cake. [The authors, Rajeev Kher and Pralok Gupta are, respectively, a distinguished fellow at RIS and associate professor at the Centre for WTO Studies, IIFT, New Delhi]
Angola-Brazil: President of Angola announces Brazilian funding for infrastructure projects (Macauhub)
Brazil will soon resume lines of credit to Angola, with the priority of covering the sectors of “large public works,” Angolan President João Lourenço said in Davos after a meeting with his Brazilian counterpart Michel Temer. The financing, in undisclosed amounts, as previously will be provided by the National Bank for Economic and Social Development of Brazil, according to the Portugal Digital website. Lourenço pointed out, among the priority projects, infrastructure in the construction, energy and water sectors, mainly hydroelectric dams.
Nigeria can’t rely on rising oil prices, finance minister says (Bloomberg)
Africa’s top oil producer is learning to ignore crude prices, Nigeria’s Finance Minister Kemi Adeosun said. “We’ve gotten to a point where we don’t care,” whether prices will be sustained at the level that they have recently risen to, Adeosun said during an interview in her office in the capital, Abuja. “We’ve been able to balance our budget at $45-$46 per barrel and we’ve got to learn to live comfortably at that level.” [Govt’s revenue drive’ll put pressure on industrialists – MAN]
Ghana: Government to offer tax incentives to 1D1F investors (GhanaWeb)
Deputy Minister of Trade and Industry, Carlos Ahenkorah has said the government is preparing a bill to parliament that will offer tax incentives to investors interested in the ‘One District One Factory’ programme. He said the bill currently awaiting cabinet’s approval is expected to encourage to take advantage of the programme and to draw more investments into the economy. [EPA to boost Ghana’s exports to EU – Ambassador]
At Davos: UN agency launches report spotlighting benefits of investing in better migration data (UN)
The report, entitled More than numbers: how migration data can deliver real-life benefits (pdf) illuminates how investing in migration data can bring huge economic, social and humanitarian benefits. Providing detailed calculations of benefits across a range of policy areas in both developed and developing countries, the report demonstrates clear examples of how better data can help manage migration more effectively. The report also provides guidance to countries interested in realising these benefits and suggests ways in which they could develop their own strategies to improve data on migration.
Today’s Quick Links: Australia, Nigeria’s trade transactions hit N100bn China, Nigeria bilateral trade hits $11.2b Agbiz: Americas remain dominant suppliers in SA chicken market WEF White Paper: The future time for a protein portfolio to meet tomorrow’s demand PIIE analysis of US tyre tariffs: saving few jobs at high cost Ajit Ranade: Why not zero-rate India’s exports? |
Related News
IMF Executive Board 2017 Article IV Consultation with Ethiopia
On January 12, 2018, the Executive Board of the International Monetary Fund concluded the Article IV consultation with the Federal Democratic Republic of Ethiopia.
Ethiopia has recorded annual average GDP growth of about ten percent in the last decade, driven by public investments in agriculture and infrastructure. The poverty rate has fallen from 44 percent in 2000 to 23.5 percent in 2015/16. In 2016/17 GDP growth is estimated at 9 percent, as agriculture rebounded from severe drought conditions in 2015/16. Industrial activity expanded, with continued investments in infrastructure and manufacturing. The current account deficit declined in 2016/17 to 8.2 percent of GDP from 9.1 percent the previous year, reflecting lower drought-related imports and lower public sector capital goods imports. However, export revenues were largely unchanged despite significant volume growth, as global agricultural commodity prices remained low. Foreign direct investment (FDI) growth, was 27.6 percent due to investments in the new industrial parks and privatization inflows. International reserves at end-2016/17 stood at US$3.2 billion (1.8 months of prospective imports cover).
In October 2017, the National Bank of Ethiopia (NBE) devalued the birr by 15 percent relative to the U.S. dollar, thereby reducing overvaluation and enhancing competitiveness. Simultaneously, the NBE increased interest rates and adopted a restrictive stance to minimize adverse effects on inflation – which was 13.6 percent in November 2017. Since October 2016, the Ministry of Finance and Economic Cooperation (MOFEC) implemented further cuts in external borrowing by the government and public enterprises (SOEs), and reduced outstanding non-concessional commercial debt. The general government deficit outturn in 2016/17 was 3.4 percent of GDP (including privatization) and the 2017/18 budget speech announced additional consolidation policies, with the budget deficit projected at 2.5 percent of GDP.
Growth is expected to stay high in 2017/18, at 8.5 percent, supported by continued recovery from droughts and export expansion as new manufacturing facilities and infrastructure come online – offsetting the potentially dampening impact of restrictive macroeconomic policies. Over the medium term, growth is expected to remain around 8 percent, supported by sustained expansion in exports and investment. The authorities’ policies envisaged under the second Growth and Transformation Plan (GTP II) are expected to underpin domestic private sector development and FDI. The GTP II also envisages allocating significant resources to poverty alleviation and the social safety net, while efforts to strengthen financial inclusion are underway.
Staff Report
Outlook and Risks
Output growth is expected to remain high at 8.5 percent in 2017/18, and only slowly decelerate over the medium term. In the short term, ongoing recovery from droughts and the expected pick-up in exports are expected to offset the impact of the restrictive macroeconomic policy stance announced by the authorities. Medium-term real GDP growth is expected to converge to 8 percent, supported by strong private investment, continuing investment in infrastructure, and improving productivity – as FDI and export-oriented industries expand. In the immediate term, inflation is likely to remain above the 8 percent target due to price momentum from earlier months and the pass-through from devaluation. Nevertheless, the announced restrictive monetary and fiscal policy stances should bring inflation back to target in 2018/19.
Export growth is expected to pick up as key supporting projects come online, but the current account deficit will only gradually decline. Exports of goods and services are envisaged to pick up substantially in the medium term, reflecting the completion of key infrastructure (electricity generation and transmission, railway to Djibouti and other logistics, industrial parks) and pay-offs from domestic investment and greenfield FDI. Nevertheless, this pickup is unlikely to reach its full extent immediately: time may be needed for testing, installation and training of newly-hired industrial workers before production facilities can operate at full capacity. Import growth will remain moderate in 2017/18, premised on continued public sector restraint, as announced in the recent budget speech. However, imports will gradually accelerate over the medium term since expanding manufacturing activities will entail substantial importation of inputs until alternative local sourcing, where feasible, develops. Thus, the current account deficit is projected to remain wide and decline only gradually.
Medium-term policies will remain framed by the GTP II strategic objectives. The GTP II allocates a major role to the public sector for public goods provision and anti-poverty and developmental programs. However, the strategy emphasizes private sector development and FDI, particularly in export-oriented manufacturing, through wide-ranging structural reforms and infrastructure improvements.
The external debt and debt service burden pose the main identifiable risk to macroeconomic stability (Annex I and Debt Sustainability Analysis, DSA). In particular, liabilities acquired in past years coupled with export supply delays have resulted in a deterioration of DSA indicators, warranting a reclassification to high risk of debt distress. Under the baseline, both the net present value (NPV) of public and publicly guaranteed external debt and debt service ratios relative to exports breach the standard cross-country thresholds calling for reclassification to high risk of debt distress. Current debt service is becoming significant: Ethiopia faces about US$1.5 billion in external public debt service payments coming due during 2017/18 and significant obligations over the medium term. Given thin reserves (Annex II) and uncertainty in the timing and profile of the export pick-up, adverse shocks could pose debt servicing risks. This in turn, could force an undesirably abrupt import compression and undermine confidence, potentially compromising, at least temporarily, Ethiopia’s successful growth trajectory. In addition, further delays in the export take-off could also put growth projections at risk. The authorities have adopted appropriate decisive policy initiatives to forestall the emergence of debt stress episodes. These include restrictive public sector external borrowing policies, devaluation of the birr, a tight policy stance to increase domestic savings and contain demand spillovers through the balance of payments, and fast-track adoption of initiatives to mobilize private sector resources for infrastructure and public goods provision. Ethiopia remains vulnerable to climate-related risks, including droughts. The authorities have strengthened their safety net and humanitarian response mechanisms, which have been commended by donors, and are developing plans for preventive mitigation with assistance from the WB.
Policy Discussions
There was agreement that after more than a decade of sustained public sector-led growth, the lead needs to be transferred now to the private sector – as envisaged in the authorities’ GTP II strategy. Should the public sector continue undertaking on its own a broad array of public projects, even if highly productive in the long term, it would risk aggravating external imbalances in the short term. These imbalances in turn would undermine the very objective of the public projects: the development of a vibrant private sector and dynamic markets able to lead the economy into its next growth phase. Thus, the timing and sequence of public investment and other public sector activities needs to be reprofiled to a pace commensurate with actual export revenue increases, and with progress in mobilizing domestic savings.
In 2016/17, the authorities appropriately curbed accumulation of external debt, but the protracted export supply response to past investment requires additional actions. Thus, the more restrictive macroeconomic policy stance adopted by the authorities, including after the birr devaluation, is appropriate. Staff also supports the reforms in tax administration and financial management of SOEs – which will enhance domestic resources and their effective use. The envisaged private sector development reforms, such as the roll-out of a financial market and improvements in the business climate should be accelerated. Use of PPPs (with adequate safeguards), private concessions, and privatizations, as envisaged by the authorities, will preserve public resources while helping private sector development.
Fiscal Policy
Box 2. Domestic Revenue Mobilization in Ethiopia
Ethiopia has a low tax ratio compared to other low-income countries. Administrative bottlenecks and weak tax compliance have been the main obstacles to revenue administration. Given the current low collection rate, achieving the target of 17.2 percent of GDP by 2019/20 will be challenging. Some countries in the region have successfully implemented reform programs aimed at improving tax compliance and strengthening effectiveness and efficiency in revenue administration (e.g. Mozambique, Congo Republic, Cabo Verde and Liberia). Reforms have focused on strengthening core operational processes, improving organizational structures, better use of data and information technology, and enhanced human resource management.
The authorities are pursuing an ambitious revenue administration reform agenda. The income tax and tax administration laws approved in 2016 aimed at improving tax collection, broadening the tax base and setting up a more efficient tax system overall. The authorities designed the strategy in collaboration with development partners and established a Tax Policy Directorate under the MOFEC. Also, the Ethiopian Revenue and Customs Authority is implementing strategic measures in human resources, data management, large-taxpayers’ compliance, tax auditing, arrears, automation, and public outreach.
Supporting the Emerging Private Sector
Efforts to spur industrialization are showing positive results. The strategic orientation of industrialization policy – a focus on labor intensive light manufacturing such as in leather, apparel, textiles, agro-processing and electricity – capitalizes on Ethiopia’s competitive advantages. This is buttressed by the promotion of industrial parks, which circumvent business climate impediments through simplified procedures, tax advantages, and easy access to financial services. Wider reforms aim at addressing other bottlenecks, most notably power supply and transport links. In this regard, the imminent start of operations of key projects such as the railway to Djibouti and transmission lines from Gibe III are welcome developments. Staff encouraged the authorities to expedite the process of World Trade Organization (WTO) accession to enhance export prospects.
Other reforms to the business climate are necessary to elicit increased investment. Businesses consider foreign exchange shortages and onerous tax administration and licensing requirements the main impediments to investment. The package of measures around the October 2017 birr devaluation discussed above will help in this regard. The authorities’ commitment to improving key business environment rankings (e.g., WB’s Doing Business, World Economic Forum’s Competitiveness Index) is a positive step. The Financial Inclusion Strategy has the potential to ease the cost of doing business and support domestic investment. The authorities have intensified anticorruption initiatives, which resulted in a number of high-profile arrests and legal prosecutions. Progress in strengthening the anti-corruption regime will also contribute to improve the investment environment.
New PPP legislation, with the appropriate fiscal safeguards, can help private sector development and fund public infrastructure. The Council of Ministers recently endorsed PPP legislation, soon to be approved by parliament. The creation of a PPP Directorate within MOFEC tasked with the centralized management and oversight of PPPs is welcome. Staff encouraged the authorities to work with development partners on the implementation of a PPP framework that strikes the appropriate balance between eliciting private participation and minimizing fiscal risks.
Ethiopia is leveraging participation in the G20’s Compact with Africa to make progress on reforms and attract FDI. The authorities have integrated their strategic goals, as outlined in the GTP II, with policy commitments aimed at maintaining macroeconomic stability, strengthening domestic revenue mobilization, upgrading public investment management, and improving the business climate.
Annex II. External Sector Assessment
Based on data as at June 2017, the external position was assessed to be moderately weaker than the level consistent with medium-term fundamentals and desirable policies. The exchange rate was found to be overvalued by about 20 percent, while international reserves were found to be below modelbased optimal benchmarks. To address external imbalances and strengthen competitiveness, the authorities devalued the currency and tightened monetary policy in October 2017. The magnitude of these changes likely largely addressed the estimated currency overvaluation. However, the final impact will depend on the pass-through of exchange rate changes into domestic prices. The tight monetary stance should help preserve a significant part of the competitiveness gains, support net exports and strengthen foreign reserves.
Until the devaluation of the exchange rate in October 2017, the National Bank of Ethiopia’s framework on managing its exchange rate had remained unchanged since the 2016 Article IV Consultation. The official exchange rate against the U.S. dollar depreciated by 5.8 percent in 2016/17, similar to the 6 percent depreciation observed in 2015/16. Data on the parallel market rate also showed a widening of the margin. On a trade-weighted basis, the birr depreciated by a smaller magnitude, 2.8 percent in 2016/17, reflecting the strengthening of the U.S. dollar against other currencies which partly offset the depreciation in the bilateral rate. As a result of this and Ethiopia’s relatively high inflation rate relative to its trade partners, the real effective exchange rate appreciated by 3.3 percent over the same period.
Since the staff mission took place, the NBE has taken significant actions to address external imbalances. The birr was devalued by 15 percent against the U.S. dollar in October 2017. Also, to contain inflationary pressures, the NBE has tightened monetary policy. The floor on deposit rates was raised from 5 to 7 percent, while the NBE’s reserve money target was lowered from 22 percent to 16 percent. Staff expects that while some pass through from the exchange rate to domestic prices will occur, the tightening of policies will help preserve a significant part of the gains in competitiveness and thus reduce the overvaluation going forward.
Before taking the devaluation into account, the real exchange rate was higher than warranted by productivity levels. Some of the observed real appreciation could arise in equilibrium as a result of Ethiopia’s strong per capita GDP growth (an indicator of productivity growth) due to the Balassa-Samuelson-Penn effect. However, even when taking this effect into account, the real exchange rate in 2016 was elevated in a cross-country context. Staff used a variant of the approach in Rodrik (2009), and fitted a log-linear model of real exchange rates against per capita GDP (both measured relative to the annual sample average, and with time dummies) in a large sample of countries for 2000-2016. Fuel and commodity exporters as well as small and micro-states were excluded from the sample. Comparing the actual real exchange rate with the level estimated by the fitted curve, the birr was found to be overvalued by 20.8 percent in 2016. This is smaller than the 36 percent estimated using Rodrik’s original methodology (which provided a poorer statistical fit) for 2015 in the last staff report.
The current account model of the Fund’s EBA-lite methodology pointed to a similar magnitude of overvaluation of around 22 percent in 2016/17 – thus, also before the recent devaluation. The current account deficit for 2016/17 was 8.2 percent of GDP, whereas the fitted current account deficit – consistent with Ethiopia’s economic and demographic fundamentals – is 5.1 percent, a gap of 3.1 percentage points. Decomposing this gap into a policy gap (the contribution of policies to the divergence), and the norm (the residual, including cyclical factors), we find that policies had reduced the gap by 1.3 percentage points due to a private credit-to-GDP ratio below the long-run level, though this is partly offset by the lower-than-adequate level of international reserves. The other policy variables – the fiscal deficit and degree of capital and financial account openness – were near their assumed long-run values and therefore broadly neutral on the gap. Once imports arising from public sector-driven investment were excluded, the remaining gap amounted to 0.7 percentage point. Applying the updated export and import elasticities in the current account EBA-lite template, we derived an overvaluation of 21.9 percent for 2016/17, lower than the 33.2 percent in the last staff report.
The October 2017 devaluation likely reduced the estimated overvaluation substantially. The immediate impact of the devaluation was a commensurate depreciation of the real exchange rate of around 13 percent (measured as USD per birr), which brought the estimated overvaluation to around 7 percent. However, the full final impact will depend on the magnitude of the pass-through effects of the devaluation on domestic inflation. Steadfast implementation of the strong monetary policy response announced by the NBE would help contain inflation after an initial increase and ensure that the gains to competitiveness are largely preserved. Subsequently, the NBE should also stand ready to adopt a more flexible exchange rate determination to ensure that inflation differentials vis-à-vis major trade partners and fluctuations of the USD against trading partners’ currencies (which are unrelated to Ethiopia’s economic conditions) do not erode the regained competitiveness.
Foreign reserves have declined in 2016/17. The National Bank of Ethiopia received an inflow of US$1 billion from an official bilateral creditor at the end of 2015, which was mainly used to finance imports, primarily foodstuffs, to alleviate the adverse impact of drought. As at March 2017, the level of reserves stood at US$3.2 billion, sufficient to finance 1.8 months of prospective imports of goods and services, down from 2.1 months in June 2016. According to the NBE’s own measure, reserves amounted to 2.5 months at the end of June 2017.
Balance of payments developments could put pressure on international reserves. Data for the H1 2016/17 showed a narrowing of the external current account deficit on account of a decline in imports of goods and non-factor services that more than offset lower private transfers. Current projections suggest the deficit will remain large at 8.2 percent of GDP in 2016/17. Given the central bank’s policy of smooth and predictable depreciation at about 6 percent annually, pressures on international reserves may emerge. Shortages of foreign exchange have persisted. The unofficial (parallel) exchange rate, previously published by the NBE, is no longer being disclosed publicly. However, based on the NBE’s latest surveys, the average parallel market exchange rate for June 2017 was 18.2 percent more depreciated than the average official exchange rate.
Evaluated using data for June 2017, Ethiopia’s foreign reserves are below model-based optimal benchmarks. While the reserves-to-broad money ratio shows reasonable coverage around 10-20 percent, other indicators are raise concerns. A formal reserve adequacy assessment based on a cost-benefit analysis for a credit-constrained low income country gives a range of estimates for adequate reserve levels, depending on the assumptions on the costs of maintaining reserves. The model evaluates shocks in external demand, terms of trade, foreign direct investment and aid flows, based on an updated panel regression. The model also assesses reserve adequacy based on the exchange rate regime, with a fixed rate regime calling for higher reserves. Ethiopia maintains a crawllike arrangement,6 with the authorities aiming for a smooth depreciation of the birr against the U.S. dollar. Therefore, the model’s assessment for a country with a fixed exchange rate suggests that the optimal reserve coverage should lie between 5.8 and 8.9 months of prospective imports for plausible costs of reserves (proxied here by the range of yields observed on Ethiopia’s sovereign 10-year Eurobond between July 2015 to June 2017). In the floating rate case, adequate reserves are assessed as between 2.1 to 2.8 months. The model results underscore the need for further reserve accumulation.
Debt Sustainability Analysis
Stagnant exports in 2016/17, due to a weak external environment and delays in completing key export-oriented projects, and the maturing of non-concessional borrowing contracted in the last 5 years has resulted in a deterioration of the 2017 Debt Sustainability Analysis (DSA) indicators relative to 2016. As in the 2016 DSA, the net present value of external debt-to-exports (PVDE) breaches the threshold in the baseline. In addition, there is now a breach of the debt service-to-exports (DSE) indicator. That said, there is no breach of the debt service-to-exports-plus-remittances indicator. In 2016/17 there was also a decline in external reserves, and widespread foreign exchange shortages. As a result, the risk of external debt distress is now assessed as “high”.
After the 2016 DSA discussions, and as exports underperformed, the authorities took decisive remedial actions consistent with staff advice. They curtailed import-intensive public projects to reduce external public borrowing and keep non-concessional borrowing (NCB) within the 2016 DSA envelope. They introduced strict control mechanisms on NCB by government and state-owned enterprises which resulted in the stabilization of the PV of external debt. The 2017/18 budget speech reaffirmed this restrictive fiscal stance. These policies were crucial in narrowing the external current account deficit by one percentage point of GDP to 8.2 percent in 2016/17 despite weak exports. In October 2017, following the 2017 Article IV Consultation and DSA discussions, the authorities devalued the birr by 15 percent and adopted a restrictive monetary stance to further reduce external imbalances and gain competitiveness.
With steadfast implementation of the announced policies, and the expected export take-off, risks are projected to diminish. However, policy slippages or further delays in export supply would keep risks elevated for an extended period. On the upside, faster-than-projected ramp up of exports – driven by recently completed projects – would strengthen debt sustainability. The projected baseline path of total public sector debt (external plus domestic) does not result in additional risks beyond those discussed for the external debt.
Background and recent developments
Growth in 2016/17 is estimated to have been strong, at 9 percent, sustained by a recovery in agriculture and expansion in industry. The re-emergence of drought in the pastoral regions in the south and east did not halt the recovery: their GDP contribution is small, government interventions were effective, and substantial past investments have enhanced the productivity and resilience of agriculture. Exports of goods and services rose by 2.9 percent in 2016/17, underperforming expectations, as merchandise exports were nearly flat during the year. On the other hand, imports fell by 4.8 percent in 2016/17 due to lower imports of food and capital goods imported by the public sector. Thus, the current account deficit narrowed significantly to 8.2 percent of GDP (from 9.1 percent in 2015/16).
The main sources of external financing in 2016/17 were foreign direct investment (FDI), and public sector borrowing, mainly in the form of project loans, largely concessional. Net FDI increased significantly from US$4.2 billion in 2015/16 to US$4.9 billion in 2016/17, driven by the newly-opened industrial parks. In addition, a stake in the National Tobacco Company, the state-owned tobacco monopoly, was sold to foreign investors during the year. New public external loans signed in 2016/17 (including loans not guaranteed by the government) amounted to US$2.8 billion. About half of the new commitments were concessional loans from multilateral development agencies and institutions. Of the remainder, close to half were at below-market rates with a roughly 30 percent grant element from EXIM Bank of China. Some of these loans were used together with IDA resources for the financing of the water and sanitation infrastructure as well as for the rehabilitation of the power infrastructure. New loan commitments from private creditors on commercial creditors were small, amounting to US$97.3 million, and used for power rehabilitation projects in the power and transmission sector.
Outlook and key assumptions
The revised macroeconomic assumptions incorporate the lower-than-expected export performance in 2016/17. The main fiscal assumptions assume a sustained fiscal consolidation effort, based on announced policies and the government’s record of prudent budget implementation. However, export performance in the immediate term were revised downward to reflect the more gradual improvement in exports in light of recent data. The export performance projections incorporate the positive impact from the new industrial parks, especially the Hawassa Industrial Park where activities have started; the new railway line to Djibouti which has already been completed and is pending the finalization of operational and safety test runs; and hydropower facilities and electricity transmission lines gradually coming online in 2017 and over subsequent years. The projections also build in gains in competitiveness due to the devaluation of the birr in October 2017. However, this medium-term outlook faces downside risks emanating from potential further delays in export-supporting infrastructure, slower-than-expected progress in implementing structural reforms to elicit investment, and shocks to the external market environment faced by Ethiopia’s exports. Upside risks include a faster-than-projected recovery in exports – driven by faster ramp up of production in industrial parks or early completion of the power transmission lines to facilitate electricity exports to Kenya.
The DSA assumes the amount of NCB disbursed over the medium term will decline significantly between 2017/18 and 2021/22. Actual NCB disbursed in 2016/17 (including disbursements to EAL) was around US$1.3 billion, consistent with what was assumed in the 2016 DSA. Going forward, the DSA assumes the level of non-concessional financing, mainly from official bilateral lenders at below-market rates, will decline substantially and amount to between US$300-650 million annually until 2021/22. The DSA also incorporates US$1.8 billion in concessional lending from donors in 2017/18, the bulk of which (US$1.3 billion) is from IDA. Going forward, concessional lending will remain stable at US$1.5-1.8 billion annually until 2021/22 on the back of new IDA commitments before declining gradually as Ethiopia gets closer to graduating to middle-income status and relying more on IBRD and other sources of financing. As a result, new disbursements of medium- and long-term external borrowing is assumed to remain largely concessional, with an average interest rate of 1.3 percent, maturity of 30.3 years and grace period of 5.7 years. In considering the stress tests, the DSA assumes that the marginal debt required to cover any financing gaps that may occur under the stress scenario would be evenly split between domestic and external borrowing, maintaining the current split for debt outstanding.
Ethiopia’s capacity to carry debt is assessed as “medium”. The 3-year average of the Country Policy and Institutional Assessment Ratings (CPIA) scores for 2014-16, which is used to classify countries based on their debt-carrying capacity, stood at 3.48, within the 3.25-3.75 range for medium capacity countries. The score for 2016 was 3.47.
Related News
New Global Commission to examine how emerging technologies can benefit the poorest
Oxford University’s Blavatnik School of Government and the Bill & Melinda Gates Foundation launch “Pathways for Prosperity” to explore the impact of rapid technological change on developing countries
Melinda Gates, co-chair of the Bill & Melinda Gates Foundation; Minister Sri Mulyani Indrawati, minister of finance of Indonesia; and Strive Masiyiwa, founder and executive chairman of Econet, joined forces on Thursday, 25 January 2018 to launch Pathways for Prosperity: Commission on Technology and Inclusive Development.
The launch, which took place at the Nairobi innovation space iHub, coincided with the World Economic Forum in Davos, Switzerland, where global leaders gathered to discuss the importance of creating a “shared future in a fractured world.” The commission emphasized the need for the global conversation to include the role of technology in driving progress and inclusion in developing countries.
The new commission, led by the Blavatnik School of Government at Oxford University, brings together a diverse range of leaders from government, business and academia to focus on the impact on developing countries of frontier technologies such as automation, artificial intelligence, 3D printing, energy generation and storage, and biotechnology. The commission will provide evidence and analysis, along with concrete policy recommendations, to help developing country governments navigate this rapidly evolving landscape.
“As an entrepreneur, technology underpins everything I do, and I am fascinated by what is coming down the line. But I know that there are also potential pitfalls and risks,” said Strive Masiyiwa. “This commission gives us a way of working together to understand how to harness technology for good, use it to enhance opportunities for all and drive inclusive growth.”
The Blavatnik School’s Stefan Dercon, former chief economist of the UK Department for International Development (DfID), and Benno Ndulu, former governor of the Central Bank of Tanzania, will lead the commission as its academic directors. Other commissioners include Kamal Bhattacharya, CIO of Safaricom; Shanta Devarajan, senior director for development economics at the World Bank; Minister Sigrid Kaag, minister for foreign trade and development cooperation of the Netherlands; Nadiem Makarim, founder and CEO of Go-Jek; Maria Ramos, CEO of Barclays Africa Group; Daniela Rus, director of the Computer Science and Artificial Intelligence Laboratory at MIT; and Shivani Siroya, founder and CEO of Tala.
“Innovation can help people transform their lives, but only if they have access to it,” said Melinda Gates. “This commission brings together diverse thinkers and doers committed to ensuring that everyone, no matter how rich or poor, can take advantage of technological innovation.”
While some technological advancements may disrupt or block traditional routes out of poverty by making certain jobs obsolete, some new technologies could offer an alternative roadmap to inclusive development. For instance, the widespread use of digital financial services in Kenya has enabled 75 percent of the people over 15 years old to have access to bank accounts (up from 10 percent in 2005), and mobile financial services such as M-Pesa have lifted 2 percent of the population out of poverty.
“We live in exciting times. The pace and scale of technological change offer big challenges and significant opportunities for developing countries,” said Sri Mulyani Indrawati. “Technology can strengthen the relationship between citizens and governments, fuelled by transparency and access to information. New tools could transform the way we deliver public services and promote inclusive growth. To chart the right path, policymakers need to be equipped with evidence-based analysis on the merits and demerits of these technologies.”
Thursday’s launch, a panel discussion moderated by Larry Madowo, a Kenyan journalist and news anchor, was the first of several events the commission will hold around the world over the next two years. Each meeting will focus on different thematic issues and countries, with the common aim of helping governments in developing countries take advantage of the opportunities technology brings.
“The world has made incredible progress over the past 25 years, with the number of people living in extreme poverty being halved to about 800 million,” said Stefan Dercon. “Whether this positive trend continues depends in large part on how we respond to the new forces shaping our world, specifically rapid technological change.”
Related News
In Africa’s Great Lakes region, UNCTAD helps build peace through cross-border trade
UNCTAD Deputy Secretary General Isabelle Durant joins UN partners to pledge political and logistical support to formerly warring central African countries.
Cross-border trade between nations in the Great Lakes region is crucial to sustaining peace and security in central Africa, UNCTAD Deputy Secretary-General Isabelle Durant said at a meeting in Nairobi, Kenya, on 23 January.
Ms. Durant was representing UNCTAD at a management board meeting of the United Nations Great Lakes Regional Strategic Framework which helps build peaceful links between Burundi, the Democratic Republic of the Congo, Rwanda, Tanzania and Uganda after years of unrest and instability.
“With our trade and development contribution, we must join forces and support such a beautiful, diverse, fertile area, where, unfortunately, political crises and severe conflicts continue to shake the region with unprecedent consequences for its population,” Ms. Durant said.
Conflicts in the region have triggered the displacement of millions of people within countries and across borders, and extreme violence and poverty is experienced daily, especially by women and children.
“Many of the challenges are regional and demand cross-border collaborative solutions,” Ms Durant added.
Among activities currently underway is returning hundreds of thousands of refugees to Burundi from Tanzania. More than 400,000 people fled Burundi in 2015-2017.
Speaking in this week, Melina Nathan, Peace and Development Advisor, United Nations Development Programme, said: “Thankfully we have women peacebuilders, as well as the local committees that they have helped put in place, to finding peaceful ways of mediating and finding solutions to these challenges.”
Transport and logistics
UNCTAD assistance can help governments increase opportunities for people living near regional borders such as smallholder farmers and other traders by improving rural agriculture transport and logistics services.
“Improvements in rural logistics help farmers to harvest and market crops more efficiently; and by improving rural transport access, they serve to expand the markets for agricultural products and lower transport costs,” Ms. Durant said.
Developing rural transport and logistics networks can result in effective and efficient transport and distribution channels between national and regional markets while improving the quality and value of agricultural products.
Among other things, UNCTAD provides support to the Economic Community of the Great Lakes Countries (CEPGL) on systems and processes to address trade and non-trade barriers.
UNCTAD also contributes to UN efforts to:
- Promote economic integration
- Promote regional private sector access to finance and other support services
- Promote border communities’ access to agricultural technology
- Provide capacity support for increased agricultural productivity and output
- Build regional resilience to climate-related shocks and conditions
Aligning the work of many United Nations bodies under the aegis of Said Djinnit, Special Envoy of the Secretary-General for the Great Lakes Region, the United Nations Great Lakes Regional Strategic Framework has taken a development approach to normalizing relations between the neighbouring states since it was formulated in 2015–2016.
UNCTAD is the latest agency to participate in the regional trust fund set up to support the framework and will use its leading role in the UN Inter-Agency Cluster on Trade and Productive Capacity to help the framework team to further broaden their work on economic development and trade.
Background
Throughout the past decades, political and security developments in the African Great Lakes region, such as the continued activities of illegal armed groups as well as electoral crises, have provided significant challenges to civilians, communities, and governments. As a result the border areas between Burundi, the Democratic Republic of Congo (DRC), Rwanda, Tanzania and Uganda remain the main theatre for instability in the region.
Such instability has resulted in tensions within and between communities, human rights violations and abuses, new and continuing cross-border movements of displaced persons, and challenges to cross-border trade. The causes and consequences of the challenges facing the Great Lakes region are regional in nature and thus need to be addressed in a comprehensive manner by ensuring a concerted and coordinated approach across state boundaries.
The UN Great Lakes Regional Strategic Framework (UN GLRSF) encapsulates a development approach to the peace and security issues in the region and builds on a regional conflict and socio-economic analysis. The analyses speak to the vital importance of addressing cross-border issues linked to the border of the eastern Democratic Republic of the Congo. The root causes of conflict in one country are frequently to be found in a neighbouring one, with events in one country often triggering reactions and repercussions in another. There are huge flows of natural resources across national boundaries and strong flows of migrants and refugees, as well as fugitives from international justice.
The conflicts feed off and reinforce each other. The success of national-level initiatives will be enhanced when they are implemented as part of a regional focus, with simultaneous and/or complementary action across the countries involved. The trends and patterns of conflict demonstrate the centrality of border areas as the main theatres where risks manifest themselves and proliferate. However, opportunities for peacebuilding also exist in these border areas, which can be tapped to enable the building of confidence, creation of trust and establishment of the momentum for peaceful settlement of conflicts, thereby contributing to the successful implementation of the Peace, Security and Cooperation Framework.
Within the theory of change underlying the Regional Strategic Framework of the United Nations country teams six interconnected building blocks or pillars of the regional approaches needed to contribute to the long-term goal of peace and security in the Great Lakes region are established, based on the Peace, Security and Cooperation Framework:
-
Sustainable management of natural resources
-
Economic integration, cross-border trade and food and nutrition security
-
Mobility
-
Youth and adolescents
-
Gender and sexual and gender-based violence
-
Justice and conflict prevention
Progress achieved under the six priority pillars of regional intervention should facilitate a powerful advance towards sustainable peace. In the present situation in the Great Lakes region, however, we can expect that some of the changes being pursued will be resisted.
International criminal networks, which are profiting from the illegal trade in natural resources, will put up a strong show of resistance. Those accused of human rights violations will use local groups for protection and to sabotage the justice systems.
Yet, it is essential to move ahead if we are to lay the groundwork for recovery and strengthen the moderate centre which supports peace. Success depends on the capacity to support goodwill and on the tangible follow-through on their commitment of the countries in the region.
The Great Lakes Regional Strategic Framework has been elaborated in response to the often-stated needs and priorities of governments, leaders and communities. It is intended to serve as a reference document, underpinned by the conviction that coherent action at the regional level, focusing on the eastern Democratic Republic of the Congo border area, and early successes, will demonstrate, particularly at this moment of fragility, that it is possible to progress along a development path. The Regional Strategic Framework will build the confidence necessary for key countries to fulfil their commitments.
Great Lakes Regional Strategic Framework
Pillar 2: Economic integration, cross-border trade and food and nutrition security
There is inadequacy in respect of economic cooperation and regulation, which could support sustainable exploitation of natural resources for the benefit of local communities. Competition between SADC and EAC needs to be shifted to a positive cooperation trajectory through the reinvigoration of COMESA and the CEPGL.
Through technical support provided to COMESA and CEPGL, issues associated with some of the building blocks needed to bridge divides will be addressed. The potentially positive role of the private sector in the region will be harnessed through a process of nutrition security partnering with key actors, ensuring appropriate facilitation of cross-border investment and the establishment of growth poles.
The issue of the food and nutrition security of border communities in the Great Lakes region needs to be addressed through focusing on enabling small farmers and herders to access modern technologies and sustainable agricultural practices for increased productivity and the building of resilience to climate-related shocks and conditions.
Three pirority regional interventions have been identified with the aim of achieving increased trade and improved food and nutrition security among border communities in the countries in the Great Lakes region:
-
Support to the Permanent Executive Secretariat of the Economic Community of the Great Lakes Countries on systems and processes to address trade and non-trade barriers and promote economic integration amongst countries in the Great Lakes Region
-
Promotion of cross-border private sector initiatives and access to investments
-
Promotion of border communities’ access to agricultural technology and provide capacity support for increased agricultural productivity and output, and build regional resilience to climate-related shocks and conditions
Related News
Nigeria can’t rely on rising oil prices, Minister says
Africa’s top oil producer is learning to ignore crude prices, Nigeria’s Finance Minister Kemi Adeosun said.
“We’ve gotten to a point where we don’t care,” whether prices will be sustained at the level that they have recently risen to, Adeosun said during an interview in her office in the capital, Abuja. “We’ve been able to balance our budget at $45-$46 per barrel and we’ve got to learn to live comfortably at that level.”
Brent crude has rallied almost 60 percent since the middle of last year as OPEC and allied producing nations stick to agreed output curbs. The global benchmark traded at about $70.25 per barrel in London on Friday morning.
The OPEC member is recovering from a contraction of its economy in 2016, the first in a quarter century, after a decline in oil prices and in the nation’s output due to unrest in the key Niger river delta. The country can’t afford to rely so much on the commodity anymore, Adeosun said.
Limit Exposure
“Yes, it’s at $66-$67 per barrel today, but we’ve been here before, right?” she said Tuesday. “And we can’t afford to be exposed to that, so I really try very hard to ignore the oil price.”
President Muhammadu Buhari submitted in December a 2018 budget based on projected oil output, including condensates, of 2.3 million barrels a day at $45 per barrel.
Nigeria, which derives about two thirds of its revenue from crude, is seeking to diversify its economy. The government’s efforts include pushing for agricultural expansion to reduce a heavy food-import bill and boost exports.
It is also seeking to plug an infrastructure gap of $25 billion, Adeosun said. “The infrastructure gap is significant, it is far bigger than anybody had imagined, in power, in roads, in rail.”
Nigeria’s foreign-exchange reserves have been boosted by the rise in crude prices, combined with an increase of oil shipments and improved investor confidence. Barring any shock, the Central Bank of Nigeria could build its reserves to $60 billion in the next 12 to 18 months, from $40 billion currently, Governor Godwin Emefiele said in an interview Wednesday.