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tralac’s Daily News Selection
What to look forward to, policy-wise, at the January 2018 AU Summit – which started today: a series of tweets by AUC Deputy Chairperson @AU_KwesiQuartey
Call for applications: COMESA Secretary General
Call for papers: 2018 Africa meeting of the Econometric Society (12-14 July, Cotonou)
COMESA trade policy updates:
(i) COMESA holds first Digital FTA workshop. Sixteen COMESA Member States participated in a two-day workshop (18-19 January, Mahe) on the Digital Free Trade Area in which they agreed that the concept is about empowering traders to do cross-border trade using ICT as a tool to minimise physical barriers. Director for Information Technology at the COMESA Secretariat, Ms Lanka Dorby, made a presentation on the approved DFTA Action plan, which includes the establishment of the COMESA Online Market. COMESA’s Director of Trade and Customs, Dr Francis Mangeni said “Trade facilitation is a key priority for Africa, and a digital FTA is a practical way of increasing intra-regional trade and creating wealth.”
The COMESA Digital Free Trade Area is defined into three segments, E-Trade, E-Logistics and E-Legislation. The DFTA will require technological and legal innovations in the fields of intellectual property, competition, data privacy and protection, cyber security and a whole range of other innovative laws. Member States sought clarification on who will lead the initiative in the implementation of the COMESA Online Market. The Secretariat informed the workshop that it is the responsibility of the Member States to decide the best approach for implementing the COMESA Online Market for example through a Public Private Partnership or through a government initiative. The Secretariat further informed the workshop that the design, rules and guidelines for implementing the online market will be developed and shared with the Member States. [COMESA: Development of e-certificate of origin on course]
(ii) Digital mobile app working well in pilot phase. The mobile application developed by COMESA Secretariat to capture small scale trade data and enhance e-business, now being piloted in the DRC, Rwanda and Uganda is working well. The mobile application will be used by the Trade Information Desk Officers at border points in the COMESA region to collect informal cross border trade performance data and then transfer the data to the Secretariat. [RCTG Carnet to launch in Djibouti Corridor by March]
Africa’s greatest economic opportunity: trading with itself (WEF)
South Africa is in the unique position of holding membership to several multilateral fora. As we take over the BRICS presidency for 2018 and as the only permanent African member of the G20, it is our responsibility to champion the case for Africa and its agenda by being at the nexus of discussions with our international counterparts. Moreover, Africa’s significance to our own economic future cannot be underestimated. We can reap the rewards of Africa’s tandem approach to growth. South Africa’s track record in doing international business makes it the natural access point into Africa for the rest of the world. But we must have a clear strategy in our approach to Africa to ensure we also become part of the continent’s growth story. South Africa must continue to cultivate its role in facilitating positive changes for Africa as this is where our own long-term economic success lies. [The author, Kingsley Makhubela, is Brand South Africa CEO]
Tanzania: Export trade needs to be revisited and diversified (The Citizen)
According to the Bank of Tanzania’s Economic and Operations Annual Report for 2016/2017 (pdf) released last week, gold accounted for 98% of the country’s exports to Switzerland in 2016, valued at $753m. Also, exports to Switzerland accounted for 16.2% of all the goods which Tanzania sold abroad in 2016. Other major buyers from Tanzania that year included India (14.8%), South Africa (13%), China (7.5%), Kenya (6.6%), DR Congo (6.2%) and Belgium (6.0%).
Zimbabwe trade and investment policy updates:
(i) President seeks to woo lenders by paying loan arrears. Zimbabwe is committed to repaying arrears to external lenders so that it can resume support programs with institutions such as the International Monetary Fund and end years of isolation from global capital markets, said the country’s president. Emmerson Mnangagwa, the 75-year-old who took over as leader of the southern African country in November after the military pressured Robert Mugabe into resigning, said one of his priorities is reintegrating his country into the global financial system. The economy has halved in size since 2000, credit lines from most lenders have been withdrawn and infrastructure has crumbled. [Investors slow to engage Zim]
(ii) Investment guidelines and opportunities. President Emmerson Mnangagwa has launched the Investment Guidelines and Opportunities in Zimbabwe document that sets out the country’s new economic order aimed at improving the well-being of Zimbabweans. The President launched the guidelines at a preparatory meeting for the World Economic Forum meeting to be held in Davos, Switzerland this week. In his foreword to the policy he said the policy also acknowledged Zimbabwe’s historical realities.
Fitch revises Egypt outlook to positive (Ahram)
Fitch Ratings has revised the outlook on Egypt’s long-term foreign currency Issuer Default Rating to positive from stable and affirmed the IDR at B. The revision comes on the back of progress on the government’s commitment to reform in 2017. Egypt embarked on an IMF-backed reform programme in 2016 with the support of a $12bn three-year Extended Fund Facility. “Fiscal consolidation is proceeding, although it will require a multi-year effort to reverse the increase in general government debt/GDP witnessed since the Arab Spring uprisings,” Fitch said in a statement. “We forecast the budget sector deficit to narrow again in fiscal year 2018, to 9.7%” the agency said, adding that it expects Egypt to achieve a primary surplus in fiscal year 2019 for the first time in more than 15 years. Primary surplus refers to government revenues minus expenditure before debt service. [Egypt targeting 8-10 flotations of state firms over 18 months]
Nigeria makes formal request to host African Development Bank’s regional hub (AfDB)
“I will like to put on record Nigeria’s strong desire and demand to host the regional hub of the African Development Bank,” Adeosun said. Noting that the Bank had made Nigeria the first regional member country to host a purpose built and Bank-owned office complex, she said the complex would boost Nigeria’s efforts and plans for regional integration in the West African Region. The improved relationship between the Bank and Nigeria has led to an all-time high portfolio level of about $6bn spread over 73 projects across sectors, she said. The Minister commended the leadership of the Bank for providing a $1bn budget loan support during the period of economic recession, of which $600m had been drawn.
Ouagadougou Declaration (CIPE)
CIPE, along with World Movement for Democracy, the US Chamber of Commerce’s Africa Business Center and the Burkina Faso government jointly launched this initiative the centerpiece of which is increasing the relationship between the private sector, civil society, and policy makers in democratic governance throughout Africa. The importance of this two-day conference was evidenced by the unique participation of three heads of state – Burkina Faso President Roch Marc Christian Kaboré, Mali President Ibrahim Boubacar Keïta, and Niger President Mahamadou Issoufou – along with political leaders from Ghana and the Ivory Coast. The conference included multiple working groups which explored a variety of avenues to create better conditions for economic growth, political stability, and long-term security.
Kenya to host Africa Hotel Investments Forum in October (Xinhua)
Kenya’s Ministry of Tourism will host the 18th edition of Africa Hotel Investments Forum (2-4 October, Nairobi) as the hospitality sector in the country records growth despite political jitters. Kenya hosted the Africa Hotel Investment Forum in 2013 while Rwanda and Ethiopia have hosted the event in subsequent years.
Ethiopia’s hotel industry needs help to encourage tourism (The Conversation Africa)
But, while the hotel industry is growing, the number of available hotel rooms is still the lowest. In terms of room availability, Ethiopia is globally ranked 134 out of 140, compared to Kenya, Uganda and Tanzania at positions 122, 121 and 118 respectively. Ethiopia also only has six internationally branded and managed hotels. This is a very low figure bearing in mind that the average number of tourists per year is nearly 700,000 and these six hotels have a combined total of less than 1,500 rooms. By comparison, Nairobi in neighbouring Kenya already hosts most of the international hotel brands – and expects 13 more to open their doors over the next five years. There are also only three five star hotels in Ethiopia and the majority of the "rated" hotels which guarantee a certain standard of service are situated in the capital, Addis Ababa.
Penny Mordaunt: “We need new ideas to future-proof against Africa’s biggest challenges” (DFID)
Penny Mordaunt has hailed the “incredible power of technology to deliver aid in new ways” on her first official visit to Kenya as International Development Secretary. Ms Mordaunt was also in the country to hear from British businesses about how new technology has helped them tap into the Kenyan market. The UK is the fifth largest exporter of goods to Kenya and trade between the two countries is worth over £1bn annually. Innovative technology, supported by DFID, is helping Kenya build resilience to climate challenges, including drought, and to build a modern economy for the future.
The Inclusive Development Index 2018 (WEF)
The Inclusive Development Index is an annual assessment of 103 countries’ economic performance that measures how countries perform on 11 dimensions of economic progress in addition to GDP. It has 3 pillars; growth and development; inclusion and; intergenerational equity – sustainable stewardship of natural and financial resources. Designed as an alternative to GDP, the Inclusive Development Index reflects more closely the criteria by which people evaluate their countries’ economic progress. Performance is mixed among BRICS economies: the Russian Federation (19) is ahead of China (26), Brazil (37), India (62), and South Africa (69). Although China has ranked first among emerging economies in GDP per capita growth (6.8%) and labour productivity growth (6.7%) since 2012, its overall score is brought down by lacklustre performance on Inclusion. Turkey (16), Mexico (24), Indonesia (36), and the Philippines (38) are among economies which show potential on Intergenerational Equity and Sustainability, but lack progress on Inclusion indicators such as income and wealth inequality.
How to avoid indicator scandals: three ways to fix the Doing Business Index (CGD)
We are not overwhelmed by Romer’s observations. Everyone knows, or should know, that there is a substantial degree of imprecision on all governance or economic-management-related ratings and that even small differences in ratings can sometimes correspond to big rankings differences because of clustering of scores. The biggest differences in rankings for Chile (by Romer’s calculation) are around 10 places, which is not a big deal even for a fixed methodology. If the difference had been say a change from a ranking of 34 to, say, one of 90, we would have been more impressed! The error range for World Bank’s Worldwide Governance Indicators – one of the few to publish error estimates – is revealing. For a mid-level country like Ecuador, the error ranges for the individual indicators in various years correspond to rankings differences of between 20 and 40 countries! However, this latest kerfuffle does present an opportunity to improve the Doing Business index. Here, we pose three fixes to avoid future scandals and improve the index: [The authors: Alan Gelb, Vijaya Ramachandran]
Societal benefits and costs of international investment agreements: a critical review of aspects and available empirical evidence (OECD)
This paper reviews alleged societal benefits and costs of International Investment Agreements (IIAs) as suggested by academia, governments, business and civil society. The paper focuses in particular on the investor protection component of IIAs. The inventory finds that for many claims about the positive or negative impact of IIAs, little robust evidence has been generated to date. The paper highlights methodological challenges and suggests areas where further study would be required to draw firmer conclusions.
Today’s Quick Links: Ecobank: Nigeria Q1 2018 Economic Strategic Report (pdf) SDGs Centre for Africa establishes West African sub-regional centre Rwanda launches virtual Centre of Excellence Kenya AGOA aims doubling 2016 exports value to US by 2025 ASPI Trade Forum Issue Paper: US bilateralism and Asia-Pacific economic integration |
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30th AU Summit kicks off with the 35th Session of the Permanent Representative Committee
Under the theme “Winning the Fight against Corruption: A Sustainable Path to Africa’s Transformation”, the 30th African Union Summit opened on Monday, 22 January 2018 at the level of the Permanent Representatives’ Committee (PRC), meeting at their 35th Ordinary Session.
The meeting at the African Union Headquarters in Addis Ababa, Ethiopia, has brought together Ambassadors of AU Member States based in Addis Ababa as well as Heads of Organs and Representation Offices abroad.
The PRC opening ceremony took place in the presence of the Chairperson of the AU Commission, Deputy Chairperson, AUC Commissioners, and representatives from the diplomatic corps, the international community, civil society, private sector and invited guests among others.
In his address to the PRC, the Chairperson of the AU Commission, H.E. Mr. Moussa Faki Mahamat, called on the Ambassadors to redouble efforts and energies so that 2018 will also mark decisive progress on the road to peace, development and well-being for our countries and the peoples of Africa.
“The salvation of our continent lies not only in the clarity of the vision that guides us, but also in the perseverance of our action, the strength of our determination,” stressed the AUC Chairperson.
He further appreciated the quality of cooperation and support of the PRC to the AU Commission which he said, has added value to the work of the Commission. He reiterated the commitment of the AUC to facilitate the work of the PRC as well as the Peace and Security Council (PSC).
The AUC Chairperson underlined that, a theme such as the “fight against corruption” raises huge expectations, which cannot be dashed.
“The commission will do everything in its power to support the implementation of the decisions that will be adopted on this matter, but in the final analysis, the primary responsibility is that of the States,” he emphasised
Chairperson Moussa Faki noted with satisfaction the progress made during the last period on the Continental Free Trade Area (CFTA) and the African Passport program. He congratulated Member States of the African Union who declared visa-free borders facilitating the free movement of people and goods within the continent. He also call on countries who are yet to do so, to join in this laudable effort.
“Fighting corruption is our scope for economic development,” stressed the AUC Chairperson before reiterating that success in fighting corruption demands commitment.
H.E. Mrs. Fatoumata Kaba Sidibe, Chairperson of the PRC and Ambassador of the Republic of Guinea, in her opening remarks, expressed her appreciation for the collective efforts of all members of the PRC and that of the AUC Chairperson to implement the Continental Agenda 2063 and its 10 Year Plan among others related issues aimed at advancing the integration process of the continent.
The Chairperson of the PRC recalled that the year 2017 was marked by efforts to find economic solutions to improve the lives of the African citizens given that most countries have been affected by terrorism, climate changes etc.
“The PRC has been tasks to collaborate in planning activities for the whole year including the implementation of the proposed AU institutional reforms,” she noted.
For two days, the 35th Session of the PRC will consider the reports of the various activities of their sub-committees, reports of the AU organs and their activities. The PRC will also exchange views on the draft agenda, as well as the draft Decisions and Declarations of the 32nd Ordinary Session of the Executive Council, and those of the 30th AU Assembly, before adopting its report.
The 35th Ordinary Session of the PRC will conclude on 23rd January 2018, with the adoption of its report to be submitted to the 32nd Ordinary Session of the Executive Council scheduled to hold from 25th-26th January 2018.
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Africa’s greatest economic opportunity: trading with itself
Changes in today’s global landscape mean emerging markets must consider how they shape their own futures.
Many countries in the developed world have focused their efforts and resources inwards as a result of challenging economic times. There is a danger that a shift away from emerging markets will negatively impact the global economy’s ability to grow in the future.
This is especially dangerous for Africa given its growing integration with the global economy in recent years. In order to mitigate this, Africa must take steps to secure its own share of global economic growth. In addition, we must be able to sustain the economic growth of Africa ourselves.
The greatest opportunity for realizing Africa’s growth potential is often overlooked, despite lying within the continent: Africa’s ability to trade and do business with itself. What is required is an inward and outward strategy acting in tandem to outwardly cement Africa’s place in the global economy through foreign investment and improved trading links; while internally driving regional trade integration.
It is no coincidence that Africa’s recent growth, epitomized by the Africa rising label, was in part realized owing to increased levels of foreign direct investment. Improvements to fiscal policies, governance and regulatory frameworks, along with a move to diversify economies away from Africa’s traditional commodities-biased economies presented greater opportunities to foreign investors.
If Africa is going to capitalize on this base, it needs to work together on its shared future. Africa’s development must be underpinned by further regional integration and trade liberalization. While the rest of the world becomes increasingly fractured and disparate, it is time for Africa to create ways to better integrate its fragmented markets which have long constrained growth and acted as barriers to trade.
World Bank statistics put intra-African trade at just 11% of the continent’s total trade between 2007 and 2011. In 2015, intra-African trade was worth just $170 million, according to the same institution’s figures, when the potential stands at trillions of dollars.
To collectively succeed, individual governments must work towards a regional imperative if Africa’s economies are to be changed in a way that drives sustainable and inclusive growth for the continent as a whole. These regional trading corridors cannot work in isolation but must be scalable to improve connectivity across the African continent.
This approach has been championed by initiatives such as the African Union’s Continental Free Trade Area (CFTA). It is estimated that the implementation of the CFTA will nearly double intra-African trade by early next decade.
We are already seeing positive results from some regional trading corridors, such as the Southern African Development Community (SADC), the Economic Community of West African States (ECOWAS) and the East African Community (EAC), but for Africa to be greater than the sum of its parts, we must learn to work together. This includes harmonizing development and economic policies, regulation, market structure and governance, along with their implementation.
Any regional initiative will need to be accompanied by huge investments in cross-border infrastructure. The African Development Bank estimates the continent would need to spend an additional $40 billion a year on infrastructure to turn around its current deficits and keep pace with economic growth.
The rising trend of urbanization only serves to put pressure on an already inadequate infrastructure and demonstrate the urgent need for greater investment if living standards for Africa’s growing population are to rise. Conversely, the benefit of Africa’s growing population could help facilitate regional trade growth. A customer base of nearly 1 billion people provides not only the opportunity for regional opportunities but also access to the broader African market if the continent’s industrial development plans can improve capacity for productivity.
If we are looking to the rest of the world to show faith in the African growth story, then as Africans ourselves, we must demonstrate our own commitment. A collaborative approach to Africa’s own growth story driven by the continent itself will make it a stronger contender globally.
South Africa is in the unique position of holding membership to several multilateral fora. As we take over the BRICS presidency for 2018 and as the only permanent African member of the G20, it is our responsibility to champion the case for Africa and its agenda by being at the nexus of discussions with our international counterparts. Moreover, Africa’s significance to our own economic future cannot be underestimated.
We can reap the rewards of Africa’s tandem approach to growth. South Africa’s track record in doing international business makes it the natural access point into Africa for the rest of the world. But we must have a clear strategy in our approach to Africa to ensure we also become part of the continent’s growth story. South Africa must continue to cultivate its role in facilitating positive changes for Africa as this is where our own long-term economic success lies.
Kingsley Makhubela is Chief Executive Officer of Brand South Africa. This article was originally published by the World Economic Forum and also published on How we made it in Africa by Brand SA.
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COMESA holds first Digital FTA workshop
Sixteen COMESA Member States have participated in a two-day workshop on the Digital Free Trade Area (DFTA) in which they agreed that the concept is about empowering traders to do cross-border trade using ICT as a tool to minimise physical barriers.
COMESA’s Director of Trade and Customs Dr Francis Mangeni said the workshop was proof that the regional block is moving a step closer to actualize the digital Free Trade Area.
“Trade Facilitation is a key priority for Africa, and a digital FTA is a practical way of increasing intra-regional trade and creating wealth,” said Dr Mangeni. He was speaking in Mahe, Seychelles. The workshop was held on 18-19 January 2018.
He added that providing traders with the necessary digital tools and infrastructure they need for enhancement of intra-trade and global trade is important for COMESA.
Speaking when he opened the workshop, Vice President of Seychelles His Excellency Mr Vincent Meriton described the Digital FTA as a unique opportunity to further realise the potential of free trade through ICT as well as contribute to greater regional integration. He added that in today’s rapidly changing world and economies, this region cannot afford to be left behind.
“We must therefore commend COMESA for seizing the benefits of ICT, for linking it with trade and for making the countries of our region part of today’s digital economy,” he said.
The COMESA Digital Free Trade Area is defined into three segments namely E-Trade, E-Logistics and E-Legislation. E-Trade intends to promote e-commerce by providing an online platform for COMESA region traders to trade online. The DFTA platform will enable duty-free and quota-free treatment making it an online market for COMESA region.
Digital logistics uses ICT as a tool to improve the commercial activity of transporting goods to customers. E-legislation looks at the readiness of legislation in countries for them to carry out e-transactions and e-payments.
DFTA will require both technological and legal innovations especially in the fields of intellectual property, competition, data privacy and protection, Cyber security and a whole range of other innovative laws. The workshop was informed that with digital delivery of e-commerce, digital transactions and digital payments legal redress is a must.
Director for Information Technology at the COMESA Secretariat, Ms. Lanka Dorby made a presentation on the approved DFTA Action plan which includes establishment of the COMESA Online Market. Member States sought clarification on who will lead the initiative in the implementation of the COMESA Online Market.
The Secretariat informed the workshop that it is the responsibility of the Member States to decide the best approach for implementing the COMESA Online Market for example through a Public Private Partnership or through a government initiative. The Secretariat further informed the workshop that the design, rules and guidelines for implementing the online market will be developed and shared with the Member States.
Furthermore, the Secretariat assured the Member States that they will provide technical assistance upon request to build country pages for the COMESA Online Market platform.
It was proposed that the DFTA starts with Member States that are ready to pilot the COMESA DFTA instruments, rollout an awareness programme, conclude a payment gateway and then operationalize through a practical approach such as entering into an arrangement with global e-markets.
Representatives from the United Nations Conference on Trade and Development (UNCTAD), Microsoft and the International Federation of Freight Forwarders Associations (FIATA) made presentations on the importance and advantages of e-commerce. Various COMESA trade facilitation tools were also presented.
Development of e-certificate of Origin on course
The development of an e-certificate of Origin (eCO) to eventually replace the hard copy version is on course. The COMESA Secretariat has now requested Member States willing to participate in the piloting of the eCO to formally write to the Secretary General Mr Sindiso Ngwenya within one month expressing their interest.
This will encourage formulation of a concrete implementation plan before the next meeting of the COMESA Intergovernmental Committee for action.
COMESA Virtual Trade Facilitation Ssystem (CVTFS) e-Initiatives Coordinator Mr Fred Besa revealed this during a presentation on the Status of development of the e-Certificate of Origin.
The eCO is a web-based system accessible using web browsers. However, using control protocols, some information or functions can only be accessed by registered and system-known users.
The system is developed based on an architecture which includes Exporter Registration Process, Application and Issuance of eCO, Importing Country Verification Process of eCO, Searching and Trace of eCO, Printing of eCO, Reporting and Statistics Function, Website Home for Information Dissemination and Digital FTA eCO Guidelines
Highlights of the eCO
Exporter Registration Process
Companies located in a Member State wishing to export to other Member States under the COMESA preference regime should be registered with the relevant designated issuing authority in the exporting Member State using the eCO system.
A Certificate of Origin in electronic format may be applied for, issued, and accepted in lieu of one in paper format, with equivalent legal effect.
Reporting and statistics of eCO
This function will handle several primary functions among them to enable the submission of Monthly / Quarterly reports by the various stakeholders as per the eCO system requirements and facilitate the generation of appropriate eCO Management reports from the eCO database by stakeholders.
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Governance, democracy and business: Ouagadougou Declaration
CIPE, National Endowment for Democracy and the U.S. Chamber of Commerce launch joint initiative with Burkina Faso Government to bring about greater collaboration between government, business and civil society
The Center for International Private Enterprise (CIPE), along with the Government of Burkina Faso, on Wednesday issued the groundbreaking Ouagadougou Declaration that recognizes the need for business, government, and civil society to work together if a prosperous and democratic society is to be sustained.
“The Declaration is all about making Burkina Faso a stronger society; giving them the tools to govern better and create sustainable prosperity which is the only real antidote to extremism, underdevelopment and social discontent,” CIPE Chairman Greg Lebedev said.
CIPE, along with World Movement for Democracy, the U.S. Chamber of Commerce’s Africa Business Center and the Burkina Faso government jointly launched this initiative, the centerpiece of which is increasing the relationship between the private sector, civil society, and policy makers in democratic governance throughout Africa.
The importance of this two-day conference in Ouagadougou was evidenced by the unique participation of three heads of state – Burkina Faso President Roch Marc Christian Kaboré, Mali President Ibrahim Boubacar Keïta, and Niger President Mahamadou Issoufou – along with political leaders from Ghana and the Ivory Coast. The Conference included multiple working groups which explored a variety of avenues to create better conditions for economic growth, political stability, and long-term security.
“An overarching goal of the conference was to highlight the fact that the secret of successful democratic governance is the dynamic interaction between business, government, and civil society,” Lebedev said. “We learned a long time ago that economic well-being is at the heart of all stable societies, and that real and sustainable prosperity can only be achieved if private enterprise is encouraged and enabled.”
Africa is a key strategic partner for U.S. businesses, and the U.S. Chamber’s Africa Business Center is focused upon increasing trade and investment that will not only create new and innovative opportunities for both American and African companies, but will result in closer ties between the United States, Burkina Faso and other countries across the African continent.
Ouagadougou Declaration
We, participants of the Conference on “Governance, Democracy and Business”, held in Ouagadougou, Burkina Faso, on January 16-17, 2018
Under the patronage of H.E. Roch Marc Christian KABORE, President of Burkina Faso,
And in the presence of:
- H.E. Mahamadou ISSOUFOU, President of the Republic of Niger
- H.E. Ibrahim Boubacar KEÏTA, President of the Republic of Mali
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Acknowledge the right of people to be responsible for their destiny under democratic and inclusive institutions.
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Assert our strong support for promoting democratic governance, characterized by accountability, transparency, open dialogue, strong market institutions, effective regulation and rule of law.
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Acknowledge that smooth democratic governance is the best guarantee for individual freedom essential for economic and social development, economic growth, political stability and security.
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Emphasize, in this respect that the roles, though specific, of Governments, parliaments, companies, civil society and social partners are complementary in poverty and inequalities alleviation, human rights protection, ethics promotion, social integration consolidation, creation of economic opportunities, establishment of corporate social liability and environmental preservation.
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Encourage the development of performing market economies for sustainable economic growth. Such market economies contribute towards strengthening democratic governance performance by securing economic freedom, competition, fair laws and regulations and mobilizing corporates to combat corruption. They moreover contribute towards developing institutions securing markets safety, fostering company ethics, securing an equal access to information and strengthening the rule of law.
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Launch an appeal to public authorities, corporates, workers and civil society to work together to promote, as appropriate, good governance and democracy for fairer and more pacific and inclusive societies.
Done in Ouagadougou on January 17, 2018
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Investors slow to engage Zim
Liquidity-starved Zimbabwe will start seeing meaningful capital inflows only after elections, which President Emerson Mnangagwa says are expected by July, the country’s national revenue authority says.
Mnangagwa took over from Robert Mugabe, who resigned in November, and has pledged to open the country for investments.
However, post-Mugabe-era Zimbabwe continues to have mixed fortunes, with inflation stoking up and liquidity woes continuing.
Investors were worried about corruption and the government’s failure to reduce its public sector costs as well as corruption perceptions, fund managers and company executives said on Thursday.
Foreign currency allocations from the central bank were a trickle and that was hitting operators in manufacturing and mining, among other sectors, hard.
“An investor coming through (to inquire about opportunities) will still be worried that someone will ask for a bribe and this scares them,” Caleb Dengu, a private equity and investment adviser, said on Thursday.
Inflation in Zimbabwe closed last year at 3.46 percent, attesting to inflationary pressures. The government revised its economic growth outlook for last year from 1.7 percent to 3.7 percent on the back of good rains last year, but economists say this is highly unlikely and the economy is struggling under a saddle of limited investment inflows.
Investors have been worried about political uncertainty in Zimbabwe, but this might have improved following Mugabe’s exit. Moreover, Mnangagwa has said elections will be held in the next five months in a bid to restore political legitimacy.
But it seems investors are waiting on the sidelines for the elections to usher in a substantive administration. Other experts say the country requires investments in its power generation sector as it is reliant on power imports from Mozambique and South Africa to bridge a power deficit that often grounds company operations.
Willia Bonyongwe, the board chairperson for the Zimbabwe Revenue Authority, said on Thursday that the government was faced with the challenge to have the interest expressed by some investors converted into direct investment inflows.
“Realistically though, not many capital inflows are likely to be realised until after the elections,” said Bonyongwe.
Mnangagwa has committed to fixing property rights issues and the indigenisation policy has been relaxed, but this has not yet been translated into policy and this, fund managers say, is deterring keen investors.
The real estate sector is also subdued and the central bank says this is because of an absence in mortgage funding.
Real estate experts say they expect interest in the sector, through new construction developments and projects, to pick up later this year.
“The sector is subdued but we have seen some projects coming up in Victoria Falls, but these have been long-term commitments.
“In terms of new projects, we may start to see meaningful activity in the second half of the year based on what is coming from the industry as investors seek a long-term settlement to the political framework through elections expected this year,” said a property evaluator with a real estate company in Harare.
Investors who have expressed a keenness to sink money into Zimbabwean ventures include Robert Gumede, the founder of the Guma Group of Companies, a South African investment firm which is eyeing $1.2billion (R14.7bn) investment deals in the country’s infrastructure, health and tourism, among others.
Africa’s richest man, Aliko Dangote, has also expressed interest in investing in Zimbabwe, but nothing has materialised yet.
President launches investment policy
President Emmerson Mnangagwa on Thursday, 18 January 2018 launched the Investment Guidelines and Opportunities in Zimbabwe document that sets out the country’s new economic order aimed at improving the well-being of Zimbabweans.
The President launched the guidelines at a preparatory meeting for the World Economic Forum meeting to be held in Davos, Switzerland.
In his foreword to the policy he said the policy also acknowledged Zimbabwe’s historical realities.
Download: pdf Investment Guidelines and Opportunities in Zimbabwe (3.20 MB)
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tralac’s Daily News Selection
Diarise: 4th EAC Heads of State Retreat on Infrastructure Financing and Development (21-22 February, Kampala)
Regional integration and informal trade in Africa: evidence from Benin’s borders (CEPII)
We use an original survey of informal transactions across Benin’s land borders, which provides the first direct and comprehensive account of trade volumes and product coverage for this type of trade. We combine this data with official trade records and exploit variation across products and countries to measure the impact of tariff and non-tariff barriers to trade on informality. Increasing tariffs on a given product by 10% makes it about 12% more likely that this product is imported informally rather than formally. Non-tariff measures also increase informality. Our results (pdf) also suggest that compliance costs, aside from tariffs and regulations, contribute to explain informality. [The authors: Cristina Mitaritonna, Sami Bensassi, Joachim Jarreau]
Southern Africa: Remittance factsheet (Finmark Trust)
The table below (pdf) summarises our country-by-country estimate of remittance market size. SADC migrants resident in South Africa are estimated to remit approximately R16.6bn home annually, with Zimbabwean migrants making up more than half of the total value of the market. The next highest sources of remittances are Mozambicans and Basotho, with these top three countries comprising roughly 89% of the regional market. In 2012, we had estimated total market size at R11.2bn (after accounting for inflation, approximately R13.9bn in 2016 terms). The difference reflects both the change in some of our assumptions of remitting behaviour, as well as the mix of migrants by nationality, given the greater accuracy allowed by availability of census data.
Rwanda: Eighth review under the policy support instrument, request for extension (IMF)
External adjustment has been more rapid than anticipated (Figure 4, Table 5). In the period of November 2016-October 2017, the trade deficit valued in US$ terms was 24% lower than compared to the pre-SCF period (July 2015–June 2016). Import volumes have increased only marginally by 1.5% when compared to the pre-SCF program period, reflecting exchange rate depreciation and adjustment policies. Export volumes are 43%higher, due to a more competitive exchange rate and policies to promote the growth of non-traditional exports such as horticulture and gold, and re-exports of petroleum products. Excluding re-exports, export volumes are still 30% percent higher than the pre-SCF program period. Box 2: Made in Rwanda (pdf):
The initiatives remain at their nascent stage, making overall assessment of their impact difficult. Some initial effects on domestic activity and external imbalances include: (i) Cement production has increased three-fold between 2014 and mid-2017, and could increase as much as nine-fold upon full use of planned upgrades. Increased domestic cement production has coincided with a sharp decline in import volumes, and slight increase in exports. (ii) Sugar and rice production has increased by around 40% since end-2014. Production should continue to increase under existing investment plans to increase processing capacity and agricultural efficiency. (iii) Investment in the textile industry has buoyed domestic production since 2014. Textile imports have fallen sharply since higher import tariffs on second-hand clothing and shoes were introduced in mid-2016 and production and job-creation has expanded rapidly. This has coincided with lower textile exports, consistent with some re-orientation of production to domestic markets. [Volkswagen to start Rwanda car assembly in May]
Why Kenya opted out of EAC project to link stock markets (The East African)
In a letter written to the EAC Secretariat in mid-November, Kenya said it would not join Burundi, Rwanda, Tanzania and Uganda to launch the platform in September, suggesting it had concerns on the infrastructure. It said it would monitor the performance of the regional platform vis-à-vis its ongoing modernisation of trading interfaces. Kenya pulled out of the CMI project in 2015, citing irregularities in the $3.3m tendering process of the software and requested for more time to consult on the matter. Burundi, Rwanda, Tanzania and Uganda are working on a schedule to have the project up and running by its September 2018 completion target. It is part of a wider World Bank-funded EAC Financial Sector Development and Regionalisation Project 1, which seeks to support the establishment of a single financial market among the EAC member states. [Kenya beats top rivals to rank fifth on stock markets index]
Mozambique: Increasing private sector participation in the Maputo Stock Exchange (SPEED+)
The Mozambique Stock Exchange (BVM) is very small with only five listed companies and very little trading. Market capitalization/GDP and turnover/GDP ratios are among the lowest in the world, and little capital has been raised through new issues in the past few years. The newly installed management team at BVM is determined to make the market larger and more active in order to make it an effective source of finance in the next phase of the country’s development. The draft SPEED+ report (pdf) observes that the number of listed companies may soon rise due to a planned wave of new issues by IGEPE the institution that is responsible for companies with state ownership and by listing of “megaprojects” in the natural resource sector. While welcoming the rise in listed companies, the report emphasizes the need to strengthen the corporate governance rather quickly, since experience shows that large-scale privatization without adequate safeguards for investors can have disastrous economic and social consequences.
Why Nigeria Stock Exchange is recording growth in 2018 (Premium Times)
On market performance in 2017, Oscar Onyeama (NSE CEO) said the market recovered from the macroeconomic overhang of the commodity down cycle to become the third best performing market in 2017 globally, with a 42% return in the NSE All-Share Index. Market capitalisation rose by 47% in 2017 to N13.62 trillion against N9.26 trillion posted in 2016, he said, adding that CBN policies increased liquidity in the foreign exchange market. Commenting further, he explained that the equity market activity rose from 2016 levels, as market turnover increased by 121% to N1.27 trillion from N0.58 trillion.
Nigeria: Compendium of investment incentives
This Compendium of Investment Incentives in Nigeria is the product of a collaboration between Nigerian Investment Promotion Commission and Federal Inland Revenue Service. It is published pursuant to the provisions of Section 4(i) of the NIPC Act, which requires NIPC to “provide and disseminate up-to-date information on incentives available to investors” in Nigeria. The Compendium is a compilation of fiscal incentives in Nigerian tax laws and sector-wide fiscal concessions duly approved by the Federal Government and supported by legal instruments. This first edition is based on the 2016 Fiscal Policy and covers 5 sectors. [Nigeria moves closer to energy overhaul with new oil Bill]
Sesheke-Livingstone road trouble for Nam truckers (New Era)
Namibian trucking firms making use of the Sesheke-Livingstone road in Zambia, which forms part of the Walvis Bay Corridor and stretches all the way to the DRC, are bemoaning its deplorable state. Namibian and other truckers lose valuable time and money which impacts on their efficiency and ultimately their competitiveness within the logistics sector. The heavily-potholed Sesheke-Livingstone road covers a stretch of only 97km, which makes up a portion of the Walvis Bay-Ndola-Lubumbashi Development Corridor as part of the overall Walvis Bay Corridor. It should take about an hour and a half to drive, but due to gaping potholes that stretch across almost its entire length truck drivers, bus drivers and other motorists take between three to five hours to travel this important road. “This road is a critical piece of infrastructure for the corridor. Our Zambia office is working tirelessly to ensure the Zambian government prioritises infrastructure development on that road,” said Johny Smith, CEO of the Walvis Bay Corridor Group.
Dar-Kigali railway a game changer – Rwanda’s transport minister (New Times)
Transport minister Jean de Dieu Uwihanganye said: “It is big in so many ways; in terms of the budget of the project, impact on cost of imports and exports to and from Rwanda and Made-in-Rwanda competitiveness on the global market, to say the least.” High transport costs in East Africa have often been cited as a serious challenge to Rwanda’s ability to compete effectively with its neighbours. Importers say it costs the country, on average, $4,990, to import a 20ft container while the sub-Saharan average is $2,504, which significantly affects Rwanda’s competitiveness in terms of cross-border trade. Deus Kayitakirwa, the Director of Advocacy at Private Sector Federation, says the cost of transporting a container between Kigali and Dar-es-Salaam currently stands at a staggering $3912. PSF’s Kayitakirwa said it will cut transport costs by over $1500 a container. [East Africa ports in fresh push to attract shipping lines]
What the SGR means for Kigali’s ambition to become a services hub (New Times)
Notably, the railway is set to be the first of the two-prong SGR – one prong from Dar es Salaam along the Central Corridor, and the other from Mombasa via Kampala on the Northern Corridor. This will uniquely place Kigali at the centre of economic activity, bridging the gap between the Central African region and the EAC, especially in the mining, agriculture and industrial development sectors. This necessarily anticipates an intermodal passenger and freight cargo enterprise that will seamlessly combine rail, air and road modes of transport opening up the hinterland, if one takes the example of the Eurasian Resources Group’s broad mining interests in the wider region, including of cobalt through its Metalkol Roan Tailings Reclamation project in the DRC. [Commentary by Gitura Mwaura]
RwandAir’s planned flights to China will spur trade and tourism – business leaders (New Times)
Jean de Dieu Uwihanganye, the State Minister in charge of Transport, said that national carrier will launch its flights to Guangzhou in May. “There are currently a lot of business transactions going on between China and the continent and we think that Guangzhou route will help ease connectivity between Africa and China,” he said. The minister added: “As an airline, we are also trying to spread our wings to different parts of Africa.” The flight to Guangzhou Baiyun International Airport in Guangdong Province, China will be tagged on the Mumbai, India route, he noted. He, however, said they were looking at possibilities of having direct flights in the long-run.
IBM, Maersk joint blockchain venture to enhance global trade (IBM)
Total trade represents 60% of the world’s GDP, and yet global supply chains are clogged with inefficiencies and heavily reliant on complex paper-based systems. A single shipment of goods from East Africa to Europe can require over 200 unique interactions with 30 individuals and organizations, generating a four-inch stack of paper records. In some instances, it can cost as much in paper and administrative flow as it does to pay for the shipping itself. Over 18 months, through initial pilots, we’ve shown that blockchain can work on many of the most common barriers in supply chains. We’ve used the technology to securely digitize, automate, and store critical paperwork. Early testing demonstrated that we can significantly reduce administrative costs, which at the time of testing could be as high as 15% of the value of the goods shipped. Now, through this new company, IBM and Maersk will commercialize and scale blockchain solutions to a much broader group of global corporations, many of whom have already expressed interest in these solutions: General Motors, Procter and Gamble, Agility Logistics, Singapore Customs, Peruvian Customs, APM Terminals, PSA International, and Guangdong Inspection and Quarantine Bureau for trade corridors in and out of China.
Status report on the SADC, COMESA and EAC harmonised seed trade regulations: where does this leave the regions’ smallholder farmers? (ACBIO)
This paper offers a critique of these frameworks which firmly embed green revolution approaches in Africa, favoring large scale agribusiness as the solution to seed insecurity in Africa. This approach will have drastic implications for smallholder farmers and their seed systems, who provide the most sustainable supply of seed in the region. Long-term solutions require comprehensive and appropriate national and regional seed policies that guarantee the rights of farmers, and particularly women farmers, supporting smallholder seed production and supply, and protect agricultural biodiversity.
COMESA develops Peace and Prosperity Index (COMESA)
Uganda was the first Member State to host a workshop on the country-specific consultations on CPPI forecasted drivers for 2018. Policy makers, technical officials drawn from the Office of the President, Office of the Prime Minister, Ministry of Foreign Affairs, Ministry of Internal Affairs and Ministry of Defence, Civil Society Organisations as well as the private sector met in Kampala from 11 – 16 December 2017 to review the key forecasted structural drivers for Uganda that were forecasted by the COMESA Early Warning System Sructural Vulnerability Assessment model. The multi-stakeholders’ consultative forum was convened in response to a Decision of the 15th Meeting of the COMESA Ministers of Foreign Affairs, that was held in Antananarivo in October 2016.
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tralac’s Daily News Selection
AU Summit (22-29 January): Winning the fight against corruption – a sustainable path to Africa’s transformation
Profiled AU summit commentaries, news reports: Paul Kagame: Unleashing Africa’s inner strengths – institutions, policies, and champions, The task at hand as Kagame takes over African Union Chair, Deutsche Welle: Will the African Union achieve better efficiency?. Profiled summit backgrounders: ISS, International Crisis Group
10th AU Gender Pre-Summit calls on African women to join in the fight against corruption: various downloads
US-Africa trade policy updates:
(i) Africa Trade Advisory Committee seeks new members. The Office of the US Trade Representative is accepting through Feb. 2 nominations for membership on its Trade Advisory Committee on Africa for the four-year charter term beginning in March. The TACA provides general policy advice and guidance on trade policy and development matters that have a significant impact on the countries of sub-Saharan Africa, including negotiating objectives and bargaining positions before entering into trade agreements, the impact of the implementation of trade agreements, matters concerning the operation of any trade agreement once entered into, and other matters arising in connection with the development, implementation, and administration of U.S. trade policy.
(ii) Corporate Council on Africa: statement by Florizelle Liser. As an organization that has been promoting US-Africa trade, investment, and business engagement for more than twenty years, the Corporate Council on Africa joins many others in repudiating the negative comments allegedly made by President Trump about African and other nations and the value of African immigrants to the United States. Africa is a vibrant continent of 54 nations that is important to the U.S. economically, politically, socially, and strategically.
(iii) House of Representatives votes to strengthen US-Africa trade. Rep. Ed Royce (R-CA): Then I walked into an artisan shop in Addis Ababa, run by a remarkable woman, Sara Abera. I learned that she, in fact, had benefitted from technical assistance through the US-East Africa trade hub and was now exporting to the US through AGOA. But I also learned that she was an exception – not the rule. Other than Sara, very few business leaders and entrepreneurs seemed to have knowledge of or access to AGOA. To fix this, the bill before us today would make information about AGOA available on an easily accessible public website. This bill also urges US embassies in eligible countries to more consistently promote AGOA and trade hubs, and seeks to bring greater transparency to commitments made at annual AGOA forums. This bill also strengthens the Millennium Challenge Corporation, which is already one of our most effective tools for incentivizing policy reform and unlocking market-based growth in developing countries. It increases MCC’s flexibility to promote regional trade, collaboration and economic integration by allowing up to two simultaneous compacts with an eligible country. And it also improves transparency and accountability by streamlining and strengthening Congressional oversight. [Statement by Rep. Karen Bass (D-Calif), The AGOA and MCA Modernisation Act: background, text]
Namibia: Attack on chicken import limits revived (The Namibian)
South African poultry producers will get another opportunity to mount a legal challenge against the chicken import restriction that was introduced in Namibia as an infant industry protection measure almost five years ago. This is the upshot of an appeal judgement that was delivered in the Supreme Court in Windhoek yesterday. The Supreme Court ruled in favour of an appeal that the South African Poultry Association and five individual poultry producers from South Africa lodged against a July 2016 High Court judgement in which judge Shafimana Ueitele dismissed their bid to have the chicken import restriction set aside. The issues raised in the matter – including the extent to which international trade treaties form part of the domestic law of Namibia and can be enforced by the country’s courts – were of considerable public importance, and it was in the public interest that they had to be ventilated and decided, judge Smuts remarked.
Chris Kiptoo: Why a trade remedies agency could save Kenyan industries (Business Daily)
The establishment of the trade remedies agency is technical and expensive since it requires budgetary resources and experts in international trade law, research and investigations and cost accounting skills. Many WTO’s developing country members do not have a WTO-compliant trade remedies legal and institutional framework. During a recent African Union Commission survey on trade remedies institutions in Africa for purposes of advancing the Continental Free Trade Area negotiations, it was established that only Egypt and South Africa had WTO-compliant trade remedies laws and agencies. Kenya is the third such country in Africa. Trade remedies can contribute to the achievement of Africa’s industrialisation goals and need to be positively considered and implemented creatively to ensure the continent addresses its supply side constraints and produces the goods that it requires for countries to trade with each other. Since manufacturing in Kenya has been identified as one of the primary areas of focus by the government, it will be worthwhile to consider that having a legal and institutional framework for the application of trade remedies in Kenya will significantly contribute to this national objective. [Dr Kiptoo is Principal Secretary, State Department of Trade, Kenya] [The Kenya National Bureau of Statistics has just posted its Statistical Abstract 2017 publication: Section 7 posts trade data]
EALA’s plenary starts in Kampala next week
The Assembly which is to be presided by the Speaker, Rt. Hon Ngoga K. Martin, shall during the three-week period further discuss, inter alia, the following legislative business: The object of the EAC Monetary Institute Bill, 2017, is to provide for the establishment of the East African Monetary Institute as an institution of the Community responsible for preparatory work for the EAC Monetary Union. In accordance with Article 23 of the Protocol on the EAC Monetary Union, the Bill is expected to provide for the functions, governance and funding for the Institute as well as other related matters. [Related: East African Business Council launches EABC Business Excellence Awards, EAC Gazette: 3 January 2018 (pdf)]
How new Pan-Africanist business men, women are driving Africa’s economic transformation – Osinbajo (World Stage)
Africa’s impressive economic transformation is currently being driven by ambitious businessmen and women who are stepping beyond national borders and going global says Vice President Yemi Osinbajo, at the inaugural Africa Rising lecture of the Harvard University Business School on Tuesday evening. “Africa Rising is as much about improving standards of governance as it is about an increasingly confident youth and civil society. It is also about businessmen and women who are stepping beyond national borders and going global.” The Vice President noted that “it appears the political pan-Africanist of old have given way in terms of prominence to the business pan- Africanists the likes of Aliko Dangote, Issad Reb Rab (Cevital), Mike Adenuga, Kim Bello-Osagie, the Sawiris (owners of Orascom from Egypt), and mining magnate Patrice Motsepe amongst others.”
Tanzania: December 2017 Economic Review (pdf, BoT)
During the year ending November 2017, current account surplus declined to $26.7m, from $94.5m in the year to November 2016, due to an increase in import of goods and services coupled with a decrease in goods export. Goods and services account deteriorated to a deficit of %8.6m from a surplus of $69.7m, owing to an increase in goods imports coupled with a decline in exports (see Table 6.2). During the year ending November 2017, earnings from export of goods and services decreased to $209.1m from $217.4m in the corresponding period in 2016. Exports of all goods declined, save for fish and fish products. The value of imports (f.o.b) – goods and services – increased to $217.6m in the year ending November 2017 from $147.7m in the year to November 2016. All categories of goods import increased, with consumer goods recording the highest growth. Specifically, the value of consumer goods imports rose by almost three times mainly due to increase in imports of food and foodstuff, particularly rice, sugar and wheat flour (see Table 6.5). [Tourism earnings up by 4.2%]
Ethiopia: IMF Executive Board concludes 2017 Article IV Consultation
Growth is expected to stay high in 2017/18, at 8.5%, 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%, supported by sustained expansion in exports and investment.
Handbook on Duty-Free and Quota-Free Market Access and Rules of Origin for Least Developed Countries (UNCTAD)
Part I of the handbook covers trade preferences granted by Canada, the European Community, Japan and the United States of America. Part II of the handbook reviews the progress made to implement the Hong Kong (China) Ministerial Decision on the Duty-Free Quota-Free (DFQF) by other Developed countries and Developing countries in the light of past initiatives and ongoing negotiations in the context of the Doha round of trade negotiations. Appendix I: China, Republic of Korea, Norway. Appendix II: Switzerland, Thailand, Turkey
National trade facilitation committees: beyond compliance with the WTO Trade Facilitation Agreement? (UNCTAD)
This study (pdf) supplements UNCTAD’s recent research work on trade facilitation, including National Trade Facilitation Bodies in the World, published in 2015, The New Frontier of Competitiveness in Developing Countries: Implementing Trade Facilitation, published in 2013, Trade Facilitation in Regional Trade Agreements, published in 2011, and several technical notes issued since 2007, particularly the note on multiagency working groups on trade facilitation, issued in 2011. The value added by this study is in the provision of an analysis of existing National Trade Facilitation Committees in the world, according to Article 23.2 of the WTO Trade Facilitation Agreement. It provides clarity on how countries are interpreting and applying this Article as to date. As reflected in table 1 of the countries surveyed, 53% (31 countries) are African NTFCs, 17% are American (10 countries), 20% (12 countries) Asian, 7% (4 countries) European and 3% (2 countries) are from Oceania. The level of development of countries is also key to understand the functions and institutional framework of a National Trade Facilitation Committee. Of the trade facilitation bodies analyzed, 66% (39 countries) were in developing countries and 29% (17 countries) in least developed countries. Developed countries are underrepresented in the sample with only 5% (3 countries).
No roads? No problem: The leapfrogging drones of Rwanda (IMF)
What’s the best solution to a lack of infrastructure? Find a solution that doesn’t require infrastructure. That’s what Zipline has done in Rwanda – a start-up that deploys drones to make emergency medical deliveries to remote hospitals and clinics. In this podcast, Rinaudo and Chief Revenue officer Matthew Steckman say Rwanda offered an opportunity to partner with a government that had a specific vision for how automated and instant delivery could have a meaningful impact.
Transport corridors and their wider economic benefits: a critical review of the literature (World Bank)
This paper provides a rigorous review of the empirical literature estimating the impacts of large transport investments. In doing so, it aims to improve policy makers’ understanding of the multiple, and potentially varied, impacts of transport corridor investments. This includes enhancing understanding of the potential trade-offs that the investments can generate both between different development outcomes and between different groups of economic actors. The review also informs policy thinking about the types of complementary policies and institutions that may be needed for wider economic benefits (WEBs) of corridors to materialize.
Today’s Quick Links: Namibia’s Ms Bience Gawanas has been appointed as the new UN Special Advisor on Africa Chair of G77 and China in Geneva passes from Tanzania to Pakistan South African Chamber of Commerce and Industry: Trade Conditions Survey, December 2017 (pdf) OECD/DAC: Detailed final 2016 aid figures released Nigeria National Bureau of Statistics: Inequality snapshot (2004, 2013, 2016) |
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10th African Union Gender Pre-Summit calls on African women to join in the fight against corruption
The Tenth African Union Gender Pre-Summit officially kicked off on Wednesday, 17 January, 2018 at the African Union (AU) Headquarters in Addis Ababa, Ethiopia.
The Gender Pre-Summit (GPS) is holding under the theme: “Winning the Fight against Corruption: A Sustainable Path to Gender Equality and Women’s Empowerment in Africa”. The meeting is chaired by Mrs. Mashair Ahmed Elamin Abdalla, Minister of Security and Social Development of Republic of Sudan and Rapporteur of the Specialised Technical Committee (STC) Bureau on Gender and Women Empowerment.
Representing the Chairperson of the AU Commission, H.E Moussa Faki Mohamed, at the opening ceremony, the Commissioner for Political Affairs of the AUC, Amb. Minata Samate Cessouma, underlined that, Gender Pre-Summit meetings have played an important role in influencing and shaping AU policies on gender equality and women’s empowerment.
Applauding the decade long journey of the GPS, Amb Cessouma added that: “the transformation of the pre-summit on gender from a civil society platform into an institutionalized political platform of the AU is testimony to the importance of a strong partnership between the AU and civil society organisations.”
“I would like to express my deep gratitude to GIMAC and other Civil Society Organizations from the continent and the diaspora who helped the launching of this platform,” she noted.
Amb. Cessouma further underscored that the 10th Pre-Summit is an opportunity to reflect on the progress made over the last decade and to plan the way ahead, particularly in the context of the new AU Reform and Agenda 2063.
With regards to the successful implementation of Agenda 2063, the Commissioner emphasized that corruption is a greater obstacle and such forums are crucial to help the AU develop innovative intervention strategies to fight corruption.
Addressing the participants of the Pre-Gender Summit later, the Director of the AU Women, Gender and Development (WGDD), Mrs. Mahawa Kaba Wheeler, congratulated and thanked the women and men whose courage and vision has contributed to the creation of the Gender Pre-Summit platform.
Mrs. Mahawa recalled that “Agenda 2063, the roadmap of our continent reminds us to renew our commitments and ambitions for the promotion of the status of women and gender equality in Africa and especially to realize them because the prosperity of Africa is clearly conditioned on the opportunities that will be created for women and young people on our continent.”
During the meeting, the theme of the AU-Gender Pre-Summit (GPS) that is aligned to the 2018 theme proved to be a well-conceived and timely issue as corruption and gender inequality are closely connected. The meeting unanimously and singularly pointed out that corruption disproportionately affects the poor especially women and perpetuates poverty by affecting public programs meant to benefit the poor.
Honorable Dr. Jean A. N. Kalilani, M.P., Chairperson of the Bureau of the African Union Specialized Technical Committee (STC) on Gender and women empowerment and Minister of Gender, Children, Disability and Social Welfare of the Republic of Malawi in her opening remarks highlighted that it is the responsibilities of Ministers responsible for Gender and Women Affairs to be actively involved in advocating for the eradication of corruption.
“It is our responsibility as Minister to ensure that the disparities persistent in the region in the area of gender equality and empowerment of women and youth especially young women are eradicated,” she noted.
In the same vein, ideas were expressed that the theme of the 10th GPS need deep analysis by decision makers as it is one of the major challenges in African countries. The Chairperson of the Permanent Representatives Committee who is also the Ambassador the Republic of Guinea, Mrs. Sidibe Fatoumata Kaba, Ambassador highlighted that, “the struggles of gender equality, men/women’s parity and empowerment of women cannot be won without the eradication of the phenomenon of corruption that plagues our people and prevents the development of our countries.”
Ms Hendrina Doroba, Chairperson of Gender Is My Agenda (GIMAC) on her part, stressed that women are more at risk of experiencing the negative consequences of corruption. She said “it is possible for us to fight this corruption for our dignity as a people and development of our continent. We need shift in values, accountability and end to impunity. We need systems to track and to prosecute. Fighting corruption should not have any sacred cows.”
Mrs. Demitu Hambisa Bonsa, Minister for Women and Children Affairs of the Federal Democratic Republic of Ethiopia in her welcome remarks stated that corruption is one of the root causes of gender inequality and therefore are closely related. She indicated that “where there is gender inequality, corruption flourishes and where there is corruption, gender inequality flares”.
On the way forward she underscored the need to win the fight against corruption so as to ensures the sustainability of gains in social, economic and political development, in general and in gender equality and women empowerment in Africa in particular. Moreover, the fact that women as agents of change are often more effective than men at fighting corruption in their commitments was also highlighted in the meeting.
According Mr. Philip Baker, Canadian Ambassador to Ethiopia and Djibouti and Permanent Representative to the AU, listing women’s engagement in the fight to end corruption include community mobilization and education on anti-corruption, spearheading public campaigns and conducted advocacy against corruption in partnership with legal, governmental, civil society and international bodies.
Mr. Baker, who also represents Development Partners at the AU Headquarters added that “the importance of empowering women and girls in the fight against corruption cannot be understated”.
The 2018 Gender Pre-Summit (GPS) is organized by the AUC Directorate of Women, Gender and Development (WGDD) of the AUC in collaboration with the Department of Political Affairs (DPA), African Union Advisory Board on Corruption (AUABC), in partnership with the Civil Society and the UN, supported by International Development Partners.
Additionally, the year 2018 also marks the 10th anniversary of the AU-GPS, which has played a significant role in influencing and shaping African Union (AU) policies on gender equality and women’s empowerment (GEWE) and ensuring the inclusion of the critical voices of women and their perspectives in AU.
Participants for the 2018 Gender Pre-Summit drawn from African Union Member States; Ministers responsible for Women Affairs, representatives of the Specialized Technical Committee (STC) meeting on Gender, AU women ambassadors; AU Organs, Representational and Liaison offices; Regional Economic Communities (RECs) and RMs; Civil Society Organizations & Diaspora organizations; UN Partners; International Development Partners, Media and invited guests.
Opening speech of the Chairperson of the AUC, H.E. Mr. Moussa Faki Mahamat
Read by Commissioner for Political Affairs of the AUC, Amb. Minata Samate Cessouma
I would like to offer you the sincere apologies of HE Moussa Faki Mahamat, Chairperson of the Commission of the African Union who, in view of the importance of the theme of your meeting, would have liked to have been with you this morning and to pronounce the introductory word but because other pre-Summit commitments he cannot be among us.
He asked me to convey his warm greetings.
It is my pleasure to welcome you to the 2018 African Union Gender Pre-Summit under the theme “Winning the fight against corruption: a sustainable path to gender equality and women’s empowerment in Africa”, as part of the activities on the sidelines of the 30th Summit of the AU.
I wish to thank you sincerely for having responded positively to my invitation to attend this event which is of outmost importance in the Gender Agenda of the African Union.
2018 marks the 10th anniversary of the AU Gender Pre-Summit, which has played a significant role in influencing and shaping AU policies on gender equality and women’s empowerment. This platform has ensured the inclusion of the critical voices of women and their perspectives in the AU.
Initially conceived as a civil society platform under the Gender is my Agenda Campaign (GIMAC), the Gender Pre-Summit is now well-established as one of the key multi-stakeholder policy platforms of the AU. The transformation of the Gender Pre-Summit from a civil society platform to an institutionalized AU policy platform affirms the importance of strong partnerships between the AU and Civil Society Organs. Allow me, therefore, to express my profound gratitude to the leadership of GIMAC and all other CSOs in the continent and the Diaspora that contributed in initiating this platform.
Over the past Decade, the Gender Pre-Summit has served as a women’s advocacy platform to ensure that gender equality and women’s empowerment remain on the priority list of the highest decision-making organs of the AU. It has enabled AU Heads of State and Government to adopt some of the most progressive women’s rights policies and legal instruments such as the 2009 Gender Policy, which is currently under evaluation, the 2010 Fund for African Women, the Women’s Decade that started in 2010 and will end in 2020.
The African Leaders have put in place various special mechanisms including the first Special Envoy on Women, Peace and Security, whom I would like to commend for her commitment and actions on the ground in favor of the empowerment of women.
The 10th AU Gender Pre-Summit is therefore an opportunity for us to reflect on the road travelled over the past Decade and to plan for the journey ahead especially in the context of the new AU reforms and Agenda 2063.
I therefore hope that this meeting will develop concrete recommendations on the future of AU gender policy platforms and will prepare adequately for the 10th anniversary celebrations of the Gender Pre-Summit, that are scheduled later in the year.
I wish to remind you that this meeting is convened under the theme “Winning the fight against corruption: a sustainable path to gender equality and women’s empowerment in Africa. The AU Heads of State and Government, concerned that Africa is considered among the world’s most corrupt continents have declared 2018, the African year of the fight against corruption to put an end to this scourge which is plaguing the continent and is delaying the progress of Africa. It appears from rankings that out of ten most corrupt countries in the world, six are from Africa. The impact on development is just as illustrative.
Every year, the African continent loses close to 150 billion dollars to corruption. This is unacceptable and must be addressed with immediate effect. Otherwise the vision of achieving an Africa that is self-sustaining and prosperous will remain nothing but a dream.
Corruption affects every facet of our lives. For example, in politics where some politicians are involved in high-level graft, to low-level bribes to custom officials, police, educators or even medical officers to receive preferential treatment. Large businesses collapse because of corruption. At a community level, service delivery is either delayed or substandard services are delivered and in the worst case scenario, no services are provided at all to the poor and vulnerable. This exacerbates poverty and delays development
Corruption is by far, the highest risk to the successful implementation of Agenda 2063. It is for this reason that meetings such as this one are important in assisting the AU to develop creative intervention strategies to prevent and curb corruption.
It is also important to highlight that corruption affects progress towards gender equality and women’s empowerment. It deepens already existing inequalities and discrimination in women’s access to their fundamental human rights. It is therefore imperative that we mainstream gender equality and women’s empowerment in our anti-corruption strategies.
On that note, I hope this Gender Pre-Summit will be able to interrogate, among others, how best to integrate gender equality and women’s empowerment in the mandate of anti-corruption institutions in the continent.
It is for us women to ensure that women’s specific concerns are addressed as well as how to support the full and effective participation of women in anti-corruption processes in the continent.
In closing, I wish to reaffirm the commitment of the African Union Commission to partner with you to fight corruption in Africa and to advance the rights of women to development, gender equality and women’s empowerment. I wish you fruitful deliberations and I look forward to your recommendations and strategies.
I thank you.
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House of Representatives passes AGOA and MCA Modernization Act
On 17 January, the House of Representatives passed the AGOA and MCA Modernization Act (H.R. 3445), which strengthens both the African Growth and Opportunity Act (AGOA) and the Millennium Challenge Act (MCA). Together, these laws have helped increase trade between the U.S. and Africa.
Rep. Karen Bass (D-Calif.), Ranking Member of the House Africa Subcommittee, applauded the passage of the AGOA and MCA Modernization Act, which passed by a unanimous voice vote on the House Floor.
The bill, introduced by House Foreign Affairs Committee Chairman Ed Royce (R-Calif.), will make AGOA more effective by directing the President to establish a website with information regarding AGOA and by encouraging embassies in chosen countries promote export opportunities to the United States.
The bill also included Rep. Bass’s MCORE Act of 2015, which enables eligible countries with Millennium Challenge Corporation compacts to simultaneously enter one additional compact if the country is making considerable and demonstrable progress in implementing the terms of the existing Compact. This would promote and develop a stronger economic relationship between the sub-Saharan Africa and the United States.
“The African Growth & Opportunity Act and the Millennium Challenge Corporation have proven track records of spurring economic development. Expanding these programs advances our position as international leaders, strengthens our domestic job market and economy, while protecting our national security interests,” Rep. Bass said. “It is in our economic and political interest to expand our economic relationships with the nations of Africa and this legislation strengthens these key laws in that effort.”
For well over a decade, AGOA has served as the key foundation to U.S.-Africa trade and investment. The AGOA Enhancement Act hopes to build on and improve this successful law. Rep. Bass has devoted a large portion of her time in Congress to pushing for the extension of AGOA. Working hand-in-hand with Democratic and Republican members of Congress, business and labor officials as well as the AGOA ambassadors and members of the African diaspora and civil society to push for the reauthorization of AGOA, earning its passage in June of 2015.
House votes to strengthen U.S.-Africa trade
On the House floor prior to the vote, Chairman Royce delivered the following remarks (as prepared for delivery):
“I have been honored to serve as the Chairman of the House Foreign Affairs Committee for the past five years. Over this period, there’s been no shortage of threats to U.S. national security.
But there have also been great opportunities – opportunities to make America safer and more prosperous through strategic investments in diplomacy and development. This bill is one example.
The AGOA and MCA Modernization Act seeks to facilitate trade and private sector-led growth in poor but relatively well-governed countries, particularly in Africa, so they can grow their own way out of poverty. It seeks to help countries graduate from the need for foreign aid while simultaneously opening doors for American businesses to break into the most promising emerging markets.
Through AGOA, goods produced in eligible African countries enter the U.S. on a duty-free basis. To be eligible, countries must be committed to the rule of law, eliminating barriers to U.S. trade and investment, combating corruption and supporting counterterrorism activities. So AGOA advances U.S. interests on many levels.
I am proud to have been a member of the AGOA coalition from the beginning, and I have witnessed its transformative impact firsthand.
Yet despite its benefits, AGOA remains underutilized in too many countries. Prior to its reauthorization in 2015, I set out to learn why. I traveled to southern and eastern Africa, where I met with U.S. and African trade officials, business leaders and entrepreneurs and visited garment factories, power stations and trade hubs. I heard a lot about poor infrastructure, competition with China and burdensome U.S. regulations that are difficult to understand.
Then I walked into an artisan shop in Addis Ababa, run by a remarkable woman, Sara Abera. I learned that she, in fact, had benefitted from technical assistance through the U.S.-East Africa trade hub and was now exporting to the U.S. through AGOA. But I also learned that she was an exception – not the rule. Other than Sara, very few business leaders and entrepreneurs seemed to have knowledge of or access to AGOA.
To fix this, the bill before us today would make information about AGOA available on an easily accessible public website. This bill also urges U.S. embassies in eligible countries to more consistently promote AGOA and trade hubs, and seeks to bring greater transparency to commitments made at annual AGOA forums.
This bill also strengthens the Millennium Challenge Corporation, which is already one of our most effective tools for incentivizing policy reform and unlocking market-based growth in developing countries. It increases MCC’s flexibility to promote regional trade, collaboration and economic integration by allowing up to two simultaneous compacts with an eligible country. And it also improves transparency and accountability by streamlining and strengthening Congressional oversight.
This is the commonsense approach the bill promotes. By helping communities grow away from aid and toward trade through cost-free policy changes, we will ultimately save American taxpayers money.
Trade and free-market principles have helped lift more than one billion people out of poverty over the past decade alone. But it is not just this humanitarian goal that leads us to invest in communities abroad. It is clear that investments targeted toward growing healthier, more stable societies also help advance U.S. security and economic interests.
It is therefore vital that we ensure that two of our most impactful development and trade facilitation tools – AGOA and MCC – are efficient, effective and fully utilized.
This bill will do exactly that. I urge Members to support this important measure, and I reserve the balance of my time.”
[Note by AGOA.info: equivalent legislation needs to also pass the Senate, before it can be presented for signature and become law. The Senate version being considered is S.832-115th Congress]
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How new Pan-Africanist business men, women are driving Africa’s economic transformation – Osinbajo
Africa’s impressive economic transformation is being driven by ambitious businessmen and women who are stepping beyond national borders and going global, said Vice President Yemi Osinbajo, SAN, at the inaugural Africa Rising lecture of the Harvard Business School on Tuesday evening.
According to him, “Africa Rising is as much about improving standards of governance as it is about an increasingly confident youth and civil society. It is also about businessmen and women who are stepping beyond national borders and going global.”
The Vice President spoke at Harvard Business School in Cambridge Massachusetts, USA where he delivered the keynote lecture at Batten Hall on the course “Africa Rising, understanding business, entrepreneurship, and the complexities of a continent” to a gathering of erudite scholars, academics, professionals, faculty, alumni and students of Africa ancestry.
Before the lecture Prof. Osinbajo met with top Harvard professors at the Law School, Africa Studies Center, the Business School and the University Marshal. He also interacted with several Harvard students who including a good number of Nigerians among them.
Dwelling on the topic of his lecture, the Vice President noted that “it appears the political pan-Africanists of old have given way in terms of prominence to the business pan-Africanists the likes of Aliko Dangote, Issad Reb Rab (Cevital) Mike Adenuga, Kim Bello-Osagie, the Sawiris owners of Orascom from Egypt, and mining magnate Patrice Motsepe amongst others.”
Prof Osinbajo traced the genesis of Africa’s economic turnaround to the last decade of the twentieth century and noted that democracy provided the fulcrum for change in the mid 1990s. He observed the change was accelerated by “phenomenal rise in Chinese resource bullishness, the commodities boom including new oil and gas discoveries in many African countries, digital technology, mobile phones and the Internet.”
He explained that the creative ingenuity of Africa’s businessmen and women cut across different sectors of the economy such as in agriculture, telecommunications , manufacturing and IT, adding “we’ve been seeing the slow but steady maturing of institutions; press and civil society that are boldly taking advantage of the empowering nature of the Internet; and an increasingly engaged diaspora.”
Drawing attention to Africa’s phenomenal growth, Vice President Osinbajo observed that the continent development experience had thrown up very important lessons one of which is that “economic growth is not sustainable without nation-building, and even of greater importance, State building.”
“Many of the ethnic and other parochial tensions that have tended to create insecurity and outright conflict time, and time again are largely as a result of failure to deliberately undertake nation- building efforts,” he submitted.
Other lessons highlighted by the VP during the well-attended speech include:
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the benefit of discarding the error of African Exceptionalism – the belief that African countries are in some way exempted from the rules by which other countries and continents have succeeded; that somehow Africa must not be judged by the standards and expectations that apply to other countries.
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the need for a healthy distrust of purist ideological prescriptions, in favour of a commonsense introduction of markets with a fair balance of state participation or intervention that has shown interesting results.
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that sustainable growth comes from productivity increases in the real sector, which perhaps explains the continued high unemployment in Africa even at 6% growth rates; the ‘jobless’ growth phenomenon.
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that Africa cannot afford to underestimate the power of technology to fast-track the continent’s rise. Emerging technologies have played extraordinary roles in every aspect of the continent’s most touted successes, and
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that many – including Africans themselves – constantly need to be reminded that Africa is not a country. Policy-makers and development partners must understand that what worked in Rwanda or Zambia might not necessarily work in Ghana.
Prof. Osinbajo cautioned African leaders to pursue a people centered economic model which translates economic growth to an improved standard of living of the average citizens on the continent. He stated that social safety nets have become imperative, citing the over 500 billion naira social Investment programmes of the Buhari Presidency which is committed to targeting the youths, artisans, market women and the vulnerables in Nigeria.
Earlier, in her welcome remarks, Prof. Caroline Elkins of the Harvard Business School, noted the contributions of the Vice President to legal profession in Africa and his impressive public service career especially during his tenure as Attorney-General of Lagos State.
In the delegation of the Vice President to Harvard were Nigeria’s Ambassador to the United States, Amb. Sylvanus Nsofor and Nigeria’s Permanent Representative at the United Nations, Prof. (Amb.) Tijani Mohammed Bande.
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tralac’s Daily News Selection
Welcome to the first edition of tralac’s Daily News selection for 2018!
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The African Development Bank launched the 2018 edition of its yearly flagship report, the African Economic Outlook, at its headquarters in Abidjan. To facilitate advocacy and policy dialogue, the 2018 AEO has been shortened to a maximum of four chapters and about 180 pages, plus the 54 Country Notes, down from more than 300 pages.
Foresight Africa: top priorities for the continent in 2018 (Brookings)
In this year’s Foresight Africa, AGI scholars and invited experts delve deeply into six overarching themes that highlight areas in which African countries and their citizens are taking the lead to achieve inclusive growth. In a world where China and other emerging economies are ascendant, where cooperation on global governance is under challenge, and where free trade faces headwinds, Africa needs its own institutions to play a more assertive role in advancing the continent’s agenda. The potential for a more unified Africa to create never-before-seen opportunities for trade and economic prosperity is gaining traction. Through our exploration, we hope to emphasize that Africa’s future lies in its own hands and that it already has the power to reach its goals. Profiled chapter: Rethinking Africa’s structural transformation - the rise of new industries:
We have found a new pattern of structural change emerging in Africa, one different from the manufacturing-led transformation of East Asia. ICT-based services, tourism, and transport are outpacing the growth of manufacturing in many African countries. Between 1998 and 2015, services exports grew more than six times faster than merchandise exports. Kenya, Rwanda, Senegal, and South Africa have vibrant ICT-based services sectors. Tourism is Rwanda’s largest single export activity, accounting for about 30 percent of total exports. In 2014, 9.5 million tourists visited South Africa, contributing 3% to its GDP. Ethiopia, Ghana, Kenya, and Senegal all actively participate in global horticultural value chains. Ethiopia has achieved extraordinary success in flower exports, so much so that the country is now a global player in the sector. We also found that, because tradable services, agro-industry, and horticulture share many firm characteristics with manufacturing, it is possible to develop a strategy for structural transformation based on three factors that have largely shaped the global distribution of manufacturing. The first is the “investment climate” (the environment within which firms operate). The second is the capacity to export, and the third is agglomeration. The three are inter-related, and to boost the pace of structural change African governments need to address them concurrently. [The author: John Page)
Global economy to edge up to 3.1% in 2018 but future potential growth a concern (World Bank)
Regional outlook – Sub-Saharan Africa (pdf): A modest recovery is underway in Sub-Saharan Africa, supported by an improvement in commodity prices. Although growth rebounded in Angola, Nigeria, and South Africa - the region’s largest economies - it remained low. Metals exporters in the region experienced a moderate rebound, partly reflecting an uptick in mining output amid rising metals prices. Growth was stable in non-resource-intensive countries, supported by infrastructure investment. The region is projected to see a pickup in activity over the forecast horizon, on the back of firming commodity prices and gradually strengthening domestic demand. However, given demographic and investment trends, structural reforms would be needed to boost potential growth over the next decade. Downside risks continue to predominate, including the possibilities that commodity prices will remain weak, global financing conditions will tighten disorderly, and regional political uncertainty and security tensions will intensify. On the upside, a stronger-than-expected pickup in global activity could further boost exports, investment, and growth in the region.
Launching today: the WEF’s Global Risks Report 2018
This year’s report covers more risks than ever, but focuses in particular on four key areas: environmental degradation, cyber security breaches, economic strains and geopolitical tensions. And in a new series called “Future Shocks” the report cautions against complacency and highlights the need to prepare for sudden and dramatic disruptions. The 2018 report also presents the results of our latest Global Risks Perception Survey, in which nearly 1,000 experts and decision-makers assess the likelihood and impact of 30 global risks over a 10-year horizon.
Committee of Ten Ministers of Finance responsible for the Financing of the African Union: updates from the Kigali meeting, 11-13 January
(i) Mahamat calls for urgency in self-financing of African Union
Available information indicates that as of December 2017, the African Union Commission had on record 20 Member States that were at various stages of implementing the Kigali Decision. Out of these, 14 Member States had already started collecting from the levy and had deposited the funds at an account dedicated for the AU opened with the Central Banks. These Countries include Kenya, Ethiopia, Rwanda, Chad, Djibouti, Guinea, Sudan, Morocco, Congo Brazzaville, Gambia, Gabon, Cameroun, Sierra Leone and Cote d’Ivoire. On the other hand, Ghana, Benin, Malawi and Senegal have initiated internal legal and administrative processes to allow implementation of the Decision
(ii) CFTA to boost domestic tax collections: an interview with Prudence Sebahizi (Chief Technical Advisor and Head of the CFTA Unit at the AUC’s Department of Trade and Industry)
Rwanda Economic Update: rethinking urbanization (World Bank)
In a special section, the Update (pdf) analyses the trends and forms of the country’s rapid pace of urbanisation to examine its contribution to economic development. An increase in the urban population has been accompanied by the physical expansion of cities, notably the periphery of Kigali though around secondary cities as well. The report finds the urban share of Rwanda’s total population (now about 12 million) has increased far faster than official records suggest because the definitions of urban areas need streamlining. A 2012 census and 2014 household survey calculated the urban share of the population at 16.5 and 17.3% respectively. However, using another, simple definition of urban, the report’s researchers found that the level of urbanization had increased far more – from 15.8% to 26.5% between 2002 and 2015, an increase of 132% or almost 2 million people.
Mozambique Economic Update: making the most of demographic change (World Bank)
The World Bank’s new Mozambique Economic Update (pdf) notes that small and medium enterprises are crowded out, and that not even the sizable growth of commodity exports is sufficient to counteract the effects this is having on the economy. The level of concentration has also increased in 2017: Just a few commodities dominate exports, representing a larger share of foreign currency inflows, which heightens the country’s exposure to external shocks. The concentration of output in the extractive and minerals sector keeps Mozambique on the path of a two-speed economy, one less capable of generating enough jobs to absorb a net inflow of the almost 500,000 people entering the labor force each year. Trends observed in 2017 make it clear that Mozambique needs to double its efforts to support small and medium enterprises and look beyond the extractive sector for more balanced growth.
Tanzania: Seventh Review under the Policy Support Instrument (IMF)
Significant public investment is planned over the coming years. Major projects include the standard gauge railway linking Dar es Salaam with Mwanza, the 2100 MW Stiegler’s Gorge hydro power project, the Bagamoyo port development, and the Hoima-Tanga pipeline linking Uganda’s Lake Albert oil fields to the Tanzanian port of Tanga. Timelines and financing modalities are not yet fully decided, and it was agreed that the medium-term scenario presented in the previous staff report continues to be relevant and will guide the authorities’ public investment plans. Thus, the baseline scenario assumes that the overall fiscal deficit would increase to about 4½ percent of GDP for a few years, before converging back to below 3 percent of GDP as major public investment projects are completed and in line with regional commitments toward the planned East African Monetary Union. That scenario allows Tanzania to maintain its low risk of debt distress rating as indicated in the accompanied debt sustainability analysis update.
The Pan-African Investment Code: a good first step, but more is needed (pdf, Columbia Center on Sustainable Investment)
It is clear, under these circumstances, that the Code will not keep its original promises. Nevertheless, it certainly remains a useful instrument for African investment policy-making. As many binding regional instruments are currently under negotiation, including the SADC-COMESA-EAC Tripartite Free Trade Agreement and the Continental Free Trade Agreement, which both contain investment chapters, the Code can serve as a useful capacity-building instrument. It can, indeed, provide guidance to the negotiators of these agreements, in support of the continent’s structural transformation objectives. Having said that, to put the Code into context and clarify its purpose, it will probably be necessary to rename it as “Pan-African Guiding Principles on Investor-State Relations.” [The author: Mouhamadou Madana Kane]
The role of trade policies in building regional value chains: some preliminary evidence from Africa (UNCTAD)
This study (pdf) uses newly published international input-output tables, obtained from the UNCTAD Eora GVC database, to quantify trade in value added between African countries and to evaluate each country’s position in the RVC. The empirical analysis concentrates on the backward integration perspective, defined as imported foreign value added from the region embedded in a country’s exports to the region. On average, 6.0% (in 2012) of the value added exports to African countries are also sourced from within the region. Southern African countries such as Namibia, Botswana and Swaziland are considered to be the most integrated countries, mainly attributed to their proximity to the regional hub, South Africa. Moreover, all African countries, except South Africa, presently import more inputs from within region than they did in 2006. Between 2006 to 2012, real imported FVA increased by 114% while total value added trade increased by 53%. The stronger increase in FVA indicates a strengthening of regional production networks.
China’s impacts on SSA through the lens of growth and exports (IMF)
If China’s impacts on SSA are well quantified, a following question would be what the potential transmission channels are? how China influences SSA? In this context, the paper (pdf) seeks to assess the traditional channels of trade and FDI by examining whether China-related variables are among the determinates of SSA’s total exports and exports to China. In summary, the paper seeks to answer the following questions: Is China’s economic growth significant for SSA growth? Does it evolve over time? Does country heterogeneity play a role? Which component of China’s GDP is more important: consumption or investment? What role does Chinese economy play in SSA’s exports?
SADC-EU Economic Partnership Agreement Civil Society Forum: conference report (pdf)
Profiled recommendation: It was agreed that the experience of the European Economic and Social Committee provided useful lessons for the establishment of a civil society platform under the SADC-EU EPA. For example, the EESC participated in a joint consultative committee with civil society from the Caribbean to discuss issues of common interest on an annual basis. It was recommended that a similar structure be established under the SADC-EU EPA with participation from existing umbrella groupings in SADC that are mandated to represent civil society, such as the SADC Council of NGOs, Southern African Trade Union Coordinating Council and the Southern African Business Forum. The platform would define its terms of reference and participate in the monitoring of the implementation of the EPA and identify initiatives to tackle bottlenecks related to the agreement. It would also serve as a space to network and exchange best practices between civil society in the EU and the SADC EPA countries.
Maritime piracy and armed robbery reaches 22-year low (ICC)
A total of 180 incidents of piracy and armed robbery against ships were reported to the International Chamber of Commerce’s International Maritime Bureau in 2017, according to the latest IMB report. It is the lowest annual number of incidents since 1995, when 188 reports were received. Beyond the global figures, the report underlined several takeaways from the past year:
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African Development Bank launches the 2018 edition of the African Economic Outlook
AfDB makes a compelling case for Africa’s industrialization
The President of the African Development Bank, Akinwumi Adesina, has made a compelling case for accelerating Africa’s industrialization in order to create jobs, reduce poverty and promote inclusive economic growth.
Citing data from the Bank’s 2018 African Economic Outlook launched in Abidjan, Côte d’Ivoire, on Wednesday, Adesina said infrastructure projects were among the most profitable investments any society can make as they “significantly contribute to, propel, and sustain a country’s economic growth. Infrastructure, when well managed, provides the financial resources to do everything else.”
Noting that economic diversification is key to resolving many of the continent’s difficulties, he urged African governments to encourage a shift toward labour-intensive industries, especially in rural areas where 70 percent of the continent’s population resides.
“Agriculture must be at the forefront of Africa’s industrialization,” he said, adding that integrated power and adequate transport infrastructure would facilitate economic integration, support agricultural value chain development and economies of scale which drive industrialization.
He reminded the audience of policy-makers and members of the diplomatic corps in Côte d’Ivoire that economic diversification via industrialization with tangible investment in human capital will enable the continent’s rapidly growing youth population to successfully transition to productive technology-based sectors.
Adesina also highlighted the relatively unknown win-win situation that Africa’s industrialization can generate within the developed world, citing data from the report, which notes that “increasing the share of manufacturing in GDP in Africa (and other Less Developing Countries) could boost investment in the G20 by about US $485 billion and household consumption by about US $1.4 trillion.”
The Bank President highlighted various innovative ways in which Africa countries can generate capital for infrastructure development and what the Bank is doing through its ambitious High 5 development agenda to address the issues raised in the report.
He announced that the Bank would organise the Africa Investment Forum on November 7-8, 2018 in Johannesburg, South Africa, to mobilise funds for infrastructure development, to bridge an estimated funding gap of $130-$170 billion a year, up from previous estimates of US $100 billion per year.
New infrastructure financing gap estimates and innovative ways through which African countries can raise funds for infrastructure development are among the highlights of the 2018 edition of the report, which was launched at the Bank’s headquarters for the first time in the publication’s 15-year history.
The Africa Economic Outlook was first published in 2003 and launched mostly in various African capitals outside the Bank’s headquarters in May each year.
In his remarks, Célestin Monga, the Bank’s Chief Economist and Vice-President for Economic Governance and Knowledge Management, said the African Economic Outlook has become the flagship report for the African Development Bank, providing data and reference material on Africa’s development that are of interest to researchers, investors, civil society organizations, development partners and the media.
This year’s edition focuses on macroeconomic development and structural changes in Africa, and outlines economic prospects for 2018. The report emphasizes the need to develop Africa’s infrastructure, and recommends new strategies and innovative financing instruments for countries to consider, depending on levels of development and specific circumstances.
Abebe Shimeles, Acting Director, Macroeconomic Policy, Forecasting and Research, said the Bank will publish Regional Economic Outlooks for Africa’s five sub-regions. The self-contained, independent reports, to be released at the Bank’s Annual Meetings in May 2018, will focus on priority areas of concern for each sub-region and provide analysis of the economic and social landscape, among other key issues.
About the report
The African Economic Outlook bridges a critical knowledge gap on the diverse socio-economic realities of African economies through regular, rigorous, and comparative analysis.
It provides short-to-medium term forecasts on the evolution of key macroeconomic indicators for all 54 regional member countries, as well as analysis on the state of socio-economic challenges and progress made in each country.
It presents the AfDB staff economists’ analyses of African economic development during the previous year and near term. It has become the main flagship report for the African Development Bank, as well as reference material for those interested in Africa’s development, including researchers, investors, civil society organizations, and development partners.
The January release provides a rigorous and comprehensive analysis of the state of African economy, country profiles with key recent developments and prospects for each country, while a set of Regional Economic Outlooks for Africa’s five sub regions to be released in late January. These self-contained, independent reports, will focus on priority areas of concern for each sub region and provide analysis of the economic and social landscape.
Given a rapidly changing Africa and international economic order, the Bank has revamped the report to enhance its policy relevance while ensuring that it serves the Bank’s operations well. A few changes are evident.
To facilitate advocacy and policy dialogue, the 2018 AEO has been shortened to a maximum of four chapters and about 180 pages, plus the 54 Country Notes, down from more than 300 pages.
Chapter Breakdown
Ch 1. Africa’s macroeconomic performance and prospects
This chapter reviews Africa’s economic performance in 2017 and presents forecasts of GDP growth for 2018-19. It analyses growth outcomes and discusses some of the macroeconomic shocks and vulnerabilities African countries face and how they have affected development financing.
Ch 2. Growth, jobs, and poverty in Africa
Africa’s growth momentum in the past 25 years has been remarkable by historical standards. Was it marked by growth dynamics that presage sustained growth? Were growth episodes accompanied by shifts in economic fundamentals? Has growth in Africa been job creating and inclusive? What are the common threads that connect rapid growth with continuous expansion in employment opportunities? This chapter explores these issues and provides insights and evidence on the character of long-term growth and its link with jobs and poverty.
Ch 3. Africa’s Infrastructure – Great potential but little impact
Africa must industrialize to end poverty and to generate employment for the 10-12 million young people who join its labor force every year. One of the key factors retarding industrialization has been the insufficient stock of productive infrastructure in power, water, and transport services that would allow firms to thrive in industries with strong comparative advantages.
Ch 4. Financing Africa’s infrastructure – New strategies, mechanisms, and instruments
The excess savings in many advanced countries could be channeled into financing profitable infrastructure projects in Africa. That this mutually profitable global transaction is not taking place is one of the biggest paradoxes of current times.
More than $100 trillion is managed by institutional investors and commercial banks globally. African countries seeking financial resources now have a wide variety of options, well beyond foreign aid. Many new financing mechanisms could be implemented in all African countries, taking into account the specific economic circumstances and the productive structures of national economies.
Chapter 3 extract
Africa’s infrastructure: Great potential but little impact on inclusive growth
Africa must industrialize to end poverty and to generate employment for the 10-12 million young people who join its labor force every year. One of the key factors retarding industrialization has been the insufficient stock of productive infrastructure in power, water, and transport services that would allow firms to thrive in industries with strong comparative advantages.
Despite the potential long-term benefits, the share of resources allocated to infrastructure was cut sharply by African governments and their development partners in the 1980s and 1990s, thanks to the structural adjustment programs most African countries adopted under the so-called Washington Consensus. That partly explains Africa’s current lag in infrastructure relative to other regions. And while capital accumulation started to pick up again in the early 2000s, the pace has been too slow to close Africa’s infrastructure gap. New estimates by the African Development Bank (AfDB) suggest that the continent’s infrastructure needs amount to $130-$170 billion a year, with a financing gap in the range $67.6-$107.5 billion. But African countries do not need to fill these gaps before proceeding with their economic transformations.
The economic costs of Africa’s insufficient stock and poor quality of infrastructure are as big for the continent as the size of the potential impacts of resolving the problem. Funding infrastructure in Africa and around the world should not be an issue of financial resources. Beyond the seemingly unlimited resources from the public sector in advanced economies and central banks, institutional investors such as insurance companies, pension funds, and sovereign wealth funds have around $100 trillion in assets under management globally.
A small fraction of the excess global savings and low-yield resources would be enough to plug the financing gap and finance productive and profitable infrastructure in the developing world. That would boost aggregate demand, create employment in poor and rich countries alike, and move the world toward peace and prosperity. In ideal political circumstances, a global pact between rich and poor nations would codify a “grand bargain” based on infrastructure financing. But the world does not have ideal political circumstances. Economic decisions are rarely rational in the realm of dreams, and without the interference of political subjectivities and irrationalities.
So, African countries facing mammoth infrastructure needs have to change their focus and strategy. In fact, even if the continent had the resources, it should not devote them to financing infrastructure. No country or region in world history has ever had to fill its entire infrastructure deficit before igniting and sustaining high rates of growth. Indeed, in the 19th century’s industrial revolution and the 20th century’s miracle economies, countries from several global regions grew at high rates for long periods, while having wide infrastructure deficits.
With an estimated infrastructure gap up to $107.5 billion a year, and urgent needs in health, education, administrative capacity, and security, Africa has to attract private capital to accelerate the building of critical infrastructure needed to unleash its potential.
African countries need to accelerate their investments in infrastructure, but in a smarter way. And they need to find new mechanisms and instruments to fund their most urgent needs – infrastructure and otherwise. African countries can jump directly into the global economy by building well-targeted infrastructure to support competitive industries and sectors in industrial parks and export-processing zones linked to global markets. Using their limited resources for infrastructure more wisely for new investments and maintenance, all African countries can leverage these zones to attract light manufacturing from more advanced economies, as East Asian economies did in the 1960s and China in the 1980s.
By attracting foreign investment and firms, even the poorest African countries can improve their trade logistics, increase the knowledge and skills of local entrepreneurs, gain the confidence of international buyers, and gradually make local firms competitive. This strategy is already being used with great success in Bangladesh, Cambodia, Ethiopia, Mauritius, Rwanda, and Vietnam. The strategy need not be limited to traditional manufacturing but can also cover agriculture, services, and other activities. Africa is well placed to help boost the global economy. It is up to world leaders to put forth the policy framework to make it happen.
Infrastructure is critical for sustainable growth and inclusive development
The positive impact of infrastructure on economic growth and inclusive social development has been well documented by researchers in several social science disciplines. Infrastructure affects productivity and output directly as part of GDP formation and as an input to the production function of other sectors. And it does so indirectly by reducing transaction and other costs, thus allowing a more efficient use of conventional productive inputs. Poor energy quality, for example, can impose additional costs on firms such as idle workers, lost production, or damaged equipment. But modern transport systems could increase manufacturing competitiveness cheaply and quickly, moving raw materials to producers and manufactured goods to consumers.
High-quality infrastructure is essential for Africa to achieve the Sustainable Development Goals (SDGs) of the United Nations (UN), Agenda 2063 of the African Union (AU), and the High Five Goals of the African Development Bank (AfDB). It is needed for raising economic productivity and sustaining economic growth. Good infrastructure has an impact on growth directly and indirectly. It increases total factor productivity (TFP) directly because infrastructure services enter production as an input and have an immediate impact on the productivity of enterprises. It thus fosters aggregate economic output given its contribution, on its own, to GDP.
Good infrastructure can also raise TFP indirectly by reducing transaction and other costs, allowing a more efficient use of conventional productive inputs. It does this by being a factor of production for virtually all goods and services generated by other sectors. In addition, it can affect the adjustment costs of investment, the durability of private capital, and the demand for – and supply of – health and education services. If transport, electricity, or telecom services are absent or unreliable, firms face additional costs (buying power generators, for instance) and struggle to adopt new technologies. Better transport increases the effective size of labor markets.
And in lowering transaction costs, infrastructure fosters more efficient use of productive inputs such as land, labor, and physical capital assets, which translates into higher TFP, and expands the production frontier and profitable investment opportunities. For example, reducing the cost of broadband internet could foster the development of e-commerce and a digital economy. And the greater availability and reliability of infrastructure is poised to develop human capital through improved education and health services, which should foster greater economic prosperity. Other transmission channels include facilitating trade flows, stimulating aggregate demand, and improving a country’s attractiveness as an investment destination. And over the short term, infrastructure projects create jobs during construction, also contributing to growth.
Africa has a compelling case for accelerating infrastructure development. First, it is a continent of small, open economies that will rely on trade as the main engine of growth for the foreseeable future. For much of the period since World War II, there has been an intellectual consensus that barriers to market access – tariffs, quotas, and nontariff measures disadvantaging foreign firms; safety and sanitary requirements; local content and the like – were the main barriers to trade and to foreign direct investment in Africa. That view still has some validity, but the global landscape for production and trade has changed considerably in recent decades.
Tariff barriers have declined steadily in advanced and developing countries, while non-tariff measures have become more prevalent. But another tectonic shift has occurred in global commerce, making infrastructure an even bigger factor in economic growth in Africa. Empirical research by the OECD and the WTO (complemented by a recent WEF-Bain & Co.-WB report) shows that tariff reductions and market access have become much less relevant for economic growth than a generation ago. International trade is no longer about manufacturing a product in one country and selling it in another. It is about cooperating across boundaries and time zones to minimize production costs and maximize market coverage. Value chains (the networks of activities for producing and getting a product to consumers, spanning the manufacturing process and transport and distribution services) are the dominant framework for trade.
Reducing supply chain barriers could increase global GDP up to six times more than removing all import tariffs. Poor quality infrastructure services can increase the input material costs of consumer goods by up to 200 percent in certain African countries.10 In Madagascar for instance, supply chain barriers can account for about 4 percent of total revenues of a textile producer (through higher freight costs and increased inventories), eroding the benefits of duty-free access to export markets. Small and medium enterprises (SMEs) tend to face proportionally higher supply chain barriers and costs. Having all countries in the world reduce just two key bottlenecks to supply chains (border administration and transport and communications infrastructure) halfway to those in Singapore would increase global GDP $2.7 trillion (4.7 percent) and global exports $1.6 trillion (14.5 percent). These massive numbers compare with much smaller gains from complete tariff elimination worldwide, which would lead to gains of “only” $400 billion (0.7 percent) in global GDP and $1.1 trillion (10.1 percent) in global exports. Even a less ambitious set of reforms that moves countries halfway to regional best practice could increase global GDP by 2.6 percent and world trade by 9.4 percent. The main implication of this huge paradigm shift in global trade is that African policy makers should devote more time and resources to building some well-targeted infrastructure that can connect their economies to global value chains.
Second, because the continent is a latecomer to the economic development process and many of its countries are still at low or lower middle incomes, the economic benefits that Africa could draw from improved infrastructure are higher than those for other regions, based on the underlying diminishing returns to capital. Indeed, supplying critical exogenous factors to low-income countries, where most African countries rank, should allow them to draw exceptionally higher returns to capital as they catch up.
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Continental Free Trade Area to boost domestic tax collections – AU official
Six years ago, African leaders decided to establish the Continental Free Trade Area (CFTA), a flagship project of the African Union’s (AU) Agenda 2063 aiming to fast-track the continent’s economic growth and development by creating one gigantic market of more than 1.2 billion people with a combined GDP of US$2.19 trillion.
Prudence Sebahizi, the Chief Technical Advisor and Head of the CFTA Unit at the AU Commission’s Department of Trade and Industry, spoke to The New Times’ James Karuhanga about the project’s progress ahead of the upcoming 30th AU Summit in Addis Ababa, Ethiopia later this month.
You say the CFTA is a game changer for Africa and its people. For readers who might not have followed developments, what is this CFTA and how is it a game changer for people on the continent?
The Continental Free Trade Area is a continental geographic zone where goods and services are supposed to move with no restrictions among member states. Once established, there shall be no administrative barriers at any country’s borders in regards to movement of goods and services. The CFTA will be established by a comprehensive agreement to be concluded by African Union Member States within the broader framework of continental integration agenda and the Abuja Treaty Establishing the African Economic Community. The CFTA aims to achieve a comprehensive and mutually beneficial trade agreement among member states covering trade in goods, trade in services, investment, intellectual property rights and competition policy.
It is a game changer in the sense that it will be transformative for Africa and her people. It is an agreement that will bring tremendous positive economic impact on people and the continent at large. Through the agreement, countries will create a single market that will spur industrialisation, economic diversification and trade. It will also be an instrument which will bring countries together to formulate a common agenda for Africa to speak with one voice and act in unison, thereby leveraging Africa’s strengths in her commercial and diplomatic engagements with the rest of the world.
According to you, during the last six months following last July’s AU Summit, tremendous progress was made in a bid to establish the CFTA. Bring us up to speed. What, precisely, has happened to date, and where do we go from here?
Since the launch of the CFTA negotiations in June 2015, there have been positive developments to prepare the ground for establishment of the CFTA. After successive rounds of negotiations, the fourth Meeting of AU Ministers of Trade that took place in Niamey, Niger, from December 1 to 2, 2017 considered and approved most of the provisions of the draft agreement establishing the African Continental Free Trade Area. The CFTA agreement includes three protocols namely; the protocol on trade in services, the protocol on trade in goods and the protocol on dispute settlement mechanism. The protocol on trade in services will have two annexes, namely, schedules of commitments and regulatory frameworks. The protocol on trade in goods will have nine annexes: tariff liberalisation schedules, rules of origin, customs procedures and cooperation, trade facilitation, transit and transit facilitation; non-tariff barriers, technical barriers to trade, sanitary and phytosanitary measures, and trade remedies.
On the overall progress in negotiations, the agreement establishing the CFTA and the protocol on trade in services were completed and endorsed by ministers responsible for Trade. It should be noted, however, that some final work is needed to complete the protocol on trade in goods and its annexes, as well as protocol on rules and procedures for settlement of disputes within the African CFTA. For that reason the roadmap has been modified and a calendar of meetings that run from January to March 2018 has been developed and agreed upon by ministers responsible for trade.
Given the loaded agenda of the upcoming AU Summit, where is the chance that the agreement establishing the CFTA will be signed?
Following completion of the pending work, the agreement establishing the CFTA and the three protocols will be ready for approval and signing by March 2018. The Heads of State and Government will decide on when and where to sign the Agreement Establishing the African Continental Free Trade Area.
Negotiations for the establishment of the CFTA were launched in June 2015. The eighth and final round of negotiations was done last November. Are you sure that the phased approach of negotiations gave countries enough room to build their internal capacities, mobilise stakeholders and adjust their national policies to continental objectives of creating a single market?
They were launched in 2015 but a Summit decision to establish the Continental Free Trade Area was made in January 2012. In parallel with organising CFTA negotiating sessions, the African Union Commission conducted technical studies to inform negotiators and organised capacity building activities for Member States. In addition, the CFTA Support Unit was established to provide technical, administrative and logistical support to the negotiations. The preparatory phase that preceded actual negotiations has allowed countries to build their internal capacities and mobilise stakeholders. However, the policy adjustment is a continuous process. Once the CFTA Agreement is signed, its implementation will be phased out over a period between five to 15 years depending on the specific economic circumstances of implementing countries. This is again an opportunity for those countries to adjust their national policies.
What implementation challenges do you expect, and how can they be countered?
Normally, implementation challenges might be of two categories: the loss of government revenues when tariff on imports from within the continent is reduced or eliminated as well as competition that local industries might face as a result of market liberalisation. However, these challenges are always easy to mitigate. Countries implementing a trade agreement are allowed to develop their local industries through applying provisions on sensitive products that are subject to longer liberalisation or transition period and exclusion list which includes products that are not subject to liberalisation. In addition, other trade remedies such as safeguards, anti-dumping and countervailing measures are always provided to deal with adverse impact of liberalising trade. The CFTA Agreement also provides for measures to protect infant industries provided that such measures are applied on a non-discriminatory basis and for a specified period. The potential loss in tariff revenues can always be offset by gains in welfare as well as increase in internal taxes revenue collections that will result from trade creation.
What industrial policies will be needed to increase or maximise the CFTA’s impact on the continent?
Countries need to maximise on intra-industry integration. Intra-industry trade may entail horizontal or vertical specialisation. Horizontal specialisation reduces product variety in the national firms, leading to cost reduction through the lengthening of production runs and the exploitation of economies of scale. Vertical specialisation permits an exchange of parts, components, and accessories that in turn allows the exploitation of economies of scale in the manufacture of these inputs at various levels of fabrication. These considerations indicate the desirability of regional integration among countries at lower levels of development for the sake of efficient industrialisation through increased specialisation and greater competition. International vertical specialisation brings gains to all countries by permitting specialisation to take place according to the relative labour intensity of the production process. This is what I would recommend to countries that will implement the CFTA Agreement.
Please break down these complex economic terms. Intra-industry integration, horizontal specialisation, vertical specialisation, and economies of scale. What do they mean?
You are right! With intra-industry integration, I mean that producers belonging to the same industry may consider developing value chains where, for example, a company in country A may specialise in producing different parts of products and sell them to country B, that will then assemble them and export a final product. The latter is what I refer to as vertical specialisation. It refers to imported goods used as inputs to produce a country's export goods.
With horizontal specialisation, the same producer may consider establishing subsidiaries of the business in many countries and take advantage of economies of scale. As regards economies of scale, when more of a good or a service can be produced on a larger scale, yet with fewer input costs, economies of scale are said to be achieved.
Last year, you told us that the CFTA borrows experience from existing trade arrangements in Regional Economic Communities and builds on them. What particular best practices do you note here?
There are many best practices that can be cited, which the CFTA process has borrowed from Regional Economic Communities. First of all, it should be understood that from the institutional point of view, the Continental Task Force on the CFTA is composed of the AU Commission and Regional Economic Communities Secretariats, among others. This Task Force has met 10 times during the process of negotiating the CFTA and it was set up to provide technical assistance to the negotiations process. Secondly, the draft text that formed the basis for negotiating the agreement was based on already existing treaties, protocols and trade agreements of regional economic communities. Thirdly, CFTA negotiators have, to a large extent, been involved in negotiations in their respective regional organisations. In this regard, both the process and the substance of the CFTA are based on best practices of Regional Economic Communities.
Since 2008, a total 27 countries under the tripartite of the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern Africa Development Community (SADC) have worked, or struggled, to form a free trade area of their own. The CFTA is bigger, involving all 55 African countries.
At this rate, once successful, won’t the CFTA make the 27-member TFTA project unnecessary and redundant? What’s your take?
I don’t think the success of the CFTA can make the TFTA redundant. If this assumption holds, then one would argue that the World Trade Organisation would have made Regional Economic Communities redundant! From the legal point of view, the CFTA Agreement shall not nullify, modify or revoke rights and obligations under preexisting trade agreements that members already concluded at regional level. In reality, the success of the CFTA will call for deeper integration at regional level for these regional bodies to remain relevant. However, you have to recall that the Treaty establishing the African Economic Community (Abuja Treaty) provides a roadmap for Africa’s integration agenda that will culminate into African Single market through stages. The formation and strengthening of Regional Economic Communities is one of those stages. There shall be a Continental Customs Union as well as Common Market that will see regional free trade areas cease to exist. Therefore, the CFTA is not an end in itself. It is a road to the vision of creating One African Market.
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Mahamat calls for urgency in self-financing of African Union
Moussa Faki Mahamat, African Union Commission Chairperson, has reiterated the need for financing the African Union agenda if the regional body is to become self-sustainable to guide the continent’s transformation. He was speaking at the opening ceremony of the meeting of the Committee of Ten Ministers of Finance (F10) responsible for the Financing of the African Union in Kigali on Saturday.
The F10 comprises ten countries representing the five regions of the African Union as follows: Chad and Congo for Central Africa; Ethiopia and Kenya for East Africa; Algeria and Egypt for North Africa; Cote d’Ivoire and Ghana for West Africa; and South Africa and Botswana for Southern Africa.
“Financing of the AU is crucial, even existential for the future of our Union. The decisions taken in Johannesburg in June 2015 and in Kigali in July 2016 attest to the determination of our leaders to live up to our collective ambitions as articulated in AU’s Agenda 2063,” Mahamat said.
The AU’s self-financing decision was adopted during the organization’s summit held in Kigali in 2016 as a medium to establish financial dependence not only in the Commission but on the continent at large, with a view that depending on international partners was such that the credibility of the African political project was at stake, according to Mahamat.
The Kigali Decision seeks to institute and implement a 0.2 percent Levy on all eligible imported goods into the Continent, with the intended purpose to address these challenges.
During that Summit, Heads of State and Government instructed Finance Ministers to implement the Decision, including opening of a special account in their respective central banks for predictability of disbursements to the AU Commission.
“Significant progress has been made on the implementation of the Kigali decision. I am proud of these advances. To date, 21 Member States are at various stages in the implementation of the 0.2% levy on eligible imports. I urge other AU member states to follow suit and with the urgency required for the collective interests of the continent,” he added.
He noted that AU Member States have so far contributed $29.5 million to the Peace Fund, enabling the body to fund some regional prevention and mediation activities.
Available information indicates that as of December 2017, the African Union Commission had on record 20 Member States that were at various stages of implementing the Kigali Decision. Out of these, 14 Member States had already started collecting from the levy and had deposited the funds at an account dedicated for the AU opened with the Central Banks.
These Countries include Kenya, Ethiopia, Rwanda, Chad, Djibouti, Guinea, Sudan, Morocco, Congo Brazzaville, Gambia, Gabon, Cameroun, Sierra Leone and Cote d’Ivoire. On the other hand, Ghana, Benin, Malawi and Senegal have initiated internal legal and administrative processes to allow implementation of the Decision
F10 chairperson Abdoulaye Sabre Fadoul observed that the AU continued “heavy dependence” on external partners for funding was unsustainable, thus the Union requires adequate, reliable and predictable resources which remains paramount to the implementation of its programmes.
“We the F10 countries will set the pace and lead from the front on the implementation of the levy. I wish to reaffirm our support to the reforms process and state that we remain available for consultations particularly those related to the prudent financial management in view of delivering on our development agenda,” Fadoul said.
The hosting Finance Minister Claver Gatete of Rwanda said that despite some “foreseen difficulties” in the implementation of Kigali Decision, the F10 meeting should allow participants to make further progress towards implementation of that financing decision.
“Let me emphasize that we are not here to debate the decision of our Heads of State and Government but rather to discuss how to implement that decision taken in July 2016 on the financing of the African Union,” Gatete stated.
“This includes addressing specific issues for various countries with the view of making further progress in implementing the said decision. We are all strong supporters of achieving sustainability of financing our African Union, and I strongly believe that the outcome of this meeting will constitute another significant milestone in that direction,” he added.
The levy of 0.2 per cent on eligible imports to finance the African Union is intended to pull enough resources which will finance 100 per cent of the African Union operations, 75 per cent of the AU programs and 25 per cent of contribution to the Peace Fund.
The F10 meeting was expected to consider and adopt the technical documents that have been developed pursuant to recommendations and also review draft decisions to be presented to the Assembly of Heads of State and Government later this month in Addis Ababa, Ethiopia.
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President Kenyatta on official visit to South Africa for talks with President Zuma
President Uhuru Kenyatta on 11 January, 2018 traveled to South Africa on a three-day official visit that will see him hold talks with President Jacob Zuma to boost cooperation in a wide range of areas including trade, security and infrastructure development.
President Kenyatta is on his first Working Visit to South Africa since his inauguration as Kenyan President on 28 November 2017.
South Africa and Kenya enjoy very warm bilateral relations underpinned by strong historical and political bonds.
South Africa is a strategic partner of Kenya in many areas, particularly trade and security. Numerous South African companies have a presence in Kenya. They operate in sectors such as banking, insurance, accountancy, pharmaceuticals, retail, tourism and engineering.
The two Heads of State will also share perspectives on various issues of mutual importance, such as continental and international developments.
Presidents Kenyatta, Zuma hold talks ahead of ANC birthday celebrations
During the bilateral talks on Thursday afternoon, President Kenyatta and President Zuma reviewed the progress in the implementation of earlier signed agreements and explored new areas to deepen the fraternal ties between Kenya and South Africa.
Addressing the press after the talks, the Presidents expressed their desire to strengthen relations between the two countries for the benefit of their nations and peoples.
They identified trade and infrastructure as the pillars that would get more emphasis in the relationship between Kenya and South Africa, and discussed how trade and connectivity would boost industrialisation and also create jobs for millions of young people.
“Industrialisation is key to creating job opportunities for the youth and wealth for our nations and peoples,” President Kenyatta said.
Apart from the issues of trade and infrastructure, Presidents Kenyatta and Zuma also deliberated on regional peace and security, especially the South Sudan conflict and the “new slave trade in Libya”.
President Zuma announced that he would host President Kenyatta for a State visit later this year. “We will then conclude key issues when President Kenyatta is back later this year,” he said.
On the agreed visit, President Kenyatta said: “We have laid the groundwork for my State visit sometime in the first quarter of this year. We look forward to concluding and signing various agreements.”
Presidents Kenyatta and Zuma also said the relations between the two countries would be taken to “a new level”.
President Kenyatta will be the keynote speaker at the African National Congress (South Africa’s ruling party) 106th birthday celebrations on Saturday at East London’s Buffalo City Stadium in the Eastern Cape.
He will speak on issues of Pan Africanism, the role of political parties in promoting African democracy, unity, and self-reliance in a highly anticipated address.
Presidents Kenyatta and Zuma said the two countries’ ruling parties – Jubilee and the ANC – would begin working together.
“I am happy to participate in the ANC birthday celebrations. We want to see how political parties in Africa can cooperate,” said President Kenyatta.
President Kenyatta will meet Deputy President Cyril Ramaphosa, who succeeded Zuma last month as party leader of the ruling African National Congress (ANC).
He will use the meeting at his villa to congratulate Mr Ramaphosa for winning a tight race for the leadership of the ANC presidency, and appraise him of key bilateral issues, including immigration.
Ramaphosa is a veteran of the anti-apartheid struggle, and was the lead negotiator in talks to end apartheid and the writing of the country’s constitution.
The new leaders of the ANC, who were elected last month, have been holding various activities in the lead up to the Saturday celebrations.
Other dignitaries expected at the Saturday function include former Mozambican President Joaquim Chissano and political party leaders from the Southern Africa region countries.
President Kenyatta will also meet the Johannesburg business community; and the Chief Executive Officer of Volkswagen South Africa, Thomas Schaefer, who set up an assembling plant in Kenya in December 2016.
Background
In October 2016, President Zuma made a historic State visit to Kenya which witnessed the signing of six agreements and Memoranda of Understanding in various sectors.
The agreements were on visa exemption for passport holders of diplomatic, ordinary and service passports, on defence cooperation, police cooperation, on cooperation between Kenya Investment Authority, Export Promotion Council and the Trade-Invest of South Africa, cooperation in the field of biodiversity, on conservation and management, and on Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor Projects.
During President Zuma’s visit to Kenya, both leaders directed that negotiation towards the establishment of a Bi-National Commission be expedited to further bolster trade relations between the two countries.
In the area of Immigration, the two countries were able to resolve some of the key issues including visa requirements for Kenya nationals travelling to South Africa. Key amongst these was the acceptance by South Africa to issue visas on arrival for official delegations, and the issuance of a one-off visa tenable for the duration of study in South Africa for Kenyan Students.
President Kenyatta’s official visit to South Africa will also focus on enhancing cooperation between the two countries in the area of training. Kenya and South Africa have concluded over 16 instruments of cooperation, agreements, MoUs and letters of intent on training. Both countries cooperate in scientific exchange, agriculture, public health, law, education and military training among others.
On trade, President Kenyatta’s discussion with President Zuma will focus on bridging the balance of trade which is currently highly in favour of South Africa.
The two leaders will also explore areas geared towards increasing consultations on global issues that would be enhanced by increased contacts at the highest bilateral level.
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Rwanda Economic Update: Rethinking urbanization
From demographic transition to economic transformation
Rwanda’s growth slowed from mid-2016 to mid-2017, bottoming out at 3.4 percent, but is expected to recover to 5.2 percent for the second half of 2017, and may well accelerate in 2018 and 2019 as private and public investment pick up and agriculture becomes more productive.
The World Bank’s Rwanda Economic Update, released this week, says that in the medium-term the economy will benefit from reduced external imbalances and the expected recovery of prices for traditional exports such as minerals, tea, and coffee. Non-traditional exports, supported by the existing competitive exchange rate, may become important sources of growth in the coming year.
“Targeting public investment to areas where there are high economic returns is important for maintaining the fiscal space, which has narrowed in recent years, as is addressing fiscal contingencies,” said Aghassi Mkrtchyan, World Bank Senior Country Economist for Rwanda.
Greater urbanization is explicit in Rwanda’s plans for becoming a middle-income country by 2020. The World Bank is supporting the government’s urbanization strategy with a $95 million Rwanda Urban Development Project that aims to provide basic infrastructure and services to six secondary cities around the country – Muhanga (formerly Gitarama), Rubavu (Gisenyi), Nyagatare, Huye (Butare), Rusizi (Cyangugu), and Musanze (Ruhengeri) – and to Kigali City, which makes up the core of the greater Kigali area.
In a special section, Rethinking Urbanization in Rwanda: from Demographic Transition to Economic Transformation, the Update analyses the trends and forms of the country’s rapid pace of urbanisation to examine its contribution to economic development. An increase in the urban population has been accompanied by the physical expansion of cities, notably the periphery of Kigali though around secondary cities as well.
The report finds the urban share of Rwanda’s total population (now about 12 million) has increased far faster than official records suggest because the definitions of urban areas need streamlining. A 2012 census and 2014 household survey calculated the urban share of the population at 16.5 and 17.3 percent respectively.
However, using another, simple definition of urban, the report’s researchers found that the level of urbanization had increased far more – from 15.8 percent to 26.5 percent between 2002 and 2015, an increase of 132 percent or almost 2 million people.
In other words, says the report, large scale urbanization has already taken place in Rwanda.
Urbanization and jobs
The report notes that urbanization has been accompanied by non-farm job creation and that this has led to a reduction in poverty primarily in areas with high urban population density and good economic and physical connectivity.
Despite rapid urbanization, a dual migration pattern of internal migration is emerging: a move toward density in search of work, with districts of Kigali city attracting many migrants between 2011 and 2014 (29 percent of them). And a parallel move away from density in search of land, with a high share of migrants (33 percent) flocking to Rwanda’s less populated Eastern Province.
The Rubavu (Gisenyi) area on the border of the Democratic Republic of the Congo (DRC) is the only urban area other than Kigali that has significant appeal for internal migrants, as part of the busy transport corridor that runs from the DRC through Rwanda to the border with Uganda just north of Musanze.
Links between urban population density and non-farm job creation are particularly strong in Greater Kigali and the cores of the six secondary cities, the report says. Within 20 km of Kigali, and within 5 km of secondary cities, a 10 percent increase in density is associated with higher non-farm employment.
The estimated effect of urban population density on poverty reduction is similarly strong, with a 10 percent increase in density associated with a 6 percent drop in the rate of moderate poverty within a 5km radius of a secondary city in Rwanda.
Capitalizing on demographic shift
As Rwanda draws up its long-term economic strategy for reaching high-income status (by 2050), how can it increase its urban dividend even more?
Effective public policy could provide an enabling environment for investment, says the report, rather than deciding where investments should be located. And towns and cities could be managed as part of a separate portfolio, with special support given to Kigali as the lead economy and recognition for the distinctive roles other cities play in the national economic geography as well.
Increasing economic (and not just population) density is also critical, particularly where opportunities for connecting urban peripheries to surrounding rural areas remain untapped. So far, urban expansion has followed a pattern of low density settlement.
“We need to work on the factors that attract people to towns to achieve this type of urbanization and transform our cities into settlements,” says James Musoni, Rwanda’s Minister of Infrastructure. “We must be able to identify sites for settlement and source the funds we need to support that.”
And, while Kigali’s rapid expansion could be managed with more urban planning, the report says investment in other cities should focus on improving basic services.
“Urbanization not only involves a demographic transition but, more importantly, facilitates socio-economic transformation,” says Narae Choi, World Bank Urban Development Specialist. “It is time to rethink the urbanization strategy to leverage its potential for economic growth and the improvement of welfare.”
For a sustainable urbanization, the Update makes some policy recommendations:
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Rwanda’s towns and cities should be managed as a separate portfolio, with support to Kigali as the leading economy and provision made for other cities
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The policy approach to internal migration needs reframing to leverage the gains from population movement rather than simply controlling it.
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Policies should focus on strengthening the links between rural and urban economies by creating an enabling environment rather than deciding where investments should be located.
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Densification is critical particularly in the peripheries of urban areas, where opportunities for connecting the cores of cities to surrounding rural areas remain untapped.
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Concerns for Kigali’s rapid expansion can be managed through more efficient urban planning, while investment in other cities should focus on improving basic services.
The Update synthesizes recent economic developments and places them in a medium-term, regional, and global context. It analyses the implications of these for policy and the outlook of the economy.
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Finance ministers to discuss progress on African Union self-financing
The African Union Commission in collaboration with Rwanda’s Ministry of Finance and Economic Planning has organized a meeting of the Committee of Ten Ministers of Finance (F10) responsible for the Financing of the African Union, according to a statement.
The meeting that will take place in Kigali on January 13, 2018 will review the progress made in the implementation of the decision of the Heads of State and Government of the African Union to implement a 0.2% import levy towards financing of the African Union.
According to a statement, the planned meeting is a follow-up to the one held in Addis Ababa, Ethiopia in August last year during which, ministers made recommendations on, among others, a need to develop a set of rules for establishing clear financial management and accountability principles, a need to review the sanctions regime on the payment of assessed contributions and a need to review the current scale of assessment for more equitable sharing of the burden of the Union’s budget.
Ministers also called for the expansion of the committee from ten to fifteen in order to accommodate countries that contribute more to the budget of the Union. The Ministers further expressed a need for the F10 to play an oversight role in the budgetary processes of the Union.
This meeting will consider and adopt the technical documents that have been developed pursuant to these recommendations. It will also review the draft decisions to be presented to the Assembly of Heads of State and Government later this month in Addis Ababa, Ethiopia.
The New Times understands that as of December 2017, the African Union Commission had 21 Member States that were at various stages of implementing the AU self-financing mechanism that was adopted in 2016 in Kigali during the 27th AU summit.
Progress
The mechanism that was designed by a group of experts led by Dr Donald Kaberuka, will ensure the continental progressively weans itself off external funding especially for its operational costs.
Out of these 20 members, 14 had already started collecting the 0.2 levy on imports and depositing the funds on an account dedicated for AU opened with their respective Central Banks.
These Countries include Kenya, Ethiopia, Rwanda, Chad, Djibouti, Guinea, Sudan, Morocco, Congo Brazzaville, Gambia, Gabon, Cameroun, Sierra Leone and Cote d’Ivoire.
On the other hand, Ghana, Benin, Malawi and Senegal have initiated internal legal and administrative processes to allow implementation of the decision while despite their national economic and legal constraints, Mauritius and Seychelles have also indicated full commitment to the principles of financing the Union.
“In many ways, the choice of Kigali as the venue for this meeting has symbolic significance in that the Decision to implement the 0.2% was taken here in Kigali at the special Retreat of the Heads of State and Government of the African Union on the 16th July 2016,” the statement further reads.
In addition, President Paul Kagame has been entrusted to lead the reforms process currently being undertaken in the African Union and he is also expected to assume the Chairmanship of the African Union for the year 2018 during the Summit of Heads of State and Government to be held in Addis Ababa, Ethiopia later this month.
The F10 comprises ten countries representing the five regions of the African Union as follows: Chad and Congo for Central Africa; Ethiopia and Kenya for East Africa; Algeria and Egypt for North Africa; Cote d’Ivoire and Ghana for West Africa; and South Africa and Botswana for Southern Africa.
Cameroon, Nigeria and Morocco will also attend the meeting based of the interest they expressed to be included in the Committee, the statement says.
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Inner-African development goals instead of inner-African borders
During the AU-EU Summit, the Commission outlined plans for its future development policy. However, it remains open how it intends to ensure that the European Development Goals in the future are not primarily a reward for migration control measures.
“With the EU’s help, we have succeeded in developing a completely new source of added value. This will enable us to ensure that more than 5,000 participants and their families no longer suffer from poverty, produce autonomously and develop a perspective for the future,” says D.A. Nii-Noi Adumuah, the head of the Ghanaian community of Adentan.
In Adentan, the EU is supporting one out of 37 Ghanaian projects over the 2016-2020 period. The municipality focuses on mushroom cultivation: from training over job creation to a subsidised purchase of the produced goods. With €820,000 in European funds, mushrooms from Adentan will soon be found in pizza, bread or chips throughout Ghana.
“The interest in such regional offers is huge. Together with the authorities of the Greater Accra district, this creates a production and sales chain that is not only a pilot project but also creates structures that can function in the long term,” Nii-Noi Adumuah says. he hopes that one day mushrooms from Adentan will be found in neighbouring African countries too.
But he wonders about the fears and plans in Europe: “Within the ECOWAS countries, we have the option to stay visa-free for 90 days. Many African sales agents use this opportunity to do business. By the way, many Europeans do that too. What we, Africans, need are free trade routes for our products.”
He is convinced that with educational and employment opportunities in African countries, fewer people will emigrate to Europe. So why create physical and mental borders between African countries when they are a prevention for an intra-African labour and trade movement, he wonders.
“Reducing inequalities and increasing the mobilisation of domestic resources should be at the heart of the European External Investment Plan (EEIP),” says Xavier Sol, director of the NGO Counter Balance.
“If the external investment plan is meant to be an innovative tool, it must focus on quality projects that offer a high development value. Focus on small projects with positive social and environmental impacts for the local population and territories is necessary.”
Yet, European goods are still flooding local markets and destroying them so it remains questionable how sustainable European development policy really is.
“Schengen for us, fences for Africa”
According to the theses on migration control in the German newspaper taz, European money flows predominantly to places where migration figures can be reduced quickly – countries like Niger, Eritrea, Sudan or Mali.
The losers are Africans, just like in colonial times. Development experts have been warning for a long time that the first steps in intra-African market liberalisation and labour migration, joint visa regulation or the free movement of goods could be dashed by the EU’s efforts to strengthen intra-African borders.
If the EU succeeds in establishing “Fortress Europe” on the African continent, the European migration defence would be a side jab on the development policy in the African states. What is more important is that the European External Investment Plan (EEIP) is decoupled from European migration strategies and that it meets real development needs, says a report by Counter Balance NGO that monitors public investment banks.
“Help through trade”
‘Regional integration’ is the magic word which can bring economic development. Before the EU-AU summit, the Parliament with great majority adopted the EU-Africa Strategy, which proposes the creation of a continental free trade zone to boost inner-African trade by 50% until 2050.
But for that, effective escape clauses, asymmetrical liberalisation plans, protection for developing branches, simplification and transparency of custom proceedings are needed.
The EU is already one of the biggest Aid for Trade donors worldwide. In 2015 alone, it provided an annual record sum of €13.16 billion. The Aid for Trade strategy aims at better coordination and combination of already present instruments for development financing at the European and national level.
This can also benefit companies like Golden Exotic Limited (GEL) in Kasunya, one of Ghana’s most modern and innovative banana plantations. It will receive more than €7 million under the Banana Aid Measures [BAM – a European aid fund designed to facilitate trade between banana-producing countries in Africa, the Caribbean and the Pacific] over the 2015-2018 period.
GEL is currently the largest exporter of bananas (51,000 tonnes per year) for the European and regional markets.
“We are concerned about the EU’s intended free trade agreement with Latin American countries. They are direct competitors for African banana cultivation. Although we comply with Fairtrade and all EU Commission seals of approval, our products are already subject to stricter tariff and trade restrictions. As long as there is no free trade agreement with Africa, the agreement with Latin America would be another competitive disadvantage,” says Golden Exotic Limited.
If the trade routes to North Africa are hampered by new border and trade regulations, this would be an additional barrier for intra-African trade.
This article was first published by EURACTIV Germany, and translated by Alexandra Brzozowski.
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Africa on the runway to seamless airspace
The dream of achieving low airfare in Africa may soon be realised should the African Union’s plans run full course.
The bloc expects to launch its Single African Air Transport Market at the end of this month in Ethiopia.
According to the AU, 23 regional countries have committed to the cause whose full implementation will see, among other benefits, the cost of air travel drop by more than 25 per cent.
AU chairperson Moussa Faki Mahamat in his New Year message said SAATM will be launched on the margins of the African Union Summit to be held between January 22-29 this year.
Efforts to have African countries open up a common airspace has been frustrated by States that want to protect their weak airlines from competition, raising debate on whether this will be achieved.
Ministers of Infrastructure from Common Market for Eastern and Southern Africa (Comesa) in a report last year October said some countries have been reluctant to embrace full implementation of a seamless airspace as it will expose their airlines to stiff competition.
“Implementation has been hampered by reluctance by States that claim to have weak airlines to embrace full implementation as their airlines cannot compete,” said the report in part.
The African Civil Aviation Commission (AFCAC) is spearheading the creation of a seamless airspace in Africa.
Kenya is among the countries that have signed commitment to the implementation of the common airspace.
Regional countries have been trying to create a seamless airline since 1999 to no avail due to lack of enforcement mechanisms and domestication of agreements by States.
East African Community states, with an exception of Tanzania and Burundi, have been pushing for the formation of a common airspace in the past.
The four countries: Kenya, Uganda, Rwanda and South Sudan were to negotiate air service agreements with foreign countries as one bloc.
The greatest benefit was expected to come from the classification of flights between the four countries as domestic airlines whenever they fly to each of the member states.
Rwanda in December 2016 signed a deal with Uganda and South Sudan to establish a legal framework for talks that were expected to see local airlines attaining what is technically known as fifth freedom rights along Juba-Nairobi, Nairobi-Juba routes.
In aviation, fifth freedom rights mean an airline is allowed to ferry passengers from one country to another and from that country to a third country.