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Global civil society reactions to end of WTO Ministerial Conference
The World Trade Organization (WTO) ministerial conference in Buenos Aires concluded without a formal statement, reflecting the deep divide between poorer countries who have demanded that WTO members deliver on their promises to address outstanding development issues and richer countries that sought to leave those promises behind and move on with negotiations on rules of commercial interest to them.
The recommendations of the global Our World Is Not For Sale Network (OWINFS), which brings together 250 organizations from 50 countries in the global North and South, called on government delegates to change existing WTO rules that are constraining policy space for job creation and development and to reject the wrong agenda to expand the failed model of the WTO to new issues.
The civil society organizations’ recommendations for the final day of MC11 included:
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Wrong Agenda: E-commerce (including MSMEs): WTO members do not have a mandate to negotiate new global rules on e-commerce. Many of the issues proposed for the e-commerce agenda have either already been discussed and resolved in other forums, most of which are more responsive and accountable to public interest concerns than the WTO. No new expansion of the existing e-commerce work programme is a positive outcome of MC11. We express strong opposition to the decision of some countries to start exploratory work towards future negotiations on these issues in the WTO.
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TRIPS Non-Violation Waiver: If the moratorium on electronic transmissions is renewed, it should be limited to two years, and only in exchange for a permanent moratorium on TRIPS non-violation complaints, which is essential to ensure lifesaving medicines for millions of people and must be agreed in MC11.
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Wrong Agenda: Investment Facilitation: Even if the proposals focus on investment facilitation, this is not a trade issue per se, and UNCTAD is already the primary multilateral agency working on investment. No new work program on Investment Facilitation is a positive outcome of MC11.
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Fishing: Subsidizing the Poor or the Rich? The developmental and economic policy space of developing countries must be maintained whilst those nations that have contributed most to the problem of Illegal, Unreported and Unregulated (IUU) overfishing must agree to eliminate harmful subsidies. Since policy space for development was not protected, it is better that members agreed to continue negotiations on this issue.
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Constructive Agenda: Agricultural Rules Must Prioritize Food Security and Food Sovereignty. The top priority for a genuine development agenda would be transforming the current rules on agriculture. We are deeply disappointed that in MC11, WTO members failed to resolve the public stockholding issue that would allow all developing countries to implement food security programs, without onerous restrictions that are not demanded of developed countries’ trade distorting subsidies, and failed to agree on a workable SSM.
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Constructive Agenda: Flexibility for Development. The G90 proposals for changes to existing WTO rules would remove some WTO constraints on national pro-development policies. These would allow developing countries to promote manufacturing capabilities, stimulate the transfer of technology, promote access to affordable medicines, and safeguard regional integration. We are deeply disappointed that the G90 proposals that should have been accepted in MC11 as proposed (without being conditioned on further market access concessions) and the Para 44 mandate continued post-MC11 were not concluded.
Below are some reactions from members of the 80 civil society representatives from 34 countries in Buenos Aires as part of the OWINFS network delegation following the conclusion of MC11 on 13 December 2017:
Jane Kelsey, Law Professor, University of Auckland, New Zealand: “Powerful countries that became used to dominating the WTO have discovered that they can no longer control the outcomes of ministerial conferences. Rather than accept the reality that the majority of the world’s countries and people want the WTO to address their urgent development realities, a self-selected group of mainly rich countries have clubbed together to set up their own process. Doubtless they plan to bully developing countries back in Geneva and at the next ministerial meeting. Doing so will simply deepen the WTO’s crisis of legitimacy.”
Sachin Kumar Jain, Right to Food Campaign, India: “It is sad that WTO members could not reach a permanent, acceptable, pro people solution on public stockholding. We were hoping that developed countries would at least now give prominence to human lives over agribusiness and profiteering food business.”
Sylvester W. Bagooro, Third World Network-Africa, Ghana: “The outcome of the MC11 from Africa’s perspective could be viewed in two ways. On one breath Africa has not accepted any further onerous obligations but also has not gotten anything from this Ministerial. So Africa returns home empty handed. It is time for Africa to look within for solutions to the Continent’s problems judging from the posturing of developed countries over the years.”
Adam Wolfenden, Campaigner with the Pacific Network on Globalisation, a Pacific Islands based network promoting economic self-determination: “The decision by Ministers in regards to fisheries subsidies upholds the right to develop for developing countries. The draft decision, under the guise of sustainability, would have been used by rich industrial fishing nations to prevent developing countries from being able to fulfill their developmental aspirations. The lack of a final outcome rests on the reluctance of Europe, New Zealand, the US and others to constructively attempt to resolve the development component.”
Ruben Cortina, President of UNI Americas, UNI Global Union represents more than 20 million workers from over 900 trade unions in the fastest growing sectors in the world – skills and services: “Again the international system is at a crossroads: change the agenda to focus on peoples’ interests and multilateralism will begin to work; keep it as it is now and no matter how many police you put in the streets and how many civil society members you deport, things still won’t work. The international trade union movement is vital for a fair and inclusive future.”
Dr. Christina J. Colclough, Director Platform & Agency Workers, Digitalisation and Trade, UNI Global Union: “The Joint Statement on Ecommerce, signed by 42 countries plus the European Union, is a far cry from the hopes of the countries who had aimed to create a WTO 2.0 on ecommerce. The collapse is good news. We will push back against any attempts to continue this agenda. Let’s be clear: the free flow of data does not equal the free and equal access to data. It won’t benefit you and I. What these ecommerce proponents were pushing for would benefit Big Tech at the expense of all others and not least workers.”
Prerna Bomzan, Third World Network (TWN), Nepal: “We are once again disappointed that least developed countries’(LDC) concerns were ignored during the Ministerial Conference in Buenos Aires. The LDC package is long overdue and we continue to demand an immediate, binding deliverable to enable the inclusion of the most marginalised countries into international trade.”
Georgios Altintzis, Trade Policy Officer, International Trade Union Confederation, representing 181 million workers in 163 countries and territories and has 340 national affiliates: “Inserting new issues prematurely to the WTO has largely been avoided. The global trade union movement remains vigilant on further developments, in particularly on e-commerce in non-multilateral settings.”
Parminder Jeet Singh, IT for Change, India: “We are happy that attempts by the US and its allies to bring e-commerce to the WTO as a way of liberalising ‘everything’ through the backdoor, and ensuring entrenching of business models of GAFA (Google, Amazon, Facebook, Apple) based on monetising our data, have failed.... Developing countries must now focus on building their domestic digital industry, through appropriate digital industrial policies. They should work together on this, developing best practices.”
Tony Salvador, SENTRO Labour Union, Philippines: “It is quite disappointing that the rich countries continue to block the more pro-poor, development-oriented agenda under the Doha Development Round, including those on agriculture, which principles were agreed upon as early as 2001. At the same time, these rich countries are trying to push for self-serving negotiations on new issues such as e-commerce and investment facilitation. Ironically, the rich are yet again calling these new issues as ‘developmental’, shamelessly telling the world that they are meant to benefit the developing and least developed countries.”
Helene Bank, Norwegian Trade campaign, Norway: “Rich countries have undermined the multilateral trading system by totally overloading the WTO-agenda and never accomodating developing countries needs. We as civil society need policies that protect societies, welfare, workers and human rights, ecosystems and common resources, NOT sell out to big corporations. Our societies need international systems that call for regulation of trade and the economy, NOT the WTO-push for deregulation and undermine just rules.”
Nick Dearden, Global Justice Now, United Kingdom: “The collapse of the WTO ministerial was ‘the best outcome possible’ given the position of rich countries at this week’s summit. We criticize the continued intransigence of rich countries like Britain who have no interest in solving the fundamental injustice of current WTO rules, and instead want to turn the whole world into a corporate playground.”
Timothy A. Wise, Researcher, Small Planet Institute and Tufts University, USA: “Intransigence by the United States has again prevented the WTO from taking steps to allow developing countries to protect their farmers from unfair trade practices such as dumping. Public stockholding for food security should be allowed without interference, to protect farmers from dumping and to feed the hungry.”
Nabil Abdo, Arab NGO Network for Development, with members and partners in 12 Arab countries. “The WTO failed again to deliver on development, and put the needs of people, farmers, workers, and vulnerable people at the center of its concerns. The MC 11 failed due to the insistence of some powerful developed countries to prioritize corporate profit and tech giants over food security and sovereignty, the ability to design national policies, and most importantly the interests of people.”
Maruf Barkat, COAST Trust, Bangladesh: “Our analysis of the proposals and their progress in the WTO’s MC11 is that true ‘development’ has been ignored. The proposed ecommerce rules will not help MSMEs even though MSMEs are a commonly cited justification for the proposed ecommerce rules. MSMEs need WTO Members to agree to the G90 special and differential treatment proposal. The proposed MSME work program would limit the policy space to help MSMEs.”
Lorelei Covero, IBON International, Philippines: “The Business Forum and its recommendations portend greater corporate power and plunder at the WTO. Worse, the International Chamber of Commerce-sponsored Joint Declaration on Trade and Women, uses women and gender issues to perpetuate corporate power through trade.”
Petter Titland, ATTAC Norway, Norway: “The TISA-countries are pushing the agenda of the big data extraction firms like Google, Facebook and Amazon without a public debate about the future of our economy and digital industrial policy. Nigeria is the only African country supporting negotiations on e-commerce in the WTO. All the other African countries want to develop their own digital industrial policy, and we must support them.”
Sophia Murphy, Senior Advisor, Institute for Agriculture and Trade Policy, Canada: “The multilateral system can only work on the basis of trust and compromise. By refusing to meet any country part way in Buenos Aires, the Trump Administration has squandered an opportunity for Americans to be part of building a trade system that starts to tackle the real challenges of the 21st century: inequality and the fragility of our planet’s resources.”
A statement from the network and link to a directory of these and other civil society experts available for interviews, can be found at www.ourworldisnotforsale.net.
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PIDA Model Law for infrastructure development in Africa endorsed at 2017 PIDA Week in Namibia
The 2017 PIDA Week ended in Swakopmund, Namibia, on Wednesday with delegates calling on Member States to commit themselves to the development of Programme for Infrastructure Development in Africa (PIDA) projects on the ground and to renew their focus to infrastructure development in rural and remote areas, among others.
Of major importance to the Economic Commission for Africa was the adoption by delegates of the PIDA Model Law which was developed by the ECA to harmonize cross-border rules, regulations, laws and policies governing transboundary infrastructure projects in Africa.
Delegates agreed to expand the law to address issues such as skills transfer, job creation and training.
“We are happy that delegates to the Third PIDA Week have given their support to the model law. I believe that this law, if adopted and domesticated, will address the impediments that have been blocking investors from putting their money in transboundary infrastructure projects on the continent,” said Adeyinka Adeyemi, Senior Advisor and Head of the Regional Integration and Infrastructure Cluster in the ECA’s Capacity Development Division (CDD).
The proposed model law facilitates private sector investment and financing in transboundary infrastructure projects; ensures transparency, efficiency, accountability and sustainability of transboundary infrastructure projects; harmonises cross-border regulation of transboundary infrastructure projects; and promotes intra-African trade and opens domestic markets to international trade.
The law is expected to be adopted by African Heads of State at their January Summit in Addis Ababa, Ethiopia after which the ECA and its partner in this project, NEPAD, will help countries to domesticate the law to fit their needs.
Meanwhile, delegates also agreed that Africa should up its game in mobilizing domestic resources to fund the complete implementation of five selected projects and promote the maximal use of local content within the beneficiary countries and regions.
The five projects are the Central Corridor (Dar es Salaam to Chalinze Toll Road), Kinshasa-Brazzaville Road and Railway Bridge, Ethiopia-Sudan Power Interconnector, Zambia-Tanzania-Kenya Power Connection and the Batoka Hydropower Plant.
In their final communiqué, delegates recommended that for Africa to build on progress made through the implementation of PIDA PAP, there was need for some strategic focus on a number of things.
This includes fast tracking the assessment of the PIDA mid-term review and engaging the preparation of the PIDA PAP 2 (2020-2030) with an updated list of the priority projects; promote integrated corridor development using data-driven decision-making models to prioritise projects for commercial viability and promote the setting up of legal frameworks and instruments for corridor management.
The communiqué emphasizes the use of cross-sectoral approaches, including the water-food-energy nexus approach, to promote and demonstrate the economic viability of water projects on the continent; and the need to ensure ICT is fully integrated in PIDA projects so broadband is available, affordable and that there is sufficient bandwidth for new services such as Data centers to support and promote online start-ups.
Delegates also said there’s need to raise awareness on the importance of the digital economy as an integral part of PIDA and Africa’s development and promote the online domain name industry and raise public awareness on DoTAfrica (.Africa) as a continental identity for African companies and citizens online.
The third PIDA Week was held under the theme ‘Regional Infrastructure Development for Job Creation and Economic Transformation’ from and ends Thursday with the tour of Namibia’s Walvis Bay Corridor.
Final Communiqué of the Third PIDA Week
We, Ministers and delegates to the Third PIDA Week and the organizing and partners institutions (African Union Commission (AUC), NEPAD Agency, the African Development Bank (AfDB), the United Nations Economic Commission for Africa (UNECA), the Government of Namibia, the Southern African Development Community (SADC), the German Cooperation, the European Union (EU), the Development Bank of Southern Africa (DBSA), Turkey and the Japan International Cooperation Agency (JICA)), member states as well as distinguished invitees:
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Express our sincere gratitude to the Government of Namibia, its people and SADC for hosting this PIDA Week and for the hospitality accorded to us;
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Reaffirm the crucial role of PIDA sectors (transport, energy, ICT and Water) in the achievement of the main goals of the AU Agenda 2063 for continental integration, prosperity and peace;
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Affirm our commitment to develop integrated and efficient systems through the application of sound policy and development strategies with a view to enhancing efficiency, sustainability and affordability of transport, energy, ICT and Water services;
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Acknowledge the diligent work accomplished during 2017 which was presented in the PIDA Annual Implementation report;
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Take note of the detailed status reports on the following projects: the Central Corridor (Dar Es Salam to Chalinze Toll Road), the Kinshasa Brazzaville Rail and Road Bridge, the Ethiopia-Sudan Interconnector, the Zambia Tanzania Kenya Power Interconnector and the Batoka Gorge Hydropower Project and INGA III Hydropower Project;
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Encourage the involvement of African and international private sector as well as emerging partners to promote technical and financial contribution to PIDA projects.
Agree to:
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Pursue the mobilization of funding for the complete implementation of PIDA projects including the showcased projects: Dar-Chalinze Toll Road on the Central Corridor, Kinshasa-Brazzaville Rail/road Bridge, the Ethiopia-Sudan Interconnector, the Zambia-Tanzania-Kenya Interconnector, Batoka Gorge Hydropower project and the Inga III Hydropower Project.
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Call upon member states, development partners and members of the Continental Business Network (CBN) to provide adequate resources including domestic resources for the PIDA project preparation facilities: the PIDA Service Delivery Mechanism (SDM) and the NEPAD Infrastructure Project Preparation Facility (IPPF) among others;
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Engage partner organisations, as well as bilateral development partners to provide the necessary technical and financial support to the implementation of PIDA Priority Action Plan projects by 2020;
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Urge the NEPAD Agency in consultation with the AUC to coordinate continental stakeholders toward the establishment of the Single Air Transport Market (SAATM) and inclusive implementation of the Abuja Declaration and Framework for a Plan of Action for Development of Aviation Infrastructure in Africa within the Move Africa initiative and PIDA work plans.
Recommend:
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Fast track the PIDA mid-term review and the preparation of the PIDA PAP 2 (2020-2030) with an updated list of priority projects;
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Promote integrated corridor development using data-driven decision-making models to prioritise projects for commercial viability and promote the setting up of legal frameworks and instruments for corridor management;
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Support the full implementation of the Yamoussoukro Decision (YD) towards establishment of the SAATM within the framework of the African Union (AU) Agenda 2063, Support the implementation of the 2017 Abuja framework action plan for aviation infrastructure development, Promote the EAC Upper Flight Information Region (UFIR) as a replicable model for a single African Airspace and Urge all member states that have not signed the solemn commitment towards the establishment of the SAATM to do so and promote aviation infrastructure development in Africa to sustain the traffic growth;
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Support the PIDA Model Law for Investment in Transboundary Infrastructure and domesticate it to address issues such as skills transfer, job creation and training;
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Use cross-sectoral approaches including the water-food-energy nexus approach to promote and demonstrate the economic viability of water projects on the continent;
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Engage partner organisations, as well as bilateral development partners to promote and provide the necessary technical and financial support for the implementation of the INGA 3 Hydropower and High Speed Rail projects within the framework of the African Union (AU) Agenda 2063;
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Ensure that ICT is fully integrated with other PIDA sector projects to support and promote job creation and entrepreneurship;
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Raise awareness on the importance of the digital economy as an integral part of PIDA and Africa’s development, Promote the online domain name industry and raise public awareness on DoTAfrica (.Africa) as a continental identity for African organisations, companies and citizens;
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Operationalise data collection, validation and reporting strategy to ensure smooth and coordinated flow of data on PIDA projects and programmes;
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Operationalise the 5% Agenda by encouraging African sovereign wealth funds and pension funds to invest a greater part of their assets in Africa’s development including the implementation of PIDA projects;
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Operationalise the MoveAfrica Traffic Light System along the 4 Border Posts – Beit Bridge, Chirundu, Kasumbalesa and Kazungula – on the North South Corridor and share good practice lessons with other regions.
Delegates of the 2017 PIDA WEEK
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Kenya’s trade in agricultural exports hampered by pesticide residue
Kenya’s trade in agricultural exports is greatly hampered by perceived high pesticide residue in crops destined for key markets.
Foreign Affairs Cabinet Secretary Ambassador Amina Mohamed says limited phytosanitary data has impelled export markets to set very low pesticide maximum residual limits in crops such as beans and peas thus denying developing countries revenue from exports.
Kenya is a largely agro based economy in which the sector contributes an upward of 27 percent to the gross domestic product.
For farmers, access to markets such as the European Union under the Economic Partnership Agreements, which is yet to be signed and ratified by the East African Community, have always been met by policies on high standards regarding phytosanitary, particularly on pesticide maximum residue limits.
The World Trade Organization Committee on Sanitary and Phytosanitary concurs this hinders exports from developing countries.
Mohamed says, “…Kenya’s exports of horticultural products have come under increased controls in our key export markets due to perceived risk from high pesticide residues. The maximum pesticide residual limits in our major export markets are usually set at very low levels, particularly for minor crops such as beans and peas with pods…”
Last year, horticulture exports increased 8.9% to stand at Ksh 110 billion.
She states “we are calling for voluntary actions by individual Members and institutions to increase the capacity and efficiency in setting international standards to address the need for more MRLs set on minor crops.”
She was speaking during the 11th WTO Ministerial conference held in Buenos Aires, Argentina.
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One Planet Summit: Finance commitments fire-up higher momentum for Paris Climate Change Agreement
On 12 December at the One Planet Summit, the 2nd anniversary of the Paris Agreement, world leaders gathered once again in the French capital to underscore how financial flows are shifting billions and trillions towards a low-carbon future that will benefit peoples and livelihoods.
Patricia Espinosa, Executive Secretary UN Climate Change, said: “Today has marked another extraordinary moment in the world-wide efforts to turn the promise of the Paris Agreement into a global reality – in other words delivering a climate secure future to all corners of the Earth and contributing to the sustainable future of every man, woman and child”.
“From the United Nations system to governments and investors, billions of dollars have today been mobilized and trillions more pointed towards a transformation of the world’s energy to agricultural sectors, adding to the finance that has already been flowing before, during and since Paris 2015”.
“We know this is going to be a long journey and there will be bumps along the way. But the alignment of so many areas of the global economy, the process to reset the financial system and the support for developing countries’ national climate action plans or NDCs announced today, should give everyone a sense that the urgency needed and the scale required is being forged”.
“We look forward from the UN Climate Conference 2017 in Bonn and the One Planet Summit in Paris, to California, COP24 in Poland in 2018 and the UN Secretary-General’s Summit in 2019 as the world moves to raise ambition further before 2020 under the UN climate change process.”
The conveners of the Summit – French President Emmanuel Macron, World Bank President Jim Yong Kim and UN Secretary-General António Guterres – signed a Declaration to welcome the outcomes of the event, which launched an array of landmark commitments.
These are helping to demonstrate that public and private finance is rapidly being deployed in both developed and developing countries to strengthen sustainable development and assist nations towards achieving their national climate action plans, known as NDCs.
This momentum also represents a broader reshaping of the world’s financial architecture, which will be fundamental to creating the conditions for a successful Talanoa Dialogue next year and the urgency of countries to raise ambition further and faster.
The French government has identified 12 #OnePlanet commitments.
The following list includes announcements made during the One Planet Summit that will help to keep global temperature rises to well below 2 degrees and, in turn, safeguard the meeting of the 2030 Sustainable Development Goals:
EU External Investment Plan: climate-smart investments worth EUR €9 billion unveiled at ‘One Planet Summit’:
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As part of the EU External Investment Plan (EIP), which is set to mobilise at least €44 billion of sustainable investment for Africa and the EU Neighbourhood countries by 2020.
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Climate Action and Energy Commissioner Miguel Arias Cañete announced climate-relevant investments in three targeted areas – sustainable cities, sustainable energy and connectivity and sustainable agriculture, rural entrepreneurs and agribusiness. These targeted areas are expected to generate up to EUR €9 billion investments by 2020.
Sustainable Finance Facilities: UNEP and BNP Paribas sign a milestone agreement to establish collaborative partnerships with a target of capital funding amounting to USD 10 billion by 2025 in developing countries:
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UN Environment and BNP Paribas will collaborate to identify suitable commercial projects with measurable environmental and social impact. The aim is to support smallholder projects related to renewable energy access, agroforestry, water access and responsible agriculture, among other sustainable activities.
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The Sustainable Finance Facilities programme is the first of its kind in terms of collaboration between companies, investors, development sector partners, and civil society organisations, with the support of national governments.
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This agreement builds on the Tropical Landscapes Financing Facility, a partnership between UN Environment, BNP Paribas, World Agroforestry Centre and ADM Capital in Indonesia.
UN Women: Initiative to boost resilience of women and youth in the Sahel through climate-smart agriculture will transform livelihoods of a million people by doubling their income in three years:
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The climate smart agriculture programme will leverage information and communication technologies (ICTs) to provide access to agriculture assets. Using a digital platform, known as ‘Buy-From-Farmers’ or AgriFed, small-scale women and youth farmers will be connected to customers, suppliers, information, markets and finance to help build their economic identity and make them valued entrepreneurs, able to end food insecurity in the Sahel.
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UN Women presented the programme, which is among some 12 initiatives showcased at today’s Summit, on behalf of the UN system.
The World Bank to no longer finance upstream oil and gas projects after 2019:
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World Bank says it will cease financing upstream oil and gas after 2019, apart from certain gas projects in the poorest countries in exceptional circumstances, where there is a clear benefit in terms of energy access for the poor and the project fits within the countries’ Paris Climate Change Agreement commitments).
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The bank also announced it was “on track to meet its target of 28 percent of its lending going to climate action by 2020.”
Financial Disclosure in China: “By 2020 every listed company in China must disclose information on environmental impacts”:
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Top green finance official Ma Jun told Climate Finance Day attendees that China wants international support to clean up its investments abroad. Ma Jun explained that without this information, the market cannot determine who is green – or not.
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China is also encouraging green investment at home. These range from cheap money for banks that invest in green projects to requiring certain industries to take out pollution liability insurance.
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He said that 2020, all companies would be required to disclose information on their environmental impact: “The basic logic is: we need a lot of money for green investments”.
Urban 20: C40 Cities launch U20 initiative to raise the profile of urban issues and enhance the role of cities in the G20 agenda:
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Urban 20 (U20) is a new diplomatic initiative, facilitated by C40 Cities, to help cities develop collective messages and inclusive solutions for global issues such as climate action, the future of work and social integration.
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The initiative will bring together 30 major cities located in G20 countries, and many other global cities, to raise the profile of urban issues in the G20 agenda and enhance the role of cities in the G20 process.
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The inaugural U20 Mayors Summit will meet in Buenos Aires in October 2018, ahead of the G20 Heads of State Summit hosted by Argentina.
The BNP Paribas Foundation and the Bill & Melinda Gates Foundation, under the patronage of the President of France, launch One Planet Fellowship:
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The One Planet Fellowship is a USD 15 million 5-year programme designed to support 600 African and European researchers working to help Africa adapt to climate change. It also aims to bolster the African and European scientific community working in this field.
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One Planet Fellows will collaborate in research and higher education projects that aim to advance agriculture and climate change issues, funded by the Agropolis Foundation over a five-year period with a budget of USD 5 million.
The full list of announcements is available here.
Together Major Development Finance Institutions Align Financial Flows with the Paris Agreement
Joint IDFC-MDB Statement
The global development agenda is being transformed in fundamental ways. The Sustainable Development Goals (SDGs), agreed upon by the international community, constitute a universal compass, highlighting the need for systemic and collective action for sustainable, equitable and inclusive development for everyone on this planet. The imperative for mobilizing and shifting financial flows, public and private, towards sustainable development was highlighted by the 2015 Addis-Ababa Financing for Development Conference. The Paris Agreement reached at COP21 recognized that all countries and stakeholders must act to combat climate change. Since the Agreement’s entry into force in 2016, the momentum for climate action has become irreversible.
Development Finance Institutions (DFIs) play a pivotal role in scaling up and directing climate finance, and in helping shape the policies and regulations needed to transition to low-carbon, climate resilient development, including achieving net zero emissions in the second half of this century. Development banks – national, regional, international and multilateral – represent some of the largest providers of public finance for sustainable development. Together, they can facilitate and accelerate the implementation of the Paris Agreement, continuously raising their ambitions.
Members of the International Development Finance Club (IDFC) and the Multilateral Development Banks (MDBs) play a fundamental role in directing capital towards sustainable investments by demonstrating the opportunities and potential returns, and by reducing the risks associated with them. At the same time, IDFC members and MDBs can actively contribute to mainstreaming the sustainable development and climate agendas across all sectors, in accordance with their mandates. Their total annual climate finance commitments have increased over the last few years, and continue on an upward trend.[1]
Members of the IDFC and MDBs are increasing their climate financing in mitigation and adaptation. They also continue to: mobilize external investments for climate actions; jointly lead on the transparent tracking and reporting of climate finance flows and impacts; support the implementation of the Nationally Determined Contributions (NDCs); and facilitate activities that transition development to low-carbon and climate-resilient pathways.
Today, at the 2017 One Planet Summit organized in Paris, building on their proven capacity and combining the power of DFIs worldwide and at all levels, IDFC and MDBs commit to deepen their collaboration, with each other and with other interested entities, in order to:
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Further embed climate change considerations within their strategies and activities, and promote the mainstreaming of climate action throughout the financial community, inspired by the five voluntary Principles for Mainstreaming Climate Action within Financial Institutions. Specific attention will be devoted to managing climate risk and to the integration of climate resilience and adaptation.
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Redirect financial flows in support of transitions towards low-carbon and climate resilient sustainable development. Building on what is already being done, this will increase the overall amount or share of finance that goes towards climate action.
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Catalyze investments to address new economic, social and environmental challenges and opportunities related to climate change, in particular by using their capital to mobilize additional private capital and to blend their financing most effectively with other sources to drive climate action and results.
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Pursue the development of processes, tools, methodologies and institutional arrangements that make it possible to design and implement climate action at the required scale. This includes reinforcing the collaborative effort between DFIs to improve the quality, robustness and consistency of climate finance tracking and reporting through the sharing of best practices and knowledge and by increasing the transparency and accessibility of their climate finance data. It also involves the development of a common framework for tracking progress towards achieving resilience, to be shared by COP24.
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Collaborate with national and sub-national governments in promoting the reduction of greenhouse gas emissions, including through developing sustainable alternatives to fossil fuel investments, based on national circumstances and contexts, and prioritizing the financing of these alternatives. This should involve the implementation of instruments or measures to shift investments to sustainable asset classes, such as: the use of a shadow price of carbon; reporting of greenhouse gas emissions; assessments to avoid the potential for stranded assets; employing measures to avoid deforestation and encourage improved land use; or putting in place more explicit policies to significantly reduce reliance on fossil fuels and rapidly accelerate financing for renewables.
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Support the development of enabling policy and regulatory environments, at both national and sub-national levels, in conjunction with the private sector and civil society, while remaining focused on the most vulnerable populations. IDFC members and MDBs will continue to deepen this work and increase country-level coordination between institutions. As per their respective mandates, IDFC members and MDBs will continue to contribute to policy dialogues, develop technical capacities of clients, and strengthen institutions to enable the translation of NDCs into policies, investment plans and financeable programs and projects, as well as into incentives for the business community.
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Further support countries and partners to accelerate climate action and ambition by 2020, including the development of long-term 2050 decarbonization pathways and strategies to reach zero net emissions and promote shorter-term actions that provide the building blocks for achieving these longer-term development pathways.
Poverty eradication and sustainable development goals cannot be met unless there is a collective push to address climate change at the same time. To accelerate impact, it is particularly important for all development partners to come together, move forward on their enhanced commitments, and raise the internal and external ambition on climate.
As public actors with long-term mandates, DFIs have a responsibility to contribute to the collective governance and action needed to fight climate change. Turning the Paris Agreement into concrete action requires new cooperative approaches. In this spirit of collaboration, the IDFC members and MDBs are teaming up, two years on from the historic moment at COP21, to reaffirm their joint commitment to align their financial flows with the Paris Agreement.
[1] The MDBs annually publish the Joint Report on MDBs’ Climate Finance. The 2016 report is available here (pdf). The IDFC reports Green and Climate Finance Data through the Green Finance Mapping reports.
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ABCA call for papers: Examining the challenges and opportunities of firms’ productivity in Africa
Consultancy opportunity: Develop a SADC trade development and trade promotion framework
SADC Members, cognizant of the strides made so far in attaining their regional economic integration goals through the establishment of the FTA, are promoting complementary steps to be undertaken with a view to taking advantage of new opportunities in trade, arising from greater liberalization as well as trade opportunities provided by growing regional and international markets. The SADC Secretariat and GIZ are therefore commissioning a study to develop a draft Trade Development and Trade Promotion framework, which will be the basis for a coordinated regional platform for practical intervention, concrete market development and trade and investment promotion tools and services, and assistance to the region’s economic operators and business organizations. Highlighted scope of work: Identifying needs and challenges (pdf); (i) Review existing regional platforms and trade promotion frameworks including institutional structures and linkages, capture lessons and experiences that Member States have had with such platforms. (ii) Map and analyse existing market development and trade and investment promotion tools and services at national and regional level including business linkages programmes, matchmaking buyers/sellers events and missions, market orientation tours, trade fairs and exhibitions, public private dialogue platforms and complaint mechanisms (e.g. Tripartite NTB Reporting Mechanism). Highlight major achievements, challenges and lessons learned. (iii) Review business needs particularly related to market (access) information (both for trade within the region as well as internationally e.g. SADC-EU EPA).
Identifying realistic export opportunities for Rwanda (IGC)
Using the DSM model for the analysis for Rwanda, indicates that more than 80% of potential value of product-market combinations are contained (in descending order of potential value) in Western Europe, Eastern Asia, Northern America, Southern Europe, South-Eastern Asia and Northern Europe – not within the direct geographic vicinity of Rwanda. As a relative share of export opportunities, Rwanda’s regional markets in Central, Eastern and Southern Africa offer a relatively small size of export value and a low number of Rwanda’s overall export product opportunities. This finding indicates that while regional integration offers some potential, the biggest opportunities for Rwanda lie in the international market where it should devote most of its attention. [The authors: Martin Cameron, Wilma Viviers, Victor Steenbergen] [PIGA trains stakeholders to explore Zambia’s trade potential]
PIDA Progress Report – 2017: Key lessons learned and recommendations
The following are lessons learned and recommendations from RECs, partners and project implementers on PIDA implementation (pdf): (i) As regional integration arrangements deepen and intra-African trade increases, there is need to focus on improved trans-continental highways in terms of road and rail networks; deepening of financial markets and increased cross-border financial flows including money transfer will require additional investments in ICT terrestrial links as well as national and regional data centres; while growing industrialization and agro-industries will require more reliable and affordable power supply across the energy mix. (ii) An integrated corridor development approach is crucial in developing PIDA projects, if the full development impact of the projects is to be realized. The project economics and viability can be enhanced by taking advantage of synergies between large trans-boundary projects. (iii) PIDA projects implementation is low in the Central African region causing the region to remain below the PIDA targets despite being one of the regions with high resources. The Northern region also has a low number of PIDA programs. Additionally, strengthening linkages between Central and the rest of Africa will help to accelerate Africa’s integration. To provide equity for all regions in terms of PIDA projects implementation, it is important to unlock further financing to support infrastructure development, enhance policy harmonization and increase/encourage governments to engage and commit more resources to implement development projects.
Assessing the economic benefits of transit trade in Tanzania (IGC)
Highlighted findings. (i) Transit volume: The volume of transit trade has grown enormously over time. For instance, the cost, insurance and freight value of transit trade increased five-fold in less than ten years; from under 6,000 billion Tshs ($3bn) in 2007 to about 29,000 Billion Tshs ($15bn) in 2015. Indeed, some analysts consider transit trade to be the third largest source of foreign exchange after gold and tourism receipts in Tanzania. (ii) GDP and welfare: There are large benefits to the economy (GDP growth, welfare etc.) when transit time/costs are reduced. As shown in Figure 2, the magnitude of impact to the economy increases with the magnitude of reduction in transit time. For example, by reducing transit time by three days, GDP increases by 2.5% compared with a GDP increase of 6.4% when transit time is reduced by nine days. The respective impact on welfare is 229.7 million compared with 572.3 million. Furthermore, the findings show that, reducing transit time has much bigger impacts on the economy compared to improving transport infrastructure. This is because the costs associated with transit delays (referred to as iceberg costs since they are vulnerable to time), have much larger effects on the transit operation. The findings imply that, the potential benefit of road infrastructure improvement cannot be realised if inefficiencies in customs and border management practices are not addressed. [The authors: Dr Josaphat Kweka, Solomon Michael] [Concern as Rwandans evade Dar port charges]
Appraisal econometrics for proposed transport corridors: optimal placement, intervention design, and wider economic benefits (World Bank)
Transport corridors to stimulate regional integration and trade have become a popular development tool. But when they fail to generate the expected wider economic benefits, they can become wasteful or unequitable investments. This paper evaluates the relative strengths and weaknesses of econometric methods as applied today to appraise the proposed placement of transport corridors and the project design to distribute benefits more widely; the future potential of these methods; and an emerging synthesis in some recent studies. [The author: Martin Melecky]
Apapa Port not conceived to receive trucks, fuel tankers, says LASG (ThisDay)
The Lagos State Government has stated that the Apapa port was originally designed to receive imported goods and petroleum products and move them out by railway and pipelines, and not to receive articulated trucks and heavy duty vehicles that transport these products and goods to different parts of the country. The Director of the Department of Petroleum Resources, Mr Mordecai Danteni Baba Ladan has also blamed the Apapa gridlock on depot owners who refused to construct holding bays in their depots for trucks that load petroleum products, contrary to the terms of their operating licenses. Speaking at the 2017 AGM of the Lagos Zonal Office of the DPR held at the weekend in Lagos, the Lagos State Commissioner for Energy and Mineral Resources, Mr. Wale Oluwo stated that all the stakeholders should go back to the original concept used in the design of the Apapa Port as a permanent solution to the gridlock.
Building trust for better movement across SADC: an update on the SADC Qualifications Framework (pdf, SAQA)
The TCCA understands that in order to maintain the momentum created over the last 15 months there is a need to consolidate, review and plan the work going forward. The TCCA is planning its next meeting to take place in South Africa from 21-25 May 2018. The purpose of the meeting is to: (i) Harmonise energies to synergise QA initiatives across Africa in a meeting with the Anglophone QA bodies of Africa. At this meeting, every effort will be made to strengthen countries' capacity to ratify the Addis Convention. [The authors: Coleen Jaftha, Joe Samuel]
Former Tanzanian President Benjamin Mkapa: speech at RPF conference on Africa’s Liberation and Transformation (New Times)
I venture to say that the pace of regional and ultimately Pan-African integration is slow for three reasons. The first is a leadership which is imbued with self-aggrandizement fuelled by excessive nationalism. The second is the failure to accept that cooperation demands a give and take readiness. The third is the influence that regional groupings elsewhere in the world, such as the European Union or Mercosur, [have] on our development perspective.
MC11 updates:
(i) Implementing the Trade Facilitation Agreement. Public and private sector leaders exchanged insights on implementing the WTO’s landmark Trade Facilitation Agreement to fully reap the benefits of swifter and less costly trade at the border. Speakers at the event, entitled “Trade Facilitation on Track”, highlighted the importance of local ownership of reform plans, multi-stakeholder cooperation, and capacity building to successfully implement the Agreement. Chris Folayan, co-founder and co-CEO of online platform MallforAfrica, noted the changing demands on trade facilitation and logistics (pdf) posed by online consumers who require fast deliveries and electronic payments. Speakers form the Netherlands, Kenya, Zambia and Uganda shared their experiences on the implementation of certain provisions of the Agreement. Highlighted presentations: Dr Chris Kiptoo (Principal Secretary, State Department for Trade, Kenya): Trade portal challenges and solutions (pdf); Katesh Dicksons (Director General of Customs, Uganda): Establishment and publication of average release times
(ii) 119 countries give political backing to role of women in trade and development. Though non-binding, the declaration (pdf) provides a framework for WTO members to adopt “gender-responsive” trade policies now that the link between promoting women’s participation in economic activity and improved economic performance has been proved. The declaration aligns WTO members with the objectives of the 2030 Agenda for Sustainable Development, notably its Sustainable Development Goal 5 on achieving gender equality and empowering all women and girls. The declaration says that both developed and developing countries acknowledge that “improving women’s access to opportunities and removing barriers to their participation in national and international economies contributes to sustainable economic development”.
(iii) Fisheries subsidies: deal or no deal? ‘Should there be no Fisheries Agreement at the Eleventh WTO Ministerial Conference, we must find other platforms within the United Nations to continue the discussions on fisheries and ensure a solution is found by 2020,’ said UNCTAD Secretary-General, Dr Mukhisa Kituyi. Depending on how the final negotiations shape up, some of UNCTAD’s member states have proposed the implementation of a WTO draft decision on “standstill commitment”, which would ensure that the global fisheries subsidies situation does not further deteriorate.
(iv) Nigeria signs joint declaration on economic cooperation with EFTA. The federal government has signed a joint declaration on Economic Cooperation with the European Free Trade Association in Buenos Aires on the sidelines of the 11th Ministerial Conference. Members of the EFTA are Norway, Liechtenstein, Iceland and Switzerland.
Tanzania: JPM orders closure of poor performing banks (Daily News)
President John Magufuli has just ordered BOT to close all banks that are performing poorly and insisted there must be proper assessments of all financial institutions. The Head of State has also ordered Finance and Planning Minister Dr Philip Mpango and Central Bank officials to stop the dollarization since more than one currency can’t be used in a country.
Southern Africa Regional Climate Outlook Forum: mid-season review (pdf, SADC)
Today’s Quick Links:
South Africa's competition policy is evolving for the better
European Commission recommends draft negotiating directives for a modernised Partnership with countries of Africa, the Caribbean and the Pacific
ECOWAS, World Bank reiterate commitment towards regional integration
IGAD hosts the coordination meeting of Eastern and Southern Africa regional organisations
Morocco signs 26 automotive deals worth $1.45bn
Man vs. machine in predicting successful entrepreneurs: evidence from a business plan competition in Nigeria
IMF Africa country statements: The Gambia, Tanzania, Namibia, Somalia
Christine Lagarde: How Benin can harness the power of economic diversification
Related News
Public and private sector leaders exchange best practices to implement Trade Facilitation Agreement
Public and private sector leaders on 12 December exchanged insights on implementing the World Trade Organisation’s landmark Trade Facilitation Agreement (TFA) to fully reap the benefits of swifter and less costly trade at the border.
Speakers at the event, entitled “Trade Facilitation on Track”, highlighted the importance of local ownership of reform plans, multi-stakeholder cooperation, and capacity building to successfully implement the Agreement.
“The implementation of the TFA will bring significant benefits to all WTO members, with developing and least-developed members having the most to gain,” WTO Deputy Director-General Yi Xiaozhun said at the event organized by the WTO Trade Facilitation Agreement Facility (TFAF) in cooperation with its partner organizations.
DDG Yi continued: “However, members will only reap these benefits through the full implementation of the Agreement. For this reason, trade facilitation needs to remain a priority for the WTO and all members.”
The TFA entered into force on 22 February 2017 following its ratification by two-thirds of the WTO membership. Since the last meeting of the WTO Trade Facilitation Committee on 3 November, four more members have ratified the Agreement bringing the total to 126 out of 164 members. These four members are Antigua and Barbuda, South Africa, Indonesia and Israel.
The full implementation of the TFA is estimated to reduce global trade costs by an average of 14.3%, with African countries and least-developed countries (LDCs) forecast to enjoy the biggest average reduction in trade costs. Furthermore, the TFA is forecast to add up to 2.7% a year to world export growth and more than 0.5% a year to world GDP growth over the 2015-30 horizon.
“Many members will face challenges in implementing the Agreement. The TFA has recognized this and has built-in provisions,” DDG Yi said. The TFA is the first WTO agreement in which these WTO members can determine their own implementation schedules and in which progress in implementation is explicitly linked to technical and financial capacity. In addition, the Agreement states that assistance and support should be provided to help them achieve that capacity.
“The tracks are laid, the train is there and donors are ready with the fuel. All conditions are there to allow members to move forward,” DDG Yi said.
The other speakers went on to share experiences about implementation of the Agreement in their respective countries. The public and private sectors must work together, speakers said. Furthermore, a change in mindset among authorities towards favouring easier flow of goods across borders and full ownership of reform plans have been vital for ensuring successful implementation, they said. Officials will also need to make room for continued transitions as security technologies and e-commerce demands evolve.
Costa Rica Vice Minister for Foreign Trade, Jhon Fonseca, said that his country’s National Trade Facilitation Committee (NTFC), for example, is a public-private team with various technical and policy making expertise. He added that it was important to constantly improve the organization to make sure it adapts to evolving needs.
Patricia Francis, chair of Jamaica’s NTFC, said that her government’s goal to turn the country into a logistics hub greatly helped to ease the implementation of the TFA as there was already an existing ambition to improve cross border flows. Automating trade procedures was not enough, she said, as there needed to be a behavioural change as well. Daniel Godinho, director for corporate strategy at Brazilian engine manufacturer WEG, shared this sentiment, saying: “At the end of the day trade facilitation means a change of culture.”
Chris Folayan, co-founder and co-CEO of online platform MallforAfrica, meanwhile noted the changing demands on trade facilitation and logistics posed by online consumers who require fast deliveries and electronic payments.
Additionally, speakers form the Netherlands, Kenya, Zambia and Uganda shared their experiences on the implementation of certain provisions of the Agreement.
Overall, the consensus of the speakers emphasized the need for border collaboration and coordination, political will, making use of technology, the establishment of baselines to measure implementation success, and publication of information in order to enable traders to work with regulatory agencies.
Sheri Rosenow, Counsellor for the TFAF, meanwhile shared information on implementation assistance available for developing and LDC members.
TFAF was created at the request of developing and least-developed countries to help ensure that they receive the assistance needed to reap the full benefits of the TFA and to support the ultimate goal of full implementation of the new agreement by all WTO members.
A selection of presentations from the event is available below. The full programme and presentations are available here.
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Buenos Aires Declaration on Women and Trade outlines actions to empower women
For the first time in the history of the World Trade Organization, WTO members and observers have endorsed a collective initiative to increase the participation of women in trade.
In order to help women reach their full potential in the world economy, 118 WTO members and observers agreed to support the Buenos Aires Declaration on Women and Trade, which seeks to remove barriers to, and foster, women’s economic empowerment.
Actions outlined in the Declaration will ultimately boost economic growth worldwide and provide more and better paid jobs for women. These actions will also contribute to UN Global Development Goals, including the Sustainable Development Goal to achieve gender equality through the empowerment of women and girls (SDG 5).
Supporting WTO members and observers have specifically agreed to explore and find ways to best tackle barriers to trade, lack of access to trade financing and sub-optimal participation of women in public procurement markets. Participating members will exchange information about what has worked – and what has not – in their attempts to collect gender-disaggregated economic data and to encourage women’s participation in the economy. Within the WTO context, members will scrutinize their own policies through a gender lens and find ways to work together to increase women’s participation in the world economy. They will also seek to ensure that trade-related development assistance pays better attention to its focus and impact on women. Progress will be reported in 2019.
Currently, many women worldwide stand on the sidelines of the economy. While women comprise about half of the global population, they generate only 37% of gross domestic product (GDP) and run only about a third of small and medium-sized enterprises. In some developing countries, female business ownership can dip as low as 3-6%. An International Trade Centre survey in 20 countries found that just one in five exporting companies is owned by women. In more than 155 countries, there is at least one law impeding economic opportunities for women. No country has managed to close the gender gap on economic participation and opportunity; progress is so slow it would take, at the current rate, 170 years to reach gender equality. It is also apparent that international trade and trade agreements affect women and men differently.
The Buenos Aires Women and Trade Declaration was spearheaded by the governments of Iceland and Sierra Leone, as well as the International Trade Centre. It stemmed from efforts made by the Trade Impact Group of the International Gender Champions, a leadership network that brings female and male decision-makers together to break down gender barriers.
With over 100 Heads of Delegation present, the Chair of the WTO’s 11th Ministerial Conference (MC11), Susana Malcorra, and the WTO Director-General Roberto Azevêdo received the Declaration today on the margins of the Conference. This is the first time members attending a WTO Ministerial Conference have issued a declaration calling for greater inclusion of women in trade.
Director-General Roberto Azevêdo said: “This joint declaration is a very welcome step in promoting women’s economic empowerment and in building the more inclusive trading system we all want to see. I am proud to support this initiative, and to help launch it here in Buenos Aires at the WTO’s 11th Ministerial Conference.”
Gudlaugur Thór Thórdarson, Iceland’s Minister for Foreign Affairs and External Trade, said: “Trade can help advance women’s economic empowerment and is also good for the economy. Therefore focusing on women and trade is not only the right thing to do, it also makes economic sense.”
Arancha González, ITC’s Executive Director, said: “Lowering the barriers facing women entrepreneurs, at home and internationally, would bolster growth and make it more socially inclusive. It would mean more and better-paid jobs for women – not least since women-owned firms hire more women, especially at higher levels. And it would go a long way towards realizing Goal 5 of the 2030 Agenda on Sustainable Development on achieving gender equality and empowering all women and girls.”
Cecilia Malmström, the European Commissioner for Trade, said: “For us to truly reap the benefits of trade, women’s independence and entrepreneurship need to take centre-stage in our policies. We need to transform ideas into action.”
Ann Linde, Sweden’s Minister for EU Affairs and Trade, said: “Getting more women involved in trade is sound economic policy for all countries, regardless of their level of development. Gender inequality is something none of us can afford.”
Kamina Johnson Smith, Jamaica’s Minister of Foreign Affairs and Foreign Trade, said: “Greater participation of women in international trade will generate sustainable jobs and boost global growth. I support the Women and Trade Declaration because trade policy is critical in making that possible.”
Heraldo Muñoz, Chile’s Minster of Foreign Affairs, said: “Economic empowerment of women is a priority in the negotiation of trade policies and export promotion actions conducted by our government. This is why I support the Declaration on Women and Trade.”
François-Philippe Champagne, Canada’s Minister for International Trade, said: “Canada has been a leader in advancing the Declaration on Women and Trade. We encourage countries to champion inclusive, progressive approaches to trade.”
Ambassador Yvette Stevens, Sierra Leone’s Head of Delegation to MC11, said: “The structural imbalances which contribute to an unequal distribution of the benefits from trade must be acknowledged and acted upon.”
Members and observers supporting the Buenos Aires Declaration on Women and Trade: Afghanistan, Albania, Argentina, Australia, Austria, Barbados, Belgium, Benin, Brazil, Bulgaria, Burundi, Cambodia, Canada, Chad, China, Chile, Colombia, Costa Rica, Côte d’Ivoire, Croatia, Cyprus, Czech Republic, Democratic Republic of the Congo, Denmark, Dominica, Dominican Republic, Ecuador, El Salvador, Estonia, Ethiopia, Fiji, Finland, France, Gabon, Gambia, Germany, Greece, Grenada, Guatemala, Guinea, Guinea Bissau, Guyana, Haiti, Honduras, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kenya, Republic of Korea, Kyrgyzstan, Lao People’s Democratic Republic, Latvia, Lesotho, Liberia, Liechtenstein, Lithuania, Luxembourg, Madagascar, Malawi, Malaysia, Mali, Malta, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Myanmar, Namibia, Netherlands, Nepal, New Zealand, Niger, Nigeria, Norway, Pakistan, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Republic of Korea, Romania, Russian Federation, Rwanda, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Samoa, Senegal, Sierra Leone, Slovakia, Slovenia, Somalia, Spain, South Sudan, Swaziland, Sweden, Switzerland, Tajikistan, Chinese Taipei, the former Yugoslav Republic of Macedonia, Togo, Tonga, Tunisia, Turkey, Uganda, Ukraine, United Kingdom, Uruguay, Vanuatu, Viet Nam, Zambia.
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Fisheries subsidies at the Eleventh WTO Ministerial Conference – Deal or no deal?
On Monday at the Eleventh WTO Ministerial Conference, the UNCTAD event on ‘Trade, Fisheries Subsidies and SDG14’ provided a platform for discussion to give a deeper understanding of some of the trade-related aspects of SDG 14, including regulatory issues, prohibition of certain fish subsidies, market access and fish management systems.
The ministerial-led event was an opportunity for enhanced consensus building at the political level with the purpose of exploring potential solutions for the controversial topic of subsidized fisheries.
On stage it was clear that, though some member states were still unsure about the final agreement expected to be announced at the end of the conference, others were much more certain that time was of the essence and that an efficient solution was urgently needed.
“Should there be no Fisheries Agreement at the Eleventh WTO Ministerial Conference, we must find other platforms within the United Nations to continue the discussions on fisheries and ensure a solution is found by 2020,” said UNCTAD Secretary-General, Dr. Mukhisa Kituyi.
Depending on how the final negotiations shape up, some of UNCTAD’s member states have proposed the implementation of a WTO draft decision on “standstill commitment”, which would ensure that the global fisheries subsidies situation does not further deteriorate.
“The standstill commitment takes us backwards by a few years and yet we had made tremendous progress and have a goal to achieve by 2030. Urgent and diligent follow-up is necessary,” added Dr. Kituyi
WTO members have been discussing fisheries subsidies since 2001, as part of the Doha Round. In 2015 the issue took on a new sense of urgency with the adoption of the SDGs and Target 14.6, in particular.
The discussion in Buenos Aires today took all of this history into account when covering numerous aspects of fisheries subsidies in relation to the SDGs. Some of the highlights of the event included comments on the significance of fish and fish products to international trade, food security, nutrition, poverty reduction and development. Fish and seafood products are the most traded food commodity globally and one important employment generator in developing countries.
Regulatory Framework and Relevant International Instruments were also covered through key international instruments that underlie and contribute to a functional fisheries management system and the development of potential disciplines on fish subsidies. According to Mr. Berdegué Assistant Director General FAO, there is a significant set of FAO treaties and soft law that seeks to address, overfishing, overcapacity, and illegal, unregulated and unreported (IUU) fishing activities that provide guidance of many aspects of responsible and sustainable fisheries.
Also taken into consideration were Trade Barriers with overview given of non-tariff measures faced by the fish sector in accessing international markets – which may include harmful fishing subsidies – and how they affect market access, particularly from developing countries.
One of the takeaways from the event was the fact that sustainable fisheries, especially in developing countries, depend on eliminating unjustifiable and unsustainable subsidies, which distort market prices, contribute to overfishing, overcapacity and generate unfair competition between industrial fleets and small scale, artisanal fishermen.
According to Ms. Okijamo, Deputy Secretary General of the Commonwealth, “small economies comprise the majority of our membership. They face formidable capacity constraints. These capacity constraints in reality mean that our members are far from the largest subsidizers. They also struggle to capture greater value within the fisheries sector”.
This was made even more clear when discussed in relation to Target 6 of SDG 14, which is one of the “early harvest” targets of the SDGs, meaning it is meant to be achieved by 2020, instead of 2030. A failure in compliance of the Goal might proceed to negatively influence the implementation of other SDGs, generating a domino effect.
It was noted that special and differential treatment must be an integral part of the negotiating outcome under SDG 14.6 and WTO mandates. However, such outcomes must not only look at levels of development but levels of fishing capacity as well. Such capacities are found to be uneven among developed and developing countries, and also amongst developing countries. For example, 15 of the 25 major wild marine producers are developing countries, with one country representing about one third of the total production.
Ms. Monica Maldonado from the Association of Tuna caning industries of Ecuador (CEIPA) mentioned that sustainability is not a trade barrier but an opportunity for competitiveness, stock conservation and social inclusion.
UNCTAD, UNEP and FAO have built-up momentum and provided guidance in the form of a joint statement, which deepened their partnership by offering a voluntary commitment to expand on trade-related aspects of SDG 14 between now and 2020 at the UN Ocean Conference.
Ultimately, Ministers at the event agreed that as some negotiating principles continue to struggle, others would focus their political will and complement efforts on the prohibition of fish subsidies to IUU fishing, improved transparency, studying the impact of subsidies on overfishing, unfair competition and access to stocks by small scale fishermen.
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PIDA Progress Report 2017
Foreword by Dr Ibrahim Assane Mayaki
NEPAD Agency CEO
Currently, half of Africa’s population of 1.1 billion is under 25 years young and it is estimated that 300 million youth will enter the African labour markets until 2030. Additionally, there is a mismatch between skills demand and supply to absorb this socio-economic capability via a well-educated and skilled workforce. The African Union recognised this potential by naming 2017 as the year of Harnessing the Demographic Dividend through Investments in Youth. As a matter of fact, in March 2017, the AU Member States’ Ministers for Transport, Transcontinental and Interregional Infrastructure, Energy and Tourism emphasized regional infrastructure as a key leverage to create jobs and invited AUC and NEPAD Agency to consider job creation a vital element during the implementation of the Programme for Infrastructure Development in Africa (PIDA).
Officials from the African Union (AU), the NEPAD Agency and the African Development Bank (AfDB) reaffirmed their commitment to ensure employment opportunities are included in infrastructure project design to create inclusive growth and sustainable development in Africa. The pledge was made at the closing ceremony of the second annual PIDA Week in Abidjan, Côte d’Ivoire in 2016. Consequently, the NEPAD Agency, as the AU’s technical implementing organ, developed the PIDA Job Creation Online Toolkit to capitalize on the demographic dividend for job creation and wider regional economic development via PIDA infrastructure projects. This is as well underscored by this year’s theme for PIDA Week “Regional Infrastructure Development for Job Creation and Economic Transformation.”
Secondly, this year, infrastructure financing has also been the key topic of PIDA’s deliberation. Closing the infrastructure deficit is vital for Africa’s economic prosperity and sustainable development. The costs of closing Africa’s infrastructure gap are enormous. The PIDA project will cost around US$ 360 billion between 2011 and 2040, with significant investments required by 2020. Such costs are beyond the financing capacities of African governments or even Development Finance Institutions (DFIs) and Multilateral Development Banks (MDBs). Therefore, a concerted effort has to be made to bring on-board all stakeholders that can pool in funds towards the financing of PIDA.
Attracting private sector participation through Public-Private Partnerships (PPPs) is therefore essential for the delivery of various infrastructure projects envisioned under PIDA. PIDA delivery will depend on effective Public-Private sector Partnerships (PPPs) and not just on the public sector or DFIs and MDBs. A clear and transparent regulatory framework is the foundation for a conducive business environment. For private investors to come on board, governments will need to create the right legislative, regulatory and institutional environment. Demonstrating political commitment by the government is key to attracting investors.
The Continental Business Network (CBN) is continuing its agenda towards de-risking infrastructure projects as a key element to attract financing. Pension and Sovereign Wealth Funds emerged as the key catalyst to close this financing gap. In September 2017, the NEPAD Agency, under the guidance of the CBN, has initiated a revolutionary campaign that is Africa-led and Africa-owned, aimed at increasing the allocations of African asset owners to African infrastructure from its currently low base of approximately 1.5% of their Assets Under Management (AUM) to an impactful 5% of AUM. NEPAD-CBN called for a more strategic engagement with domestic institutional investors in support of this campaign. The purpose of the 5% Agenda campaign is to work with Pension and Sovereign Wealth Funds including Ministers of Finance to gradually increase infrastructure investments, using financial resources available on the continent and strengthen public-private partnerships to mobilize financial and global institutional investments. There is need therefore, for policy makers to create an environment for pension and SWFs which will enable them to invest in large-scale infrastructure projects in Africa under the appropriate reform national and regional regulatory frameworks that will guide institutional investment in Africa.
2017 also saw the commissioning of the Continental High Speed Railway Network Project, an AU Commission-led initiative – designed to interconnect all African Capitals – including major economic, commercial and industrial hub – with appropriate high-speed rail infrastructure and technology. I am once again glad to inform you that our enhanced M&E System (VPic/AID) has been revamped with more features fulfilling its promise in supplying the required infrastructure status information on PIDA implementation. Please visit the new VPic website: http://www.au-pida.org.
Let me conclude with these three critical points:
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Africa must take leadership in financing its infrastructure projects, with African Pension and Sovereign Wealth Funds playing their rightful role.
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Africa’s regional infrastructure development is the foundation for the African transformation that we all expect and want, and the implementation of regional infrastructure projects will accelerate industrialisation and trade.
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The 5% Agenda is revolutionary and another critical game changer that will drive financing by institutional investors into Africa’s national and regional infrastructure projects, through the de-risking of projects.
Key Lessons Learned and Recommendations
The following are lessons learned and recommendations from RECs, partners and project implementers on PIDA implementation:
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As regional integration arrangements deepen and intra-African trade increases, there is need to focus on improved trans-continental highways in terms of road and rail networks; deepening of financial markets and increased cross-border financial flows including money transfer will require additional investments in ICT terrestrial links as well as national and regional data centres; while growing industrialization and agro-industries will require more reliable and affordable power supply across the energy mix.
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In terms of Energy and related infrastructure, Africa has abundant reserves of fossil fuels and an even greater abundance of renewable energy assets which provides a key opportunity for Africa’s infrastructure development for the future. The continent has more than half of the world’s renewable energy potential.
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Africa’s infrastructure development can also leverage on the anticipated youth dividend anticipated from the youthful population structure of Africa as well as a deliberate strategy to include and involve women in infrastructure projects, implementation and management.
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An integrated corridor development approach is crucial in developing PIDA projects, if the full development impact of the projects is to be realized. The project economics and viability can be enhanced by taking advantage of synergies between large trans-boundary projects.
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PIDA must also build upon and optimize existing instruments such as:
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IAIDA to strengthen coordination and cooperation between PIDA actors
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Regularly stakeholder meetings such as the PIDA Steering Committee
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SDM services of stakeholder mapping and assisting with cost/benefit sharing agreements between countries
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Use team planning/coordination/retreats between continental and regional institutions
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PIDA projects implementation is low in the Central African region causing the region to remain below the PIDA targets despite being one of the regions with high resources. The Northern region also has a low number of PIDA programs. Additionally, strengthening linkages between Central and the rest of Africa will help to accelerate Africa’s integration. To provide equity for all regions in terms of PIDA projects implementation, it is important to unlock further financing to support infrastructure development, enhance policy harmonization and increase/ encourage governments to engage and commit more resources to implement development projects.
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Other areas that need to be looked at specifically are joint resource mobilization strategies, more financial engagement from government, and supporting countries in conflict or transition situations to graduate from conflict to cooperation through joint regional projects such as cross-border roads, railways and power transmission projects.
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Assessing the economic benefits of transit trade in Tanzania
The untapped potential of transit trade in Tanzania
Tanzania benefits significantly from transit trade, serving as a potential driver of economic growth, welfare and local enterprise development. This highlights the indispensable role of the government in promoting transit trade in the country.
One of the highlights of the Tanzanian 2017 budget speech was the abolishment of value added tax (VAT) on ancillary transit services. This move supports the belief among people of Tanzania and the business world, of the country’s untapped growth potential in transit operations. Transit trade is vital in facilitating economic transformation and regional trade, offering multiple benefits to the surrounding society by unlocking the economic potential of those areas.
Whether current economic policy in Tanzania supports transit trade is an empirical question we cannot address here. Nonetheless, for the first time, a detailed study has been conducted to assess how and to what extent Tanzania benefits from facilitating transit trade for her landlocked neighbours (Zambia, Malawi, Eastern Democratic Republic of Congo, Burundi, Rwanda, and Uganda).
The study
The study is funded by the International Growth Centre (IGC) with support from the Tanzanian Planning Commission, and was conducted by Dr Josaphat Kweka, assisted by Solomon Michael. The study seeks to answer three questions:
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What benefits does Tanzania gain from Transit Trade?
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How do we assess these benefits?
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How could Tanzania leverage these benefits to support economic transformation?
It provides evidence that Tanzania benefits significantly from transit trade, and that it is a potential driver of growth and job creation.
Methodology
To comprehensively capture the benefits associated with transit trade, the study used multiple approaches to quantify as well as qualify the benefits of the transit trade value chain:
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The study applied the Global Trade Analysis Project (GTAP) framework which has multi-country database for conducting Computable General Equilibrium (CGE) analysis of international trade policy issues.
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A structured survey was used to obtain data for analysing the spatial impacts of transit trade on communities around the selected transit and border townships.
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Industry insights were obtained through interviews with industry operators.
The benefits can be:
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Direct: transits charges, clearing and forwarding agents, or fuel levies etc.
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Indirect: accommodation, restaurants, repair services etc.
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Induced: benefits from urbanisation in a transit location.
Findings
1. Transit volume
The volume of transit trade has grown enormously over time. For instance, the cost, insurance and freight (CIF) value of transit trade increased five-fold in less than ten years; from under 6,000 billion Tshs (US$ 3 Billion) in 2007 to about 29,000 Billion Tshs (US$ 15 Billion) in 2015. Indeed, some analysts consider transit trade to be the third largest source of foreign exchange after gold and tourism receipts in Tanzania.
Figure 1: Growth of transit trade in Tanzania
Source: Author’s analysis using transit data (2016).
2. GDP and welfare
There are large benefits to the economy (gross domestic product (GDP) growth, welfare etc.) when transit time/costs are reduced. As shown in Figure 2, the magnitude of impact to the economy increases with the magnitude of reduction in transit time. For example, by reducing transit time by three days, GDP increases by 2.5% compared with a GDP increase of 6.4% when transit time is reduced by nine days.
The respective impact on welfare is 229.7 million compared with 572.3 million. Furthermore, the findings show that, reducing transit time has much bigger impacts on the economy compared to improving transport infrastructure. This is because the costs associated with transit delays (referred to as iceberg costs since they are vulnerable to time), have much larger effects on the transit operation. The findings imply that, the potential benefit of road infrastructure improvement cannot be realised if inefficiencies in customs and border management practices are not addressed.
Figure 2: Impact of reduction in transit time (days) on GDP and welfare (USD)
Source: Based on GTAP Model.
3. VAT
The introduction of VAT on ancillary transit services has negative impact on transit trade. Estimates from industry operators show that introduction of VAT resulted in a 30% fall in cargo volume. In recognition of its potential negative impact, the Tanzanian Government abolished VAT.
4. Local enterprise development
In the locations through which transit trade stops (either for customs procedure or park and rest), transit operations generate considerable spatial development opportunities that contribute to local economic development. Although direct attribution cannot be established, interviews with households and enterprises show that transit trade was the main factor explaining establishment and growth of businesses, hence urbanisation in those locations.
Figure 3 described the type of businesses – dominated by hotels/lodges, agro-product sellers, and retail shops, which have grown to be sources of income, jobs and livelihoods in these locations. For instance, a simple calculation shows that, on average, each enterprise in a transit location generates three jobs.
Figure 3: Types of local enterprises in transit locations
Source: Survey of transit locations, 2017.
It is important to note that some of the businesses rely directly on the existence of transit operations more than others (in terms of number of trucks or/and time trucks spends on the location). Such business (e.g. restaurant or guest houses serving truck/transit drivers) are directly affected when the number of trucks declines or when trucks take shorter times on the location.
Figure 4 maps businesses on the extent to which they are vulnerable (hence resilient) to changes in volume or time delays in transit cargo. Such businesses, such as social services, hardware stores, or furniture making, do not rely as much on the transit of cargo.
Figure 4: Contingent business activities to transit trade
Source: Survey of transit locations, 2017.
These spatial developments have led to a growth in welfare as households have wider choices of goods and services. This is due to increased competition, and farmers and land owners receiving higher value for their crops and properties respectively. Also, over time, there has been improved availability of social services (education, health, water and housing) among other (financial, business or transport) services over time.
5. Negative outcomes
Growth of transit trade has been associated with negative outcomes, including increased incidences of promiscuity among truck/transit drivers(leading to increased prostitution, HIV Aids, and unwanted pregnancies), illegal immigrants, rising crime rates, theft and smuggling.
Clearly, public policy has an important role to play (e.g. urban planning) in amplifying the spatial benefits of transit trade, and in addressing the associated challenges of population growth (congestion, environmental impact, and road accidents) and social ills.
Recommendations
This research begins to explore the importance of transit trade in Tanzania, and will be extended in a follow-up study. It is expected though that the findings are generally applicable to similar (coastal) transit countries. The study provides a compelling case for the indispensable role of the government (both local and central) in promoting transit trade as a potential growth driver.
Indeed, some actions are crucial to amplify the benefits of transit trade for the economy. The Tanzanian Government could:
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accelerate urban planningin locations along the transit corridor to maximise the benefits of urbanisation in these areas,
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complement infrastructure investment with measures to improve efficiency of trade facilitation agencies; and
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promote policy research and data for informing dialogue, and monitoring performance.
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tralac’s Daily News Selection
Featured tweets:
@AUC_MoussaFaki: #SDGsAfricaRoundtable: Leadership in Africa must speak, act local to galvanise intra-African trade, stronger political commitment to address the real needs of all Africans.The #AUReforms is part of acknowledgement that we must own, pay for our collective ambitions. Now. Not later.
@AlibabaGroup: Jack Ma: In the future, trade will not go through containers, it will go through packages. E-commerce will not be one of the solutions, it will be THE solution. Rules and laws should be simple and modernized – designed for e-commerce.
MC11 updates:
(i) WTO, WEF, eWTP launch the Enabling E-commerce Initiative. The initiative aims to bring together leading voices from governments, businesses and other stakeholders for public-private dialogue on e-commerce policies and practices that can benefit small businesses. It will start its work early in 2018, with a high-level meeting at Davos in January to be followed by other conversations, including a major event in Geneva later in 2018. [WEF: 5 ways to make global e-commerce easier for everyone]
(ii) More than 40 ministers issue joint statement affirming support for the WTO. Ministers from 44 WTO members issued a joint statement on 11 December underlining their support for the WTO and reaffirming the “centrality” of the rules-based multilateral trading system. “We, the Ministers from 44 developing and developed Members that are strongly supportive of the multilateral trading system, are concerned that the World Trade Organization is facing challenges,” they declared. “We reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the WTO and the centrality of the rules-based multilateral trading system.”
(iii) The unseen impact of non-tariff measures: insights from a new database. A new report by UNCTAD and the World Bank Group launched at the WTO’s 11th Ministerial Conference reveals that non-tariff measures make trade costlier for developing countries than tariffs. The report is based on the updated database TRAINS 2.0, which collects comprehensive and comparable NTM data for 109 countries, covering 90% of global trade. On usage of NTMs, the report found that (pdf): (i) NTMs affect 77% global trade; (ii) In general, developed countries regulate more products and a higher share of imports than least-developed and developing countries; (iii) Agricultural products are more often regulated than manufactured goods and natural resources; (iv) Technical barriers to tradeand Sanitary and phytosanitary measures are the most frequently used form of NTMs; (v) Developed countries drive the high global usage of TBTs and export measures, while the use of SPS measures is more uniformly distributed. The report also measures the impact of NTMs on trade by estimating their equivalents according to value, or ad valorem equivalents (AVEs), which makes them comparable to tariffs. Four findings stand out:
(iv) TRAINS 2.0: New report reveals that trade regulations are costlier for developing countries than tariffs. A new release of UNCTAD’s global non-tariff measures database, TRAINS 2.0, was presented yesterday. The update means that the database now offers systematic and comprehensive information on 109 countries and covers 90% of world trade. UNCTAD TRAINS 2.0 contains 14,561 different regulations that comprise 50,511 distinct regulatory measures. Each entry provides information on the substance of measures, and the products and trading partners subject to the measure.
(v) WTO, ITC launch Cotton Portal to enhance transparency and support development. The Cotton Portal is designed for exporters, importers, investors and trade support institutions to search business opportunities and market requirements for cotton products. It provides a single entry point for all cotton-specific information available in WTO and ITC databases on market access, trade statistics, country-specific business contacts and development assistance-related information as well as links to relevant documents, web pages and to other organizations active in the cotton sector. Four African cotton-producing countries – Benin, Burkina Faso, Chad and Mali – proposed a Sectoral Initiative on Cotton in 2003. Since then, cotton has been discussed as a specific topic in the WTO.
(vi) Commodities and Development Report 2017. To support its policy recommendations, the report reviews policies pursued by several countries and their respective socio-economic impacts. The case studies cover such commodities in producing countries as soybeans in Argentina and Brazil, rice in Bangladesh, diamonds in Botswana and Sierra Leone, cotton in Burkina Faso, coffee and bananas in Costa Rica, cocoa in Ghana, nickel in Indonesia, sorghum in Mali, oil in Nigeria, and copper in Zambia. According to the report, policies that can promote inclusive growth over the next 15 years include economic diversification, expanding the linkages between the commodity sector and the national economy, adopting countercyclical expenditure policies which build commodity revenue buffers during price upswings to use them during downswings, adding value to raw commodities, and investing in social protection, health and education. [Various downloads available]
(vii) MIKTA Ministerial Communique; Statements by Members and Observers at the plenary session; USTR Lighthizer’s opening plenary statement; UNCTAD Secretary-General at MC11: It’s time to re-energize the global trading system; @MalmstromEU: Despite all the hard work yesterday we still have no agreed outcomes says MC 11 chair @SusanaMalcorra. Now the real tough negotiations start.
Nigeria’s trade surplus hits N1.2trn on recovering oil price (Sundiata Post)
Nigeria’s trade surplus hit the N1.2 trillion mark in the third quarter of 2017 for the first time since 2014, buoyed by oil price recoveries since the beginning of the year, the National Bureau of Statistics said Monday. Nigeria’s oil exports rose by 99.13% year-on-year jump, as the economy gradually recovers from its worst economic slump in almost three decades, recorded a trade surplus of N1.2 trillion in the period under review, as the value of exports rose 54% from last year toN3.5 trillion while imports declined 4.5% to N2.3 trillion. On a quarterly basis, exports rose 15% while imports fell 9%. The trade surplus in Q3 is the third straight surplus this year, having been followed by N719 billion and N506 billion trade surpluses in the first and second quarters respectively, according to data compiled by BusinessDay.
Sudan and the IMF
After 20 years, long-standing US sanctions on trade and financial flows were revoked in October 2017, considering Sudan’s progress in cessation of hostilities in internal conflicts, improved cooperation on regional stability and counterterrorism, and improved humanitarian access. However, Sudan remains on the U.S. list of State Sponsors of Terrorism, blocking progress towards badly needed debt relief. Arrears to the Fund are large (SDR 966.3 million). Selected Issues report: Banking relationships between Sudanese banks and foreign correspondents are likely to be gradually re-established. CBOS officials and commercial banks interviewed by the mission reported that negotiations with correspondent banks started since early 2017; however, they did not report material change to CBRs yet. CBOS officials also indicated that foreign banks have expressed interest for dealing with Sudan again. European and Middle-East banks are reportedly waiting for U.S. banks to begin operating in Sudan before taking action, and expect delays in resuming transactions between 6 to 12 months, despite the lifting of US sanctions, due to the need for compliance reports from the requesting bank. 2017 Article IV Consultation: Extract – Supply side reforms (pdf). The authorities have intensified efforts to modernize the business environment, notably in the context of their application for WTO membership. A high-level committee and eight sub-committees have been formed to coordinate this effort, and they have already identified 151 laws to be amended or completely modernized; staff encouraged them to press on with this effort. The authorities also continue to develop measures to fight corruption, including the Auditor General Act of 2017 which permits the Auditor General to audit any entity with at least 1 percent government ownership, the establishment of a Special Prosecutor General to investigate cases of abuse of public funds, and the establishment of an Anti-Corruption Commission.
Niger: Systematic country diagnostic (World Bank)
The economy is undiversified with few indications of structural transformation. Agriculture is the dominant sector in the economy (40% of GDP) and sectors such as manufacturing (6% of GDP), construction and public works (3% of GDP), and production of electricity gas and water (1% of GDP) are relatively small and underdeveloped. More than 60% of GDP is generated in the informal sector. The share of the secondary sector in GDP did increase over the past 15 years, however, not because of growth in industrial production but due to the expansion of the extractives industry. The tertiary sector generates around 40% of GDP. The relatively high contribution of the tertiary sector is not so much the result of the development of a more modern section of the economy as the reflection of the importance of import and export trade and the cost of transportation. Commerce and transport and the public sector represent the most important activities in the tertiary sector with shares of 12% of GDP respectively. Box 4.1: Niger’s economic symbiosis with Nigeria and consequences of the naira devaluation (pdf):
Re-exports are another aspect of trade between Niger and Nigeria. Niger functions as a warehouse state for products that are heavily taxed or subject to import restrictions in Nigeria, including used cars, textiles, rice, and cigarettes. In 2014 and 2015, the value of re-exports to Nigeria represented 15% and 12% of the GDP, respectively. While these figures are not part of Niger’s trade balance, they however contributed the equivalent of approximately 1% of GDP to the national budget each year in terms of customs duties. The cumulated effect of lower demand from Nigeria because of the recession in Nigeria for livestock and other products exported by Niger and the lower transit trade is significant. The impact of transit trade alone could be about 0.15–0.2% of GDP reduction in growth. The negative impact is mitigated to some extent by lower prices of imports from Nigeria. Cereal imports from Nigeria, which account for 2% of GDP, play a major role in food security. Well-organized distribution channels supply Niger’s markets from regions of Nigeria where there is surplus production. The substantial naira devaluation affected prices of food products favorably, even without full pass-through of this devaluation.
The World Economic Situation and Prospects 2018 report (UN)
A 3% upturn in the global economy has paved the way to readjust policy towards longer-term issues, such as addressing climate change, tackling existing inequalities and removing institutional obstacles to development, according to a new UN report on global economic prospects. According to the report, 2017 global economic growth had reached 3% – its highest since 2011 – as crisis-related fragilities and the adverse effects of other recent shocks have subsided. The improvement is widespread. Roughly two-thirds of the world’s countries have experienced stronger growth in 2017 than in the previous year, and movement is expected to remain steady at three per cent in 2018 and 2019. Noting that the recent pickup in global growth stems predominantly from firmer growth in several developed economies, the report states that East and South Asia remain the world most dynamic regions. Extract (pdf): In 2017–2019, further setbacks or negligible growth in per capita GDP is anticipated in Central, Southern and West Africa, Western Asia, and Latin America and the Caribbean. These regions combined are home to 275 million people living in extreme poverty. This underscores the importance of addressing some of the longer-term structural issues that hold back more rapid progress towards sustainable development and to ensure that the targets of eradicating poverty and creating decent jobs for all are not pushed further from reach. Failure to address these issues may leave a quarter of the population of Africa in extreme poverty by 2030. Very few of the LDCs are expected to reach the Sustainable Development Goal target for GDP growth of “at least 7%” in the near term. Approaching this target will require higher levels of investment in many LDCs
PIDA Week updates:
Remarks by Dr Cheikh Bedda (AUC Director for Infrastructure and Energy): With regards to project development, as of December 2017, from the 433 PIDA PAP projects, we are pleased to announce the following status following our data collection efforts 46 are at Concept, 40 are at Pre-Feasibility, 30 are at Feasibility, 30 are at Detailing Structuring, 18 are at Financing, 19 are at Tendering, 83 are at Construction and 50 are in operation. The AfDB acknowledged that even though the cost of PIDA projects is very high, the cost of not implementing PIDA projects bears higher impacts to the sustainable development of the continent. It is imperative to analyse the “cost of inaction”, its impacts in the future economic growth of Africa. PIDA projects have so far created jobs and will continue to create employment in the region.
At the African Union Commission, we are already in the process of carrying out a mid-term review of the PIDA in order to assess the current projects on the ground and also to select projects for the next cycle of PIDA implementation, which is from 2020 – 2030. It is our strong expectation that the new phase of the programme will leverage partner support towards a comprehensive package of PIDA implementation strategy. In that regard, the AUC is proposing a strategy with renewed focus to infrastructure development in rural and remote areas through an integrated approach that will prioritise programmes that deliver roads, energy and ICT to help these regions leapfrog in their development trajectory. [Remarks by Dr Ibrahim Assane Mayaki (NEPAD Agency CEO); Improving project bankability key to bridging Africa’s infrastructure gap; Adeyemi unpacks PIDA Model Law for transboundary infrastructure projects in Africa]
Today’s Quick Links: African Economic Conference: Fair trade with Europe should depend on quality African exports ECOWAS Free Movement and Migration programme: African trade unions seek ways to improve migration Africa’s slice of $6.2 trillion global air cargo up for grabs European Investment Bank signs €250m financing for SMEs in Egypt |
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PIDA Week: Improving project bankability key to bridging Africa’s infrastructure gap
Preparing a pipeline of bankable sustainable infrastructure projects is vital, participants of the Programme for Infrastructure Development in Africa (PIDA) Week heard as it opened on Monday in Swakapomund, Namibia.
This, according to high-level speakers from the African Union Commission, the NEPAD Agency, the African Development Bank and the Southern African Development Community (SADC) is key to closing the infrastructure gap and creating jobs in the continent.
In his official opening address, Namibia’s Minister of Works and Transport, Alpheus GNaruseb called for strong coordination in the implementation of PIDA and the preparation of bankable, investment-ready projects that can attract financing for implementation.
The Director for Infrastructure and Energy at the African Union Commission, Cheikh Bedda said that policy makers, infrastructure experts and the private sector have a crucial role to play in training and skills acquisition in infrastructure development to prepare young Africans for the implementation of complex programmes such as PIDA.
“The continent needs as a matter of urgency, to scale-up capacity for project preparation in terms of resources, skills and development of bankable project pipelines to create enough jobs and opportunities for the large African youth population entering the labour market,” Mr. Bedda said.
Reflecting on the mid-term review of the PIDA Priority Action Plan (PAP) that the AUC is currently conducting, the Director stated, “Early indications on the implementation of projects clearly show the critical importance of a sound project preparation, given that more than half of the portfolio of projects are still at the conceptual stage.”
Also speaking at the opening session, Dr. Ibrahim Assane Mayaki, NEPAD Agency’s Chief Executive Officer, noted that African Heads of State and Government including leaders of Industry and Finance recognize the lack of technical capacity for project preparation as one of the key bottlenecks in the implementation of PIDA projects.
Mayaki explained that ‘the African Union Commission and NEPAD established the PIDA Service Delivery Mechanism (SDM) as an instrument for tackling the lack of technical capacity during the project preparation phase.
“This year NEPAD, under the leadership of the African Union Commission Chairperson Moussa Faki Mahamat, launched the 5 Percent Agenda,” Dr. Mayaki recalled.
Noting that the private and public sectors are joining forces in Africa to create conducive environments to attract investments, which are so vital for the continent’s growth, Dr. Mayaki explained that “the 5 Percent Agenda is a campaign to increase investment allocations by Africa asset owners into African infrastructure from its low base of about 1.5% of their assets under management to an impactful 5%.”
More suggestions on possible solutions came from Mr. Shem Simuyemba, the African Development Bank’s Coordinator for Multi-Donor Special Fund – NEPAD Infrastructure Project Preparation Facility who highlighted the Bank’s financial commitments to Africa’s infrastructure development, which accounts for half of its total spending.
“The African Development Bank is stepping up the pace by focusing on the High 5 priorities that are crucial for accelerating Africa’s economic transformation. Light up and power Africa, Feed Africa, Industrialise Africa, Integrate Africa, and Improve the quality of life for the people of Africa,” Mr. Simuyemba said.
The solution is to scale-up capacity for project preparation and development as the only means to assess, package and structure the projects in such a way that there is a ‘rolling pipeline’ of bankable projects, he added.
Referring to the theme, the Deputy Executive Secretary-Corporate Affairs for the Southern African Development Community (SADC), Mrs. Emilie Mushobekwa stated that SADC has taken a multi-pronged approach to accelerate the preparation and implementation of PIDA Projects in the region to facilitate regional integration and job creation.
A case in point, Mrs. Mushobekwa stated that SADC Secretariat has allocated an annual budget since May 2016 to support project preparation to bankability and corridor development.
Co-organized by the African Union Commission, the NEPAD Agency and African Development Bank, Africa’s premier infrastructure meeting, the 2017 PIDA Week is ongoing in Swakopmund, Namibia on the theme “Regional Infrastructure Development for Job Creation and Economic Transformation”.
At the PIDA Week, the NEPAD Agency also launched its pioneering 2017 PIDA Progress Report, which is the outcome of collaboration between all PIDA stakeholders who shared information on projects and interventions on the ground and on progress made during the year.
PIDA, acronym for Programme for Infrastructure Development in Africa was adopted by the AU heads of state and government in January 2012 as the reference for Regional and Continental infrastructure development in Africa. PIDA covers four main sectors – transport, energy, information and communication technology as well as transboundary water resources. The programmes are divided into 433 projects, the main implementation phases being short term from 2012 to 2020, medium term from 2020 to 2030 and long term from 2030 to 2040. PIDA projects are 433, with 51 marked as priority. The 2017 commemoration ends on Thursday, 14 December.
After two successive record-breaking years, 2017 PIDA Week is shaping up to be the hottest ever registered, welcoming more than 300 leading thinkers from international institutions, government, academia, business and finance, engaged in ground breaking debate on the opportunities and the challenges of investing in infrastructure in Africa.
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WTO, World Economic Forum and eWTP launch joint public-private dialogue to open up e-commerce for small business
A new initiative designed to drive public-private dialogue on e-commerce was launched on Monday, 11 December 2017 by the World Trade Organization, the World Economic Forum and the Electronic World Trade Platform (eWTP).
The initiative, entitled ‘Enabling E-commerce’, aims to bring together leading voices from governments, businesses and other stakeholders to begin a high-level conversation on e-commerce policies and practices that can benefit small businesses.
The launch event took place in Buenos Aires, on the margins of the WTO’s 11th Ministerial Conference. Director-General Roberto Azevêdo was joined by Jack Ma, Executive Chairman of Alibaba Group, representing the Electronic World Trade Platform (eWTP), and Rick Samans, Head of Global Agenda, Member of the Managing Board, World Economic Forum.
E-commerce is a growing force in global trade and has the potential to make the world economy more inclusive by creating opportunities for micro, small and medium-sized enterprises (MSMEs) and expanding choice for consumers. However, for MSME engagement in e-commerce to grow rapidly worldwide, reforms to industry practices and government policies are needed.
The Enabling E-commerce initiative will provide an opportunity for stakeholders to develop a clearer understanding of how to enable MSME e-commerce around the globe. It will also encourage research and knowledge sharing on the practical challenges faced by MSMEs and serve as a bridge between global e-commerce practice and policy.
DG Azevêdo said: “There has been a groundswell of interest in e-commerce at the WTO – and in its potential to lift up small businesses around the world. The vibrant debate on these issues has shown the desire of many WTO members to bridge the digital divide, and to gain a deeper understanding of the challenges and opportunities of e-commerce. The Enabling E-commerce initiative will therefore provide a valuable resource – bringing a range of stakeholders together to further explore these issues. I want to thank the World Economic Forum and eWTP for this initiative.” His full speech is available here.
Jack Ma said: “The Enabling E-commerce Initiative envisions a world where small businesses, young people and developing countries can succeed in the global marketplace. The problem with globalization is that its benefits have not been made available to all. We cannot stop globalization, we must improve it. If business and government work together, we can create a more inclusive trade model to expand the benefits of globalization to those who have been left behind.”
Richard Samans said: “We have an opportunity to harness innovation to create a more inclusive global economy. As the international organization for public-private cooperation, the World Economic Forum will work with WTO and eWTP to bring all interested stakeholders together to deepen understanding of how to facilitate cross-border e-commerce for small business.”
The initiative will start its work early in 2018, with a high-level meeting at Davos in January. This will be followed up by other conversations, including a major event in Geneva later in the year.
5 ways to make global e-commerce easier for everyone
E-commerce sales worldwide hit an estimated $25.3 trillion in 2015 and are likely to have grown since.
The internet makes buyers and sellers more visible and accessible to each other locally and globally. The international bit is really interesting. The opportunity to connect quickly and efficiently to multiple markets can be a boon for smaller businesses and a great attraction for consumers. Without e-commerce, establishing a physical presence in multiple markets can be costly, while consumer demand might also not always be clear. Survey after survey has shown that the number one limitation to buying and selling across borders is information – exactly what the internet excels at.
Entrepreneurs everywhere dream of their start-up being “born global,” identifying a niche and reaching customers around the world from day one. Latin America’s largest e-commerce platform, MercadoLibre, started in a garage in 1999 with 100 products on a website.
Unfortunately international e-commerce isn’t always easy. Cross-border e-commerce represents around 7% of total business-to-consumer e-commerce, even less in some regions. When was the last time you ordered something online from the other side of the world?
Even in developed and highly integrated markets such as France and Germany, try to buy a book or film across the no longer visible physical border and you’ll find it’s still very present in cyberspace. “Suitcase traders” ferrying online purchases from one country to another are still an active community.
The issues holding back cross-border e-commerce range from limited access to e-payments, delivery logistics and costs, warehouse access, product returns processes, complex consumer protection regulations, fees for e-commerce platforms, retailers protecting price differentials, lack of technical skills and business knowledge.
So although global e-commerce potential is warming up, we’re not quite there yet. And certainly, more could be done to ensure that these new tech-driven opportunities are widely utilised. Here are five options to think about:
1. Plug the digital divide
E-commerce can’t work without reliable Internet. Some four billion people across the globe still don’t have access to or use the Internet. Infrastructure is a major hurdle – particularly in rural areas. High-speed broadband can be unaffordable in a number of places. Lack of locally relevant content and skills are another drag.
Image: Internet for All: A Framework for Accelerating Internet Access and Adoption, World Economic Forum, 2016
The complexity of these challenges requires a multi-dimensional response. The Internet for All initiative, for example, brings together leading organisations across business, civil society and government to create partnerships to address Internet access and use barriers. The initiative is currently delivering projects in four countries - Rwanda, South Africa, Jordan and Argentina. The approaches vary according to local need, in some instances working on digital skills, in others on connectivity for refugees.
2. Map out the ecommerce how-to
There is a general need for deeper consensus on best practices for facilitating e-commerce. Certain e-commerce tools have already been around for a couple decades or more. Equally, e-transaction related policies have long been on the books in some places.
But approaches vary between countries and don’t always take into account the cross-border element. Policy communities involved in different aspects of e-commerce may also not be aware of each other’s’ work. For example, the overlap between financial system regulators and the trade community is not as high as it might be in the context of borderless e-payments. The specific challenges facing small businesses in e-commerce – as well as solutions – may not always be clear. Supportive industry efforts could also be explored.
A new Enabling E-commerce initiative led by the Forum, WTO and eWTP aims to bring together leading voices from governments, businesses and other stakeholders for public-private dialogue on e-commerce policies and practices that can benefit small businesses. The collaboration will further explore these issues to drive a more inclusive global economy.
It was launched at #MC11businessforum on 11 December 2017.
3. Act on good data
E-commerce is currently quite difficult to measure due to different national definitions, methodology and scope of data collection. An absence of e-commerce data hampers targeted policies and affects companies’ decision-making and investments. The lack of data may feed fears too – is the digital economy facilitating VAT workarounds and the like?
A joint effort by various UN agencies and other intergovernmental agencies such as the Universal Postal Union, World Bank, World Customs Organization and World Trade Organization (WTO) to improve the measurement of cross-border e-commerce is a helpful step in the right direction for informed discussion.
4. Let trade deals help
WTO Members agreed a trade deal four years ago to cut red tape for goods crossing borders. The Trade Facilitation Agreement (TFA) is helpful for small business and e-commerce. As this type of trade often involves lower value packages, extra transaction costs eat into margins. Long delays in between order and delivery may affect consumer ratings and confidence.
Collaboration between governments on trade policies in other areas could also help. About 27% of FTAs notified to the WTO already have “e-commerce chapters.” These touch on issues such as regulatory transparency and cooperation, digitized customs, online consumer protection and capacity building, among other things. The chapters could be used as a basis to examine where trade policy can contribute to promoting best practices or addressing problems.
5. Regional digital integration
The impact and responses to e-commerce are by no means uniform across all countries. Regional approaches, however, offer a test ground for best practices. A regional market could also help small businesses pilot export models.
The Association of Southeast Asian Nations (ASEAN) has been collaborating on digital integration since 2000. Good progress has been made in some areas, such as on trade facilitation and e-transactions, while more work is needed around the data flow governance, cross-border dispute resolution and digital payments. Separately, Asia Pacific Economic Cooperation (APEC) economies agreed to a Blueprint for Action on E-commerce in 1998 to work on both domestic and international flows; focused on the needs of small businesses and encouraged better data collection and measurement. Efforts have continued among the group since.
Elsewhere, Pacific Alliance nations – including Chile, Colombia, Peru and Mexico – have included an e-commerce chapter in recent integration arrangements. The EU, meanwhile, aims to deliver an improved digital single market by 2020 to boost jobs and other benefits.
Trade’s got a future online
Global trade has come under fire of late. Some see it as taking away their job. Others consider the rules unfair or don’t feel like they experience any benefits.
It is true that the opportunities of an open global economy have not yet delivered for everyone. Small businesses face a lot of hurdles to going global. By improving their way into international markets, e-commerce could change that, and bring us closer to an inclusive global economy.
The authors of this article are Kimberley Botwright, Policy Analyst, Digital Trade, International Trade & Investment, World Economic Forum and Sean Doherty, Head of International Trade and Investment System Initiave, Member of the Executive Committee, WEF Geneva. The views expressed in this article are those of the authors and not the WEF.
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Commodity-dependent developing countries need to boost efforts to diversify their economies
Without policy change, commodity-dependent developing countries risk falling short of achieving sustainable development by 2030, UN report warns.
Without a renewed commitment to policy change, commodity-dependent developing countries (CDDCs) are by 2030 set to lag behind countries with more diverse economies in their social and economic achievements, UNCTAD and the Food and Agriculture Organization of the United Nations (FAO) said in a report issued on Monday, 11 December.
The Commodities and Development Report 2017 argues this is a likely scenario given that global food and non-food commodity prices – with the exception of oil – are expected to remain at their 2010 levels.
They may even increase slightly in the years leading to 2030 – the target date for the achievement of the Sustainable Development Goals (SDGs) agreed by the international community in 2015.
However, the report notes that these global price patterns may diverge once broken down to the regional and national levels.
The 2003-2011 commodity price boom drove up export revenues and, generally, economic growth rates for many CDDCs, but this trend has either slowed down or has been reversed since global commodity prices stabilized at a lower level, the report notes.
This in turn has brought to light the importance of investing in human capital and social protection as well as of redistributive policies, considering that strong overall economic growth alone does not necessarily translate into poverty reduction and food security achievements.
The report stresses the need for CDDCs to pursue structural transformation to improve their social and economic prospects, reduce poverty, realize food security and achieve the SDGs at large.
To support its policy recommendations, the report reviews policies pursued by several countries and their respective socio-economic impacts. The case studies cover such commodities in producing countries as soybeans in Argentina and Brazil, rice in Bangladesh, diamonds in Botswana and Sierra Leone, cotton in Burkina Faso, coffee and bananas in Costa Rica, cocoa in Ghana, nickel in Indonesia, sorghum in Mali, oil in Nigeria, and copper in Zambia.
According to the report, policies that can promote inclusive growth over the next 15 years include economic diversification, expanding the linkages between the commodity sector and the national economy, adopting countercyclical expenditure policies which build commodity revenue buffers during price upswings to use them during downswings, adding value to raw commodities, and investing in social protection, health and education.
CDDCs will require more policy space in order to tailor the right policy mix to fit their economic conditions and circumstances and drive their sustainable economic development in an increasingly globalized world.
Ultimately, structural transformation should result in the successful implementation of the 2030 Agenda for Sustainable Development, of which the SDGs are the core, the report concludes.
Download: Commodities and Development Report 2017 (PDF, 3.33 MB)
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Lift in global economy prompts opportunities to tackle deep-rooted development issues – UN
A 3% upturn in the global economy has paved the way to readjust policy towards longer-term issues, such as addressing climate change, tackling existing inequalities and removing institutional obstacles to development, according to a new United Nations report on global economic prospects.
Launched in New York on Monday, among other things, the World Economic Situation and Prospects (WESP) 2018 offers policy imperatives that include tackling inequality and delinking economic growth from environmental degradation.
“The World Economic Situation and Prospects 2018 demonstrates that current macroeconomic conditions offer policy-makers greater scope to address some of the deep-rooted issues that continue to hamper progress towards the Sustainable Development Goals,” stated UN Secretary-General António Guterres in the Foreword.
According to the report, 2017 global economic growth had reached three per cent – its highest since 2011 – as crisis-related fragilities and the adverse effects of other recent shocks have subsided.
The improvement is widespread. Roughly two-thirds of the world’s countries have experienced stronger growth in 2017 than in the previous year, and movement is expected to remain steady at three per cent in 2018 and 2019.
Noting that the recent pickup in global growth stems predominantly from firmer growth in several developed economies, the report states that East and South Asia remain the world most dynamic regions.
Despite the improved short-term outlook, the global economy continues to face longer-term challenges, including trade policy changes and rising geopolitical tensions.
The report highlighted that the improved macroeconomic situation has opened a door for reorienting policies, including to increase economic diversification; reduce inequality; support long-term investment; and tackle institutional deficiencies. It noted that addressing these challenges can generate stronger investment and productivity, higher job creation and more sustainable medium-term economic growth.
Uneven Growth
However, the recent economic improvements have been unevenly distributed across countries and regions.
Through 2019, negligible per capita income growth is expected in several parts of Africa, Western Asia and Latin America and the Caribbean – underscoring the urgent need to foster an environment that will both accelerate medium-term growth prospects and tackle poverty through policies that address income and opportunity inequalities.
The report also found that – hindered by institutional deficiencies, inadequate basic infrastructure and greater exposure levels to natural disasters, along with challenges to security and political instability – very few least developed countries (LDCs) are expected to reach the Sustainable Development Goal target for GDP growth of “at least 7 per cent” (SDG 8.1) in the near term.
In addition to mobilizing financial resources to meet LDC investment needs, policies must also focus on conflict prevention and removing barriers that continue to hinder more rapid progress.
After remaining flat for three consecutive years, preliminary estimates suggest that 2017 global energy-related CO2 emissions increased, according to WESP.
“While the upturn in global growth is a welcome sign of a healthier economy, it is important to remember that this may come at an environmental cost,” said Under-Secretary-General for Economic and Social Affairs Liu Zhenmin.
As the frequency of weather-related shocks continues to rise, the urgent need to build resilience against climate change and prioritize environmental protection is becoming more prevalent.
International shipping and aviation emission polices, which do not fall under the purview of the Paris Agreement, must be strengthened as their emissions continue to grow faster than those from road transport.
“This calls for stronger efforts to delink economic growth and environmental degradation – as also emphasized by the UN Climate Change Conference in Bonn last month,” stressed Mr. Liu.
Africa expected to see stronger growth in 2018 and 2019 as global environment improves
Growth underpinned by an improvement in domestic and external demand amid firmer global commodity prices
An upturn in the global economy – now growing by about 3 per cent – paves the way to reorient policy towards longer-term issues such as addressing climate change, tackling existing inequalities and removing institutional obstacles to development, according to the WESP 2018 Report.
Africa is expected to see a recovery in aggregate GDP growth, with a projected expansion of 3.5 per cent in 2018 and 3.7 per cent in 2019, up from 3.0 per cent in 2017. Strengthening external demand and a continued firming of global commodity prices will ease fiscal and external pressures. However, significant fiscal adjustments lie ahead for many commodity exporters, constraining the pace of rebound in countries of this region.
Furthermore, GDP growth on a per capita basis is expected to be negligible in several subregions, namely Central, Southern and West Africa in 2018-2019. These regions combined are home to nearly one-third of the global population living in extreme poverty.
The report notes substantial differences in growth prospects among the five African subregions. East Africa will remain the fastest-growing subregion, with aggregate GDP projected to grow by about 6 per cent in 2018 and 2019, facilitated by large infrastructure investments and the expansion of domestic markets.
Growth in North Africa is projected to stabilize at 4.1 per cent in 2018 and 2019, after reaching 4.8 per cent in 2017, as a result of firmer commodity prices, further improvement in the security situation and continuing economic recovery in Europe.
West Africa will continue its growth recovery, from 2.4 per cent in 2017 to 3.3 per cent in 2018, as oil prices rise and oil production gradually increases in Nigeria, easing fiscal and foreign exchange pressures. Several other West African countries continue a path of strong growth including Côte d’Ivoire, Ghana and Senegal, supported by robust spending on infrastructure, higher investor confidence and improvements in the business climate.
Growth in the Southern Africa is projected to improve but remain modest. Following growth of 1.2 per cent in 2017, GDP is projected to expand by 2.3 per cent in 2018 and 2.5 per cent in 2019. In South Africa, net exports will rebound with the moderate recovery in the agriculture and mining sectors. Growth will, however, remain relatively subdued amid heightened political uncertainty.
Buoyed by higher oil prices, growth in Central Africa is estimated to rebound from 0.7 per cent in 2017 to 2.1 per cent in 2018. Insecurity and relatively low commodity prices weigh on prospects for the area.
The report also notes that several central banks in Africa decreased policy rates in 2017 amid moderately easing inflationary pressures. As the impacts of large currency depreciations subside, inflation is projected to decrease in 2018-2019. However, inflation in many African countries remain high relative to the rest of the world.
Risks and policy challenges
Despite the improved short-term outlook, the global economy continues to face risks – including changes in trade policy, a sudden deterioration in global financial conditions and rising geopolitical tensions.
The world economy also faces longer-term challenges. The report highlights four areas where the improved macroeconomic situation opens the way for policy to address these challenges: increasing economic diversification, reducing inequality, supporting long-term investment and tackling institutional deficiencies. The report notes that reorienting policy to address these challenges can generate stronger investment and productivity, higher job creation and more sustainable medium-term economic growth.
For Africa, a sharper-than-expected increase in global interest rates could lead to an increase in the premium for sovereign bonds, a decrease in access to financing and could raise debt sustainability risks. Lower external demand or a reversal in commodity price growth could decrease foreign direct investment. Internally, an absence of fiscal adjustment policies could jeopardize macroeconomic stability in many countries. An escalation of security concerns and political instability ahead of key elections also pose risks to growth. Several agriculture dependent economies remain exposed to weather-related shocks.
The report calls for renewed efforts to decrease the over-reliance on commodity revenues through economic diversification and structural transformation. In this aspect, investments in human capital as well as efforts to strengthen governance and institutions are needed. Importantly, acute malnutrition in conflict-affected areas must be urgently addressed.
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At MC11, new report reveals that trade regulations are costlier for developing countries than tariffs
Joint UNCTAD-World Bank Group findings confirm that non-tariff measures (NTMs) affect 77% of world trade and are more important than tariffs in trade policy.
A new report by UNCTAD and the World Bank Group being launched at the WTO’s Eleventh Ministerial Conference in Buenos Aires, Argentina, on 11 December reveals that non-tariff measures (NTMs) make trade costlier for developing countries than tariffs.
NTMs are policy measures other than ordinary customs tariffs that can have a potential economic effect on international trade in goods by changing quantities traded or prices or both.
Examples might include safety regulations for machinery or toys, health regulations for food or medicines, quotas, price controls, and export restrictions.
The report is based on the updated database TRAINS 2.0, which collects comprehensive and comparable NTM data for 109 countries, covering 90% of global trade.
On usage of NTMs, the report found that:
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NTMs affect 77% global trade
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In general, developed countries regulate more products and a higher share of imports than least-developed and developing countries
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Agricultural products are more often regulated than manufactured goods and natural resources
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Technical barriers to trade (TBT) and Sanitary and phytosanitary (SPS) measures are the most frequently used form of NTMs
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Developed countries drive the high global usage of TBTs and export measures, while the use of SPS measures is more uniformly distributed
The report also measures the impact of NTMs on trade by estimating their equivalents according to value, or ad valorem equivalents (AVEs), which makes them comparable to tariffs.
Four findings stand out:
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NTMs are more important than tariffs in almost all sectors, but especially in agriculture where, on average, NTMs have an effect equivalent to 21% of tariffs
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NTMs are associated with a 3 percentage-point higher cost for low income countries
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Technical measures, such as SPS measures TBTs, matter more in high-income countries than in middle-income countries
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Traditional trade policy measures, such as quotas and price measures, constitute a higher barrier to trade in low-income countries than in middle and high-income countries
The findings will help policymakers in developing countries determine how best to design policy schemes that enhance their integration into the global economy.
Non-tariff measures matter, on average, more than tariffs
The report is a joint work by UNCTAD and the World Bank, under the supervision of Aaditya Mattoo and Ralf Peters. It was launched during an MC11 side-event entitled Transparency matters: The unseen impact of Non-Tariff Measures.
UNCTAD sheds new light on murky trade regulations with update of non-tariff measures database
A new release of UNCTAD’s global non-tariff measures (NTMs) database, TRAINS 2.0, was presented during the Eleventh Ministerial Conference (MC11) of the World Trade Organization (WTO) in Buenos Aires, Argentina, on Monday 11 December.
The update means that the database now offers systematic and comprehensive information on 109 countries and covers 90% of world trade.
“The real untapped potential for further trade growth lies in regulations,” UNCTAD Secretary-General, Mukhisa Kituyi said. “More transparency on non-tariff measures and regulatory standards can improve regional trade and regional integration especially for small companies in developing countries.”
UNCTAD TRAINS 2.0 contains 14,561 different regulations that comprise 50,511 distinct regulatory measures. Each entry provides information on the substance of measures, and the products and trading partners subject to the measure.
NTMs are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs.
NTMs can include such regulations as packaging requirements and limits on the use of pesticides ensure safe food in our supermarkets, restrictions on toxins in toys to protect our children, and emissions standards for cars that limit climate change.
But the lack of transparency about them are at the top of the list in private sector surveys as a challenge to trade. Empirical findings confirm that they are four times more important than tariffs.
Around 80% of world trade is affected by NTMs yet information on these measures is hidden in hundreds of thousands of difficult to read or find national legal texts.
This lack of transparency has prompted some WTO members to work together on a proposal for more stringent notification requirements during the WTO ministerial conference.
The new release of UNCTAD TRAINS features customer-friendly search queries offering cross-country comparison of NTMs by sector and measure type. Users can access it through the NTM Hub and compare statistical indexes of the countries’ usage of regulatory measures for their export and import.
Moreover, researchers interested in NTMs can download for free an aggregated dataset at HS 6 digits in addition to extended dataset with additional variables.
UNCTAD has coordinated the global effort to establish a comprehensive, comparable and accessible database on regulatory measures in partnership with the:
- African Development Bank
- Latin American Integration Association
- Economic Research Institute for ASEAN and East Asia
- International Trade Centre
- National Graduate Institute for Policy Studies
- World Bank Group
- WTO
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More than 40 ministers issue joint statement affirming support for the WTO
Ministers from 44 World Trade Organisation (WTO) members issued a joint statement on 11 December underlining their support for the WTO and reaffirming the “centrality” of the rules-based multilateral trading system.
“We, the Ministers from 44 developing and developed Members that are strongly supportive of the multilateral trading system, are concerned that the World Trade Organization is facing challenges,” they declared. “We reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the WTO and the centrality of the rules-based multilateral trading system.”
The group also said they “greatly value the WTO’s framework of rules, which has helped to foster international trade and development, facilitate the peaceful settlement of trade disputes, and served as a bulwark against protectionism. This has contributed to the strength and stability of the global economy.”
Signatories to the statement were: Argentina; Australia; Benin; Canada; Chile; Colombia; Costa Rica; Côte d’Ivoire; Dominican Republic; Guatemala; Hong Kong, China; Iceland; Israel; Kazakhstan; Korea; Kuwait; Laos; Liberia; Liechtenstein; Mauritania; Mexico; Montenegro; Myanmar; Moldova; New Zealand; Nigeria; Norway; Pakistan; Panama; Paraguay; Peru; Qatar; the Russian Federation; Senegal; Singapore; Switzerland; Chinese Taipei; Thailand; the former Yugoslav Republic of Macedonia; Turkey; Ukraine; Uruguay; and Viet Nam.
The statement of support came on the second day of the WTO’s 11th Ministerial Conference (MC11) in Buenos Aires. The biennial meeting is bringing together hundreds of senior trade diplomats from the WTO’s 164 members to take stock of the progress made at the WTO in recent years and to discuss the future direction of the organization.
Joint Ministerial Statement
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We, the Ministers from 44 developing and developed Members that are strongly supportive of the multilateral trading system, are concerned that the World Trade Organization (WTO) is facing challenges.
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We reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the WTO and the centrality of the rules-based multilateral trading system.
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We greatly value the WTO’s framework of rules, which has helped to foster international trade and development, facilitated the peaceful settlement of trade disputes, and served as a bulwark against protectionism. This has contributed to the strength and stability of the global economy.
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We recall the successful WTO Ministerial Conferences in Bali in 2013 and in Nairobi in 2015 and welcome the positive developments in the WTO since the Nairobi Conference. Notably, we welcome the entry into force, in 2017, of the Trade Facilitation Agreement and of the Protocol Amending the Agreement on Trade-Related Aspects of Intellectual Property Rights. We call on Members to further their efforts towards the full implementation of all Bali and Nairobi decisions.
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We acknowledge the essential role of regular WTO bodies in ensuring oversight of the implementation of WTO agreements, and underline the importance of Members’ compliance with notification obligations.
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We note that the WTO’s trade monitoring work contributes to the effective functioning of the multilateral trading system, by enhancing transparency of trade policies and practices of Members. In this context, we take note of the successful conclusion, in 2016, of the Sixth Appraisal of the Trade Policy Review Mechanism.
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We note that the WTO’s Dispute Settlement Understanding has established and continues to offer an essential means for the settlement of disputes among Members that is unique in international agreements. We underline the importance of ensuring its effective functioning. In this regard, we call for all vacancies on the Appellate Body to be filled without delay.
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We consider a productive negotiating function to be essential for the WTO to continue delivering meaningful outcomes for Members of all sizes and at all levels of development. In this regard, we note with concern the lack of progress in our negotiations since the WTO Ministerial Conference in Nairobi.
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We welcome the accessions to the WTO, in 2016, by Afghanistan and Liberia and remain committed to further expanding the Organization’s membership.
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We note the major role trade can play in the promotion of sustainable development and the alleviation of poverty, as recognized in the United Nations’ 2030 Agenda for Sustainable Development. We underline the importance for all Members, and in particular developing and leastdeveloped countries, to benefit from opportunities that the multilateral trading system generates.
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We reaffirm the central importance of development in the WTO. In this context, we underline the role of technical assistance and capacity building, including through the Enhanced Integrated Framework to support Least-Developed Countries’ (LDCs) integration into the multilateral trading system. We also note the Sixth Global Review of Aid for Trade in 2017 and ongoing efforts to fully implement the Decisions taken in Bali and Nairobi for LDCs.
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We note that the international trading environment continues to evolve with developments such as global value chains, use of digital technologies, and the pursuit of regional trade agreements, and recognize the need for the WTO to be responsive to these developments.
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We confirm our commitment to a successful 11th WTO Ministerial Conference (MC11) in Buenos Aires and express our confidence in MC11 Chair Susana Malcorra and WTO Director-General Roberto Azevêdo. We call on all Members to safeguard the integrity of the open, rules-based multilateral trading system embodied in the WTO. We will continue working with all Members to address the challenges facing the organization to ensure its sound functioning.
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IMF Executive Board 2017 Article IV Consultation with Sudan
On November 29, 2017, the Executive Board of the International Monetary Fund concluded the Article IV consultation with Sudan.
Economic conditions in Sudan have been challenging since the secession of South Sudan in 2011 and the loss of the bulk of oil production and exports, which have compounded the difficult external environment – including arrears and limited access to external financing, U.S. sanctions, and the withdrawal of correspondent bank relations. The authorities have implemented partial policy adjustments to help stabilize the economy and reestablish growth, most recently by allowing for greater exchange rate flexibility and reducing fuel subsidies. However, while these measures were helpful, they were insufficient to turn the tide toward sustained macroeconomic stability and broad-based growth.
External imbalances are moderating from previous high levels, but economic activity remains modest. The current account deficit (cash basis) is expected to decline by 3.25 percentage points to 2.75 percent of GDP in 2017, reflecting (i) the strong depreciation of the parallel exchange rate and the introduction in late 2016 of a commercial bank incentive rate close to the parallel rate for many formal transactions; (ii) fuel and electricity price hikes in November 2016, which helped curb domestic demand; (iii) quantitative import restrictions adopted in 2016; and (iv) improved the terms of trade. GDP grew at an estimated 3.5 percent in 2016, led by private and public consumption and a positive contribution from net exports. Data for the first half of 2017 indicate weaker real domestic demand, partly offset by a strengthening contribution from net exports (notably due to lower imports), and 3.25 percent growth is projected for 2017.
Loose policy settings are fueling inflationary pressures. The on-budget fiscal deficit is expected to widen from 1.6 percent of GDP in 2016 to 1.8 percent of GDP in 2017. This is slightly better than the budget target (2 percent of GDP), as revenue shortfalls (largely oil related) have been more than offset by expenditure restraint, notably in goods and services, capital expenditure, and transfers to state governments. Access to foreign currency at the overvalued official exchange rate for socially sensitive imports leads to quasi-fiscal activities that – result in continued monetization, causing monetary aggregates to expand rapidly and increasing inflationary pressures.
The recent revocation of U.S. sanctions would amplify the benefits that would arise from decisive implementation of ambitious reforms to support inclusive growth and macro stability. Associated upside risks are broadly balanced by downside risks stemming from the continuation of fiscal and monetary policy settings that are incompatible with macro stability, alongside risks to external financing that has declined from earlier peaks.
Sudan remains in debt distress and is eligible for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. Public and external debt remain high and unsustainable, and most external debt are in arrears. Sudan’s arrears to the Fund declined to SDR 966.3 million at end-September 2017. The authorities plan to continue to engage with external creditors to secure comprehensive support for debt relief, and continue to strengthen their cooperation with the Fund on policies and payments.
Staff Report
Context
Economic conditions in Sudan have been challenging since the secession of South Sudan in 2011, and the associated loss of the bulk of oil production and exports. Since then, the authorities have implemented partial policy adjustments to help stabilize the economy and reestablish growth, most recently by allowing for greater exchange rate flexibility and reducing fuel subsidies in November 2016. However, while these measures were helpful, they were insufficient to turn the tide toward sustained macroeconomic stability and broad-based growth, particularly given the difficult external environment – including arrears and limited access to external financing, U.S. sanctions, and the withdrawal of correspondent bank relations.
The permanent revocation of U.S. sanctions on trade and financial flows on October 12, 2017 has strengthened optimism and is a unique opportunity to implement ambitious reforms. In revoking the sanctions, the U.S. government cited progress made on cessation of hostilities in internal conflicts, and improved cooperation on regional stability, counterterrorism, and humanitarian access. Sanctions revocation will lead to significant reductions in costs of imports, trade, and international financial services, potentially also opening new import sources and export destinations. Domestic optimism has risen since January 2017 – when the sanctions were initially suspended – and there are indications that prospective foreign investor interest in Sudan could be substantial. However, most investors (and correspondent banks) are proceeding cautiously, while concerns about macroeconomic policies and the investment climate persist.
A National Consensus Government, with participation from opposition parties, was installed in May 2017, and a new constitution is to be drafted. This is the result of a national dialogue that took place in 2015-16. Twelve of the 31 ministerial portfolios were given to opposition parties involved in the dialogue. First Vice President Saleh was named Prime Minister. In July 2017, the UN reported significant improvements in the humanitarian situation, though it remains difficult, with large numbers of internally displaced people and refugees from several countries including Eritrea, Central African Republic, South Sudan, Syria, and Yemen.
With sanctions now revoked, the authorities intend to pursue negotiations with the U.S. government to remove Sudan from the State Sponsors of Terrorism List (SSTL). Removal from the SSTL is necessary for the elimination of statutory prohibitions on U.S. aid to Sudan, which currently block progress toward debt relief and the clearance of large arrears to the Fund (Annex I). Sudan has had 14 Staff-Monitored Programs (SMPs), and the authorities have expressed interest in another SMP to pursue sound macroeconomic policies and fulfil debt-relief conditionality.
Developments, Outlook and Risks
External imbalances are moderating from previous high levels, but economic activity remains modest.
- The external position is substantially weaker than implied by fundamentals, but the gap appears to be narrowing. Comparing the current account deficit to its estimated equilibrium level indicates that the overvaluation of the average real exchange rate declined from about 38 percent in 2015 to a stillhigh 30 percent in 2016 (Annex II).
Alongside, the current account deficit (cash basis) declined by 1½ percentage points to 6 percent of GDP in 2016.
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Further moderation in external imbalances is underway in 2017. Based on H1 2017 data, a 3¼- percentage point decline in the current account deficit (cash basis) is projected, to 2¾ percent of GDP in 2017, which would imply additional substantial reduction in the overvaluation of the real exchange rate, to about 15-19 percent.
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The recent improvement in the current account deficit primarily reflects weaker imports due to (i) the strong depreciation of the parallel exchange rate, and the introduction in late 2016 of a commercial bank incentive rate close to the parallel rate for many formal transactions; (ii) fuel and electricity price hikes in November 2016 which helped curb domestic demand; (iii) quantitative import restrictions adopted in 2016, including a negative list and a prohibited list of selected imports; and (iv) lower international import prices which improved the terms of trade,
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However, while gross international reserves increased by $100 million in H1 2017, they remain very low ($1.1 billion, 1¾ months of imports). Moreover, the exchange rate system is highly distorted, with Multiple Currency Practices (MCPs) being used to implement various fiscal and social objectives, hampering investment and growth.
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GDP grew at an estimated 3½ percent in 2016, led by private and public consumption and a positive contribution from net exports. Data for H1 2017 indicate weaker real domestic demand, partly offset by a strengthening contribution from net exports (notably due to lower imports), and overall, 3¼ percent growth is projected for 2017.
Policy Discussions
Re-establishing macro stability and strengthening growth will require exchange rate and structural reforms, and tighter monetary and fiscal policies – including tax and subsidy reform.
There was consensus that reforms are urgently needed to reestablish macroeconomic stability and create conditions for stronger broad-based economic growth. Without corrective measures, the circle of loose policy settings, inflationary pressures, and depreciation would continue and become unsustainable, requiring greater eventual adjustment with a higher social impact. The beneficial impact of the recent revocation of sanctions on confidence is unlikely to persist without the implementation of sound policies to capitalize on the improved external environment and domestic optimism. In addition, the recent revocation of sanctions is likely to amplify the payoff from policy adjustment – an opportunity that should not be missed. Restoring macro stability would require exchange rate reform and tighter monetary and fiscal policies – including through tax and subsidy reform. At the same time, structural reforms would be needed to help strengthen the economy’s supply response and boost inclusive growth.
Staff’s analysis suggests significant short-term costs to reform, but sound policies and improved competitiveness would substantially improve the medium term economic outlook. In a scenario with full exchange rate liberalization, phasing-out of fuel and wheat subsidies with compensating targeted social spending, and supply side reforms, the immediate impact of policy adjustment and reform would lead to inflation accelerating above 36 percent (compared to 23 percent in the baseline scenario), and GDP growth slowing to 2 percent (compared to 4 percent in the baseline scenario). Over the medium term, policy adjustment and reform would lead to significant improvements in the fiscal and external balances and inflation, and a significantly stronger growth outlook (Annex III).
Exchange Rate Reforms to Boost Competitiveness and Public Finances
Staff and the authorities broadly agreed that exchange rate liberalization is critical for restoring macro stability and eliminating the distortions that hamper investment and growth. A unified market-based exchange rate would boost competitiveness by (i) removing the adverse incentives against exports implicit in the overvalued exchange rate, and (ii) improving the profitability of domestic companies competing against more-appropriately priced imports in the domestic market. It would reduce rent-seeking activities, helping to establish a level playing field that would encourage more investment. It would also improve fiscal policy by boosting revenues, and monetary policy by relieving the central bank of responsibility for subsidies and other quasifiscal activities.
Staff recommended unifying all exchange rates at the same time, thus eliminating distortions upfront and sending a clear signal to investors about the credibility of the authorities’ reform agenda. This would also be consistent with the authorities’ plans to embark on deep macroeconomic and structural reforms to strengthen economic growth and facilitate WTO membership. Upfront unification would also reduce the risk of delay and interference from vested interests. Prior to reform, however, it would be important to review banks’ financial positions and asset quality to assess their resilience to exchange rate changes and identify measures to address potential risks. The authorities requested Fund Technical Assistance (TA) to help them conduct bank stress tests and identify appropriate remedial measures as needed.
Exchange rate unification would substantially increase revenues and strengthen the fiscal position. Assessing import duty and US dollar-denominated oil revenues at the parallel exchange rate (rather than at overvalued official exchange rates), and adjusting for import volume changes using plausible price elasticities, results in an estimated revenue gain of about 5 percent of GDP. Thus, exchange rate unification would generate a large revenue windfall, with the true deficit (including all fuel and wheat subsidies) falling from 6½ percent of GDP to 3½ percent of GDP, even accounting for increases in foreign currency denominated expenditure. Deficit monetization would in turn fall sharply, and this – after the initial impact of the unification on prices – would reduce inflationary pressures and help buy additional time for socially sensitive subsidy reforms. With the heavier import duty burden, there may be a need to reduce import tariff rates to mitigate their distortionary impact – the World Bank has recommended that the number of tariff peaks should be reduced; the maximum tariff rate reduced from 40 percent to 25 percent; and tariffs on food phased out. The negative impact on revenues caused by tariff rate reduction and simplification should be offset by broadening the tax base and strengthening customs administration.
The authorities agreed in principle with staff’s advice, but were concerned about the potential for exchange rate overshooting, and the social impact of adjustment. With minimal international reserves, there is no cushion to use to moderate exchange rate volatility. Moreover, exchange rate liberalization – even with gradual phasing out of energy and wheat subsidies – would generate substantial increases in prices that could raise social tensions among vulnerable groups and the middle class. They indicated that after suffering for 20 years under sanctions, it would be difficult to ask the population to make further substantial sacrifices with no clear guarantee that reforms would better their lives. Moreover, Sudan would be one of the few countries to undertake deep reforms without the benefit of concessional loans from International Financial Institutions to cushion the pain of adjustment.
Thus, the authorities leaned toward a gradual pace of exchange rate reforms. An alternative under consideration was a phased approach, where the commercial bank incentive rate and the parallel rate are unified, with the new private-sector rate determined thereafter by market forces; the other official rates would then be moved gradually toward the market rate, at a pace that is yet to be determined.
Staff observed that gradual exchange rate reforms would incur other costs that would have to be mitigated, and adjustment should be time-bound to ensure its credibility. Notably:
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Weaker competitiveness, investment, and economic growth from incomplete exchange rate adjustment and the continued adverse impact of MCPs and rent seeking activities on the business environment. This could be a particularly costly missed opportunity given the revocation of sanctions. Mitigating this would require stronger efforts to upgrade the business environment and improve governance. Tighter monetary and fiscal policies would also be needed to help contain external imbalances.
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Continued fiscal revenue losses from the use of overvalued official exchange rates in customs duty assessments and the valuation of foreign currency denominated revenues. Mitigating this would require stronger up-front revenue mobilization, which would also reduce the monetization of deficits and buttress macro stability.
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Continued large costs from the provision of foreign currency at overvalued official exchange rates for fuel and wheat imports, on the central bank’s balance sheet. Mitigation would require additional increases in domestic energy and wheat prices.
Irrespective of the pace of exchange rate unification, its success would require appropriate supporting fiscal, monetary, and structural policies to ensure macroeconomic stability and lay the foundation for higher growth. Clear communication and implementation of a comprehensive reform package would boost its credibility and help contain overshooting pressures. It would also be important to disentangle exchange rate and fiscal issues during the reform process. Transparently presenting subsidies on the budget and breaking the formal link with the overvalued official exchange would allow for better informed policy making, including on subsidy removal, without hindering the pace of exchange rate reform.
Supply Side Reforms
While exchange rate and trade policy reform would be important contributions to competitiveness, the business climate will also need to be overhauled to support investment and growth. Sudan ranks 168 out of 190 countries on the 2017 World Bank Doing Business rankings, with major improvements needed especially in getting credit, protecting minority investors, and trading across borders. Efforts to boost investment and productivity in key sectors such as agriculture, gold, and oil, as well as better public infrastructure and human capital, could also bear large dividends. Staff encouraged the authorities to explore and address any additional constraints that hinder female entrepreneurship and employment.
The authorities have intensified efforts to modernize the business environment, notably in the context of their application for WTO membership. A high-level committee and eight sub-committees have been formed to coordinate this effort, and they have already identified 151 laws to be amended or completely modernized; staff encouraged them to press on with this effort. The authorities also continue to develop measures to fight corruption, including the Auditor General Act of 2017 which permits the Auditor General to audit any entity with at least 1 percent government ownership, the establishment of a Special Prosecutor General to investigate cases of abuse of public funds, and the establishment of an Anti-Corruption Commission.
Selected Issues Paper
Challenges facing correspondent banking with Sudan
Since 1997, economic sanctions weighed heavily on CBRs with Sudanese banks. The U.S. imposed sanctions on Sudan that include arms and trade embargoes, a prohibition on the provision of financial services and of transactions related to the oil industry, and the freezing of assets of designated persons. The European Union (EU), the United Nations (UN), and others followed, mostly by imposing an arms embargo and targeting the assets of designated persons. The cost of compliance with these sanctions led U. S. and global financial institutions to stop dealing with Sudanese banks. Central Bank of Sudan (CBOS) data for the period 2012-2015 indicates that 168 correspondent banking relationships have been restricted (e.g., limitation of account activity; exclusion of categories of customers), and 248 have been terminated. A 2012-2016 Financial Stability Board survey covering 150 correspondent banks revealed that Sudan is one of the world’s 10 most affected jurisdictions, in terms of the absolute number of complete exits and the number of restrictions.
The enforcement of U.S. sanctions in the private sector affected significantly global transactions in U.S. dollars (USD) with Sudan. Starting 2009, forfeitures and fines imposed on financial institutions operating in the United States for breaching the economic sanctions regime against Sudan multiplied and amounted in hundreds of millions of USD, and continued to increase significantly as with the 2012 HSBC case. However, it was not until the 2014 settlement with BNP Paribas4 that Sudan began to lose most of its CBRs. Since then, correspondents have generally refused transactions involving Sudan or Sudanese entities or individuals, including those covered by licenses issued by the Office of Foreign Assets Control (OFAC), to avoid potential sanctions. The impact of such decisions on Sudanese economy has been significant.
Sudan was also subject to enhanced monitoring by the Financial Action Task Force (FATF), but managed to address its AML/CFT concerns by October 2015. In February 2010, the FATF identified Sudan as a jurisdiction with strategic AML/CFT deficiencies. Two years later, Sudan was placed under monitoring due to remaining deficiencies, and agreed with the FATF on an action plan with a timetable to address these deficiencies. IMF technical assistance to Sudan on AML/CFT started in December 2013, and helped in reforming the legal, regulatory, and institutional frameworks. Consequently, Sudan met its commitments to the FATF by end 2015 and is no longer subject to enhanced monitoring. This development prompted foreign governments to encourage Sudan to pursue reforms that can help reconnect its economy with the rest of the world.
In October 2017, the U.S. revoked its sanctions on trade and financial flows against Sudan following their suspension in early 2017. The suspension of sanctions in January 2017 generally authorized U.S. persons to transact with individuals and entities in Sudan, and unblocked the property of the Government of Sudan subject to U.S. jurisdiction. U.S. banks were authorized to process transactions in relation to Sudan and finance trade in USD. In October 2017, following a review period, the U.S. revoked E.O.s 13607 and 13412, having assessed continued positive cooperation with Sudan on internal conflicts, regional stability and humanitarian issues. Therefore, SDN list related to these E.O.s is now revoked, which allows U.S. persons to deal with those designated persons and entities.
Prospects for Re-connecting Sudanese Banks with the International Financial System
Banking relationships between Sudanese banks and foreign correspondents are likely to be gradually reestablished. CBOS officials and commercial banks interviewed by the mission reported that negotiations with correspondent banks started since early 2017; however, they did not report material change to CBRs yet. CBOS officials also indicated that foreign banks have expressed interest for dealing with Sudan again. European and Middle-East banks are reportedly waiting for U.S. banks to begin operating in Sudan before taking action, and expect delays in resuming transactions between 6 to 12 months, despite the lifting of US sanctions, due to the need for compliance reports from the requesting bank.
Due to challenges of compliance with regulatory requirements, larger domestic banks are likely to attract new CBRs, which may further accentuate the banking concentration in Sudan. In May 2011, OFAC removed two designated entities from the Sudan SDN list, one of which was the largest bank in Sudan. Since then, this bank has reportedly developed its access to Eurodenominated transactions through relationships with banks in Sweden, Switzerland, Belgium, Turkey, and France, but not yet to USD denominated ones. CBOS officials consider that the near-exclusive access to CBRs by this bank contributed significantly to further enhance its growth and market dominance. From a correspondent banks' perspective, dealing with a large bank would probably be more substantial and lucrative, less costly, and supported by a better risk management and compliance with the AML/CFT requirements. A large domestic bank with a satisfactory ability to understand prevailing risks and identify and review transactions and individuals represents, obviously, a good entry point for foreign correspondents.
Even with the lifting of sanctions, establishing a new CBR with a Sudanese bank may continue to pose challenges to a potential correspondent bank. Due to remaining sanctions by the U.S., UN, and other countries, banks engaging in trade with Sudan should still exercise necessary due diligence to ensure that no transactions are connected to the SDN list under the Darfur related sanctions, and comply with other applicable measures outside the scope of the SSR. It was observed that even for transactions where sanctions have been revoked, U.S. financial institutions conducted enhanced and lengthy due diligence, to ensure compliance with the remaining sanctions. Although Sudan is no longer under the FATF's enhanced monitoring, it has been called to improve the effectiveness of its AML/CFT regime, including in the implementation of its mechanism for targeted financial sanctions. Addressing these challenges would mean, for a correspondent bank, enhancing due diligence on CBRs thus increasing the budget for compliance, and expecting no compliance failures from respondent banks.
Continued U.S. enforcement actions against banks breaching the remaining sanctions regimes or AML/CFT requirements may discourage some correspondent banks. The risk of civil and criminal sanctions remains significant, discouraging banks from potential exposure to sanctions. Due to compliance costs and challenges, correspondent banks may perceive a low profitability of CBRs in Sudan and have less appetite for them.
tralac’s Daily News Selection
2017 PIDA Week is underway in Swakopmund. Profiled, recent PIDA documentation: PIDA Progress Report 2017 (pdf); Evaluation of PIDA water projects and formulation of respective action plans; AU-NEPAD Continental Business Network: 5% Agenda Report; Backgrounder from the recent 6th EU-AFRICA Business Forum session: Unlocking investment for regional infrastructure to accelerate job creation. Download additional PIDA reports here.
ACP Council takes key positions taken on trade, migration, ACP-EU relations
Several decisions were taken on trade, including a commitment to enhance intra-ACP trade and economic relations by setting up an ACP-wide trade information portal for ACP individuals and businesses in search of information on manufactured products, commodities, services, investment opportunities and best practices. Ministers also endorsed an incremental approach to intra-ACP trade, targeting areas that could bring immediate benefits such as dealing with non-tariff measures and trade facilitation. To tackle non-tariff measures set by the EU that impede, the Council of Ministers mandated the establishment of a new programme to support ACP states to cope with the myriad of SPS, TBT and other challenges related to exporting to the EU market. The Council of Ministers also passed a resolution welcoming progress towards the implementation of the ACP’s “New Approach” to commodities, which focuses on transforming ACP commodities by enabling integration into regional and global value chains. The Council urged the expeditious completion of a new programme on value chains that will provide support to sectors such as cotton, sugar, banana, cocoa, kava, fisheries and rum.
A suite of CFTA updates, related African trade policy issues:
Featured tweets: (i) @rsezibera: How can @jumuiya compete without deeper and wider integration? Complete the CFTA now. Implement the Tripartite FTA. (ii) @jattamensah: Africa can’t afford not to have CFTA. The youth of Africa needs it yesterday. We could be bolder and go for the common market. @AfDB_Group @_AfricanUnion @ECA_OFFICIAL report ARIA IV on intra-African Trade is the genesis.
Slow implementation of African single aviation market irk experts. “The year (2017) is almost over, yet only 23 countries have signed the solemn commitment on the immediate implementation of the Yamoussoukro Decision,” said Soteri Gatera, the chief of the industrialisation and infrastructure section of the Economic Commission for Africa, during his opening remarks at the three-day meeting in Addis Ababa, Ethiopia last week. “It is my duty today to remind the other 30 or so countries of the benefits of the Single African Air transport market,” Gatera added, stating that SAATM is strategic for the implementation of the African Agenda 2063.
Fourth Senior Experts Dialogue on Science, Technology and the African Transformation Agenda. Governments were also urged to deploy ICT to improve access to higher education, reduce the cost of research innovations and to use continental trade policy, notably Continental Free Trade Area that is currently being negotiated, to advance the focus of African universities and to drive STI. In closing, Mr Nwuke said this SED was successful as participants had used it to broaden and deepen the constituency for higher education and STI on the continent as they sought to help Africa to support higher education and STI ‘because it is only by so doing that we can achieve African development and integration’.
Commentaries on the CFTA: (i) The Economist – African countries are building a giant free-trade area; (ii) Bridges Africa – African countries make headway towards the creation of the CFTA
Egypt’s trade with Kenya, Ethiopia, South Africa registers $3.1bn (Egypt Today)
Egypt’s trade with Kenya, Ethiopia and South Africa registered $3.1bn in the first eight months of 2017, a recent report of the Central Agency for Public Mobilization and Statistics (CAPMAS) said. The exports of Egypt to these countries recorded $2.1bn, while imports were $1.1bn, according to the report. Egypt’s total exports from January and August were $17bn, compared to $41.8bn of imports. Bilateral trade between Egypt and other African countries in 2016 recorded $5.46bn, $3.25bn of which is exports, while the remaining amount is imports. In the first half of 2017, bilateral trade between both parties reached $2.43bn, including $1.66bn in exports. [Afreximbank, Export Development Bank of Egypt sign $500m intra-African export support scheme]
Africa 2017 Forum postings: Africa 2017 Forum urges acceleration of African integration; African leaders draw consensus on inclusive growth; Ex-ECA official lauds Chinese investment in Africa; ‘Africa 2017’ emphasises Egypt’s stance on African cooperation: Shoukry; Egypt-Chad road project on agenda of Africa 2017 forum: EU to fund feasibility studies
11th WTO Ministerial Conference: updates
Ministerial Conference opens with signing of presidential declaration in support of WTO. The World Trade Organization’s 11th Ministerial Conference opened in Buenos Aires on 10 December with a forceful declaration by four Latin American presidents pledging support for the WTO and its guardianship of the multilateral trading system. In their joint declaration, the four presidents reaffirmed the importance of the multilateral trading system as the “best way to take advantage of the opportunities and to face the challenges of international trade”.
New WTO book examines the impact of accessions on the multilateral trading system. The book concludes that the new realities of the 21st century require an upgrading of trade rules to take into account the new architecture of the multilateral trading system. By erecting its ‘upper floors’ on the foundation of existing trade rules, the WTO can continue to adapt to a fast-changing environment and to maximize the benefits brought about by its ever-expanding membership. The book has been co-edited by Dr Alexei Kireyev, Senior Economist at the IMF, and former IMF representative to the WTO, and Ambassador Chiedu Osakwe, Director-General and Chief Negotiator at the Nigerian Office for Trade Negotiations and former Director of the WTO’s Accessions Division. It pulls together a wide range of topics related to accessions and draws on a broad range of contributors – from politicians and chief negotiators to academics and trade practitioners – who provide first-hand accounts and expertise in trade policy-making.
UNECE side event: Advancing trade facilitation and paperless trade for sustainable growth
All goods are not created equal: a Q&A on rules of origin with UNCTAD’s Stefano Inama
India’s Suresh Prabhu reaches out to China and South Africa to put up united front
India pushes for a work programme on services at WTO
B20 recommendations: Make MC11 a success
tralac: MC11 Resource box
Mauritius trade and development policy analyses: new IMF reports
(i) Selected Issues Report (pdf). Extract – Boosting international competitiveness. Mauritius’ progress in improving competitiveness over the last decade has been nothing short of remarkable, however some areas of concern have emerged. During the last decade, Mauritius has jumped 15 places in the international competitiveness rankings, and is now the most competitive economy in SSA. However, stagnating productivity in some sectors and recent associated increases in unit labor costs have signaled growing cost competitiveness concerns. To propel Mauritius to the next level of economic development, further reforms are necessary to address the competitiveness gaps emerging vis-a-vis emerging market comparator countries. While Mauritius is leading the pack in SSA on international competitiveness, data also suggest that competitiveness gaps are opening vis-à-vis emerging market comparator countries (Singapore, Panama, Hong Kong, Iceland, and Malta). Areas to be urgently addressed are the labor market, skill mismatches, and innovation policy.
(ii) Staff Report for the 2017 Article IV Consultation (pdf). Mauritius is seeking to become a high-income economy within the next ten years. The growth strategy is anchored around an ambitious public investment program and improvements in the business climate. However, fiscal space is limited, and competitiveness bottlenecks are limiting the gains from trade. The macroeconomic outlook is broadly positive. Growth in 2017 is projected at 3.9% in 2017, and about 4.0% over the medium term. However, the vibrant Global Business Sector faces pressure from international anti-tax avoidance initiatives.
(iii) IMF Executive Board Concludes 2017 Article IV Consultation with Mauritius. Attaining the next level of economic development will require Mauritius to overcome the variety of policy challenges outlined above. A bold, coordinated, strategic vision, guided by strong and independent institutions, is necessary to guide the economic transition. Early signs are promising, with both the pending formation of the National Economic Development Board and the drafting of the Financial Services Sector Blueprint, important welcome steps towards harmonizing the policy direction and implementation across sectors. Considering Mauritius’ track record of reinventing its economic model, there are grounds for optimism that the country will successfully manage the reform process.
Nigeria: CBN plans revival of moribund manufacturing companies with N500bn (ThisDay)
Determined to significantly boost the contribution of the non-oil sector to Nigeria’s GDP, the Central Bank of Nigeria has said it plans to revive moribund firms in the non-oil export business through its N500 billion export stimulation facility. CBN Governor, Mr Godwin Emefiele, disclosed this plan Friday night when he spoke with journalists after meeting with stakeholders in the non-oil export business. “The basic issue is that we have decided to bring back to the table the N500 billion Export Stimulation Facility that we had proposed two years ago, as well as the N50bn direct intervention fund from the Nigeria Export-Import Bank.” [As FG introduces new export, import guidelines…]
Nigeria: Less than 14 of 34 FTZs operating – NEPZA MD (Vanguard)
Less than 14 of the nation’s 34 Free Trade Zones are operating, actively, the Managing Director of the Nigeria Export Processing Zones Authority, Rt. Hon. Emmanuel Jime, disclosed at the weekend. He told journalists in Abuja, that lack of infrastructure, especially electricity power supply, good roads and water, among others had made the FTZs unattractive to investors and that immediate steps must be taken to address the challenge. He added: “Today, most foreign investors coming to Africa, the first place they think of is Ghana. That should be a critical concern for us. I hear some people say ‘Nigeria has a big market.’ Oh yes, but we should recognize that there have been partnership agreements and platforms that enable a businessman to set up his factory in Accra and be able to access the Nigerian market. He can use the ECOWAS platform. So that argument, quite frankly is defective and we must be honest with ourselves. “This is what I think we must engage ourselves with at the policy level, that without putting our house in order, the likelihood that we will be able to attract foreign investors is very slim.”
Botswana: Govt clashes with SA retailers again (Weekend Post)
The Ministry of Investment, Trade and Industry is once again on a collision course with South African retailers – this time warning them that they risk revocation of their licenses should they continue pricing their goods in foreign currencies. Peggy Serame, the Ministry of Trade Permanent Secretary issued a statement (Friday) stating that government will review their licences if they do not comply. There have been complaints in recent years that locals are being cheated by retailers by being forced to pay more than they should owing to the exchange rate between foreign currencies, especially the South African rand and the Pula. This situation usually involves South African retailers, who dominate Botswana’s retail sector.
ECOWAS moves to harmonize biosafety regulations in West Africa (ECOWAS)
Experts from ECOWAS Member States, the Republic of Chad, the African Biosafety Network of Expertise (ABNE) and the Permanent Interstate Committee for Drought Control in the Sahel have commenced a joint technical consultative meeting in order to validate the draft regulations on biosafety in the region. Opening a two-day meeting on the 6th of December, 2017 in Abuja, the ECOWAS Commission’s Commissioner for Agriculture, Water Resources and Environment, Mr. Tchambakou Ayassor said the aim of the consultative meeting is to achieve a joint regional approach to prevent and manage the risk of biotechnology in the region.
Today’s Quick Links: Fitch cuts Nigeria’s 2017 GDP growth forecast to 1% Benin cassava flour makers seek Geographical Indication Amazon says it may build SA data centres Huawei opens latest OpenLab in Egypt South Centre: China’s debt problem and rising systemic risks – impact of the global financial crisis and structural problems UAE-KSA joint trade mission concludes African tour China and the new phase of trade expansion: commentary by World Bank’s Otaviano Canuto |
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2017 PIDA Week: Enhancing trade and economic transformation through regional infrastructure development
The 2017 PIDA Week will be held from 10 to 14 December in Swakopmund, Namibia under the theme “Enhancing Trade and Economic Transformation through Regional Infrastructure Development”.
Organized by the African Union Commission (AUC), the NEPAD Planning and Coordinating Agency (NPCA), the African Development Bank (AfDB) and the UN Economic Commission for Africa (UNECA) in collaboration with the Namibian Government and the Southern African Development Community (SADC), the Programme for Infrastructure Development in Africa (PIDA) Week aims to build on the achievements of the 2015 and 2016 meetings in Abidjan and the momentum created in the previous two events to continue to engage stakeholders on the effective delivery of infrastructure on the continent.
Speaking ahead of the meeting, H.E. Dr Amani Abou-Zeid, Commissioner for Infrastructure and Energy at the African Union Commission said that about 500 delegates were expected in Walvis Bay to discuss how to create synergies and mobilise support in the implementation of African Union’s Agenda 2063 infrastructure projects in Africa, with a particular emphasis on PIDA.
“Delegates gathering in Swakopmund for the Third PIDA Week will address several important issues, with a view to moving PIDA projects from conception to implementation and pushing Agenda 2063’s infrastructure goals for Africa,” Dr Amani Abou-Zeid stated.
“This event will offer an opportunity for delegates to unpack the enormous growth potential of increasing the visibility of PIDA projects and validating the relevance of corridors and thereby facilitating the continent’s economic transformation, harnessed to the benefit of our people,” the Commissioner added.
On his part, NEPAD Agency’s Chief Executive Officer, Dr Ibrahim Assane Mayaki stated that “Accelerating the development of Africa’s regional infrastructure could be the game changer that will trigger industrialisation and create jobs. It is for this reason that African leaders developed the Programme for Infrastructure Development in Africa (PIDA) in 2012, as the means for socio-economic growth and intra-African trade.”
Khaled Sherif, Vice-President – Regional Development, Integration and Business Delivery reaffirmed the African Development Bank’s strong commitment to infrastructure development in the continent stating that infrastructure promotes trade and creates a conducive environment for investments and business.
He applauded the significant strides made by PIDA implementing partners in promoting trade and economic transformation through regional infrastructure development, adding that the Bank aims to attract more capital into the infrastructure sector by helping governments structure transactions to contribute to the financing of infrastructure.
Vice President Khaled stated that expectations are high that this meeting will provide a fresh impetus towards PIDA implementation. Similarly, he alluded to the fact that “Co-financing and partnerships remain critical towards mobilising more resources for PIDA implementation.”
PIDA Week was inaugurated in 2015 as a platform for PIDA stakeholders and the first two events have been held in Abidjan under the auspices of the African Development Bank. The event will provide a platform for stakeholders to engage in accelerating and synergising their efforts to: (1) accelerate projects preparation and implementation; (2) mobilise adequate financial and technical resources for projects; (3) increase private sector participation in PIDA implementation; and (4) mobilise Member States to integrate the PIDA projects into their national development plans.
Additionally, statutory closed meetings under the Institutional Architecture for Infrastructure Development (IAIDA) and the NEPAD Infrastructure Project Preparation Facility (IPPF) meetings will be held during the Week. PIDA Week will also focus on accelerating all PIDA Projects with specific emphasis on five selected projects and a site visit to Walvis Bay.
The meeting will be attended by various stakeholders including AUC, NPCA, AfDB, and UNECA, Member States, development partners, Financial Institutions, private sector, civil society and members of the media.
Leveraging the twin-opportunities of infrastructure investment and job creation for Africa’s transformation
Financing Africa’s infrastructure has occupied the agenda of international organisations, bilateral and multilateral donors, and African governments in particular. It is on this back that African Heads of State and Government endorsed the Programme for Infrastructure Development in Africa (PIDA), which forms the core of African Union’s Agenda 2063.
From 10-14 December 2017, some of the world’s best minds in the infrastructure world will gather in Swakopmund, Namibia in the context of the upcoming PIDA Week, which will focus on Regional Infrastructure Development for Job Creation and Economic Transformation as a theme. African countries and their partners must grasp this unprecedented opportunity to chart the course for the development of infrastructure in Africa and to renew their commitment to PIDA and to embark on new efforts to bring the projects closer to reality.
PIDA was initiated to provide large-scale and innovative finance for Africa’s infrastructure. The opportunities are immense. PIDA has identified the growth of productive sectors as a priority and it is estimated that US$70 billion of PIDA infrastructure investment will generate US$172 billion in additional growth. More importantly, these infrastructure projects will generate spin-offs in the form of direct and indirect employment, engender African integration and drive sustainable growth.
Much focus on infrastructure development and economic opportunities among the continent’s young people is crucial. We are at a crossroads. Statistics by the United Nations indicate that 226 million people between the age of 15 and 24 resided in Africa in 2015. This means 19% of the global youth population were Africans. Though this could be seen as demographic dividend, various economies in the continent have failed to provide economic and social opportunities.
Let’s take, for example, the infrastructure base of informational and communication technology. About 75% of the population of Africa is offline, denied access to the wealth of knowledge, information and services that the Internet brings. This is a major drag to developing competitive entrepreneurial spirit among young people.
Over the past few years, the momentum around infrastructure investment is growing. The African Union’s Agenda 2063 has prioritised the need to increase finance for infrastructure.
PIDA, which was initiated by the AU in partnership with the NEPAD Agency, the African Development Bank (AfDB) and the UN Economic Commission for Africa (UNECA), covers four mains sectors including transport, energy, Information and Communication Technology (ICT) and trans-boundary water.
Dedicated to facilitating African integration by upgrading regional infrastructure, the programme is an important stride in the implementation of African Union’s Agenda 2063 infrastructure priority. The importance of regional integration for supporting Africa’s economic development has long been recognized by the African Union, who has consistently expressed the desire to build a common market for goods and services. The grand vision for PIDA is that of economic integration and to act as a springboard for growth and prosperity.
The NEPAD Agency has increased its efforts to bring in private investors to invest in PIDA projects. This has been undertaken via the Continental Business Network (CBN) aimed at de-risking PIDA infrastructure projects. Also, NEPAD’s Infrastructure Project Preparation Fund (IPPF), since its establishment in 2005, has mobilised US$91.67 million and assisted with 66 project grants, of which 35 have been completed. The African Development Bank (AfDB) has made solving Africa’s energy challenges and unlocking the continent’s huge energy potential the Bank’s number one priority through its Ten-Year Strategy (2013-22). It launched the ‘New Deal on Energy for Africa’, which intends to increase on-grid transmission and grid connections in Africa that will create 130 million new connections by 2025, 160% more than today.
The private sector plays a key role to unlock greater finance for Africa’ infrastructure. But much more opportunity exists in public-private partnership. The recently launched 5% Agenda campaign by NEPAD Agency, aimed at increasing institutional investment in Africa’s infrastructure, reinforces the importance of public-private partnership to redressing Africa’s infrastructure shortfall.
More than 250 participants are expected to participate in the PIDA Week from all over the world, including policy makers, continental and global infrastructure investor communities, development finance institutions, export credit agencies, project sponsors (public and private) and media. Participants will have a unique opportunity to expand the boundaries of partnerships through personal meetings with potential institutional and private investors, exchange ideas and experiences during the meeting.
Download:
pdf
PIDA Progress Report 2017
(3.66 MB)