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Opening markets will remove barriers to EA food security
Recent food shortages in Kenya brought on by fluctuations in climate patterns resulted in the importation of tens of thousands of tonnes of maize from the international market this past year, mainly Mexico and southern Africa, to manage the crisis.
Tanzania responded by imposing a ban on maize exports in order to strengthen food security and mitigate price inflation for their citizens.
This ban has recently been lifted due to bumper harvests and follows an assessment on the current food stock against the National Food Reserve Agency’s budget for maize purchase.
Meanwhile, Uganda struggled to produce enough maize to export to Kenya, Rwanda, Burundi, South Sudan and DRC. Arguably export bans lead to increased informal grain trade, with most of this data going unrecorded, leaving smallholder farmers more vulnerable to exploitation.
The Kenyan maize deficit highlights the impact non-tariff barriers have on the East and Southern African (ESA) region by limiting the free flow of food.
Despite Africa having great potential to produce sufficient and even surplus basic staple foods, it has over the last several decades witnessed a surge in imports with the annual food import bill in excess of $40 billion (Sh4.2 trillion).
Whenever some countries in the ESA region have surplus, there are others in deficit, creating opportunities for inter-regional trade.
It is notable that many governments in the region appear to favour in-country protection of food reserves for food security.
However, since most food products are tradable on world markets, food security is heavily dependent on the purchasing power of the poor and not only on management of domestic supply.
These protectionist tendencies have negative implications on the region’s food security and shifts in government agricultural policy on regional trade and domestic food price controls can at times be ad hoc.
For instance, it is not uncommon for farmers who arrive at a border to find that a government has imposed an unannounced export ban, or sometimes a ban has been removed but customs officials have not been informed.
A wide range of barriers to trade have resulted in the fragmentation of markets for both agricultural products and their inputs. This has led to a high level of price volatility and has contributed to food insecurity.
In countries such as Kenya, Malawi, Zambia, and Zimbabwe where governments have directly intervened to control prices of staple food crops, prices are more volatile than in countries with fully liberalised food markets like Uganda.
Other policy distortions include subsidies, price or income support and regulations that tend to discourage private sector investment in services that smallholder farmers need. Besides protectionist government policies, there are other factors that equally frustrate intra-African trade.
Key among them is the lack of formal trade channels supporting smallholder farmers who represent 80 per cent of farms in sub-Saharan Africa (SSA) and contribute up to 90 per cent of food production in some countries.
Smallholder farmers in Africa are prevented from taking advantage of existing and emerging opportunities such as rapidly rising urban populations and growth in per capita incomes that are driving vigorous growth in domestic and regional market demand for food.
They can only access poorly regulated markets that often have no regard to grades and standards, traceability and competitive pricing mechanisms, which all depress the value farmers receive for their produce.
Ways of opening up markets Contract farming is emerging as one way to open up markets for smallholder farmers. The arrangements ensure that buyers have access to more reliable, and higher quality products to meet current and growing demands.
Farmers on their part have a guaranteed market for their produce and an assured price. Consequently, farmers realise increased and reliable income from greater volume sold and higher prices due to improved quality and more control over timing of sale.
Although there is some controversy surrounding the exploitative nature of some market intermediaries, this group is the most accessible market channels for most smallholder farmers.
It is estimated that over 60 per cent of maize farmers sell their produce directly to trade intermediaries at the farm gate. However, these market intermediaries face a host of challenges and risks that in some instances contribute to the low prices they offer the producers.
According to the World Bank, the costs incurred to transport produce from the farm to a primary market is on average four times higher than transporting the same quantities from the primary market to the wholesale market.
By working with grant beneficiaries, the UK-funded Food Trade East and Southern Africa programme has demonstrated to governments that private sector off-takers have capacity to provide markets and better prices to thousands of farmers when there are no policy restrictions to trading.
Africa has enough food to feed itself but for that to happen we need to address these non-tariff barriers.
Steve Orr is Team Leader, FoodTrade ESA.
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tralac’s Daily News Selection
Featured tweet, Kenya School Of Revenue: Africa is far from integration when Kenya imports Zambian copper from China and Nigeria imports Kenyan coffee from London. We need to build value chains to facilitate trade within the continent - @UNCTADKituyi
Underway, in Niamey: Senior Trade Officials Meeting (26-30 November) in preparation for the 4th African Ministers of Trade meeting (1-2 December)
Underway, in Banjul: WCO, West and Central Africa customs experts meeting to discuss border protection from illicit trade, international terrorism
Diarise: African Entrepreneurship Policy Forum (13-14 December, Kigali); The annual Conference of Ministers of Finance, Economic Planning and Development (5-10 April 2018) will discuss trade and financing for Africa’s integration.
Today, in Yaounde: Central African countries to set up single regional economic community. Ahead of the meeting of the Finance and Integration ministers due to open on Monday, experts are currently working on the topic to be submitted to the Council of Ministers. The Central African region has three economic communities (CEMAC, ECCAS, CEPGL) whose quasi-autonomous way of functioning slackens the sub-regional integration. [Discours de Mme Mfoula M T Chantal: reunion des experts (23-25 November, pdf)]
North Africa’s trade relationships: complementarities and contradictions with the Continental Free Trade Area (Regions Refocus)
Overall, the workshop (June 2017) raised urgent questions of how the CFTA can contribute to industrialization and development while promoting efforts towards gender equality and improving the conditions of small producers, in North Africa and throughout the continent. Concrete recommendations, such as including a people-centered compensation mechanism within the CFTA agreement or coordinating strategic litigation on behalf of civil society, emerged from the discussions. Getting these and other important concerns of infrastructure, free movement of people, and required industrial policy into the CFTA framework will prove challenging, especially if the agreement is to be concluded by December as planned. The primary lens for civil society engagement around the CFTA and other trade relationships, Saadi asserted, is to consider who will benefit and how the needs of the majority of the population will be met. These political and economic choices can prevent or enhance developmental efforts, added Ziad Abdel Samad of Arab NGO Network for Development, emphasizing the importance of broad-coalition building, awareness-raising, and advocacy around the right to development and the trade relationships of both the Arab states and the African continent. [Various downloads available, including the conference backgrounder]
IGAD woos EAC 3 for a new common market (The East African)
Uganda, Kenya and South Sudan could soon become members of a new common market, further complicating the existing tensions over free movement of persons in East Africa. The three East African Community members are being targeted alongside the other five members of IGAD - Djibouti, Ethiopia, Somalia, Eritrea and Sudan - which is planning to have a common market by December next year, allowing for free movement of persons, goods and services in the bloc. The decision by IGAD to have a common market comes at a time when a similar initiative in the EAC is faltering, over partner states’ fears of losing land or jobs. So far only Uganda has agreed to the IGAD free movement of persons protocol. South Sudan, the other country that has so far been consulted, would like to get an exemption. IGAD’s Ms Daxbacher said that to overcome such hurdles as some countries rejecting critical clauses in the protocol, IGAD is looking to Uganda, which is a willing participant, to push the others.
South Africa overtakes US in exports to Kenya (The EastAfrican)
South Africa’s exports to Kenya grew by Ksh11bn ($106.4m) in the first eight months of 2017 saw it overtake the US in sales to Kenya. South Africa sold goods worth Ksh42.7bn ($413.1m)in the eight-month period, a 34% growth from Ksh31.7bn ($306.7m) in a similar period a year earlier. The faster growth in sales saw Pretoria displace the US to emerge sixth biggest seller of commodities to Kenya. [KNBS: Leading Economic Indicator September 2017 – see Tables 11-15c for trade data]
ECOWAS: An increase on excise duty on tobacco products (Leadership)
ECOWAS has begun talks to increase excise duty on tobacco products, a measure that is targeted to raise revenue for member states and decrease tobacco consumption in the region. This is one of the major topics of discuss by the Financial Council of Ministers meeting held at the ECOWAS Commission aimed at harmonizing the draft ECOWAS Customs Codes. Vice President of the ECOWAS Commission, Edward Singhatey, said the community is working on a draft document that will harmonize excise duties on tobacco products. The draft, he says will also embody the legislative and regulatory processes of member states in tracking and tracing tobacco products. Nigeria’s Minister of Finance, Kemi Adeosun, says Nigeria is setting up policies to increase excise tax on tobacco, cigarettes, alcohol and tobacco beverages. “Without putting in place an effective track-and-trace system, illicit trade will undermine trade and tax measures and will have serious adverse effects on public health in West Africa,” clarified Adeosun, who was represented by the Finance Permanent Secretary, Mahmoud Dutse. [ECOWAS Finance Ministers meet on consolidation of the ECOWAS Customs Union]
Uncertain future for “diabolic” free trade pacts between EU and Africa (IPS)
In the run-up to the fifth EU-Africa summit in Côte d’Ivoire, the future of the Economic Partnership Agreements between Europe and its former colonies looks bleaker than ever. While most of Europe’s trade partners around the world keep refusing to sign the deals, the African Union’s Commissioner for Trade will most likely announce a moratorium on all EPAs. “There has always been a diabolic whiff about EPAs,” former EPA chief negotiator Sandra Gallina said a few weeks ago at a meeting of trade ministers from all ACP countries in Brussels. “There is nothing diabolic about them, they were just extremely badly communicated. For the last five years I have been fighting a misinformation campaign.”
EAC urged to preserve investment policy space (New Times)
Conditions which host countries impose on multinational enterprises requiring them to meet specified goals with respect to their business activities are one way regional countries can preserve their investment policy space. This was at the end of a workshop Friday organised by SEATINI-Uganda, and Governance for Africa -Rwanda, a non-profit with a continental mandate on aspects such as regional integration. For three days, regional government officials responsible for investment promotion convened for a workshop meant to equip them with knowledge on historical perspectives of investment policy, among others, and how they shape current investment policy dynamics. Fred Karemera, Division Manager One Stop Center at Rwanda Development Board, told Sunday Times that the country’s investment legal framework “has catered for that.” Deogratius Mbarara, an EAC investment officer, said the EAC Investment Policy does not provide for the Performance Requirements. However, he explained, there are provisions on promotion of local content.
Mozambique: Import and export of fishery products only through Single Electronic Window (Club of Mozambique)
The process of importing and exporting fishery products in Mozambique will, from January 2018, be conducted through the Single Electronic Window of Customs, simplifying procedures and reducing customs clearance times. The first three-month phase will cover only the city and province of Maputo, and implementation in other parts of the country will be preceded by training for operators in the fisheries sector and customs brokers. Director of the National Fish Inspection Institute Lucia Sumbana Santos said the platform would facilitate the collection of statistical data, “which remains a challenge for us, because often the information that is provided by customs does not coincide with that of the operators”.
Kenya: Clearing agents blame tough KRA rules for slow port operations (Business Daily)
The logistics lobby group, Kenya International Freight and Warehousing Association, claimed that nearly all goods coming to the country by sea were being subjected to stringent procedures including mandatory verification that took too long. “For the first time in the history of clearing and forwarding, all cargo is attracting storage charges because it is not possible to clear the goods within the stipulated four days,” Kifwa chairman, William Ojonyo said. The Kenya Ports Authority gives an allowance of four days to clear domestic cargo for free while transit goods should be cleared within nine days after which they start accruing storage charges. Mr Ojonyo said Kifwa would engage relevant government agencies to ensure that their concerns are addressed.
Great Lakes Trade Facilitation Project: update (COMESA)
20 Trade Information Desk Officers that were recruited recently to facilitate small cross border trade between Eastern D R Congo and the neighboring countries of Rwanda and Uganda are participating in a two-day capacity building workshop at the COMESA Secretariat in Lusaka. The training is intended to enhance the capacity of the TIDOs to effectively deliver on their duties and responsibilities of serving the small scale cross border traders, majority of whom are women. In addition, it is a platform for sharing experiences by various stakeholders in the implementation of the COMESA Simplified Trade Regime at the project border posts.
Tanzania: Bagamoyo EPZ set to vitalise industrial drive (Daily News)
Plans are underway to set up 190 industries at Bagamoyo Economic Special Zone before 2020, Industry, Trade and Investment Minister, Charles Mwijage said yesterday. The industries, according to the minister, will include fertiliser and fish processing plants at the 100 square kilometer Bagamoyo Economic Zone. Mr Mwijage made the revelation in Dar es Salaam yesterday while officiating at the Symposium on Belt and Road Initiative between Tanzania and China. “The discussion to implement the initiative is going on between Oman, China and Tanzania,” he said, adding that the setting up of the industries will go in line with the building up of modern mega port at Bagamoyo. Mr Mwijage said the government plans more economic special zones along the Standard Gauge Railway Linein order to ease and fast track the supply of finished goods in and outside the country as the nation heads and achieves its mission of making Tanzania an industrial country come 2025.
Nigeria suffers $15bn post-harvest losses in tomato value chain (Sun News)
Nigeria is Africa’s second largest producer of tomatoes with nearly 2 million tonnes annually, yet up to 40% of the crop never makes it to market, impacting food security and smallholder farmers’ incomes. However, stakeholders who spoke at the 2017 Agra Innovate West Africa in Lagos, said challenges affecting tomato value chain need a holistic effort to address post harvest losses in the country. Despite government placing a 50% import duty on tomato paste, 96% of tomato imported into Nigerian market are said to be substandard and not good for consumption. The policy, which took effect in May this year has been very slow to create any effect on the sector as no tomato paste industry is currently in operation in Nigeria and imported pastes are still finding their way into the Nigerian market. [Importers frustrating Nigeria’s tomato policy – experts]
Promoting the African Internet Economy (Internet Society)
Internet-based companies currently represent a single digit percentage of the economy of most African countries. The Internet Society believes efforts should be made to bring the benefits of the Internet to the rest of the economy. A virtuous circle exists — greater demand for Internet-enabled content, applications, and services leads to greater demand from users for Internet access services, which leads to greater taxation generation, greater revenues for telecom operators, greater interest from investors in Africa, and, of course, greater usage of Internet applications and services. Extract (pdf). Business use of email: Research from the World Bank reveals that just over 60% of surveyed companies in sub-Saharan Africa use email to interact with clients or suppliers. This is fairly high, but below the global average of 72%. Business with websites: The World Bank queried businesses as to whether they have a website. More than two-thirds of companies in sub-Saharan Africa do not have a website. [The author: Michael Kende]
Cameroon accounts for 49% of electronic money transactions in CEMAC
According to the Bank of Central African States, which has just published a study on mobile money at the end of 2016 (pdf), there were 32,551 points of service across Cemac (Cameroon, Congo, Gabon, Central African Republic, Equatorial Guinea, Chad), compared with 23,867 a year earlier. The BEAC notes that this figure is below the reality because, for some operators, it is not possible to accurately determine the number of resellers (called “call box” in Cameroon) affiliated wholesalers. Nevertheless, the Central Bank is able to ensure that Cameroon accounts for 49% of activity and Gabon 41%.
Suresh Prabhu: India should be very realistic about Buenos Aires WTO meeting (LiveMint)
India’s new commerce and industry minister Suresh Prabhu will face his first big challenge of defending multilateralism and securing India’s interests at the upcoming ministerial meeting of the WTO in Buenos Aires starting 10 December. In an interview, Prabhu talks about his strategy for WTO, China and free trade agreements. Prabhu also hopes to use exports as a tool to create employment opportunities in India.
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Industrialize Africa: Strategies, policies, institutions, and financing
The secret of the wealth of nations is clear: developed nations add value to everything they produce, while poor nations export raw materials. Africa must quit being at the bottom of the global value chains and move to rapidly industrialize, with value addition to everything that it produces. Africa must work for itself, its people, not exporting wealth to others.
Industrialise Africa is one of five accelerators of the African Development Bank. The others are Feed Africa, Light Up and Power Africa, Integrate Africa, and Improve the Quality of Life for the People of Africa.
To industrialise Africa, the African Development Bank is committed to mobilising capital, de-risking investments for the private sector, and leveraging capital markets. This is essential for moving Africa’s Industrial agenda forward and for building an Africa of the twenty-first century that is well positioned to take its place in global value chains.
Africa is certainly the place to do business today. We have a rapidly growing young population, and an increasing demand for consumer goods, food, and financial services. Together, these factors make Africa an attractive business and industrial proposition for the private sector.
Diversification is not a goal. It is the outcome of well-planned policies for the structural transformation of economies. No region of the world has moved to industrialized economy status without passing through the transformation of the agricultural sector. This is the formula: agriculture allied with industry, manufacturing and processing capability, equals strong and sustainable economic development and wealth creation throughout the economy.
The bottom line is that we need to produce more and we need to produce better. Most of all, we need to add value to our resources and raw materials, and turn them into processed products.
Introductory remarks: Promoting sustainable industrial policies
by Joseph E. Stiglitz
1. Market inefficiency
For several decades, the Washington Consensus dominated development thinking, and industrial policies were discredited under the prevailing belief that markets would solve all problems. Early in 1978, I gave a lecture, titled “Broader Objectives, More Instruments” at the World Institute for Development Economics Research (WIDER), in which I criticized the policies of the Washington Consensus to make that point. Not everyone agreed with me at that time. Fortunately, the set of ideologies and views about how the economy operates and the one-size-fits-all policies advocated by the Washington Consensus are now largely discredited.
There have been many facts that brought us to understand the limitations of markets. The economic crisis in 2008 was the coup de grâce, because it showed that markets, in their own right, were neither efficient nor stable. And the countries that were most successful in development – and let me emphasize that there have been enormous successes in development, well beyond anything that anybody had ever anticipated – especially, those in East Asia, did not follow the Washington Consensus whereas the countries that followed the Washington Consensus suffered.
One of the questions that I get asked very often is: Why did Africa do so poorly in the quarter century before 2000? Why, when East Asia had enormous success in industrialization, was there the process of de-industrialization in Africa? While there were several factors contributing to it, I believe the most important cause was the structural adjustment policies that were imposed by international economic institutions. Structural adjustment policies advocated by the IMF and the World Bank were predicated on the belief that by eliminating “distortions” in the economy, Africa would grow faster by constructing an economy based on principles of free and unfettered markets.
In reality, these structural adjustment policies foisted on developing countries have actually discouraged indus industrial development and stifled growth, and the result is that, over the past 30 years, Africa has suffered from de-industrialization. A few years ago, Ben Bernanke, then Chairman of the Federal Reserve of the United States, talked about a “savings glut,” by which he meant there was too much savings. When he said that, I thought he must have been living on a different planet than I was living on.
Because when I traveled around developing countries, even when I went to New York, what I saw was huge investment needs for infrastructure, for technology, for retrofitting the world for climate change and for human capital. I continue to see huge investment needs, and yet, Bernanke was talking about too much savings! This is another example of market failure. One of the important markets in the economy, namely the financial market, is supposed to mediate between savings and investment, but it is failing to do so.
Let me explain: the investment needs that we have for infrastructure and retrofitting the world for climate change are long term, and much of the savings, such as sovereign wealth funds and people’s savings for retirement, are also long term. Yet, in between, there are financial markets that are not showing concern about the next quarter, or not even the next hour. So, there is something wrong in an economic system in which short-term financial markets are trying to mediate between long-term investment and long-term savings needs.
Meanwhile, the neoliberal/neoclassical model suggests that there is only limited importance to be attributed to market failures, but global warming and climate change has made us recognize that there are some first order important externalities of market failures that are threatening the very survival of our civilization. So, it is not only that there were conventional market failures that demonstrated how markets have not managed risk and that markets were inefficient and unstable, but also markets are failing to help the world address the key issue of global warming.
These are all examples of the ways in which the markets do not work well, or simply examples of market failure. This clearly points in a direction that there is a need for governmental policies.
2. The inevitability of industrial policies
Often when people talk about industrial policies, they are thinking about manufacturing, but industrial policies have a far broader agenda than only industrialization, narrowly defined, and merely increasing GDP. The view of industrial policies has to be broadened. I view industrial policies as any government policies that affect sectoral composition or choice of technology or direction of innovation. They can be energy policies, modern service sectors, and many other aspects that promote a whole range of non-traditional activities and non-traditional technologies.
Thus, industry is not just about manufacturing. Although there are real advantages to developing a manufacturing sector, because it is an important way of moving from agriculture into a more advanced economy, we have to be realistic that the overall number of jobs in manufacturing globally is going down. This decrease is the result of the success of the manufacturing sector. Productivity in manufacturing is increasing faster than the output of manufactured goods, which means not every country can have an increase in manufacturing jobs. There will be, or has been, a significant decrease in manufacturing employment in countries like the United States and in Europe, and they will have to accept and adapt to that kind of decrease. The increase in the cost of labor and the changing comparative advantage means that manufacturing is moving elsewhere. An institution like the United Nations Industrial Development Organization (UNIDO) can play an important role in helping some of the countries, for instance, in Africa, to seize a larger fraction of those jobs that are going to be moving from where there are today. There have been big successes in some African countries, for instance, in Ethiopia, where 50,000 jobs have been created in the shoe industry. This is a real success for industrial policies.
Governments are inevitably involved in industrial policy. Markets do not exist in vacuums; instead, they have to be structured. Markets and governments must be viewed as complements, as working together. All governments have to make decisions about expenditure policies, tax policies, and which infrastructure to invest in. These policies favor one industry over another, one technology over another, and their infrastructure decisions affect one over another.
So, I want to emphasize that every country has industrial policies. In the United States, many people do not believe in industrial policy. The truth is, of course, that it has an industrial policy – the industrial policy that the United States has had for the past 25 years has been to encourage the financial sector. A case in point is the bankruptcy law. In many countries, in the event of bankruptcy, the law states clearly who gets paid when the debtor cannot pay all his debts, whereas in the United States the laws give priority to derivatives. That is an example of industrial policy. Also, the policy of privatization is, or can be, an industrial policy, because it favors some sectors over others. The result of this set of policies in the United States has led to the growth of the financial sector, which has grown from around 2.5% of GDP to around 8% of GDP. As a teacher, I feel this very strongly, because our most talented students are going into the financial sector and real estate speculation, rather than into more productive activities.
And think about what were the most important innovations at the end of the 20th century. One of them was the Internet, which, basically, resulted from one of the industrial policies of the US government. It was a very successful industrial policy, and it was the basis of what has continued to be one of the important sources of our economic growth. Many of these industrial policies in the United States are admittedly hidden in the Defense Department, but they are still important.
In short, all governments have industrial policies, explicit or otherwise. The only difference is between those who construct their industrial policy consciously and those who let it be shaped by others, typically, special interests, which vie with each other for hidden and open subsidies, for rules and regulations that favour them over others.
In this regard, UNIDO has been very good at emphasizing that the issues of industrial policy do not apply just to developing countries and the least developed countries, but also to advanced countries. In addition, I think the focus of UNIDO should be on helping countries figure out good industrial policies – policies that will promote inclusive sustainable growth and are consistent with the Sustainable Development Goals. Just as I said in one of my talks in 1998, we ought to be promoting equitable, sustainable, and democratic development. All of these issues are interrelated.
Development is, to a large extent, a structural transformation; it is not just growth, it is changing the structure of the economy. There are many dimensions to structural transformation. One aspect is that we are moving towards a green economy, a learning society, and an innovation economy. In one of my more recent books, titled Creating a Learning Society, I talked about how industrial policies can help structure the economy. I call it a “learning society,” because it is more than a learning economy – it is the way our whole society interacts.
In the developing countries, they are moving from agriculture to manufacturing. In many of these countries, there is a process of moving toward an urban economy. This year marks the first year in which a majority of the world’s population will probably be living in cities, and that is a very big transformation. In advanced countries, there are other aspects of structural transformation insofar as they are moving toward service sector economies. In all of our economies, we should be moving from a finance-based economy to a real economy, and we should put emphasis on inclusive growth and inclusive industrial development.
Ironically, one of the problems facing the world today has to do with innovation. There is something very peculiar about the nature of innovation going on today, especially, in the developing countries in which the real challenge is job creation. Innovation across the globe is largely focused on saving labor, which goes in exactly the wrong direction. If employment does not increase, then inequality will, and if inequality increases, then aggregate demand will become weak. If aggregate demand is weak, then GDP growth will be weak. This is a vicious circle.
To prevent this from happening, it is very important for us to frame policies that shape the direction of technology. We need to encourage innovation, which is focused on saving the planet and protecting the environment and less involved in saving labor. If we want to have sustained economic growth, we have to make sure that the industrial policies framed should create employment and shared prosperity, as well as save the planet.
3. Instruments for sustainable industrial policy
Admittedly, there are many tensions between global agreements and the logic of modern economics, tensions between what developing countries and emerging markets need and the global agenda, which is, to some extent, stifling industrial policy. Countries have to learn how to deal with and navigate this difficult terrain.
For example, one tension is in education. When I was a Chief Economist at the World Bank, one of the important aspects of the advice that we gave to countries and programs, which we supported, was about education. Most of the education advice that was given to countries was that they should focus their scarce resources for education on primary education. Although that policy made some sense, because resources were limited and that meant everyone was given a small amount of education, it actually was a recipe for making sure the countries did not develop. Countries could not develop, based on just primary education for its peoples. Instead, people who have secondary and university education were needed. Countries, such as Korea and China, and most of the East Asian countries, realized this need in their development strategies. Therefore, we should adopt a broader education strategy, one that can help countries succeed.
Another example of tension lies in trade policy. We have come to realize that many trade policies have actually stymied development instead of promoting it. One of the ways in which advanced countries have done well for such a long time is what I call escalating tariffs – tariffs on unfinished goods, namely raw materials, have been lowered whereas tariffs on finished goods have been increased. As a result, developing countries are forced to stay at the lower level of the value-added chain. The development round, like the Doha Round, was supposed to stop such tactics of the advanced countries – who try to maintain the status quo of developing countries providing only raw materials – but, unfortunately, the development round failed to address this problem.
There are multiple instruments that are at the disposal of governments and the international community for promoting industrialization, broadly defined. One of them is creating a learning society. My colleague Bruce Greenwald and I have tried to define a broad agenda for creating a learning society. There are multiple strategies for doing that, and it has been successful in several countries. In the book, we show how well-designed government trade and industrial policies can help create a learning society, and how poorly designed intellectual property regimes can retard learning.
Each government policy has effects, both positive and negative, on learning, a fact that policymakers must recognize. Many standard policy prescriptions, especially those associated with “neoliberal” doctrines that focus on static resource allocations, have impeded learning. Broad-based industrial policies may bring benefits, not just to the industrial sector but to the entire economy. One of the instruments is exchange rate interventions. China has used a competitive and stable exchange rate very effectively.
Another important set of tools involves development banks. Twenty years ago, the World Bank, even though it was a development bank, said development banks were not a good idea. We understand now that they are important. There are many successful development banks, and some very important new development banks, such as the BRICS Development Bank and the Asia Infrastructure Investment Bank. They are going to play an important role in providing finance for industrialization.
Another point in this broad area of instruments is in promoting a sustainable industrial policy; we need a tax on carbon. I think developing countries, emerging markets, and advanced countries that want to promote sustainability will have to have a price on carbon, which should have been sought at the Climate Summit in Paris.
Meanwhile, the strengthened versions of traditional instruments can also play an important role in industrial policies. Traditional instruments, like anti-trust policies, can also be considered to be part of industrial policies. When I was at the World Bank, we formulated what was called the Comprehensive Development Framework (CDF).
The issues of development are so complex that there is no magic bullet; we cannot approach them with any single tool. Instead, we need a comprehensive approach with a comprehensive industrialization framework and toolkit, adapting to the circumstances of the individual country.
Joseph Stiglitz is Professor at Columbia University. He was the 2001 Nobel Laureate in Economic Sciences, and member of the Special Panel on Accelerating the Implementation of the pdf AfDB Ten-Year Strategy (844 KB) .
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North Africa’s trade arrangements: Complementarities and contradictions with the CFTA
Summary Report
The Arab NGO Network for Development, l’Espace Associatif, Third World Network-Africa, and Regions Refocus, in collaboration with Friedrich-Ebert-Stiftung, convened a workshop from 28-29 June 2017 in Rabat, Morocco to address the context of trade and economic relationships within North Africa and its neighboring regions.
Bringing together a diverse group of approximately 30 policy-makers, representatives of regional institutions, civil society, women’s networks, academics, and activists, this workshop provided an unusual opportunity to air North African perspectives on sub-regional trade relationships, in light of the forthcoming Continental Free Trade Area (CFTA) and its implications for the Maghreb and the broader North African region. The workshop also served as a space to explore steps towards potential heterodox and feminist approaches to the CFTA, and to strategize towards a mode of regional integration that benefits North African producers, consumers, societies, and people.
Over the two days of the workshop, participants listened to perspectives from governments, activists, trade unionists, and academics on North Africa’s trade arrangements internally, with Europe, and with the rest of the African continent. Aiming to raise awareness about the CFTA and stimulate understanding of its regional and sector-specific implications, the methodology encouraged both mutual learning and collective strategizing. Participants agreed on concrete follow-up at the regional level, to take forward an action plan on information-sharing, capacity-building, and advocacy surrounding the CFTA in North Africa.
Towards Transformative Regionalism, for the Maghreb and beyond
Setting a framework to guide the workshop discussions, Mohamed Said Saadi began the substance of the meeting with a keynote presentation of his forthcoming paper exploring the regional integration landscape of the Maghreb and the potential implications for North Africa of the Africa-wide CFTA. He explained the failures of the traditional approach to liberalization, which has not altered the structures of the economy or increased productive capacity in the region. Rather than continuing to push for market-led regional integration that relies on exports of raw materials to European markets, Saadi argued for a “transformative regionalism” that encourages structural transformation, solidarity and cooperation among African countries. “The reallocation of economic activities from low productivity and added value sectors to higher productivity industrial and modern services sectors,” his paper explains, can encourage economic growth and equitable development while reinforcing “collective industrialization” and regional collaboration.
Illustrating the context of the Maghreb, including its constraints in terms of employment, climate change, and conflict, Saadi spoke of the need for indigenous models of regional integration, rather than a “copy paste of the standard Jacob Viner type model applied in Europe.” As the Maghreb is the least integrated region in the world, collective political and economic action will be required to achieve structural transformation that benefits the majority of Maghrebi people. Embedded within this aim are social policies that promote gender equality, ensure labor rights, provide essential services, and guarantee democratic participation of civil society and social movements. Saadi’s paper underlines several key prerequisites for transformative regionalism in the Maghreb, including a political solution to the conflict between Algeria and Morocco (continually referenced during the workshop as a primary obstacle to regional integration); introduction and implementation of collective industrial development initiatives; and the “full democratization of decision-making processes in terms of social and gender issues.”
The Arab Maghreb Union (AMU), as the Regional Economic Community that covers the Maghreb and Egypt, has a fundamental role to play in the integration of the region and its participation in the CFTA, Saadi asserted. Established in 1989 but currently mostly dormant, the AMU is intended as the building block of Maghreb accession to the CFTA. Saadi recommended (and the workshop embraced) a proposal for civil society advocacy and government engagement to strengthen and revive the AMU, including through reexamining its founding treaty as a starting point. His paper calls for implementing provisions of the AMU treaty regarding joint ventures and action around production, common resources, and improving bargaining positions. Reconstituting the AMU could also help to streamline and rationalize the multiplicity of overlapping regional and sub-regional agreements applicable to North Africa, as Saadi’s paper outlines.
From this starting point, participants envisioned regional integration – of the Maghreb, of broader North Africa, as well as with the Arab States and the African continent – as a process that will benefit workers, consumers, and producers, women and men, if orchestrated according to a democratic and developmental framework. Jihen Chandoul of Observatoire Tunisien de l’Economie summarized the factors contributing to the low level of integration: unstable sociopolitical contexts, an absence of regional leadership, and an integration process that does not take into account a strategic vision for the region. Shifting priorities towards horizontal, development-focused integration is key, Chandoul concluded, to benefit local enterprise and the development agendas of the Maghreb.
Achieving transformative regionalism in the Maghreb and beyond will require rebalancing governments’ priorities, which have so far tended to focus on vertical integration with Europe rather than horizontal integration with their neighbors. Abdeljelil Bedoui of the Forum Tunisien pour les Droits Économiques et Sociaux drew attention to the “flagrant contrast” between the multiplicity of trade arrangements entered into by Arab states and the “structural weakness of Arab integration in general.” Mohammed Benayad, Secretary General of the Moroccan Ministry of Trade, made a similar point regarding the contradictions between efforts to integrate at sub-regional or continental level and the myriad of free trade agreements (FTAs) signed by North African countries with external actors such as the EU, UK, Turkey, and China. These relationships commit governments of the Maghreb to terms that pose significant challenges to regional integration.
The CFTA and its Implications for North Africa
Given the overall objective of transformative regionalism for North Africa as outlined through the workshop discussions and Saadi’s paper, participants turned their focus to the ongoing negotiations at the African Union to develop a Continental Free Trade Area (CFTA). Beginning with keynote presentations by Tetteh Hormeku-Ajei of Third World Network-Africa and Mehdi Mehamha of African Trade Policy Centre at United Nations Economic Commission for Africa (UNECA), the workshop examined the genesis of the CFTA as well as its current political situation and the potential implications for (North) African industry, agricultural producers, and workers. Mehamha provided an overview of the rationale for the CFTA as well as the current context of its negotiations, including the key update that AU member states have agreed on a threshold of 90% liberalization of tariffs on goods. This liberalization will be delayed for 10-15 years for goods on a “sensitive goods list,” though criteria for exclusion was still being developed, by UNECA and UNCTAD at governments’ request.
Much of the discussion around the CFTA focused on its ambitious anticipated deadline for agreement of December 2017. Participants raised the concern that this quick turnaround leaves insufficient time for democratic debate and civil society consultation, and precludes the opportunity for discussion around complementary economic policies that should be applied to ensure the CFTA does not harm producers and consumers in the less industrialized countries in Africa. Mehdi agreed that the December deadline poses a “major challenge,” especially since the final meeting of African Heads of State and Government (HoSG) is intended to adopt the CFTA agreement, leaving only two cycles of meetings of senior trade officials and ministers to negotiate the terms. While acknowledging the decision by HoSG to fast-track the CFTA and their commitment to agree it by the end of this year, Tetteh articulated the common understanding that this timeline raises a challenge for citizens in terms of ensuring the agreement reflects national and regional needs and concerns. Asserting that HoSG should delay the adoption of the agreement in order to ensure time to reflect the issues at stake, Tetteh explained some of the political and economic dimensions into which the CFTA would intervene.
Tetteh proposed beginning from the premise of determining what African countries require to become autonomous drivers of their own development, and then articulating the role of trade and of the proposed CFTA in achieving that scenario. Some measure of trade liberalization is necessary due to the small size of most African economies, he posited, but trade agreements including the CFTA should explicitly strive to address the constraints of African economies rather than exacerbate them. As discussed during the workshop’s framing of transformative regionalism, structural transformation of Africa’s economies requires promoting productive capacities; expanding infrastructure; and integrating markets, which in turn requires creating markets (in land, labor, etc.) where they do not exist. Tariff liberalization, as proposed by the CFTA, is just one element of market integration, itself just one element of the kind of regional integration that can lead to structural transformation, Tetteh explained. The negotiations as they have unfolded so far, with a bias towards extreme tariff liberalization and deregulation of services, “do not take proper cognizance of the actual challenges that will make trade liberalization fit the needs of building productive capacity.”
Ensuring the CFTA makes provisions for countries with differing levels of industrialization and productive capacity (referred to as “variable geometry” in the CFTA principles) is key, Tetteh continued, in preventing tariff liberalization from eradicating domestic industry in countries that cannot compete with their larger neighbors. Uganda’s dairy industry, for example, cannot provide products as cheaply as Kenya’s, so Kenya will be at a clear advantage in a proposed CFTA. How can Africa liberalize its dairy sectors, Tetteh asked, while still giving space for Uganda to catch up?
Another challenge posed by the CFTA for North Africa is its relationship with existing regional economic communities (RECs) currently at varying levels of integration. For example, Benayad raised the question of trade preferences. Morocco has recently requested to join the West African REC, ECOWAS, which has an FTA and a customs union. Will joining the CFTA render existing tariff levels moot? This question is further complicated by existing trade arrangements between African RECs or individual countries and the EU. If European goods have access to African markets at more or less the same preference as goods from other African countries, this potentially erodes both the advantages offered through existing agreements and the potential benefit of a CFTA. These issues of coherence, Benayad concluded, have yet to be discussed at national or regional level. Elbous added a further layer of complication, referring to North Africa’s position as “between Africa and Europe.” While serving as a conduit for European goods may benefit certain North African countries, this is likely to entrench, rather than address, infrastructure and trade deficits experienced by the rest of the continent.
Finally, the workshop continually referred to the lack of civil society engagement in the CFTA process thus far and the urgent need for the negotiations to be guided by dedicated modalities to share information with and hear perspectives from women’s groups, agricultural producers, trade unions, domestic private sector actors including business associations, and civil society at large. Imbuing the negotiations with solidarity and other guiding principles, perhaps in a charter, was expressed by Redouane Benchikh as a potential way forward, while acknowledging that the HoSG may rush through to arrive at a CFTA agreement without institutionalizing civil society participation at the continental level. Sayed Elbous pointed out that consultation with various stakeholders is supposed to be undertaken at national level as part of AU member states’ arriving at their negotiating positions, but none of the North African participants had heard of opportunities to engage with their governments on the CFTA.
Overall, the workshop raised urgent questions of how the CFTA can contribute to industrialization and development while promoting efforts towards gender equality and improving the conditions of small producers, in North Africa and throughout the continent. Concrete recommendations, such as including a people-centered compensation mechanism within the CFTA agreement or coordinating strategic litigation on behalf of civil society, emerged from the discussions. Getting these and other important concerns of infrastructure, free movement of people, and required industrial policy into the CFTA framework will prove challenging, especially if the agreement is to be concluded by December as planned. The primary lens for civil society engagement around the CFTA and other trade relationships, Saadi asserted, is to consider who will benefit and how the needs of the majority of the population will be met. These political and economic choices can prevent or enhance developmental efforts, added Ziad Abdel Samad of Arab NGO Network for Development, emphasizing the importance of broad-coalition building, awareness-raising, and advocacy around the right to development and the trade relationships of both the Arab states and the African continent.
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EAC urged to preserve investment policy space
Conditions which host countries impose on multinational enterprises requiring them to meet specified goals with respect to their business activities are one way regional countries can preserve their investment policy space.
This was at the end of a workshop Friday organised by the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI)-Uganda, and Governance for Africa (GFA)-Rwanda, a non-profit with a continental mandate on aspects such as regional integration.
For three days, regional government officials responsible for investment promotion convened for a workshop meant to equip them with knowledge on historical perspectives of investment policy, among others, and how they shape current investment policy dynamics.
The need to strengthen performance requirements is based on the thought that though foreign direct investment can play an important role in development of host countries, positive impacts of FDI are not automatic because the commercial interests of companies do not always coincide with states’ development goals.
According to Faith Lumonya, a SEATINI Program Officer, one key challenge with EAC partner states’ legal frameworks – national laws, policies, and investment agreements – is the provision to do with performance requirement measures.
Performance Requirements’ measures are a range of policy instruments available to governments to optimize the impact of investments, especially FDI, she said.
“They are and have been used by developed and developing countries together with other policy instruments, such as monetary and fiscal policy, trade policy, labour policy, environment laws, screening mechanisms and incentives appraisal frameworks; and are often aligned to the host states’ development strategies,” Lumonya said.
“They stipulate what constitutes the obligations of an investor; that is, exportation, facilitate value addition and industrialization; promoting use of local content; employment creation; leads to foreign exchange inflows; fosters transfer of a particular technology and skills, among others. It can emphasize even levels at which locals should be employed including number of those to be engaged in the managerial positions.”
Fred Karemera, Division Manager One Stop Center at Rwanda Development Board, told Sunday Times that the country’s investment legal framework “has catered for that.”
Among others, Karemera who is head of RDB’s investment, promotion and facilitation department explained that – basing on the 2015 investment law – a registered investor and his or her dependents can be issued with a residence permit in accordance with relevant laws; a registered investor who invests an equivalent of at least US $250,000 may recruit three foreigners without necessarily demonstrating that their skills are lacking or insufficient on the local labor market.
Karemera said: “This implies that other than the three employees cited in the law, the recruitment of other foreigners by a registered investor will first check whether the skills and qualifications required in such jobs are not available among Rwandans. If the skills are available our labor market, then he will not be allowed to recruit foreigners.
“Again, the ministry of labor and the immigration department are always updating the availability of skills in the Rwanda labor market through ODL (Occupation Demand List) so that when an investor applies for a work permit for his foreign employees he is advised on availability of such skills on the local labor market.”
Basically, he said, this was intended to protect and enforce performance requirements as a means of ensuring that regional economies “are not cheated by foreign investors.”
“On the skills and technology transfer aspects, this is obvious as the employer (investor) needs to train his employees for better delivery of the work assigned especially the locally recruited team,” Karemera said.
Deogratius Mbarara, an EAC investment officer, said the EAC Investment Policy does not provide for the Performance Requirements. However, he explained, there are provisions on promotion of local content.
“But Partner States are allowed to impose performance requirements to promote domestic development benefits from investments,” Mbarara said.
Such requirements may include, he said, exporting a given level or percentage of goods or services, achieving a given level or percentage of domestic content, purchasing using or according to a preference to goods produced or services provided in its territory, and other measures intended to promote domestic development.
The workshop was facilitated by Burghard Ilge, an expert at Both ENDS, an organization from The Netherlands which works towards a sustainable, fair and inclusive world. Ilge told Sunday Times that the ability to have performance requirements “is the most important thing”.
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South Africa overtakes US in exports to Kenya
Imports from South Africa grew by Sh11 billion in the first eight months of the year that saw Africa’s most industrialised economy overtake the United States in sales to Kenya.
South Africa sold goods worth Sh42.7 billion to Nairobi in the eight-month period, a 34 per cent growth from Sh31.7 billion in a similar period a year earlier.
The faster growth in sales saw Pretoria displace the US to emerge sixth biggest seller of commodities to Kenya.
South Africa is the most industrialised and diverse economy in the continent and is the top seller to Kenya among African countries.
It sells to Nairobi goods such as wines and other alcoholic drinks, cars as well as spare parts, oil lubricants and machinery.
Imports from the US grew to Sh40.2 billion in the eight-month window, from Sh34.2 billion, slipping one position behind South Africa on Nairobi’s import table, data from Kenya National Bureau of Statistics (KNBS) shows.
Paltry
But Kenya’s exports to South Africa remain paltry, at less than Sh5 billion in the period with the country not featuring among the top 11 buyers of goods from Nairobi, the KNBS data shows.
South African companies with operations in Kenya include MultiChoice, SABMiller, and Massmart (Game brand) while thousands of Kenyans are frequent travellers to South Africa for business and leisure.
Kenya has long expressed discomfort with the many hurdles its citizens travelling to South Africa continue to face with little response from Pretoria.
Ideally, Kenya and South Africa are supposed to be dealing with each other under the principle of reciprocity – meaning that benefits extended by one country are mirrored by the other.
The KNBS data shows China remains the biggest seller of goods to Nairobi, having shipped in Sh273 billion worth of goods in the year to August, ahead of second-placed India (Sh117 billion).
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Featured tweet, @UNCTADKituyi:
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tralac’s Weekly newsletter is posted: A new dawn for Zimbabwe!
Launching today, Regional Migration Data Hub for the Southern African Region
Ahead of next week’s AU-EU Summit: Africa Week at the European Parliament
(i) Looking ahead to the conference, the President of the European Parliament said: In recent years we have lost sight of the fact that Africa’s problems are Europe’s problems too. We are not linked only by geography, but also by shared strategic interests, by major challenges and opportunities which we must address together. The time has come to put Africa at the top of the EU’s agenda. Ahead of the Abidjan Summit, Africa Week highlights the central role which the European Parliament intends to play in setting the terms of a new EU-Africa partnership. We must look towards Africa’s young people. We must involve them in a project which uses effective tools to offer them real prospects and the hope of a stable, secure and prosperous future in their own countries. If we fail, in the coming years not tens of thousands but millions of them will spare no sacrifice to seek a better future in Europe. We must act now, before it’s too late, through a Union which speaks with one voice. We must secure the political consensus needed to bring about a radical overhaul of our policies in Africa, starting with a properly funded multi-annual budget. I am thinking of a Marshall Plan for Africa which can attract hundreds of billions of euros in investment and support Africa’s transition to a future founded on a sustainable manufacturing base, modern farming and network infrastructure. We can use that investment, channelled through a partnership between equals which involves the private sector and civil society, to promote real economic diplomacy, transfer technology, industrial know-how and professional skills and so help to create a climate conducive to entrepreneurship.
(ii) Towards a renewed partnership with Africa: speech by Vice-President Federica Mogherini. So, to conclude, we go to Abidjan with new ideas, with new initiatives – with an unprecedented investment plan, with our migration work that for the first time ever has turned into a real partnership, which is – I believe – the key to manage this phenomenon effectively, and with all our common work and support for peace and security. We go to Abidjan together with the United Nations. And let me say that we will have, there, further step in something unique we have started – a trilateral cooperation between the European Union, the African Union and the United Nations. Because together we can push forward so much of the global agenda that the world and not only our two continents need. On different issues, peacekeeping, economic and governance reform, investment, sustainable development, action on climate change: all of this, if led together by Europe and Africa with the United Nations, can really change, not only – again as I said – our two continents, but the rest of the world. So, we go to Abidjan, probably for the first time ever, as partners, as political partners, overcoming the donor-recipient kind of relationship, that belongs to the past. We are starting a new page, a page of political partnership, which means that we set our direction together, and each of us accepts the responsibility to contribute its own way on all the priorities.
(iii) The EU’s External Investment Plan: five investment windows. The European Commission singles out five areas of investment, so-called “investment windows”, in which the first actions of the External Investment Plan will be implemented. These investment areas are crucial for the sustainable development in countries in Africa and the EU Neighbourhood countries. The High Representative/ Vice-President Federica Mogherini said: “The European External Investment Plan is the largest ever investment programme for Africa. Today, only four per cent of global foreign direct investment goes to Africa. With the European External Investment Plan, we can raise at least €44 billion in private investment by 2020, notably for the most fragile parts of the continent. I hope and I expect that others will join this effort. This is a strong signal of the strengthened partnership with Africa as we are heading towards the AU/EU Summit next week.” The five investment windows include:
(iv) Council of EU adopts conclusions on digital for development. The Council welcomes the publication of the Commission Staff Working Document on Digital4Development (pdf), which provides a framework for mainstreaming digitalisation into EU development policy and identifies four priority areas with an immediate focus mainly in Africa. The Council underlines the need to promote D4D as a comprehensive framework in all developing countries focusing on those where digital needs and opportunities are the greatest. The Council invites the Commission to swiftly implement the D4D approach through a series of concrete and demand-driven actions to be launched during the 2017-2020 period. It further calls on the Commission to bring successful pilot projects to scale.
On the sidelines of next week’s AU-EU Summit:
6th EU-Africa business forum: Investing in job creation for Youth. Download the programme
Leadership4Agriculture Forum: This action-oriented forum, supported by the Rockefeller Foundation and in collaboration with the Initiative for Global Development and Grow Africa, will assemble influential leaders — African high-level officials, private sector leaders and community champions — for dialogue, advocacy and policy action to drive Africa’s agriculture transformation on the theme Leadership for agriculture: moving African policy to action. The AfDB estimates that between $315-400bn over the next ten years is required to transform strategic agricultural value chains.
1st Africa-Europe Forum of Local and Regional Governments: The Forum will also address the issue of the renewal of the cooperation framework between Africa and Europe at a time when negotiations for a new agreement will succeed the Cotonou Agreement, which has structured Europe-Africa relations since the year 2000 and will expire in 2020. The Forum will adopt the Abidjan Declaration of the Africa-Europe Forum of Local and Regional Governments, which will be presented to the Summit for Heads of State and Governments of the two regions.
Downloads: the concept notes for the seven official summit side events
Kenya’s Amina Mohamed: Youth empowerment is crucial for Africa to root out modern day slave trade (The Wire)
For those of us who were at the Durban World Conference 16 years ago when slavery and slave trade crimes were declared against humanity, our horror and sadness at reports that sub-Saharan migrants are being sold at slave markets in Libya is immeasurable. That the world would be silent as this heinous crime were reported is something we cannot comprehend and tolerate. That a people and country that claim African citizenry can practice this repulsion in a continent that bears so many scars is scary at so many levels. For several years now, Libya has continued to serve as the primary departure point for migrants crossing the Mediterranean from North Africa, with more than 90% of those crossing the Mediterranean Sea departing from Libya.
ECOWAS draft Customs Code, CET: updates
(i) The Directors-General from the fifteen Member States of ECOWAS met yesterday to consider the ECOWAS draft Customs Code. The one-day conference, which was preceded by a meeting of experts and senior officials, also considered the report of the Technical Committee on Trade, Customs and Free Movement. ECOWAS Commission’s Commissioner for Trade, Customs and Free Movement, Mr. Laouali Chaibou said, in addition to the need for the uniform application of the regional tariff by the ECOWAS Member Countries, it is still necessary to “put in place an institutional mechanism for managing this instrument” He noted in this regard, that the ECOWAS Common External Tariff being a dynamic instrument, “should be able to reflect the economic and commercial policy options of both our states and the region over the years”
(ii) Nigeria implements 70% ECOWAS Common External Tariff. The Nigeria Customs Service says the country has implemented about 70% of the requirements of the ECOWAS Common External Tariff. The Comptroller-General of NCS, Hameed Ali, said this at the opening of the meeting of ECOWAS Directors-General of Customs in Abuja on Thursday. He further called for increased cooperation of border officials in “an efficient and transparent manner” and urged member countries to strengthen security at the borders to promote a more business friendly sub-region. “Our borders are getting increasingly assaulted and weakened by the criminal activities of smugglers, drug trafficking, armed bandits and insurgents. These elements can only thrive when there are gaps in our operations.”
Related: ECOWAS Summit to be hosted in Nigeria (16 December, Abuja)
Gulf of Guinea Commission: updates from yesterday’s 4th Assembly of Heads of State and Governments. Nigeria’s NSA: Maritime crimes deprive Gulf of Guinea of development; Buhari, other presidents absent as Gulf of Guinea Summit holds in Abuja; Buhari emerges Chairman of Gulf Of Guinea Commission
Today’s Quick Links: Mozambique: Assembly passes bill on taxes on luxury goods African Ministers of Communication and Information Technologies: update Starting tomorrow, in Nairobi: AUC’s 5th Annual Humanitarian Symposium COMESA, Rockefeller Foundation to host resilience academy (28-30 November, Lusaka) Mauritius hosts 17th meeting of African Solidarity Fund World Bank: How can Malawi move from falling behind to catching up? Trade MEPs want to scrap all EU export restrictions on encryption Babatunde Fagbayibo: Toothless Pan-African Parliament could have meaningful powers - here’s how |
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European Parliament holds High-Level Conference: “Towards a renewed partnership with Africa”
Many positive changes such as rapid economic progress, the strengthening of institutions and rule of law have taken place on the African continent over the last two decades. At the same time, challenges remain linked to security deficiencies, including terrorism, climate change, desertification and environmental degradation, the outbreak of famine, poverty and unemployment, all of which cause migration flows.
The dynamic demographic trend that will make Africa the youngest and most populous continent in the world with 2.5 billion inhabitants by 2050 is both a challenge and an opportunity.
Taking Africa forward is a shared goal. The continent needs to be stabilised and attract major investment through economic diplomacy crafted to develop an industrial base, improve skills and create jobs that will enable young Africans to build a future in their own countries. The European Union should be at the forefront of this effort as we share common values and interests with Africa.
As we celebrate ten years since the adoption of the joint Africa-EU strategy, 2017 is proving to be crucial in our relationship as many political and legislative measures taken at EU level will strengthen our ties. In May, the High Representative and the European Commission issued a joint communication for a renewed impetus of the Africa-EU Partnership. In June, the European Consensus on Development was signed and the Council adopted conclusions stressing the EU’s strategic interest in deepening its longstanding partnership with Africa. In September, the European Parliament and the Council adopted the European Fund for Sustainable Development (EFSD), the centerpiece of the EU’s new External Investment Plan.
In addition to legislative and democratic support, the European Parliament has had a defining role in strengthening political and economic ties with Africa by inviting both the Chairperson of the African Union Commission and the President of Côte d’Ivoire, to address the plenary in Strasbourg.
The European Parliament is therefore taking the lead in encouraging other EU institutions and Member States to be more ambitious, going beyond the existing partnership and financial instruments. Our priority must be an Investment Plan for Africa. The EFSD is a step in the right direction but its means remain limited if we want it to be a game changer. New economic and academic diplomacy is needed that focuses on infrastructure, technology transfers, resource efficiency, vocational training and a conducive environment for private sector growth. The EU should promote legal migration while cooperating with third countries on fighting irregular migration. Finally, further support for scholarships for African students under the Erasmus+ programme and extending cross-border exchange programmes for young entrepreneurs to African countries would also be invaluable.
The aim of the high-level conference was to continue to raise the visibility and importance of our partnership, to open a debate on the need to maximise existing instruments and resources in view of discussing the post-2020 EU budget. It also comes at the right time: one week before the fifth African Union-European Union summit that will take place in Abidjan, Côte d’Ivoire.
This year, the focus of the summit was on “Investing in youth”, a key priority for both Europe and Africa. Other priorities of the partnership that will be tackled include peace and security, governance including democracy, human rights, migration and mobility, investment and trade, environmental preservation and climate change, skills development and job creation.
The conference was organised in conjunction and with the participation of key parliamentary committees and Members of the European Parliament – in particular with rapporteurs on critical files and stakeholders.
Opening speech by Antonio Tajani, President of the European Parliament, at the High-Level Conference: ‘A new partnership between the European Union and Africa’
It is a real pleasure to see this Chamber full to the rafters to discuss the major issue of our partnership with our African friends.
I will straightaway say that that Summit must be different from the others, and must yield tangible results and a clear and precise roadmap.
For many years, the Union failed to give Africa the attention it deserves. Often we looked the other way, heedless of the emergencies – humanitarian or linked to climate, security or stability – which Africans have to deal with every day. We failed to recognise that we have an overriding strategic interest in what happens in Africa.
Europe’s approach was a piecemeal one, with individual countries falling over one another in pursuit of their own interests and agendas. The result was a road paved with good intentions, but there were many missed opportunities and few successes along the way. We failed to exert any real political and economic influence on the future of Africa.
Globalisation and migration have shown that building walls or putting up barriers is not the solution. Africa’s problems are Europe’s problems too.
It is time to put our relations on a new footing, before it’s too late. Our links go beyond mere geographical proximity. We have common interests and face common challenges.
By 2050, the population of Africa will double, to more than 2.5 billion. This population explosion may be a problem, but it may also be an opportunity.
Desertification, famine, pandemics, terrorism, unemployment and bad governance are exacerbating instability and contributing to uncontrolled immigration.
Without determined action to tackle these phenomena, new generations will continue to set out for Europe in search of hope and a future. They may be attracted by images on television or on the internet depicting what seems to them to be a land of milk and honey. We urgently need to offer them real prospects in their home countries, so that they stay and help to revitalise them.
The challenges facing Africa
Supporting Africa is not only a duty. It is clearly also in our shared economic and political interest.
Many African countries are already showing that their continent offers genuine opportunities: in 2016, five African economies were among the top ten in the world in terms of growth, with rates of more than 7%.
Africa has critical raw materials essential for our industries: 64% of the world’s cobalt, without which batteries for electric cars cannot be made, comes from Congo; tantalum, which is used in solar panels, comes from Rwanda; platinum, which is used to limit harmful emissions from cars, comes from South Africa.
These raw materials are also of interest to our competitors, starting with China, which is seeking to establish a dominant position in order to boost its own industries.
There is also a problem of environmental sustainability. In the context of the Raw Materials Partnership, which I promoted when I was Industry Commissioner in 2012, cooperation developed between EU and African geological surveys which has led to innovation and greater awareness of the need to protect the environment.
There are many other good examples of our work with Africa. To start with, there is the integration of markets, under the Lomé Conventions and the current Cotonou Agreement. These agreements have granted free access to the European market for 99.5 % of African products.
Discussions on the post-Cotonou settlement are continuing. I should like to thank Parliament’s rapporteurs for their contribution.
Despite these efforts and the tens of billions that have been invested, there is still a long way to go if we are to guarantee decent living conditions and greater security for people in Africa.
We are far from achieving the Sustainable Development Goals set by the UN with a view to reducing poverty: one-third of Africans live below the poverty line; one-sixth of them need humanitarian aid to survive; in rural areas, 60% of people have less than one euro a day to live on.
Farming and raw materials, including energy, are the main sources of revenue, whilst the level of industrialisation is extremely low.
Last Monday was Africa Industrialisation Day, which provided an opportunity to emphasise once again that developing a manufacturing base is fundamental to growth and employment.
Only 15% of Africans have the internet at home. Barely one person in three has electricity.
Sub-Saharan Africa has the world’s highest illiteracy rates: one child in every five does not go to school, and almost 60% of young people are not undergoing training of any kind.
Is it any surprise, therefore, that young Africans should believe that they have nothing to lose; that they should decide to risk their lives to come to Europe; or that they should be seduced by people who preach violence in God’s name.
Many problems could be solved by means of greater investment in education, infrastructure, industry and modern farming techniques. Africa, however, is the continent which attracts by far the lowest volume of foreign investment: barely more than EUR 80 billion a year, only 3% of African GDP. China is the country whose investments are increasing the most in proportional terms.
Africa’s destiny must be put back in the hands of Africans. But Europe must play its part as well.
We must work together with Africa, as equals, and make available the fruits of our leadership in the areas of technology, quality, industrial know-how and training.
Ten years have passed since the EU-Africa strategy was adopted. In that time many hopes have been dashed. Europe has lacked the courage to develop truly effective instruments.
Instead of consolidating our position as Africa’s main partner, we are losing ground. Not only China but other emerging investors as well, such as Turkey, India and Singapore, are gaining in influence.
A Marshall Plan for Africa
The fifth African Union-European Union Summit, which will be held on 29 and 30 November in Abidjan and bring together more than 80 heads of state, comes at a crucial time.
We must send out a clear signal that we are determined to relaunch and strengthen our partnership, and speak with a single, strong voice.
The focus of all our efforts must be young people: they hold the key to a more stable, prosperous and modern Africa.
The EUR 3.4 billion investment plan for Africa is an important step in the right direction. But it is nowhere near enough.
We must support the efforts Africans themselves are making to establish a sustainable manufacturing base and develop efficient farming, renewable energy sources and proper water, energy, mobility, logistical and digital infrastructure, by drawing up a real ‘Marshall Plan’ for Africa. By doing so we will strengthen governance and the rule of law, step up the fight against corruption and foster the emancipation of women and education.
We must work to ensure that under the next EU multiannual budget at least EUR 40 billion is earmarked for the investment fund for Africa. The leverage effect and synergies generated with the funding provided by the European Investment Bank could make it possible to mobilise some EUR 500 billion in public and private investment.
On that basis, we can continue to conduct effective economic diplomacy which promotes the integration of markets, the transfer of technology and industrial know-how, sustainability and training.
The aim must be to establish an environment conducive to the development of a manufacturing base and entrepreneurship and the creation of SMIs and jobs for young people. For that we also need instruments such as Erasmus for young entrepreneurs, which should be extended to cover Africa.
At the same time, legal immigrants from Africa can meet the demand for workers in some sectors of the economy in the EU and acquire professional skills which they can then use to create businesses in Europe.
We also need academic and cultural diplomacy which, by expanding Erasmus+ and stepping up cooperation between universities on research and mobility projects, makes it possible for more Africans to study in Europe.
Conclusions
More resources are not in themselves the answer. Already today we are investing EUR 33 billion from the EU budget alone, not counting the bilateral aid provided by individual Member States.
If our taxpayers’ generosity has failed to produce the hoped-for results, we must ask ourselves whether the current development cooperation model is the right one.
Carrying on as we have always done would be a serious mistake. Our citizens are calling for a political Europe which is capable of making brave choices. Starting with the budget; more of the same is not acceptable, and the budget must reflect the priorities of the peoples of Europe,
The proposed sum of EUR 40 billion – 12 times more than the current budget for the Investment Plan – is needed to generate an impact commensurate with our objectives. This is a critical mass large enough to attract European private and public investment.
It is not a Utopian idea. If the political will is there, resources can be found, partly by using the funds already earmarked for Africa more effectively, partly by providing guarantees under the EU budget, and partly by identifying new sources of funding.
It is for just that reason that I have proposed an increase in the next budget. Making new resources available must not serve to impose a burden on citizens or SMIs. Instead, we must use new own resources for this purpose, by collecting taxes from those who currently don’t pay them and reducing taxes on those who do pay them.
I am thinking of tax havens, the internet giants and speculative financial transactions of all kinds.
Today, the European Parliament is committing itself to playing a central role in a new Partnership with Africa. Our debate, involving young people, political leaders, experts and investors from Europe and Africa, must serve as preparation for the new start we will make in Abidjan.
This conference must be more than a formal event at which we read out speeches – rather, we must take the opportunity it offers to relaunch our partnership.
If our partnership really is a priority, then we must meet more regularly – every two years.
Follow-up meetings should be held at multiple levels on a regular basis, including between the representatives of civil society, business and commerce and the young.
Abidjan must mark a new beginning in our relations.
Read the full speech here.
Speech by High Representative/Vice-President Federica Mogherini at the opening session of the High-level conference
So I would like to discuss some of the priorities that we constantly hear from our African friends, which have become now our shared priorities.
First, one of the great urgencies of our times. And I would start from this, not because it would be at the centre of our summit in Abidjan, but because, as my friend, the Foreign Minister of Mali mentioned, this is a top priority for all of us as human beings. We cannot ignore the reports on the inhuman treatment of migrants in Libya. Let me tell you that unfortunately, this is not new, and as an Italian – and I know, Antonio [Tajani, President of the European Parliament] has experienced the same – we have heard so many stories of migrants, and especially women arriving on the coast of Lampedusa telling us stories of slavery. And, it has been years that we have said as Europeans – first I have to say more as Italians – we have to face the dramatic situation of our African brothers and sisters that are in slavery in those centres. And this is why, it has been years that we have worked hard to try to save lives, protect people, dismantle criminal networks. But, everytime that we have new waves of news, new waves of reports coming out, it is a sad moment.
But, it is also a window of opportunity for us to join forces, politically and with our societies, to put pressure and face the situation as it is, and try to find the solutions. And, this is why I was in touch immediately after this new report came out with President of the African Union, Alpha Condé, and we agreed that our cooperation – Europe and Africa – is even more needed today. And it is going to increase exactly on how to tackle this situation in more concrete terms.
Our development policy makes us collectively, as European Union and Member States, the largest donor by far, not only in Africa but also in all the rest of the world. But for Africa, let me mention one data that is often forgotten: we invest in Africa €20 billion every year. Antonio [Tajani, President of the European Parliament] often refers to a Marshall Plan for Africa. If we put together all that we are doing, we have a Marshall Plan for Africa. The question Antonio [Tajani] put, how do we use this money, how do we make sure together – Africans and Europeans – that this has the maximum impact on societies. And, when I talk with our African partners about the future, it is not development that comes up more often, it is other two words: investment and security. And you have heard this today from our two friends.
We need to do better and I believe that over the past three years, we, the European Union, have come up with new initiatives and innovative tools to deliver on these two priorities.
On investment, first of all. Today, only four per cent of global foreign direct investment goes to Africa. That's about €50 billion per year, and it only goes to certain parts of Africa – and let me tell you – not necessarily to those that needed the most.
So, with the European External Investment Plan that we have just launched, we can raise at least €44 billion – to start with, then I am open to consider expansion – in private investment by 2020.
This is the largest ever investment programme for Africa. I hope and I expect that others will join this effort. For instance, I hope that our Member States – and I know, here, I speak with different hats – will put adequate resources into this, to make this major investment plan even bigger.
This will try to focus private sector investment first of all in the areas that need it the most, which means the fragile parts of the continent, and to invest this money to create good jobs, particularly with micro, small and medium enterprises and in line with the Sustainable Development Goals, for instance upgrading African connectivity, investing in renewable energy and in digital solutions.
And, you may be surprised that I have not yet mentioned the main issue, the main theme of our Summit in Abidjan – that is, the youth, girls and boys of our continents. And, let me stress girls, because sometimes we only focus on boys. Girls and young women, and women in general, are the beating heart of Africa, and I think also of Europe. But, actually, I have mentioned youth, because everything we do, it is with and for our young people.
It is not just one issue among others. This is not just one priority among others. It is the centre, the lens through which we see all the different initiatives we are taking. So, when we work on investments, on job creation, on migration, on e-governance, on climate change action, this is the work we do with and for our youth.
Half of the African population is under twenty. So, it is simply impossible to find the right answers – not only for the future, but also for the present – if we don't work for the African youth but mainly with the African youth.
This is why I am glad that young Africans from different parts of the continent together with young Europeans and including the diaspora of young Africans in Europe have been working in the last weeks in Africa and in Europe to prepare the Summit. They will give an input to the Summit. I met them a few weeks ago, here, in Brussels. Moussa Faki [Mahamat, Chairperson of the African Union Commission] met them a few weeks ago in Addis [Addis-Ababa]. And they will have a key role in the Summit next week with concrete ideas of how we can make policies effective for them, which means, for the present of the two continents.
And, we are working with our youth, not just for them, as we are working with Africa, and not just for Africa. And this is why our Summit next week will be different.
So, to conclude, we go to Abidjan with new ideas, with new initiatives – with an unprecedented investment plan, with our migration work that for the first time ever has turned into a real partnership, which is – I believe – the key to manage this phenomenon effectively, and with all our common work and support for peace and security.
We go to Abidjan together with the United Nations. And let me say that we will have, there, further step in something unique we have started – a trilateral cooperation between the European Union, the African Union and the United Nations. Because together we can push forward so much of the global agenda that the world and not only our two continents need. On different issues, peacekeeping, economic and governance reform, investment, sustainable development, action on climate change: all of this, if led together by Europe and Africa with the United Nations, can really change, not only – again as I said – our two continents, but the rest of the world.
So, we go to Abidjan, probably for the first time ever, as partners, as political partners, overcoming the donor-recipient kind of relationship, that belongs to the past. We are starting a new page, a page of political partnership, which means that we set our direction together, and each of us accepts the responsibility to contribute its own way on all the priorities.
We are doing something new. It is a new kind of partnership we start not only for our people, but for the entire world. And I believe, here, we share a responsibility to humanity. And I believe we can honour this task, that indeed is heavy, but I think that our continents are able to carry this responsibility on our shoulders. So, I thank you very much. And the summit is not the end of it. The Summit is the beginning of it. We will continue our work from the day after.
So – to take the words of a colleague, that has intervened before – thank you, vive l’Afrique, vive l’Europe.
Read the full speech here.
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EU-Africa strategy: An incentive for development?
After “years of indifference” and one of the biggest waves of migration to ever hit Europe, Africa now tops the political agenda. That means a new strategy has to be found, according to the European Parliament.
On the 29 and 30 November the African Union-European Union Summit 2017 will take place in Abidjan (Côte d’Ivoire), and delegates do not want to turn up empty handed. The European Parliament, meeting in Strasbourg, recently adopted a report from the Commission’s Committee on Development whose demands are to be incorporated into this new strategy.
By the spring of 2018, the AU and EU representatives plan to revise their joint strategy, which will then feed into a new treaty and supersede the 2002 Cotonou Agreement.
“A fair and equitable partnership between our continents is needed more than ever to meet these challenges, both short and long term, and to create a safer and more prosperous future for African and European citizens, especially young people, women and the most vulnerable,” said Gianni Pittella, leader of the Group of the Progressive Alliance of Socialists and Democrats, following the resolution.
It is estimated that Africa’s population will increase to 2.5 billion by 2050. Fair trade relations, faster industrialisation and the creation of appropriate infrastructure are, according to the report, the prerequisites for African countries, especially in order to be able to integrate young people into the labor market.
To do this, the African states will have to create annually around 18 million new jobs by 2035. The infrastructure needs in Africa alone are estimated at €75 billion a year, making a modern and sustainable partnership between Europe and Africa absolutely necessary.
Preventing further migration towards the EU, as well as secure conditions for European investment capital, top Europe’s wishlist. However, this will only work if the African community as a whole develops both economically and constitutionally.
The previous EU strategy, to promote development through simple cash flow, failed. The focus of the new development strategy is on private investment. For this, African countries should create more attractive framework conditions to attract European donors and provide guarantees and risk protection to private companies.
In Africa’s interest, the investments coming from the EU would then have to be steered in such a way that local value chains would be created at local level, the industrialization of the African countries would be stimulated and structural changes would take place.
Education and the rule of law play a key role in this. Proposals made by the EU, such as launching a Youth Facility for Africa and extending the scope of Erasmus+ and the EU’s vocational education and training program, could be a step in the right direction, if the gap between the needs and opportunities of the labour market on the one hand and the qualifications of graduates on the other in the target countries would be closed.
With regard to refugees from African countries, the future Africa strategy only makes sense if it is designed sustainably, according to the report. Both the UN and international NGOs emphasise that a mixture in means of combating the causes of migration and partnership-based development cooperation is not forward-looking.
It is therefore important “that development assistance is not used as a lever to cope with the migration challenge”, warns Norbert Neuser, Socialist spokesman on the European Parliament’s Development Committee and shadow rapporteur for the European strategy report.
Instead, efforts to create regular migration opportunities into the European Union need to be stepped up.
But for the Abidjan Summit to launch a true shift from the old to a new Europe-Africa partnership, real commitments by European and African leaders to reach the United Nations Sustainable Development Goals through coherent policies are needed.
Background
Europe is Africa’s closest neighbour and main partner in foreign investment, trade, security, and development and humanitarian assistance. What happens in Africa matters in Europe and vice versa.
This summit will not only focus on the challenges both continents have in common, like peace and security, but also centre around common interests shared by both parties, especially sustainable growth that is inclusive and generates employment for youth.
Key figures
EU exports in 2016 had a value of €145 billion. Imports amounted to €117 billion. EU-Africa trade accounts for nearly seven percent of the Union’s total external trade. Under the auspices of the EU, there are numerous bilateral agreements that regulate, among others, the movement of goods between the two continents.
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EU aid represents more than 50% of global aid. €21 billion in development aid was provided to Africa in 2016 by the EU and its member states,
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One third of the overall foreign direct investment in Africa comes from the EU with €32 billion invested in Africa by EU companies in 2015,
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€3.35 billion are allocated to the European investment fund for sustainable development, which should trigger up to €44 billion of investments
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7 civilian and military missions are deployed across sub Saharan Africa
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€1.4 billion are committed to educational programmes in Africa from 2014 to 2020
Ahead of the summit, in May 2017 the Commission and the High Representative/Vice-President set out the EU’s political priorities and concrete proposals for a stronger strategic partnership with Africa.
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Regional customs Directors-General meet to consider ECOWAS customs code
The Directors-General from the fifteen Member States of ECOWAS began their meeting at the ECOWAS Commission headquarters in Abuja, Nigeria, on the 23rd of November 2017 to consider the ECOWAS draft Customs Code among others.
The one-day conference which was preceded by a meeting of experts and senior officials, will also consider the report of the Technical Committee on Trade, Customs and Free Movement.
Declaring the meeting open, the ECOWAS Commission’s Commissioner for Trade, Customs and Free Movement, Mr. Laouali Chaibou pledged the Commission’s continued support of a smooth implementation of the regional system with the drawing up of a regional guarantee system in line with best practices.
He stated that the Commission will also work to operationalize the legislative framework of mutual assistance and the exchange of information between customs administrations in order to strengthen the fight against fraud and organized cross-border crime.
According to the Commissioner, in addition to the need for the uniform application of the regional tariff by the ECOWAS Member Countries, it is still necessary to “put in place an institutional mechanism for managing this instrument”.
He noted in this regard, that the ECOWAS Common External Tariff (CET) being a dynamic instrument, “should be able to reflect the economic and commercial policy options of both our states and the region over the years”.
Commending the Gesellschaft für Internationale Zusammenarbeit (GIZ), as well as the United States Agency for International Development (USAID) for their support of the on-going customs processes, Commissioner Chaibou disclosed that all the projects tied to a functional customs union that are under way at the level of the ECOWAS Commission, call for the full participation of the Member States.
The Comptroller-General of Nigeria Customs Service Colonel Hameed Ibrahim Ali (Rtd) held that free trade is central to the regional economic development. “As critical regulatory authorities, our participation in the build-up towards regional and continental common markets is therefore the right step forward,” he said.
The Nigerian customs boss told the gathering that as the major implementers of the common policy measures, it is necessary to have a clearer understanding of the general rules and procedures for application of the legislations, if they are well developed and spelt out as guiding codes.
In view of the current vulnerabilities, Col Ali also stressed the need to promote border security alongside trade facilitation. “Our borders are getting increasingly assaulted and weakened by criminal activities of smugglers, drug traffickers, armed bandits and insurgents. These elements can only thrive when there are gaps in our operations,” he added.
The Head of Section, Economic Integration and Energy of the European Union (EU) delegation to Nigeria, Mrs Nadia Cannata, described the EU as a close partner of the region in the realization of integration and trade.
She noted the good legal frameworks developed in this regard by ECOWAS as something which have manifested in the adoption of the CET and ECOWAS Trade Liberalization Scheme (ETLS).
She however suggested that improved growth of intra-regional and international trade will happen when appropriate monitoring and evaluation measures at both regional and national levels are put in place. Added to this, is increased outreach and access to technology and finance by the private sector in order to guard against the slowing down of investment decisions in developing regional value chains.
Other measures highlighted in this regard include diversifying the engagement of stakeholders during policy development and implementation, the removal of technical and financial constraints at the level of the ECOWAS Commission and Member States to implement regional policies and programmes, as well as the clearing of prevalent non-tariff barriers including other duties and charges that impede trade in the region.
Delegates at the 60th meeting of the technical committee on Trade, Customs and Free Movement of Persons had earlier approved the draft code and recommended to the ECOWAS Council of Ministers its submission to the Authority of Heads of States and Government for adoption.
Specifically, Directors-General will also appraise the strategic plan for the consolidation of ECOWAS Custom Union, regional training strategy and interconnectivity as well the recommendations regarding excise duty on tobacco products and the tracking and tracing of same, ahead of the 3rd meeting of the ECOWAS Finance Ministers which comes up on the 24th of November 2017.
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IOM launches first ever Regional Migration Data Hub for the Southern African region
This hub forms part of IOM’s global response following the launch of the Global Migration Data Analysis Centre (GMDAC) in 2015, in Berlin, Germany
The International Organization for Migration (IOM) Regional Office in Pretoria will officially launch the Regional Migration Data Hub for Southern Africa (RMDHub) on 24 November 2017.
The establishment of the Hub is part of IOM’s response to requests by SADC Member States to IOM to enhance capacities of Governments to generate accurate and reliable data to better inform policy development. The Hub also responds to recommendations by SADC Ministers of Home Affairs and Ministers of Labour that urged Member States to work in close collaboration with IOM and partners to ensure that migration data are shared and communicated more effectively.
This hub forms part of IOM’s global response following the launch of the Global Migration Data Analysis Centre (GMDAC) in 2015, in Berlin, Germany. It is the conviction of the IOM Director General Amb. William Lacy Swing that “Poor presentation of migration data can contribute to misperceptions about migration, and distort public debates about the topic. We need to do more to ensure that data are presented accurately and communicated in ways that can be easily understood.”
Recently, as migration has risen to the top of the global and regional policy agendas, there is increased demand for reliable data to shape and inform the migration narrative. Migration data is key in the formulation of effective migration policies and it is for this reason that IOM has established this Hub to support the collection, analysis and interpretation of migration data at the national and regional levels. In effect, without consistent and comparable data, it is difficult to analyze trends and forecast migration patterns to develop strategies to manage migration in a more humane, safe and orderly manner.
“Migration is a multi-sectoral and inter-ministerial issue with migration data hosted by different Government ministries and institutions. The RMDHub will therefore serve as a central repository of migration data and information gathered through studies, research and operational activities in the SADC Region carried out by IOM, National Institutions, Academia, Civil Society and Private Sector. It will also ensure coherence in migration data collection, analysis and interpretation,” explains the Regional Director for Southern Africa, Mr. Charles Kwenin. “In collaboration with the Global Migration Analysis and Data Centre, the Hub will explore innovative approaches to collect reliable data on migration flows, patterns and trends,” he adds.
Through a significant and progressive move, migration was included in the UN 2030 Development Agenda. In addition, the New York Declaration for Refugees and Migrants of September 2016 stresses the need to enhance data collection, specifying that such data should be disaggregated by sex and age and include information on regular and irregular flows, human trafficking, and the needs of refugees and migrants among other aspects.
The launch, to be attended by senior Government officials, Ambassadors and High Commissioners accredited to the Republic of South Africa, academic institutions, development partners, UN agencies, IOM officials, civil society, private sector and other key stakeholders, will also showcase innovative technological tools and resources that IOM has developed in recent years to enhance this important regional response.
Distributed by APO Group on behalf of International Office of Migration (IOM).
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The European Union’s External Investment Plan: green light for the first five investment areas
The European Commission has defined concrete areas of investments for its External Investment Plan. The new plan will mobilise €44 billion of sustainable investment for Africa and the EU Neighbourhood countries.
The European Commission singles out five areas of investment, so-called “investment windows”, in which the first actions of the External Investment Plan (EIP) will be implemented. These investment areas are crucial for the sustainable development in countries in Africa and the EU Neighbourhood countries.
The High Representative / Vice-President Federica Mogherini said: “The European External Investment Plan is the largest ever investment programme for Africa. Today, only four per cent of global foreign direct investment goes to Africa. With the European External Investment Plan, we can raise at least €44 billion in private investment by 2020, notably for the most fragile parts of the continent. I hope and I expect that others will join this effort. This is a strong signal of the strengthened partnership with Africa as we are heading towards the AU/EU Summit next week.”
Commissioner for International Cooperation and Development Neven Mimica added: “With today’s decision we are setting the agenda for sustainable investments. Unlocking the potential of sustainable energy, promoting digitalisation for development or supporting micro, small and medium sized enterprises will help us to create sustainable development and reduce poverty, for the benefit of all.”
Commissioner for European Neighbourhood Policy and Enlargement Negotiations Johannes Hahn commented: “The investment windows represent real opportunity for many people and businesses in partner countries and in the European Union. Involving the private sector and securing the most conducive environment for it to flourish will contribute to sustainable growth, which is what we aim for. The External Investment Plan will bring tangible results for citizens across our Neighbourhood and beyond, contribute to job creation and greater competitiveness, stronger economy, governance, connectivity, and a stronger society.”
The five investment windows include:
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“Sustainable Energy and Connectivity” – to attract investments in renewable energy, energy efficiency and transport.
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“Micro, Small and Medium Sized Enterprises (MSMEs) Financing” – to improve MSME’s access to finance. Such businesses are the main employers in Africa and the EU Neighbourhood, and offer important and more sustainable alternatives to the informal economy.
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“Sustainable Agriculture, Rural Entrepreneurs and Agribusiness” – to provide better access to finance for smallholders, cooperatives and micro, small and medium sized enterprises agribusiness, allowing to address food security issues.
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“Sustainable Cities” – to mobilise investments in sustainable urban development of municipal infrastructure, including urban mobility, water, sanitation, waste management, renewable energy services.
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“Digital for Development” – to promote investments in innovative digital solutions for local needs, financial inclusion and decent job creation.
Background
As a next step, the European Commission will invite eligible financial institutions, for example development banks, to present their concrete proposals for investment programmes within these five areas. After an assessment by the Commission and independent experts, a number of selected financial institutions will be entrusted with managing these investment programmes. The first agreements with such financial institutions are expected to be signed in the first half of 2018.
Businesses and organisations, who would like to benefit from support under the EIP, will then be able to contact these financial institutions with their project proposals. A dedicated EIP secretariat and a web portal will help to guide interested businesses.
Projects have to have a clear sustainable development objective and contribute to economic and social development, with a focus on sustainability and job creation, particularly for youth and women. Investment proposals should provide adequate risk sharing, be economically and financially viable, as well as socially and environmentally sustainable. They have to address market failures or sub-optimal investment situations and must not distort market competition.
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tralac’s Daily News Selection
On the CFTA’s scope: Ambassador Chiedu Osakwe highlighted the fact that historically, the CFTA would be the largest trade agreement in terms of members and potential since the coming into force of the WTO Agreement in 1995.
Featured infographic, @Yann_Sefacil: 70% of container trade flows to Eastern/Southern Africa are concentrated on Mid East-Asia routes. Intra-Africa cabotage weights few percent only.
Concluding today, in Livingstone: The PMAESA meeting targets land-linked countries as key facilitators of trade, investments in the development of the maritime sector in East and Southern Africa. Addressing delegates, PMAESA Chairperson and CEO of the Namibian Ports Authority, Mr Gerson Bisey Uirab, described land-linked countries as part of the architecture of the maritime sector which must be fully integrated. “The maritime sector offers several opportunities and a future that can support the transformation of African economies. However, this demands that the region develops a comprehensive view of what the maritime sector could be and what it could offer.” The DBSA’s Mr Davies Pwele revealed that the DBSA will soon sign a MoU with PMAESA to become the preferred financier for the development of port infrastructure in Eastern and Southern Africa.
Starting today, in Nairobi: 2nd ESA Regional Research Conference on the impact and implication of the Trade Facilitation Agreement and the WCO Mercator Programme to the ESA region. The conference will cover the following topics: Impacts of the WTO Trade Facilitation Agreement; Data analysis for effective border management; Best practices in digital customs; E-commerce as a driver for economic growth; Securing and facilitating trade in East and Southern Africa, and regional integration, addressing levels of intra-regional trade in East and Southern Africa. [For twitter updates: @KESRA_KRA, #2ndESAConference]
Today in Lusaka: Training on Zambia’s export and investment potential, using ITC’s Export Potential Map
African Trade Information Portals: updates
(i) Harnessing transparent trade information for effective trade facilitation in the EAC: Nairobi workshop. The workshop (which concluded yesterday in Nairobi) provided a forum for EAC member states to share current status, challenges and achievements on the implementation of Trade Information Portals. The workshop will further formulate a regional Trade Facilitation Index and measurable targets for the online publication and simplification of trade procedures. The workshop was organised by the EAC Secretariat, in collaboration with TMEA and UNCTAD.
(ii) Information for Trade in Kenya web portal launches: Principal Secretary, State Department of Trade, Dr. Chris Kiptoo noted that the InfoTradeKenya platform was complimentary to the Kenya Trade Portal which was launched in October 2017. The latter, he clarified, is aimed at promoting Kenyan suppliers to the international market by linking them to global traders. On the other hand, the InfoTrade Kenya portal was intended to increase access to information on international trade procedures and regulations, cut back unwarranted penalties resulting from documentation errors and enhance trade efficiency. Dr. Kiptoo said that the two portals will be integrated in order to offer seamless information to traders.
Trading up: the benefits of exporting for small firms (IGC)
SMEs employ a large proportion of the labour force in developing countries. Compared to large firms, however, few SMEs export – direct exports represent just 3% of total SME manufacturing sales, compared to 14% for large enterprises. Recent research has found that exporting provides important gains for small firms. An innovative project in Egypt found that exporting raised rug firms’ profits by 26%, with similarly dramatic rises in productivity. By learning new skills from intermediaries and foreign buyers, exporting firms increased the quality of their products as well as their efficiency. Demonstrating the importance of this process of “learning by exporting” and the resulting increases in profitability makes the case for increases in trade finance and better policies to facilitate trade for SMEs.
Extract (pdf): The barriers small firms must overcome to begin trading internationally are often so high as to be prohibitive. Any firm looking to start exporting must first find foreign buyers to sell to, know how to create a successful trading relationship, and understand what regulations to comply with. Atkin et al. enabled SMEs to export by matching them directly with buyers. The costs of matching buyers and sellers are commonly referred to as “matching frictions”. They constitute up to half of total trade costs. For small firms, it could be an even higher share. Therefore, supporting small firms in their efforts to find buyers by reducing such costs is a key goal for governments and export promotion agencies. There are several reasons why these costs can be high, and why they may particularly affect smaller firms. A number of actions can be taken by policymakers to lower them: [The authors: David Atkin, Amanda Jinhage]
Launch of Jack Ma’s eFounders Initiative (UNCTAD)
Alibaba Business School and UNCTAD have brought together 24 Africa-based entrepreneurs to participate in the inaugural eFounders Initiative. The eFounders Initiative is the first step to fulfilling the commitment Alibaba founder and executive chairman Jack Ma made as UNCTAD special adviser for young entrepreneurs and small business to help empower 1,000 entrepreneurs in developing countries over the next five years. The young e-commerce pioneers travelled from seven African countries to attend the programme at Alibaba’s global headquarters in Hangzhou and learn from China’s experience in building an e-commerce ecosystem. The two-week intensive course included capacity-building in e-commerce, from inventory management and rural commerce to logistics and mobile payment systems, as well as how to use data to best capture consumer preferences. ”In the future, we will need more than the G20 and the B20 to create the kind of inclusive development the world needs,” Mr. Ma said.
Tananzia: Value of digital money services increase by 78trn/- in four years (IPPMedia)
The value of transactions in the national digital payment system at the end of 2016 soared to almost 119trn/-, which was about three times more the electronic payments made in 2012. During the four year period, the value of the digital money services increased tremendously by nearly 78trn/-. New data from the Directorate of Banking Supervision (pdf) at the central bank show that the transactions increased by about 189% from 40.95trn/- in 2012 to 118.61trn/- last year. In 2015, the value of electronic payments made in the country amounted to about 88.88trn/-.
Zambia is exporting jobs to South Africa and importing poverty - Dr Chanda (Lusaka Times)
Ruling PF Bwana Mkubwa Member of Parliament in Ndola, Dr Jonas Chanda, says Zambia needs a strong national trade policy which protects Zambia’s interests first centred around free and fair trade with other countries. Dr Chanda said this will enable the country to be competitive with its trading partners. Speaking in Parliament on Wednesday evening in support of the 2018 budget vote for the Ministry of Commerce, Dr Chanda said it was high time Zambia developed a very assertive National Trade Policy so that the country is not turned into a dumping ground for cheap imports from its main trading partners like South Africa, China and others. Dr Chanda stated that the total bilateral trade between Zambia and South Africa in 2016 was $3.8bn, with the balance tilted in favour of South Africa with a trade imbalance of over $2bn. Dr Chanda said the current situation where 95% of Zambia’s exports to China was unfinished copper products was not good for the economy since the country was not exporting value added goods to China. “In fact China has created an industry of copper refineries, smelters and other value-adding industry around copper and other minerals, exporting back finished products to Zambia at a much higher price.”
Namibia: President Hage Geingob’s opening address at SWAPO elective congress
Even during the current economic downturn, where debt was permitted to exceed our self-imposed ceiling, Namibia’s debt, as a ratio to GDP at 42% remains lower than the SADC benchmark of 60%. In addition to this, the Namibian economy continues to be vibrant with economic growth projected to pick up in line with the global economic recovery. Our external position, at 5 month of import coverage, is strong; price pressures are well contained; there is ample liquidity and subscriptions to Government bonds have been well received, showing that Namibia remains credit worthy. Going forward, we will ensure the economy is managed in a responsible manner, by remaining far from IMF bailouts and ensuring the limited resources we have at our disposal, are spent in an inclusive, pro-poor and pro-growth manner.
The impact of infrastructure shocks on agricultural markets: evidence from the Zambezi river in Mozambique (UNU-WIDER)
The aim of this paper was to add to the literature on the impact of infrastructure investments on economic performance in developing countries. We noted that poor provision of road infrastructure can significantly increase costs to firms and make potential market opportunities unprofitable. Investment in transport infrastructure is widely seen as crucial to overcoming natural barriers and mitigating connectivity problems, in turn enhancing market integration. For this purpose, we used a quasi-natural experiment based on the construction of a new bridge across the Zambezi river that connected markets in Mozambique.
Tanzania: Country results brief 2017 (pdf, AfDB)
This Tanzania Country Results Brief demonstrates the Bank’s recent progress in moving the country toward its goal of reaching middle-income status by 2025. It also highlights the Bank’s responsiveness to Tanzania’s needs, in moving closer to the field and providing the best value for money. Today the Bank has a Tanzania portfolio of 21 operations valued at $1.8 billion, which builds on the record of development results it has achieved in Tanzania since 2006. [Twaweza report on Tanzanians’ experiences and views of corruption]
WTO agriculture talks intensify as Buenos Aires Ministerial approaches (ICTSD)
As trade talks in Geneva enter the final stretch, WTO negotiators have tabled new proposals on agriculture for the Buenos Aires ministerial that begins in just over two weeks. They have also put forward suggestions for a work programme to deal with unresolved topics after the conference takes place. A new paper from Mexico has put forward proposals for a limit on trade-distorting farm support, while Norway and Singapore have tabled a draft ministerial decision on public stockholding for food security purposes. These two subject areas have dominated the WTO’s agricultural talks in recent years, including this one. Two other proposals seek to spell out in more detail how WTO members would continue negotiations after Buenos Aires on topics that are not seen as top of the agenda for the ministerial. While some negotiators told Bridges that they were not optimistic about the prospects for achieving an outcome on agricultural trade issues at the ministerial, others said they believed that progress was possible if ministers could reach agreement on a “package” of measures to adopt at the conference. [US blocks work on WTO ministerial statement ahead of meeting]
UNIDO publications on trade, investment and innovation
Effective efforts in trade, investment and innovation can provide the conditions to end poverty within a generation. In full consultation with public and private partners, UNIDO designs and implements holistic interventions that are tailored to specific country needs. The interventions actively identify and combine complementary services from across six strategic thematic areas: [Six downloads available]
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“The CFTA will contribute to the completion of the architecture of the African Union System (AUS)”
The Department of Trade and Industry of the African Union Commission is organizing the 8th Meeting of the Continental Free Trade Area Negotiating Forum (CFTA-NF) from 20-24 November 2017.
The objective of the meeting is to consider and finalize recommendations coming from Technical Working Groups and the Dedicated Session on Trade in Goods. The Meeting will also consider the draft texts of the Agreement Establishing the African Continental Free Trade Area; the draft Protocol on Trade in Goods; draft Protocol in Trade in Services and their Annexes and Appendices.
The Meeting is being attended by Chief Negotiators and Trade experts from AU Member States, Trade Experts from the eight Regional Economic Communities (RECs) recognised by the AU (CEN-SAD, COMESA, EAC, ECCAS, ECOWAS, IGAD, SADC and UMA), African Development Bank (AfDB) and United Nations Economic Commission for Africa (UNECA).
In his opening remarks, the Commissioner for Trade and Industry of the African Union Commission, H.E. Amb. Albert M. Muchanga, thanked the Government and the people of the Federal Republic of Nigeria for their hospitality and their generosity.
He recalled the achievements of the last Session of the CFTA Negotiating Forum in Addis Ababa, in October 2017 and expressed his appreciation for the commitment of the Member States in moving the CFTA forward.
Commissioner Muchanga also recorded his appreciation of the contributions made by the Regional Economic Communities and the technical partners throughout the CFTA process; namely, the United Nations Economic Commission for Africa, United Nations Conference on Trade and Development and the African Development Bank.
According to the Commissioner for Trade Industry, the African Union vision of creating ‘an integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international arena’ now has a solid foundation of realization with all the work that has been done by the Chief Negotiators since the launch of negotiations in 2016.
“With this visible success, we are attracting supporters. The Afro-Champions Club jointly headed by Chairman Aliko Dangote and Former President Thabo Mbeki. The Afro-Champions Club awaits with enthusiasm, the establishment of the Continental Free Trade Area. They want to be part of it. It is their number one priority. They are ready to invest in it,” he underlined.
Ambassador Muchanga reported that the members of the Pan African Chamber of Commerce and Industry have positioned themselves to invest in the Continental Free Trade Area.
Before he concluded, the Commissioner urged the CFTA Negotiating Forum to come up with very clear recommendations to the African Union Ministers of Trade aimed at building momentum towards the consideration of the documents by Ministers of Trade, their adoption by the Assembly and ultimately their signature and ratification by Member States.
“You are bringing Africa where she needs to be: determining her future by creating a unified market, a borderless continent for her people, goods and services; line with the dream of Kwame Nkrumah; in line with the dream of the Lagos Plan of Action; and, in line with the dream of the Abuja Treaty, which are all being brought to life through the African Union Agenda 2063 and its Ten-Year Implementation Plan,” he concluded.
In his opening remarks, Amb. Chiedu Osakwe, Nigerian Chief Trade Negotiator and Director-General of Nigerian Office for Trade Negotiations (NOTN) paid tribute to the African Union Commission (AUC) for choosing Nigeria to organize the last round of the CFTA Negotiating Forum.
He pointed out that there is a strategic dimension to establishing the African CFTA. According to him, it is much more than a trade agreement.
“The CFTA will be about re-organizing the geo-economic landscape of Africa. It is about shedding the inheritance of a divided continent and fragmented markets. It is about robust growth for job creation, modernization of Africa’s economy and relating with the global economy on a surer footing,” he underscored.
Ambassador Osakwe highlighted the fact that historically, the CFTA would be the largest Trade Agreement in terms of members and potential since the coming into force of the World Trade Organization (WTO) Agreement in 1995.
“It is headline news that we are on the threshold of this accomplishment and then we shall turn to the Built-in Agenda,” he concluded.
The Senior Trade Officials Meeting will kick off from 26-30 November and be followed by the 4th African Ministers of Trade Meeting from 1-2 December 2017 in Niamey, Republic of Niger.
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Caucus seeks to integrate land-linked countries into maritime transport
Experts in port management, policy makers and financiers from across Africa began a two-day meeting in Zambia on 22 November 2017 to explore how to reshape policy and harness the benefits that accrue from maximizing the comparative advantages of land linked countries.
Organized by the Port Management Association of Eastern and Southern Africa (PMAESA), the meeting targets land linked countries as key facilitators of trade, investments and the development of the maritime sector in East and Southern Africa. Zambia’s Vice President Mrs. Inonge Wina opened the meeting.
PMAESA is an intergovernmental body comprising Port Authorities, Terminal Operators, government line ministries, logistics and maritime service providers drawn from 25 countries in Eastern and Southern Africa with 11 land-linked countries under its jurisdiction.
Addressing the delegates, PMAESA Chairperson and Chief Executive Officer of the Namibian Ports Authority Mr. Gerson Bisey Uirab described land-linked countries as part of the architecture of the maritime sector which must be fully integrated.
“The maritime sector offers several opportunities and a future that can support the transformation of African economies,” Mr Uirab said. “However, this demands that the region develops a comprehensive view of what the maritime sector could be and what it could offer.”
He said the conference, whose theme is; ‘Raising the profile of land linked countries in the logistics and maritime value chains’ provides the opportunity to discuss this in detail and reshape the policy.
The PMAESA meeting has in recent years revised its approach to focus on the total value chain in response to global competition. According to Mr. Uirab, the aim is to address the needs of member countries, including the participation of the private sector to ensure greater collaboration.
Zambia’s Vice President commended the organizers for having the meeting in her land linked country for the first time in the history of PMAESA. This, she added shows that land linked countries like Zambia have been recognized for the key role they can play in maritime transport.
She said: “Hosting this important function is an endorsement of the need to be inclusive in world affairs and will help bridge the gap that landlocked countries face in accessing services of the blue economy.”
COMESA Assistant Secretary General, Ambassador Dr Kipyego Cheluget said COMESA was proud to be associated with PMAESA and the 2017 Conference to address diverse issues under Maritime Transport and Logistics.
“I am convinced that solutions and strategies to take the subsector forward will be generated during the conference,” Amb. Cheluget said. “These solutions should essentially contribute towards sustainable transport systems and reduction in the cost of doing business for our region.”
The Head of the Development Bank of Southern Africa Mr Davies Pwele revealed that the institution will soon sign a Memorandum of Understanding (MoU) with PMAESA to become the preferred financier for the development of port infrastructure in Eastern and Southern Africa.
PMAESA was founded in 1973 by the United Nations Economic Commission for Africa (UNECA) to promote and nurture best practices among sea ports and the logistical industry in general. It promotes the role and competitive advantage of dry ports and inland waterways within the region to drive intra-Africa trade and regional integration with the aim of reducing the cost of doing business.
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Information for Trade (InfoTrade) in Kenya web portal officially launched in a bid to ensure international trade efficiency
It will now take a trader a maximum of 5 minutes to access summarised information on international trade procedures in Kenya
Traders in Kenya stand to benefit from increased efficiency following launch of the Information for Trade in Kenya web portal (infotradekenya.go.ke), which has consolidated more than 120 documents and procedures required for import and export business in Kenya on one online platform.
The portal is estimated to serve at least 1.5 million users per month and consolidates 73 documents under exports, 52 under imports and one under transits (cross border trade) thus ensuring a shorter period in the export and import processes. Completion and launch of the information portal makes Kenya the first country in the East Africa Community (EAC) to fulfil Article 1 of WTO Trade Facilitation agreement which requires member states to publish their trade procedures online, displaying them step-by-step, with contact information on enquiry points, access to forms and other required documents and all relevant trade and customs laws.
Kenya Trade Network Agency (KenTrade) implemented the portal with financial support of approx. US$ 498, 000 from United States Agency for International Development (USAID) through TradeMark East Africa (TMEA). United Nations Conference on Trade and Development (UNCTAD) provided technical assistance.
Presiding over the launch, the National Treasury Principal Secretary, Dr. Kamau Thugge said, “The InfoTrade Kenya portal is part of the Government’s initiative to facilitate trade in line with the World Trade Organization (WTO) Agreement on Trade Facilitation, to which Kenya is a signatory and obliges governments to be transparent and to provide information to businesses.”
He explained that the Government has been at the forefront in streamlining international trade procedures through the implementation of National Electronic Single Window System also known as KENYA TRADENET that has seen improvement of Kenya’s rating in the latest World Bank Ease of Business Index. Kenya advanced by 12 points to position 80, emerging third in Sub Saharan Africa after Rwanda and Mauritius in the Trading Across Borders category.
Principal Secretary, State Department of Trade, Dr. Chris Kiptoo who also attended the event noted that the InfoTradeKenya platform was complimentary to the Kenya Trade Portal which was launched in October 2017. The latter, he clarified, is aimed at promoting Kenyan suppliers to the international market by linking them to global traders.
On the other hand, the InfoTrade Kenya portal was intended to increase access to information on international trade procedures and regulations, cut back unwarranted penalties resulting from documentation errors and enhance trade efficiency. Dr. Kiptoo said that the two portals will be integrated in order to offer seamless information to traders.
Also speaking at the launch KENTRADE CEO Mr. Amos Wangora said, “If you are a trader, the portal will enable you to access all the relevant documentation requirements for imports and/or exports of your respective commodities from the comfort of your office or place of business.
“Our aim is to boost Kenya’s efforts to become a globally competitive player in the overall share of trade in the world. It provides the current, potential traders and other stakeholders with total transparency on rules and procedures pertaining to import and export formalities, through detailed, practical and up-to-date descriptions of steps to go through, as seen from the user’s point of view to assist them to make informed business decisions,” Mr Wangora explained.
Mr. Wangora added that the InfoTrade Kenya Portal together with the Kenya Trade Net System (National Electronic Single Window System) would provide an end to end solution on regulatory and documentation requirements in the country and to streamline and simplify trade processes for the business community.
TradeMark East Africa, Chief Executive Officer, Frank Matsaert said, “Reducing the barriers to trade in Kenya to increase its trading opportunities internationally remains a key mandate for TMEA. We are proud to have partnered with Kentrade and UNCTAD to provide a portal that makes international trade information available, thus simplify the process of exports and imports and reduce the time taken.
“This portal complements TMEA’s other work with government agencies including improving roads, the port, border posts and automation of key trade processes. Ultimately, these interventions will create a conducive business environment in Kenya, promoting job creation and reducing poverty.”
UNCTAD’s head of the business facilitation programme, Frank Grozel, said that the portal uses UNCTADS’s eRegulation content management system that enables transparency and efficiency in Trade therefore helping decision makers and implementers objectively analyze their progress towards effective trade facilitation.
Benefits of the InfoTradeKenya portal to traders and government include:
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Provides a concise summary of foreign trade processes
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Repository of trade related laws, regulations, acts and legislations
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Succinct responses to queries made by traders on compliance issues
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Traders and investors are empowered with prior information to comply with regulatory requirements for importation and exportation of goods.
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Traders are able to perform all trade procedures with fewer time consuming interactions
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Ensures Kenya is compliant with World Trade Organization (WTO) Bali Agreement on Trade Facilitation.
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Provides a step by step guide on foreign trade procedures
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Curbs and reduces the chances corruption
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Boosts Kenya’s efforts to become a globally competitive player
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Provides a trader’s point of view of foreign trade processes
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User friendly and easy to navigate
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Assists government agencies to evaluate and simplify their trade related processes
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Fosters transparency in trade processes
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Improves ease of doing business
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Bridges the information gap on trade processes
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Reduction in penalties resulting from non-compliance
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Reduction errors in documentation.
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Access to complete, timely and accurate foreign trade information
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WTO agriculture talks intensify as Buenos Aires Ministerial approaches
As trade talks in Geneva enter the final stretch, WTO negotiators have tabled new proposals on agriculture for the Buenos Aires ministerial that begins in just over two weeks. They have also put forward suggestions for a work programme to deal with unresolved topics after the conference takes place.
A new paper from Mexico has put forward proposals for a limit on trade-distorting farm support, while Norway and Singapore have tabled a draft ministerial decision on public stockholding for food security purposes. These two subject areas have dominated the WTO’s agricultural talks in recent years, including this one.
Two other proposals seek to spell out in more detail how WTO members would continue negotiations after Buenos Aires on topics that are not seen as top of the agenda for the ministerial.
While some negotiators told Bridges that they were not optimistic about the prospects for achieving an outcome on agricultural trade issues at the ministerial, others said they believed that progress was possible if ministers could reach agreement on a “package” of measures to adopt at the conference.
Mexico: cap trade-distorting support
The proposal from Mexico calls for a new ceiling on the overall amount of trade-distorting support which WTO members will be allowed to provide.
This would be composed of subsidies classified as highly trade-distorting “amber box” support, as well as “de minimis” payments, a WTO category of trade-distorting support that falls below a set share of the value of agricultural production.
The Mexican proposal comes after several other countries or groups have put forward their own submissions in recent months to establish a new limit on trade-distorting domestic support.
However, the Mexican proposal argues in favour of special treatment for those developing countries that have committed not to exceed a ceiling on amber box payments at the global trade body. While most developing countries do not have entitlements to amber box support, Mexico is among over a dozen members that do, in a reflection of historical patterns of subsidy provision at the time the Uruguay Round of global trade talks was concluded over two decades ago.
Other developing countries with these entitlements include Brazil, Colombia, Costa Rica, Israel, Jordan, Morocco, Papua New Guinea, Saudi Arabia, South Africa, South Korea, Chinese Taipei, Tajikistan, Thailand, Venezuela, and Vietnam.
Three categories of countries
Mexico is proposing three categories of countries, each of which would take on different reduction commitments. One category would cover developed countries. Another would cover those developing countries that do not have amber box commitments, while a third would cover those that do have them.
In calculating their level of cuts, developed countries would first take twice their permitted “de minimis” support during a historical base period, which Mexico proposes should be 2011-15, and add this to their existing WTO commitment on amber box support. The resulting figure would be cut by a percentage, which members would need to negotiate.
Developing countries without amber box commitments would also take twice their “de minimis” support levels in the same base period, and subject this to a different percentage cut, which again would have to be negotiated.
Developing countries which do have amber box commitments would cut the sum of their amber box and “de minimis” support, by applying the same cut as other developing countries plus an “additional contribution” if their total amber box commitments exceed US$500 million, a figure which again would be negotiated by members.
Developed countries would have to implement the new limit as soon as WTO members adopt the relevant decision, while developing countries would have two extra years. Least developed countries would not be required to make any domestic support commitments.
Other unresolved domestic support topics would be addressed as part of a work programme for after the Buenos Aires conference, the proposal says.
Public stockholding
A new submission from Norway and Singapore sets out a draft ministerial decision on public stockholding for food security purposes, building on the structure of an agreement reached on this topic at the WTO’s Bali ministerial conference in 2013.
India, China, Indonesia, and other developing countries in the G-33 coalition have long argued in favour of greater flexibility for developing countries that buy food at minimum prices as part of their public food stockholding schemes. However, exporting countries have also expressed concern that exempting these purchases from WTO disciplines could distort trade and undermine food security elsewhere.
The proposal follows shortly after Paraguay and Russia tabled a separate submission on the same topic, which also seeks to build on the Bali deal. Under the latter, WTO members agreed not to challenge the legality of developing countries’ public food stockholding programmes, under certain conditions – such as more transparency about how the schemes function.
A new footnote in the Norway-Singapore proposal would grant extra flexibility to new programmes, so long as these did not involve procuring more than 15 percent of the domestic crop in question. The Bali deal was limited to programmes that existed at the date it was adopted by WTO members.
Market access and export competition: revitalising talks
Argentina and four other agricultural exporting countries have tabled a draft decision which would commit ministers to reinvigorate talks on market access for farm goods. The decision specifies that talks would take place in dedicated sessions of the global trade body’s committee on agriculture, with a view to achieving tangible market access outcomes at the twelfth WTO ministerial, which is due to be held in 2019.
In addition to Argentina, the paper was co-sponsored by Brazil, Paraguay, Thailand, and Uruguay. All of those countries, except Peru, are part of the South American economic bloc Mercosur. In May, Paraguay and Peru had put forward a detailed proposal on agricultural market access, with a two-step process for simplifying and reducing trade barriers.
While there has been little enthusiasm among most countries for addressing market access at the WTO ahead of the Buenos Aires conference, a number of agricultural exporting countries are eager to ensure the issue remains on the negotiating table after the ministerial.
A separate negotiating submission, backed by Canada, Chile, and Switzerland, would have trade ministers agree to continue talks on agricultural export competition, building on the decision on export subsidies and related areas that was agreed at the Nairobi ministerial conference two years ago.
Export prohibitions and restrictions
A revised proposal from Singapore seeks to improve transparency when WTO members impose temporary export prohibitions or restrictions. The paper reflects the results of consultations with other WTO members since an earlier version of the proposal was put forward in May.
The decision would now also commit members to continuing talks on this area after the Buenos Aires ministerial. It also includes clauses requiring countries to provide more information to the WTO about measures they have introduced, and exempting humanitarian food aid purchased by the World Food Programme from constraints affecting exports.
Data released earlier this month by the UN Food and Agriculture Organization (FAO) shows that although food prices are now higher than in the last two years, they are still below the peaks they reached in 2008 and 2011. Export restrictions were among the measures that are believed to have exacerbated price spikes at that time, causing food import bills to rise sharply for net food-importing developing countries.
Final consultations in Geneva
Following small group meetings this week in Geneva, Kenyan Ambassador Stephen Karau, who chairs the WTO agriculture negotiations, is expected to convene an informal negotiating session on Monday to report back to the whole membership on the state of the talks.
The WTO’s top decision-making body outside of the ministerial conference, the General Council, is then due to meet from 30 November-1 December.
Trade officials who spoke to Bridges were divided over the prospects for progress on agriculture in Buenos Aires. Several delegates noted that the US in particular is sceptical about whether an outcome can be achieved, a sentiment which it has expressed in other WTO negotiating contexts, citing time constraints and the diverging views among members.
Other officials expressed cautious optimism, with some suggesting that the publishing of various proposals in recent weeks now meant that negotiators were able to discern approximate “landing zones” in some areas of the talks.
One source cautioned that political leaders could still spring surprises in Buenos Aires, even if the outline of a deal were to emerge from the Geneva process.
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Joint Statement of the AUC, UNIDO and UNECA on Africa Industrialization Day 2017
The United Nations Industrial Development Organization (UNIDO) brought together a wide range of African Ministers, senior policymakers, academics, representatives of UN organizations and entrepreneurs at the United Nations Headquarters in New York to mark Africa Industrialization Day on 20 November 2017.
UNIDO organized a panel discussion about the Continental Free Trade Area (CFTA) and issues related to industrialization. The panel included H.E. Lazarous Kapambwe, Permanent Representative of the Republic of Zambia to the United Nations, who delivered a comprehensive analysis from the member state perspective, as well as experts from the Brookings Institution, McKinsey & Company and UNCTAD.
Speaking at the opening of the symposium, the Director General of UNIDO, Li Yong, said that “recognizing the scale of the actions needed, UNIDO – with its long-standing expertise in supporting countries to achieve inclusive and sustainable industrial development – stands ready to contribute.”
A message from the UN Secretary-General, delivered by UNOV’s Yury Fedotov, re-affirmed “the continued strong commitment of the United Nations to support Africa’s industrialization, the implementation of a continental free trade agreement, and the building of inclusive, resilient, peaceful and prosperous societies for all.”
Opening statements were also delivered by Paul Maseli, Director and UNIDO Representative to the United Nations; David Mehdi Hamam, Acting Special Adviser to the Secretary-General on Africa (OSAA), who delivered a statement on behalf of the UNSG António Guterres; and by H.E. Michel Xavier Biang, Chair of the African Group and Permanent Representative of the Republic of Gabon to the United Nations.
The meeting was attended by numerous participants, particularly from African member states, including Permanent Representatives from Cabo Verde, Malawi, Mozambique, Namibia, and Tanzania, as well as high-level officials from Austria, Botswana, Cameroon, China, Congo, Czech Republic, Ethiopia, Germany, Ghana, Guinea, Morocco, Nigeria, Portugal, Togo, Tunisia, and Zimbabwe. Numerous UN entities and private sector stakeholders were represented in the audience as well.
Joint Statement of the AUC, UNIDO, UNECA
on Africa Industrialization Day 2017
Today, we celebrate the Africa Industrialization Day in support of the ongoing economic transformation efforts of the continent towards industrialization. We would like to welcome the tremendous progress achieved but also underline the remaining challenges and much-needed efforts to set the economies of African countries on a path to sustained economic development and poverty eradication.
This year’s theme, “African industrial development: a pre-condition for an effective and sustainable Continental Free Trade Area (CFTA)”, allows us the take this opportunity to discuss, throughout Africa and the World, further steps to accelerate the continent’s trade-related integration. It also reminds us that we need to do more in expanding our industrial capacity and productivity in order to boost intra African trade and give the CFTA its full potential.
The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, endorsed a decision to establish the Continental Free Trade Area (CFTA). The CFTA is expected to be launched by African Heads of States at the next AU Summit to create a single market for Africa in line with the overall objective of the Abuja Treaty.
The CFTA is a flagship project of the African Union’s (AU) Agenda 2063 and a key initiative for the economic development and integration of Africa. It will bring together fifty-five African countries with a combined population of more than one billion people and a combined gross domestic product of more than US $3.4 trillion. The underlying objective is to increase the trade levels, create a large market for African goods and services and ensure that trade continues to play its transformative role by providing opportunities for value addition and industrialisation. The African Common Market can also help to improve economic performance through a large increase in business opportunities, Foreign Direct Investment flows and Tax Revenues. AU member states are urged to diversify their economy and products and upgrade the quality infrastructure in their countries in to be able to benefit from this expected huge open market across the continent. In order to become a reality, the CFTA must rely on a coherent rapid and robust industrialization at country level. Market size which has been a daunting challenge to industrialization in African countries should be overcome on the continent. To this effect, at the level of enterprises and Industries, exploiting new opportunities for scale production, and effective reallocation of resources are imperative.
On the other hand for the CFTA to fulfill Africa’s industrialization there is a need for some major policy adjustment in order to create the most required conducive environment, through intelligent and dynamic industrial policy including the, Special economic Zones and regional joint ventures ,promoting the quality and standards, R&D, and infrastructure ,effective financial mechanisms, promotions of regional and subregional corridors and join ventures to enhance competitiveness to facilitate the continent’s participation in global value chains, trade and services.
At the same time, the 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs), in particular Goal 9 and the Addis Ababa Action Agenda, mark a transition to a new development paradigm recognizing that Africa needs to rapidly restructure and diversify its economies with arobustand durable support of the private sector. In addition the critical importance of this nexus was underscored by the adoption of the Third Industrial Development Decade for Africa 2016-2025 (IDDA3) by the UN General Assembly and recently reconfirmed during the joint high-level event entitled: “From political commitments to actions on the ground” that successfully took place on 21 September 2017 on the side lines of the UN General Assembly 72nd Session in New York.
Undeniably, much remains to be done to generate an inclusive growth and create the much needed sustainable jobs and livelihoods by the means of industrial development. Yet, we would like to reiterate our commitment to stand ready to assist African countries in prioritizing structural transformation for inclusive and peopleoriented development on the continent in accordance with the African Union’s Agenda 2063. Africa should pursue the CFTA as one of the best means of promoting industrialisation and take bold actions to advance its agenda.
Thus, with one strong voice, the AU, UNECA and UNIDO, in line with their respective mandates, call for renewed and improved actions to support an inclusive and sustainable industrialization in Africa. The shift to an industry-driven African economy should not be delayed anymore in order to fulfill the vision of “One Africa, One market”. We wish you all an excellent celebration of the 2017 Africa Industrialization Day.
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tralac’s Daily News Selection
African Group perspective on MC11: draft Ministerial Decision on electronic commerce
The AfDB posts a series of EOIs for the Tripartite Capacity Building Programme: Programme coordinator, Rules of Origin expert, Trade expert, NTMs / NTBs Mechanism manager / administrator, Industrial development expert
In event, report updates:
(i) Launched this morning, in Nairobi: the InfoTradeKenya Portal
(ii) Launching later today, in Geneva: Least Developed Countries Report 2017, on the theme of transformational energy access. A related initiative: Commonwealth kick-starter project to support Least Developed Countries
(iii) Starting tomorrow, in Vienna: UNIDO’s LDC Ministerial Conference 2017
(iv) UNCTAD’s Trade and Development Commission (ninth session, 27 Nov - 1 Dec, Geneva): advance documentation. Profiled input: Report of the Multi-year Expert Meeting on Transport, Trade Logistics and Trade Facilitation (pdf). The secretariat presented a new portfolio of tools dedicated to sustainable freight transport, the sustainable freight transport toolkit, aimed at building the capacity of developing countries to enable a reorientation towards sustainable freight transport, through sound transport policies, measures and actions and financing mechanisms. The toolkit featured three main products, namely a web portal, a training package and the UNCTAD Framework for Sustainable Freight Transport.
South Africa joins Afreximbank as a shareholder
With the shareholding, South Africa becomes the 47th African country to join Afreximbank as a participating state and/or shareholder. It is being represented by the Export Credit Insurance Corporation of South Africa as its designated investor in line with the terms of the provisions of the Charter of the Bank. “It is a significant vote of confidence to have South Africa join Afreximbank as a shareholder,” said Dr. Benedict Oramah, President of the Bank, in welcoming the news that the country had joined the Bank as a shareholder. “South Africa accounts for about 30 to 35 per cent of total intra-African trade, making its membership critical for the attainment of the Bank’s strategic goal of moving intra-African trade share of Africa’s total trade from about 15% currently to 22% by 2021 and raising its annual value to more than $250bn by that year.” [Eritrea joins Afreximbank as participating state]
Magufuli, Museveni sign big business deals (The Independent)
Isaac Shinyekwa, the renowned research fellow and commentator on trade and regional integration issues from the Economic Policy Research Centre at Makerere University in Kampala says Magufuli’s visit presents an opportunity for Uganda and the EAC integration process. He said, however, that Magufuli’s visit also “provides space for the two presidents to remind themselves about unfulfilled promises and find ways of delivering on them”. “Magufuli is a serious leader and his visit means he supports the EAC integration process. We should not read the initiatives being launched by the heads of state as rituals. The Presidents are serious; they want to do business.” [EAC Summit to decide fate of stalled infrastructure projects, Future of EAC lies in presidents’ hands]
US-Nigeria Bi-National Commission: updates
(i) Economic growth and development (extract from joint communique): Both sides decided to hold the next U.S. Trade and Investment Framework Agreement talks in the first part of 2018 and to work to finalize an agenda for that meeting, to include a decision on a joint work plan on intellectual property protection. The two sides finalized a Memorandum of Understanding establishing a Commercial and Investment Dialogue signed by Commerce Secretary Wilbur Ross and Minister of Industry, Trade and Investment Okechukwu Enelamah as a way to strategically engage the private sectors of each country in strengthening commercial ties. Both sides acknowledged the importance of and potential for increased bilateral trade and investment through enhancing the business climate, policy predictability, and transparency. The two sides discussed the importance of implementing World Trade Organization-consistent trade measures, as well as the Trade Facilitation Agreement. The BNC directed the Working Group on Economic Growth and Development to meet within six months to review progress on joint goals.
(ii) Opening remarks by John Sullivan, Deputy Secretary Of State. We want to be partners in your economic success as well. That is why the US government will soon launch a Commercial and Investment Dialogue. Led by our Department of Commerce, the Dialogue will help to develop stronger business networks between our countries and help frame subsequent discussions under our Trade and Investment Framework Agreement, to be led by the Office of the US Trade Representative. We will continue to work closely with the Government of Nigeria on repatriating stolen assets to the people of Nigeria, and as such, we are pleased to co-host the Global Forum on Asset Recovery in December.
Nigeria: ‘Over 50% trucks in Apapa have no business in port’ (Daily Trust)
A new report released by a leading maritime consulting firm has said that more than half of the container trucks visiting Apapa, Lagos, daily have no immediate business to transact at the port. The report, which stems from an independent study conducted by Ships & Ports and a don of the Lagos Business School, Dr. Frank Ojadi, also stated that truckers that genuinely had business to do in the Apapa Port spent an average turnaround time of two days. A total of 5,515 trucks were surveyed at both observation points over a period of two weeks. [Backgrounder, by Francis I. Ojadi, Jackie Walters: Critical factors that impact on the efficiency of the Lagos seaports]
Nigeria loses N1trn to cargo diversion as importers dump Lagos ports (Leadership)
Cargo diversion to seaports of neighbouring countries like Cameroun and Benin Republic has cost Nigeria a whopping N1 trillion annually, Leadership findings have revealed. The loss is due to bad roads, exorbitant import duties and other excessive fees that are payable in Nigerian ports but not present in seaports of neighbouring countries. Leadership had last week reported exclusively that N320bn congestion surcharge earlier saved by the efficiency on the seaside of the ports due to the 2006 ports reform has returned to the nation’s seaports as a result of the present inefficiency. It was gathered that shipping companies now ask importers to pay this surcharge, even before the ship arrives on the shores of Nigeria. Lagos port, being the most viable of all the ports in Nigeria, account for over 80% of importation into Nigeria.
Ghana: Private sector diagnostic (pdf, IFC)
The objective of the Ghana Country Private Sector Diagnostic is to identify the main opportunities for the private sector that will have a strong development impact in Ghana and to highlight the key constraints (both cross-cutting and sector-specific) hampering private sector growth. The CPSD consists of a systematic assessment of all of Ghana’s economic sectors along two dimensions: (a) desirability: how private investments in these sectors could help Ghana to address its development challenges; and (b) expected feasibility: how the constraints standing in the way could be removed. This sector scan led to identification seven priority sectors, of which, three were selected to conduct deep dive studies: namely agribusiness, ICT and education. Extract (pdf):
Cocoa remains the main export crop, accounting for 25% of foreign exchange earnings and 81% of agricultural exports, at nearly $3bn in 2016. The second most important export earner in the food category was fruits ($227m), dominated by bananas, mangoes, cashew nuts and pineapples, while fresh vegetable exports were in fifth position ($35 million, mostly yams). Juice products alone earned $8m in 2016. Most agricultural products are exported to the US, the EU and Japan, but regional markets are growing and cashew nuts have found new markets in India and Vietnam. Opportunities abound to produce for domestic and regional markets, both for industrial use and food consumption. Population growth, high rates of urbanization and rising incomes are driving Ghana’s import bill because of increased demand for more quality and safer foodstuffs such as meat, dairy, and fresh and processed vegetables. Between 2007 and 2014, total imports grew from 8.7bn to $13.3bn, while the proportion dedicated to foodstuffs within that total remained largely unchanged. The total food import bill is projected to increase fourfold over the next 20 years (World Bank, 2017), unless local production is increased.
The Gambia: Investment Policy Review (UNCTAD)
The IPR assessed The Gambia’s regulatory environment as it affects businesses and set out recommendations for improvement. Among the reforms the report proposes is the clarification of laws affecting investors. The report also recommends the reinforcement of resources for their implementation and the reduction of Government interference in business operations. Addressing the meeting, Isatou Touray, Minister of Trade, Industry, Regional Integration and Employment, was optimistic for The Gambia’s prospects. Extracts (pdf):
A history of liberal trade policies and the opportunities offered by the port of Banjul and by river transportation have allowed the country to act as a re-export hub in the West African region. The re-exports are mainly composed of basic consumer goods with no or very limited value addition. Still, re-export trade represents over 80% of the country’s total exports and is one of the main sources of foreign exchange. Recurrent border closures have a significant negative impact on trade and investment. Land border closures between The Gambia and Senegal have occurred more than a dozen times in the past 16 years, initiated unpredictably by one of the two countries. Most recently, a 14-week closure, without prior notification or predetermined end date, which also breached trade agreement obligations, came to an end on 24 May 2016. During this period, there was thus no land access to Mali, the destination for about 30% of The Gambia’s exports in 2013 and 2014. This recent closure also affected trade with Guinea, Guinea-Bissau and Senegal, which, during the same period, together accounted for 49% of Gambian exports.
Moody’s perspective: Some Sub-Saharan African sovereigns display similar - and in some cases higher - indicators to those preceding the late 1990s emerging market crisis
New World Bank Africa reports:
(i) The impact of fiscal policy on inequality and poverty in Zambia. This study assesses the redistributive impact of fiscal policy, and its individual elements, in Zambia. The study uses an internationally recognized methodology developed by the Commitment to Equity Institute. The study estimates the impact of fiscal revenue collections (taxes) and fiscal expenditures - direct cash and near-cash transfers, in-kind benefits, subsidies - on household-level income inequality and poverty. It then provides evidence to help policy makers and other Zambian stakeholders understand the trade-offs inherent between government’s current fiscal policy priorities (such as energy policy) and other social goals (such as poverty reduction). Having an evidence-based understanding of fiscal policy in Zambia is crucial for two reasons:
(ii) Gender and youth employment in Sub-Saharan Africa: a review of constraints and effective interventions. The paper synthesizes the emerging lessons from a growing evidence base on interventions that aim to support young women’s employment, and identifies knowledge gaps and priority research questions for the future. The objective is to develop a gender-informed policy and research agenda on youth employment that can guide practitioners, development partners, and researchers who seek to advance young women’s empowerment and employment in the context of youth employment programming and policy making. [Companion analysis: Gender and property rights in Sub-Saharan Africa: a review of constraints and effective interventions]
(iii) Comparative perspective: constraints to women’s small-scale cross-border trade in Cambodia and Lao PDR (World Bank)
Trade facilitation projects often assume indirect benefits for small-scale, cross-border traders. Recent studies have shown the challenges faced in Africa by this population, especially women, but it remains unknown in Cambodia and the Lao People’s Democratic Republic, despite large trade facilitation investments. This paper fills this gap, thanks to an innovative mix of original qualitative and quantitative data from various checkpoints on the borders with Thailand and Vietnam. The quantitative data, collected in 2014, consist of an exhaustive list of trade-related border crossings during two to three days and a survey of 158 randomly selected small-scale, cross-border traders and brokers.
Related News
Progress in least developed countries hinges on access to modern energy
Expanding access to adequate, reliable and affordable sources of modern energy is essential if the world’s poorest nations are to escape the poverty trap.
According to The Least Developed Countries Report 2017: Transformational Energy Access, published today, the world’s 47 least developed countries (LDCs) are falling far behind the rest of the developing world in terms of getting power to homes and businesses. While they have made great strides in recent years, achieving the global goal of universal access to energy by 2030 will require a 350 per cent increase in their annual rate of electrification.
“Achieving Sustainable Development Goal 7 is not only a question of satisfying households’ basic energy needs,” UNCTAD Secretary-General Mukhisa Kituyi said in Geneva, ahead of the report’s publication on Tuesday.
“That in itself has valuable welfare implications, but we need to go beyond… For electrification to transform LDC economies, modern energy provision needs to spur productivity increases and unlock the production of more goods and services.”
Dr. Kituyi added: “The productive use of energy is what turns access into economic development, and what ensures that investments in electricity infrastructure are economically viable. But that means looking beyond satisfying households basic needs to achieving transformational energy access – satisfying producers' needs for adequate, reliable and affordable energy.”
While on average 10 per cent of people in other developing countries lack access to electricity, this remains the case for more than 60 per cent of the population in LDCs. And LDCs as a group have around just 8 per cent the capacity of other developing economies to generate electricity per person, and barely 2 per cent that of wealthier nations.
The Energy-transformation Nexus
This two-way relationship between the productive use of energy and economic development, which the report dubs “the energy-transformation nexus”, remains very weak in LDCs. More than 40 per cent of businesses operating in these countries are held back by inadequate, unreliable and unaffordable electricity. On average, they suffer 10 power outages per month, each lasting around five hours, and this costs them 7 per cent of the value of their sales.
High time for donors to meet aid commitments
Achieving universal access to modern energy in LDCs by 2030 will be costly. Based on previous global estimates, the report puts the cost at US$12 billion to US$40 billion per year. Transformational energy access would cost still more.
This far exceeds the resources currently available, the report says. Total official development assistance to the energy sector is just US$3 billion per year, domestic resources for public investment are scarce in most LDCs, and most also face serious limits to borrowing without risking an unsustainable debt burden.
Private investors show little enthusiasm for investments in electricity infrastructure in LDCs, which entail large irreversible costs, long project cycles and slow payback. Most LDCs are also seen as relatively high-risk environments – although the availability of de-risking instruments, such as insurance and guarantee products, might help to bolster confidence.
Governments could raise extra capital by developing domestic debt markets or tapping into alternative sources of funding, such as impact investors, infrastructure funds and, in some LDCs, the population living abroad.
Better still, the report says, would be for international donors to honour their long-standing commitment to provide at least 0.15-0.20 per cent of their national income in aid, as part of the Istanbul Programme of Action for the Least Developed Countries for the Decade 2011-2020 of the United Nations. Current aid levels to LDCs fall short of this target by US$33 billion to US$50 billion per year.
Renewables have potential but will need support
Renewable energy sources, such as solar and wind power, could have a revolutionary effect in rural areas, home to 82 per cent of those without power in LDCs, and help to overcome the historical obstacles to rural electrification.
But non-hydro renewable energy in these countries has so far come mostly from small-scale technologies, such as solar lanterns and stand-alone home systems. While these have brought some progress, they fall short of the game-changing access to power that LDCs need to transform their economies.
Utility-scale renewable technologies capable of feeding the grids and mini-grids necessary not only to power homes, but also to grow businesses and industries, need to be deployed rapidly. But to achieve this, LDCs must overcome important technological, economic and institutional obstacles. This will require both the right national policies and stronger international support.
Despite remarkable potential in LDCs, wind and solar power alone cannot meet their needs. Hydroelectricity also plays a major role, currently providing half of all the electricity generated in LDCs; and fossil fuels will also have a continuing role in many cases, with a progressive shift towards less carbon-intensive technologies such as natural gas.
Because energy technologies, and particularly renewable technologies, are constantly evolving, it is critical that LDCs gain access to the technologies suited to their particular conditions and circumstances, and that they strengthen the capacity of their energy sectors to absorb such technologies.
The recently created Technology Bank for the Least Developed Countries could help, but developed countries could help even more by living up to their technology-transfer obligations under the United Nations Framework Convention on Climate Change and the Kyoto Protocol.