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Time to reset African Union-European Union relations
Relations between the African Union (AU) and European Union (EU) reached a nadir in 2016 following serious disagreements over European payments to AU peacekeepers in Somalia. The fifth AU-EU summit in November presents a chance to reinvigorate the partnership if both sides can deal openly with disagreements, address deep-seated mutual frustration and agree to tackle the root causes driving migrants toward Europe.
Executive Summary
African and European leaders are scheduled to meet in November for the fifth triennial African Union-European Union summit at a time when relations between the two institutions have reached a turning point. Both are in transition, undergoing internal reforms that will have serious implications for their future peace and security partnership. After significant disagreements in 2016 over European Union (EU) payments to troops in the African Union (AU) mission in Somalia, there is now considerable political will on both sides to strengthen cooperation. While collaboration has improved in some areas in recent months, deep-seated frustrations over financing and each other’s perceived deficiencies remain strong. Relations are too emotional, bound up in colonial history – a breeding ground for mistrust and resentment. If the relationship is to be deepened, both sides must deal openly with disagreements. Deliberations should be less transactional, moving away from a narrow list of African demands and negotiations over what the EU will pay for. Instead, they must be more strategic, based upon clearly articulated interests.
The AU has embarked on a potentially transformative process of institutional reform that, if implemented, will make it leaner and more efficient and should increase its financial self-sufficiency. However, there are significant challenges to the AU’s authority resulting from the changing nature of conflict in Africa, especially the spread of jihadist and other non-state armed groups, and the concomitant rise of ad hoc military coalitions to combat them, such as the Multinational Joint Task Force in the Lake Chad basin and the G5 Sahel. These changes also bring into question the suitability and sustainability of the continent’s peace and security architecture. Designed in the 2000s, it is now under strain and in need of wholesale review. The AU needs to clearly set out its strategic priorities and define its role in peace and security, deciding whether to focus on developing and harmonising policy and maintaining political oversight or becoming an implementer of projects. It also should reassess its relations with the regional economic communities, a central element of the continent’s security architecture, clarifying which organisations should take the lead in conflict situations.
With the prospect of the UK’s exit, the EU is preparing for life without one of its most influential and wealthy member states. This inevitably will impact its relations with the AU, as will renegotiation of the Cotonou Agreement, a partnership between the EU and 79 sub-Saharan Africa, Caribbean and Pacific countries which expires in 2020. The African Peace Facility, the main source of EU support for the AU’s peace and security activities, is funded through the agreement’s financial instrument, the European Development Fund.
The EU is one of the AU’s most significant peace and security partner; since 2004 it has provided more than €2 billion ($2.39 billion) in assistance. The question of financing is one of the areas of greatest tension between the two institutions. Their relationship is essentially that of donor and recipient but both are reluctant to characterise it as such, even though they actively, if inadvertently, perpetuate the dependency. The EU increasingly resents being treated like a “cash machine”, especially as it believes it does not receive due recognition. It wants the AU to pay its “fair share”. The AU claims to want this too. It wishes to reduce its reliance on external support and, as a result, member states have agreed to proposals for a 0.2 per cent levy on imports to the continent that could generate more than $1.2 billion per year. This is essential. If the suggested levy is not workable for some or all member states, alternative solutions must quickly be found.
The vexed donor-recipient dynamic is further complicated by tensions over the legacy of European colonisation, which intensified greatly during Nkosazana Dlamini-Zuma’s tenure as AU Commission chairperson. This has a detrimental effect on trust and confidence, prevents free and frank discussions and bars progress toward an interest-based partnership.
The AU-EU summit is unlikely to be as transformational as the two institutions would wish – preparations have not progressed far enough for this. But it could still be a useful springboard for more strategic discussions and movement toward an interests-based relationship, if the following steps are implemented:
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Pursue a pragmatic partnership based on mutual interests: assertions about an “equal partnership” in a seriously imbalanced relationship cause unnecessary tensions, irritating some AU member states and raising unachievable expectations. The notion, while remaining an aspiration, should be de-emphasised and replaced with a more pragmatic understanding of AU and EU mutual interests and the interdependent nature of their relations.
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Focus on strategic and political interests: discussions of the minutiae of what the EU will or will not pay for tend to dominate AU-EU meetings at all levels. It will be hard to avoid financial matters, but the summit should focus on matters that are vital to the long-term interests of the two unions and address the issue of funding as part of a strategic examination of peace and security after Cotonou. Ideally, any future support should be predictable to enable the AU to do more medium-term planning, and flexible to permit adopting new initiatives and adapting the continental security architecture. It also should include an instrument for rapid reaction like the existing Early Response Mechanism. Support should focus on four key areas: early warning; preventive diplomacy and mediation; peace support operations; and capacity-building and non-lethal equipment for AU member states’ military and security forces. To encourage AU member states to increase their financial support, any future mechanism should be based on a matched funding system in which the EU’s contribution is proportionately linked to those made by African governments.
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Put migration on the agenda: another step toward a more interests-based partnership would be the inclusion of migration and mobility on the summit agenda, a highly contentious issue that AU member states are reluctant to discuss openly. The EU’s kneejerk reaction to increasing flows of irregular migration from Africa has alienated the AU, which wants Europe to increase legal migration routes and tackle root causes rather than the seal its borders. However uncomfortable, the issue should be on the table – it will permeate the meeting regardless.
Download the full report on the International Crisis Group website.
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Africa Week 2017 is underway at the UN: update, downloads
SADC-EU Economic Partnership Agreement: updates from yesterday’s regional conference in Johannesburg. (i) Minister Davies, Cecilia Malmström mark first anniversary of the EPA, (ii) Cecilia Malmström speech on monitoring of EPA, impact, (iii) Peter Fabricius: South Africa fails to exploit free trade agreement access to massive EU market
ACP Parliamentary Assembly: last week’s meeting, statement by Dr Patrick Gomes
Later this week, in Rome: 13th annual meeting of the Infrastructure Consortium for Africa. Summary of background paper (pdf): Toward smart and integrated infrastructure for Africa – an agenda for digitalisation, decarbonisation and mobility: In this perspective, the Next Production Revolution (NPR) represents a potential opportunity and a big challenge for Africa and its socio economic development, also due to the traditional leapfrogging attitude that has already characterized the straight and successful diffusion of a number of smart or clean innovations in the continent. Indeed, NPR entails a confluence of technologies ranging from a variety of digital technologies to new materials and processes. Moreover, in the 2030 Agenda of the United Nation, the 5 clusters of emerging technologies (bio-tech, digital-tech, nano-tech, neuro-tech and green-tech) are considered crucial for the achievement of the Sustainable Development Goals (SDGs). Among the five clusters it emerges that Digital and Green Tech appear as the most relevant for the achievement of the SDGs like Health, Water, Energy, Ecosystem, Land, Ocean Management, Climate Change, Sustainable Production and Consumption patterns. Recognizing this relevance, Digital and Green Tech, broken down into digital infrastructure, sustainable energy infrastructure and smart mobility have become the core of ICA 2017.
Africa’s $110bn migrant resources could fund continent’s infrastructure – Oramah (Afreximbank)
In a keynote address to the Frontier 100 Forum organized by the Initiative for Global Development, President Oramah said that those resources, composed of $53bn of savings and $63bn of annual remittances, were well in excess of the continent’s annual infrastructure financing requirements, currently estimated at about $93bn. He noted that since the early 2000s, migrant remittances had become the most important source of foreign currency inflows for many African countries and had become more important than FDI as a source of foreign exchange in many. Dr Oramah regretted that many Governments were yet to put in place policies and programmes to effectively harness the many significant benefits offered by the Diaspora, saying that lessons could be learned from the experience of countries like the Philippines, Israel, Bangladesh, India, and Mexico that had robust programmes to improve Diaspora participation in national economic activities.
Can Sub-Saharan Africa be a manufacturing destination?: Vijaya Ramachandran blog (CGD)
It is always risky to speculate on the future, especially considering evolving trends in technology which will shape the evolution of comparative and absolute advantage in manufacturing. However, a new paper co-authored by Alan Gelb, Christian Meyer, Divyanshi Wadhwa, and myself suggests that Africa is not, in general, poised to embark on a manufacturing-led take-off, stepping into the shoes of emerging Asia. Africa, including those countries that have come to be regarded as leaders in development, has high manufacturing labor costs relative to GDP as well as high capital costs relative to low-income comparators. Using a newly-constructed panel of firm-level data from the World Bank’s Enterprise Surveys, we look at labor costs in a range of low and middle income countries in sub-Saharan Africa. We then compare these with labor costs in low-cost countries outside of Africa such as Bangladesh as well as a wide range of other countries. We estimate labor costs—both actual and hypothetical: [Even Africa’s poorest countries are too expensive to be the world’s next manufacturing hub (Quartz Africa)]
Joseph Stiglitz: From manufacturing led export growth to a 21st Century inclusive growth strategy for Africa (Babacar Ndiaye Lecture, Afreximbank, 15 October)
South Africa: Economic overview – with a focus on exports (Industrial Development Corporation)
(i) Significant shifts in the global reach of South Africa’s export sector. The geographical reach and sectoral spread of South Africa’s merchandise export basket have improved over time, but high degrees of concentration prevail. Export trade has been shifting towards emerging market economies such as China and India, with the advanced economies’ combined share of the overall export basket having declined. The rest of Africa has become one of the largest markets for South Africa’s merchandise exports, accounting for 27.8% of the overall export basket in 2016, up from a 25.4% share in 2010. The extent of South Africa’s trade concentration is higher at the sectoral level, but has also been improving. The manufacturing sector accounted for 60% of the merchandise export basket in 2016, compared to 57.1% in 2010. Exports play an important role in terms of economic activity and employment creation. An estimated 1.23 million jobs in the South African economy, or more than 10% of total employment, are directly related to exports. The figure jumps to 2.53 million, or 21.4% of overall employment, if indirect exports (i.e. through linkages of export producers with input suppliers across the economy) are also taken into account. The European Union as an external market has contributed positively to the overall growth (in real terms) in South Africa’s merchandise exports from 2014 to the 1st semester of 2017 (refer to Figure 5). In contrast, the drop in exports to the United States and some members of the Southern African Customs Union (SACU) in 2016 as well as in the 1st half of the current year implied negative contributions, or detractions from overall export growth.
(ii) Changing composition of South Africa’s export basket. The product composition of South Africa’s export basket has also been changing, with the normalised Herfindahl-Hirschman Index improving from 22.1 in 2010 to 21.2 by 2016 – that is, exhibiting increased diversification. Nevertheless, the export basket is still highly concentrated on a few sectors, especially within manufacturing, as well as heavily reliant on the mining sector for its foreign exchange earnings (refer to Figure 6). Mining exports accounted for approximately one-third of total merchandise exports in 2016, down from 38.4% in 2010. During the course of last year, weaker global commodity demand, especially from China, together with relatively low commodity prices and operational challenges in the domestic market took a toll on South Africa’s mining exports and consequently production across most segments. Over time, the historical reliance on gold has been substantially reduced, whereas iron ore and coal exports have come to the fore, as illustrated in Figure 7. The platinum group metals (PGMs) have also contributed to diversifying the composition of South Africa’s mineral export basket. Despite rising export volumes since the recent trough in 2012, the lower platinum price, which fell from an average of USD1 613 per ounce in 2010 to USD985 per ounce by 2016, contributed to the share claimed by PGMs within the country’s overall export basket declining from 10.1% in 2010 to 8.2% in 2016. As shown in Figure 6, the manufacturing sector accounted for 60% of the overall export basket in 2016, up from 57.1% in 2010. The composition of the manufacturing export basket has changed significantly, with a substantial rise in the relative contribution made by the motor vehicles sub-sector. This domestic sector is reaping the benefits of increased integration in global supply chains and is providing opportunities for domestic production (and exports) of parts and accessories for motor vehicles. The combined shares of the motor vehicles, parts and accessories sub-sectors in the total export basket rose from 11.3% in 2010 to 14.7% by 2016.
Mozambique: Economic transformation and job creation (SET)
The SET report on economic transformation and job creation in Mozambique synthesises 30 recent studies to understand commonalities and differences on promising sectors and value chains in Mozambique, binding constraints to developing these activities, and policies that have been suggested to achieve these. Thus, rather than undertaking new analysis, this synthesis paper reflects on existing analyses broadly related to industrialisation and economic transformation in Mozambique in order to provide a base from which to move forward on the specifics of how to transform the economy. [The authors: Neil Balchin, Peter Coughlin, Phyllis Papadavid, Dirk Willem te Velde, Kasper Vrolijk]
Dangote, Mbeki launch Africa Champions Initiative in Lagos (ThisDay)
Prominent African leaders under the aegis of the Afrochampions Initiative, at the weekend, charted a course to transform the continent with the aim to make it a destination for international investments. The initiative, jointly chaired by African’s richest man, Alhaji Aliko Dangote, and former President of South Africa, Thabo Mbeki, called for greater integration of African economies to enable the continent develop free trade among African Union member nations. Present at the launch were the Vice President Yemi Osinbajo, former President Olusegun Obasanjo,Commissioner for Trade and Industry of the African Union, Ambassador Albert Muchanga, Aig Imokhuede, Executive Secretary of Nigerian Export Promotion Council, Segun Awolowo among others. Dangote promised to work with his colleagues to make the club a unique platform on which “We as African business leaders, can overcome our differences and speak with one voice, to foster reforms facilitating trade between our states with investments in strategic projects and synergies between our countries.”
Nigeria: Some take ways from the NESG summit (Business Day)
For three days, players in the public and private sector gathered in Abuja to brainstorm and proffer solution to the many challenges of the Nigerian economy. They have been doing this for 23 years now and some sceptics say that it has not changed much in the Nigerian economy. Organisers of the of the Nigeria Economic Summit, the Nigeria Economic Summit Group disagree, noting that these annual discussions have done much good to Nigeria and that the economy would have been much worse off without these annual discussions. The annual summit has become Nigeria’s version of the World Economic Forum. [Osinbajo: FG attains 70% success in ease of doing business action plan]
No policy on visa on arrival for Africans – Nigeria Immigration Service (Business Day)
Nigerian Immigration Service, on Monday, dismissed trending report on issuance of ‘visa on arrival’ for Africans by the Federal Government. “As the Federal Government of Nigeria’s lead and foremost agency saddled with the responsibility for the regulation and enforcement of migration laws of the country, the Nigeria Immigration Service states clearly that; no such decision was in place, it is an unconfirmed and yet to be considered policy of the government of Nigeria.”
Call for new momentum to fast-track free movement in Africa (New Times)
Policies that govern movement of persons and services on the continent must be tailored to the current needs of Africans, experts have urged. The call was made yesterday in Kigali at the opening of a weeklong meeting on the adoption of an African Union procedure on Migration, Refugees and Internally Displaced Persons, seen as a critical forum to advance the continent’s goal on free movement of persons and their goods. The gathering kicked off yesterday with a meeting of the AU’s Specialised Technical Committee on Migration, Refugees and Internally Displaced persons, who have a duty to deliberate on and draft several critical documents that will be adopted by African Ministers in charge of migration matters during their meetings on Friday and Saturday.
Ghana to open up borders to West African neighbours (Graphic)
The Minister for Business Development, Mr Ibrahim Mohammed Awal has said the country will soon open up its borders to its West African counterparts in a bid to foster trade between the country and its neighbours. He said plans were far advanced to open up the country’s borders to Benin and Niger, as it had already opened up to Togo. This he said formed part of plans to expand business operations through regional integration. The Managing Director for Emerging Markets and Africa of Deloitte, Dr Martyn Davies, also in an interview with the GRAPHIC BUSINESS called on the need to have a business hub for the West African region. He said every region needed a hub and “just like Nairobi is the hub of East Africa and Johannesburg is the hub of South Africa, I think Ghana can also be the hub for West Africa.”
Africa vs the USA: a secondhand clothing showdown (BoF)
Linda Calabrese argues that halting the trade of second hand clothing isn’t the right approach and won’t enable the development of textile industries in developing countries alone. “The garment sector [in developing nations] needs more investment to expand production capacity. The sector is currently not receiving a lot of new investment to expand production capacity, and costs are outweighing profits. Transport is expensive, getting skilled workers is expensive, the energy supply is unreliable and costly compared to other regions, such as Southeast Asia.” It could also have undesirable effects, like promoting illegal trade and smuggling in banned imports, if the population has to choose between buying new imported garments, or buying domestically produced second-rate goods. “Clothes are an essential item and if they become more costly, poor families will suffer the most,” says Calabrese, but adds: “To be fair, I think that East African governments already have a very good understanding of the existing challenges and are trying to address them.”
Dubai Africa business forum to host 5 heads of state (TradeArabia)
The upcoming fourth Global Business Forum on Africa in Dubai, UAE is set to welcome five African heads of state, 12 ministers, and more than 1,000 top-level government and corporate decision-makers and industry experts. The forum, organised by the Dubai Chamber of Commerce and Industry, will be held under the theme “Next Generation Africa” on 1-2 November. The event will bring together high-profile attendees such as Paul Kagame (Rwanda); Danny Faure (Seychelles); Yoweri Museveni (Uganda); Ameenah Gurib-Fakim (Mauritius); and Edgar Lungu (Zambia); along with a long list of ministers, senior government officials, young African entrepreneurs, economic and industry experts. [Reposted: Bridging the Red Sea – how to build an Africa-Gulf partnership]
Alarm bells as more developing countries become commodity-dependent (UNCTAD)
The new UNCTAD report The State of Commodity Dependence 2016 highlights that between 2010-2015 developing countries saw their revenue from commodity exports jump 25% to US$ 2.55 trillion. The rise in commodity dependence was most noticeable in Africa, where seven new countries entered the category in 2014-2015, bringing the total to 46. Over the same period, the number remained stable at 28 in Latin America and the Caribbean, while the region of Asia and Oceania saw its total increase by two to 17. Regarding the type of exports, dependence was predominantly on agricultural goods. This was the case for 41% of the countries, while 30% depended on fuel exports and 23% on minerals, ores and metals. More than half of the countries depending on agricultural commodity exports were African, while the region of Asia and Oceania was home to two thirds of those relying on minerals, ores and metals, and almost half of those dependent on the export of fuels.
Today’s Quick Links: Stephen Karingi: 2017 breakthrough year towards implementation of CFTA Bruce Byiers, San Bilal: ‘Making Africa work’ – what not to do Mary Kawar, Siddharth Chatterjee: Can Kenya become the South Korea of Africa? The State Department and USAID FY 2018 Africa Budget: hearing submissions 10 years on from the financial crisis: co-operation between competition agencies and regulators in the financial sector (pdf) International Monetary and Financial Committee: communiqué, statements Development Committee: communiqué World Bank Blog: Trade agreements as public goods India’s international trade in services: RBI August 2017 data BIMSTEC-FTA: a new hope for enhanced regional trade |
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Africa Week 2017: Integrated, prosperous, people-centred and peaceful Africa
“The international world must change the way it looks at Africa. Africa is a place of opportunity,” said Mr António Guterres, Secretary-General of the United Nations during the opening session of Africa Week in New York.
Africa Week commenced with a high level event on Supporting an Integrated, Prosperous, People-Centred and Peaceful Africa: Towards the Implementation of Agenda 2063 and the 2030 Agenda for Sustainable Development.
The rationale for this year’s theme for a prosperous African continent is one where different national economies are seamlessly integrated and the economic and social participation of all citizens is guaranteed and promoted. Governments and partners were therefore urged to work to ensure an environment in which entrepreneurship takes root and flourishes, as a means to stimulate economic growth and with a focus on peace and security.
In his opening remarks, Mr David Mehdi Hamam, Acting Special Adviser on Africa pointed out that the UN agenda is central for Africa’s prosperity and peace. “The question is not whether Africa can achieve its goals, but rather how we can facilitate the continent’s partnerships to achieve these goals. Africa is progressively overcoming its challenges towards the Africa We Want leading up to the World We Want,” Mr Hamam said.
In the same light, Mr Miroslav Lajčák, President of the 72nd Session of the UN General Assembly reiterated that, “Africa is rising. The World Bank has confirmed that after a period of stagnation, growth on the continent is on the up-swing. Africa is taking charge of its own development.”
Prof Victor Harison, Commissioner for Economic Affairs at the African Union Commission stated that achievements in Africa include implementation of the First Ten Year Plan of Agenda towards integration.
“Industrialisation must spearhead development and rural infrastructure development will lead to greater transformation,” Prof Harison said.
Dr Ibrahim Assane Mayaki, CEO of the NEPAD Agency focussed on what not to do in order for Africa’s transformation to be realised. He stressed on the need for countries not to implement solutions that contradict regional priorities, if integration is to be attained.
With regards to people-centred transformation, Dr Mayaki called for the broadening of partnerships, that is, governments, private sector and civil society. In order to realise a peaceful continent, he emphasised on the need for raising sufficient levels of youth employment through labour intensive industries, coupled with inclusive governance.
Prof Mahamoud Youssouf Khayal, Chairperson, African Peer Review Panel of Eminent Persons, underscored the fact that both Agenda 2063 and 2030 Agenda are people centred, and the African Peer Review Mechanism for Africa is also people centred.
Ms Chinwe Esimai, Managing Director and Chief Anti-Bribery and Corruption Officer at Citibank, made the point that through Agenda 2063, technology and innovations have the potential to root out corruption and contribute to prosperity.
The events of Africa Week present an opportunity for open discussion on issues that are in line with the implementation of goals set out in the African Union’s Agenda 2063 and the 2030 Agenda for Sustainable Development. These two Agendas are mutually reinforcing as they focus attention on inclusive and sustainable structural transformation across all dimensions of sustainability including governance, peace and security and sustainable development.
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ACP countries target economic transformation in new relationship with Europe
Members of Parliaments from Africa, the Caribbean and the Pacific gathered in Brussels this week for the 47th session of the ACP Parliamentary Assembly, as well as joint intersessional meetings with Members of the European Parliament.
With less than one year to go before negotiations begin for a new partnership framework between the 79 members of the ACP Group of States and the European Union, one of the key issues of concern for the ACP is the state of preparations, including the shared principles and rationales that would guide the process.
“Negotiations for [a new ACP-EU partnership] are so important that all voices of the ACP Group need to be heard, including parliamentarians, civil society, etc. The ACP we want, must be people-driven… because the issues touch on the ordinary lives of all ACP citizens,” emphasised the President of the ACP Parliamentary Assembly, Hon. Ibrahim Rassin Bundu, MP of Sierra Leone.
Summarising discussions of the Assembly from 9-11 October, including an exchange of views with Brussels-based Ambassadors on Monday, the Secretary-General H.E. Dr. Patrick I. Gomes noted the call from representatives for a “radical departure” from the traditional relationship, marked by an “imbalance” between the two blocs of countries in terms of economic might and levels of technology and capacity.
Members urged consolidated efforts to achieve a level of sustainable development whereby ACP developing countries are able to progress from being dependent exporters of raw materials, to being able to add value to their own products.
“The underpinnings of the entire process for a post-Cotonou Agreement rests on the fundamental aim of achieving the structural transformation of ACP economies,” said Dr. Gomes, referring to the current ACP-EU partnership framework known as the “Cotonou Agreement” – a comprehensive and legally binding treaty that governs trade, development cooperation and political dialogue between EU and ACP countries. The agreement was signed in 2000 in Cotonou, Benin, for a period of 20 years.
“Transforming economic structures and investment strategies is essential to achieve healthy and productive lives by the great majority in our societies and not only for a few… This means productive resources must enable jobs, particularly for youth, women and girls; investments must give equitable returns to workers by living wages that improve the quality of life of families; and education and health care must become available, at reasonable or no costs,” he added.
These aims, in line with the globally endorsed 2030 Development Agenda, are captured in the policy framework document adopted by the ACP Council of Ministers in May 2017 entitled “Towards the ACP we want.” It cites three pillars that would steer the work of the ACP Group in the future, including: (i) Trade, Investments, Industrialisation and Services; (ii) Development Cooperation, Technology, Science and Innovation/Research and (iii) Political Dialogue and Advocacy.
According to the document, which was shared and discussed by Members of Parliament, a Central Negotiating Group at both ministerial and ambassadorial levels will be set up to lead talks with the EU side, supported by Technical Negotiating Teams focussing on the strategic pillars. Negotiations are set to start by August 2018, for a renewed ACP-EU partnership framework to replace the current one expiring in 2020.
Following the meetings of the ACP Parliamentary Assembly from 9th to 11th October, members took part in joint meetings with European counterparts from 11th to 13th October. These intersessional meetings of the Bureau and Standing Committees of the ACP-EU Joint Parliamentary Assembly (JPA) are in preparation for the upcoming 34th session of the JPA to be held in Haiti, tentatively scheduled for 13th to 20th December 2017.
Statement by the Secretary General at the 47th session of the ACP Parliamentary Assembly
11 October 2017, Brussels
I would like to take a few moments to update you on some of the developments being undertaken by the Secretariat since our last meeting in Malta. But before doing so, given Monday’s very enlightening exchange with Parliamentarians, my remarks cannot be a mere update.
I listened carefully to the genuinely-felt concern that the post-Cotonou ACP-EU Agreement must show a radical departure from the unbalanced relationship that has so far prevailed, despite some tangible benefits. In trade terms it is asymmetrical – greater capacity in volumes of production and marketing by the EU and institutional mechanisms have more technology, skills and human resources.
The underpinnings of the entire process for a post-Cotonou Agreement rests on the fundamental aim of achieving the structural transformation of ACP economies.
This means productive resources must enable jobs, particularly for youth, women and girls; investments must give equitable returns to workers by living wages that improve the quality of life of families; and education and health care must become available, at reasonable or no costs.
Transforming economic structures and investment strategies is essential to achieve healthy and productive lives by the great majority in our societies and not only for a few.
These ideas mirror what several others said on Monday. Gambia was clear on this so was Cameroon; and Ethiopia spoke of the youth bombshells ready to explode.
This is the context and process for the negotiation positions that will be undertaken by a reinvented and restructured ACP Group. The elements are there in the document Towards the ACP We Want. It was distributed since Malta and deserves to be read thoroughly and critiqued. Embellish it with your comments. To those who do not have it, copies can be sent electronically.
The negotiation process has a road map guiding it – the Georgetown Agreement is to be revised; briefs prepared for the Technical Negotiating Teams on each of the 3 strategic pillars; studies done on the Political Dialogue and Investment Facility in the Cotonou Agreement, etc. leading to an exchange of a Negotiating Brief with the European commission by August 2018. You as parliamentarians must play a key role. You will debate, amend, clarify and ratify a new Agreement or reject as your Parliaments see fit.
I was particularly struck by the lady members of Parliament of Samoa and Gabon who gave us an impetus to place emphasis on charting a course to bring tangible benefits to the millions of peoples in our 79 Member States.
To the Honourable Parliamentarian from Gabon, I admire your searching question on how will the EU regard the diversification of ACP partnerships? I can only answer your question by saying that it is for us to determine the nature and kind of partnerships the ACP Group as a whole will pursue.
These need not be incompatible with what we agree to as a legally binding Agreement – a Treaty – with the European Union. The nature and scope of membership in the ACP Group will be determined on the provisions of our Constitutive Act – the GT Agreement of 1975 and amended in 2003.
The Council has decided that the Agreement be revised. That will be another milestone in our roadmap. The revision will require your critical inputs.
While most of the discussions and consultations in the lead up to the negotiations, and during the negotiations themselves, will be conducted from Brussels, there will be need for deeper reflections at regional level to ensure that the ACP approach is as comprehensive and inclusive as possible. The Secretariat has been actively engaged in this regard, at both regional and international levels.
Let me illustrate.
I was privileged to attend the Pacific ACP Leader’s Summit held in Apia, Samoa, on 5 September 2017, to which the Member of Parliament from Samoa referred.
Most encouraging from the Leaders’ Summit is the unequivocal and unambiguous endorsement of the ACP policy framework in the document which was studied and debated.
The Leaders also reaffirmed, and I quote, their “strong commitment to, and support of, the decisions taken by the ACP Summits and the ACP Council of Ministers for the ACP Group to negotiate a successor post-2020 Agreement with the EU as a single unified trans-regional entity with guidance to be provided by a Central Negotiating Group.
The Resolution also reiterated their “commitment to work in mutual understanding and cooperation with other ACP regions and endeavor to further enhance the relationship and engagement with the ACP Group in the spirit of partnership, unity and solidarity.”
We would do well to have this kind of sustained engagement on the part of all ACP regions in order to enrich and buttress the work that will be done at Ministerial and Ambassadorial levels.
The Committee of Ambassadors and the ACP Secretariat are committed to ensuring that the voices of our Parliamentary representatives are heard and their concerns taken account of in the negotiations.
I turn now to progress made on thematic issues for structural economic transformation.
In July the ACP and UNCTAD approved guiding principles for investment policymaking.
These principles are in support of existing ACP initiatives, such as the ACP Private Sector Development Strategy, the New Approach to ACP support for the development of Agriculture Value chains, and the ACP Investment Facility.
These non-binding principles provide a basis for investment policymaking with a view to:
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promoting inclusive economic growth and sustainable development;
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promoting coherence in national and international investment policymaking;
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fostering an open, transparent and conducive global policy environment for investment; and
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aligning investment promotion and facilitation policies with sustainable development goals.
These Guiding Principles come at a time of mounting economic, social and environmental challenges, which highlight the critical role of investment as a driver of equitable economic and social growth. Mobilizing investment and ensuring that it contributes to sustainable development remains a key objective of the ACP Group.
The ACP held its 5th Meeting of ACP Ministers of Fisheries on 18 -20 September, in Nassau, Commonwealth of the Bahamas. In line with SDG 14 on conservation and sustainable use of oceans, seas and marine resources, the meeting addressed issues such as Illegal, Unreported and Unregulated (IUU) fishing, effective fisheries management, the blue economy, aquaculture development, small scale fisheries and fisheries subsidies reforms.
This meeting sought to reinforce political and financial commitment to enhance capacity and collaboration, ensure robust monitoring and enforcement to eliminate IUU including the implementation of regional and international obligations. It also sought to increase investments and measures to unlock the economic potential of fisheries value chains and accrue benefits to countries and coastal communities particularly the SIDS.
At the conclusion of that meeting, Ministers renewed their commitment to developing the fisheries and aquaculture sectors in ACP countries, as well as unlocking the potential of the ‘blue economy’ through a new €40 million EDF grant resources for “ACP Blue Growth Initiative”. Scope for blending with the World Bank will be explored.
Another topic that I would like to bring to your attention is the historic launch of a Gender initiative to fight against sexual and gender based violence against women and girls. This initiative was launched in the margins of the UN General Assembly and the ACP was represented by the Chairman of the Committee of Ambassadors, Ambassador Amadou DIOP of Senegal. The ACP is a key partner alongside the EU and the UN.
This initiative will strategically focus on the most prevalent forms of Violence Against Women and Girls in different regions, including sexual and gender-based violence and harmful practices; specific forms of domestic and family violence; trafficking in human beings; and economic (labour) exploitation.
For the ACP regions, the emphasis will be on sexual and gender-based violence and harmful practices in Sub-Saharan Africa, domestic and family violence in the Caribbean, and domestic violence in the Pacific.
Violence against women and girls is a global pandemic that holds back development. Today it is said that one out of three women experience violence in their lives, this is, about 30% of women in the world. Up until last year 19% of women between 15 and 49 years of age have experienced physical and sexual violence by an intimate partner. These numbers tell us that the issue can no longer be ignored and must be addressed.
Mr. President, the above are a few examples of the process of transformation the ACP is pursuing in the Global context of Agenda 2030.
Before I conclude, allow me to express my gratitude for the constructive exchanges we had on Monday on the post-Cotonou process. The Secretariat continues to be inspired by the enthusiasm and dynamism this body has portrayed. This speaks clearly of how determined you are to make a difference in the lives of our people.
The Secretariat has listened carefully and is taking due action.
We remain committed to ensuring that the 2020 Agreement will be one that responds to the challenges of our times, the needs of our people and the objectives of Agenda 2030. We look forward to continuous policy engagement with the Parliamentary Assembly to ensure that the new agreement is fit for purpose as we accelerate changes to end poverty.
In conclusion, I would like to reiterate that your presence in these intercessional meetings speaks of the importance you attach to the wellbeing of the people you represent. The responsibility lies on you to tackle the economic turbulence and political challenges that call for decisive leadership and sincerity. Our mission at the ACP will not be a task for individuals but together with clarity of purpose and by those like you, who are here today, determined to discharge their duty with dignity, determination and distinction.
I am inspired by words from the late Nelson Mandela – “Thus shall we live, because we will have created a society which recognizes that all people are born equal, with each entitled in equal measure to life, liberty, prosperity, human rights and good governance.”
Thank you for your kind attention and all success in your meetings.
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ICA Annual Meeting 2017: Toward smart and integrated infrastructure for Africa
The focus of the 13th Annual Meeting of the Infrastructure Consortium for Africa (ICA), which will take place in Rome, Italy on 19 and 20 October 2017, will be “Toward Smart and Integrated Infrastructure for Africa: An agenda for digitalisation, decarbonisation and mobility”.
The meeting will be hosted by the Government of Italy at the Italian Ministry of Foreign Affairs and International Cooperation headquarters, and jointly organised with the African Development Bank and the ICA.
To provide updated technical information, guide participants and provide a focus for discussions, a background paper was commissioned by the ICA and the Italian Ministry of Foreign Affairs and International Cooperation.
The ICA’s annual “Infrastructure Financing Trends in Africa” report will also be analysed and discussed at the meeting.
Background paper: Executive summary
Africa is ready to jump straight into the revolutionary frontiers which may represent the enabling environment for the transformative change requested by the 2030 Agenda. Africa does not need to replicate misleading trends of development, production and consumption which are now calling for deep remedies. Indeed, strong efforts and Partnership at global level are requested to support the achievement of sustainable development while maintaining global Peace, reduce inequality among People and promote a more equitable Prosperity for all, including the Planet at large.
The potential of the next production revolution in Africa
In this perspective, the Next Production Revolution (NPR) represents a potential opportunity and a big challenge for Africa and its socio-economic development, also due to the traditional leapfrogging attitude that has already characterized the straight and successful diffusion of a number of smart or clean innovations in the continent. Indeed, NPR entails a confluence of technologies ranging from a variety of digital technologies to new materials and processes. Moreover, in the 2030 Agenda of the United Nation, the 5 clusters of emerging technologies (bio-tech, digital-tech, nano-tech, neuro-tech and green-tech) are considered crucial for the achievement of the Sustainable Development Goals (SDGs). Among the five clusters it emerges that Digital and Green Tech appear as the most relevant for the achievement of the SDGs like Health, Water, Energy, Ecosystem, Land, Ocean Management, Climate Change, Sustainable Production and Consumption patterns. Recognizing this relevance, Digital and Green Tech, broken down into digital infrastructure, sustainable energy infrastructure and smart mobility have become the core of ICA 2017.
Physical (e.g., telecommunication, energy, transport, water supply) and social infrastructure (e.g., health, education, banking, commercial services) are crucial for socio-economic development at country level. However, infrastructure development needs to cope with the new global framework. Indeed, only a confluence of technological innovation matching political, institutional and social innovations may have the power to trigger a transforming process that is requested for our society. From a technological standpoint – the OECD has just formalized the concept of Next Production Revolution which will have a very strong impact on productivity, work, skills, markets, poverty and inequality, well-being and environment. From a political and institutional point of view, the Paris Agreement on climate change, the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda represent paramount innovative reference assets. However, infrastructure development, within the current production schemes, may represents a big burden for additional green-house gases emissions. Thus, long lasting effects of infrastructure need to be considered in order to avoid the risk of technological lock-in to a set of configurations that are able to meet 2030 or 2050 targets but that inevitably are due to fail in achieving the target beyond 2030.
Quality and reliable infrastructures are preconditions that may trigger access to different services pivotal for fighting poverty and boosting the local economy and entrepreneurship. Africa needs to bridge a large infrastructural gap in the energy, transport and ICT assets mainly due to low population density, high concentration of landlocked countries and high share of rural settlements. In the energy sector, the infrastructure dearth is largely manifest both from a quantitative and qualitative perspective. Access to electricity and modern fuel is still low in the Sub-Saharan region. Per capita electricity consumption, in the whole continent, is very low, less than 600 kWh/per capita per year that represents less than 20% of the world average; energy intensity and CO2 intensity are very high, thus giving evidence of a very low efficient and not clean energy supply chain.
Transport infrastructure, in terms of both roads, rail lines, air transport and port, is another crucial pillar to foster sustainable development in Africa enabling local, regional and international trade. Road transport contributes to 90% of passengers’ mobility and more than 80% of goods’ exchanges. More than 50% of Africa’s road network is unpaved hindering the access to basic social services and burdening local economic activities, especially for rural population. Air transport is still modest compared to other macro regional aggregations. Maritime transport, despite being fundamental for trade, is also weakly developed. Information and communication technologies had a rapid growth in Africa which is now the second largest mobile phone market in the world. But the Africa penetration rate of mobile phones varying from 71% to 111% is still among the lowest compared to other macro-regional aggregations. Moreover, individual Internet access still scores very low, having a range between 20 and 39% of individuals using Internet. Despite the positive trends, African ICT sector is still relatively immature as shown by the low number of fixed broadband subscriptions, and with low impact of Internet on African GDP (1.1% compared to 3.7% of developed economies).
Filling the infrastructural gap of Africa is urgent and in this perspective, additional resources are needed, but further value could be brought by cooping wise investments on quantitative capacity with a set of other strategies to improve productivity of current infrastructural asset use. At global, level ensuring a value of infrastructure stock at around 70% of GDP, a rise of annual baseline infrastructure investment from $2.6 trillion in 2013 up to $4.5 trillion in 2030 would be required. Such an investment would not be enough to fill the existing gaps between developing countries and developed regions, to address universal access to roads, clean water, sanitation, and electricity and to consider extra investments required to tackle environmental stresses from climate change mitigation and adaptation. The additional amount to meet the need of Sustainable Development for developing countries is between $3.3 trillion and $45 trillion per year to be mainly allocated in the sector of basic infrastructure (roads, rail and ports; power stations; water and sanitation), food security (agriculture and rural development), climate change mitigation and adaptation, health, and education. Within this total amount, physical infrastructures would require from around $1.6 trillion to $2.5 trillion per year. This brings to evidence an estimated gap close to $1-1.5 trillion per year when compared to current investments.
As a global picture, investments in infrastructure in developing countries are estimated to be at 1.8% of global Gross Domestic Product (GDP) while the investment gap should be between 2.4% and 4.2% of global GDP. In 2015, investments for Africa’s infrastructures amounted to $83.4 billion showing a 12% increase with respect to the previous year. African national governments committed 34.1% of total investments while the private sector shared only 8.9%. Energy and transport sector collected more than 80% roughly equally distributed among the two for a total investments sharing of $69.4 billion. At regional scale, investments were mostly allocated in Eastern Africa (23.1%). Investments from private sector were almost entirely focused in the energy sector and were mostly concentrated in South Africa (51.2%) followed by West Africa (17.2%) and North Africa (16.5%). In the whole Sub-Saharan Africa private sector investments were around $6.3 billion with the power sector sharing more than 95% of it and the remaining allocated in road construction and water infrastructure. In the period from 2010 to 2015 most of private investments in Sub-Saharan Africa were allocated in ICT infrastructure with few but big projects. However, in the last three years a shift of private investments from ICT to energy infrastructure has been observed. Private investments in transport sector are still very small mainly concentrated in ports.
The share of middle- and low-income countries in global GDP (on purchasing parity terms) has increased from less than 40% to more than 50% since year 2000 and is expected to increase to two-thirds by 2030; these countries are coming to be the major drivers of investment and growth. This unique transformation calls for rapid technical progresses in digitalization, energy, transport and other spheres. At the same time, this progress needs to be carried out in compliance with the urgency of controlling impact on resources, environmental quality and on climate. The Next Production Revolution offers to developing countries and therefore to Africa the opportunity to achieve sustainable development goals provided the setting of an enabling infrastructure and a new generation of leaders able to manage such innovation. The early path towards low-carbon and quality infrastructure has already led to a ‘leapfrogging’ change of infrastructure system, which needs to be more focused on a comprehensive smart and integrated approach including functional, data integration and governance; a decentralized paradigm, a life cycle perspective and a new and pro-active role of users.
Smart and integrated infrastructure in Africa
Smart refers to a massive penetration of digital technologies in the infrastructure sector to control, manage and optimize uses. Integration refers to the coping of functionality, data integration and sharing across sectors between physical infrastructure like energy, transport, telecommunication and digital technology including the use of Internet of Things, Artificial Intelligence, Big Data. Integrated infrastructures can therefore promote a new infrastructure governance able to foster an overarching approach to planning, delivery and management of infrastructure assets. In addition, integration leads to the promotion of new technological nexus, overlapping different sectors, such as waste, energy, transport, ICT, banking, financing. This implies that the development of, e.g., transport, energy and ICT, infrastructures should be seen as intertwined and synergic.
Decentralization is a crucial element in the transformative path for infrastructure: from the physical perspective, we assist to a capillary distribution of technologies more massively available to citizens; digital technologies (e.g. smart-phone) have increased the chance for everyone to get access to digital services, energy and also transportation services. Additionally, technological advances have allowed the deployment of “local” digital services, which may stand regardless the availability of connectivity with centralized infrastructures. From the financial perspective, we are assisting to a parallel shift of capitals and infrastructure owners, from large creditworthy entities (e.g., large corporations and central governments) to smaller one (e.g., households, smallholders, emerging economy cities without good credit ratings, new project developers). In the same perspective, investments in infrastructure need to be more directed to solutions that aim at optimizing resource use in a life cycle and system perspective enabling the transition that is requested from now to 2030 but also casting the right seeds for the more challenging shift needed to 2050. Lastly, a new people-centered perspective is envisaged, where households and communities are engaged in new or adapted forms of distributed control, with demand-response approach.
Smart and Integrated Infrastructures (SMART-I Infrastructure) need to become the driving element for the next investment generation in Africa and they are the essence of the taxonomy proposed for ICA 2017. They represent the natural evolution of the list of attributes for infrastructure development and complement the previous definition of sustainable and quality infrastructure.
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Even Africa’s poorest countries are too expensive to be the world’s next manufacturing hub
Even though the global economy has evolved significantly in the last few decades away from the industrial revolution – which transformed many of the world’s advanced countries – there’s still much hope tied to the idea that manufacturing will play a key transformative role in developing countries in Africa today.
Yet, it may be foolish to place too big a bet on manufacturing in Africa, according to a new research paper from US think tank, Center for Global Development.
The researchers used World Bank data to look at 5,500 firms in 29 countries. They compared labor and capital costs, and productivity and efficiency of manufacturing in sub Saharan Africa with similar countries outside Africa, in particular Bangladesh. They did not have good news for most of the region.
In a bid to find out if African countries can “break into global manufacturing in a substantial way”, the researchers found factories in Africa were almost always more expensive to start and run. Looking at overall costs, small African firms were 39% more expensive than comparative firms elsewhere while medium and large firms were around 50% more expensive.
Take a middle income African country like South Africa: Labor costs were described as “very high” despite unemployment levels as high as 30%. A mix of structural factors, restrictive labor laws, and high minimum wages mean the continent’s most advanced economy, is “not likely to emerge as a strong competitor in labor-intensive industry in the foreseeable future.”
Stable, coastal countries like Senegal, Kenya, and Tanzania seem like strong candidates for a role in global manufacturing, yet they’re still too expensive. The labor cost per Kenyan worker is $2,118 compared with Bangladesh, where it’s $835. The capital cost per Kenyan worker is nearly $10,000, but is less than $1,100 per worker in Bangladesh. As a middle income country, Kenya does have a higher GDP per capita ($1,116) versus Bangladesh ($853), but low income Senegal (GDP per capital $775) is still twice as expensive as Bangladesh in terms of labor and capital costs.
There is good news, and it’s mostly all in Ethiopia. The researchers believe Ethiopia, already leading the way as Africa’s 21st century center for manufacturing has the best likelihood of being the “New China” as labor costs rise in the “world’s factory” and social issues such as child labor arise in some other Asian countries. Fashion brands like H&M, Guess, and J. Crew are already finding potential in Ethiopia, one of the few African countries whose labor costs ($909) are close to Bangladesh.
The researchers are reluctant to speculate why African manufacturing costs are so high, but it isn’t difficult to imagine what some of the challenges would be. A lack of infrastructure such as transport networks and stable electricity in many poor African countries plus low levels of education will mean factory running costs and training the African worker are going to be more expensive than they need to be. This can get exacerbated by unhelpful regulation and poor policy.
That’s why the authors suggest “carefully designed industrial policy” to “possibly unleash the potential for manufacturing and rapid industrialization.”
Download the CGD working paper here: Can Africa Be a Manufacturing Destination? Labor Costs in Comparative Perspective
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Economic overview: Recent developments in the global and South African economies – August 2017
With the domestic drivers of growth currently under strain, the South African economy will most likely have to rely on exports for a positive performance.
Consumer and business confidence are at very low levels, thus providing little hope for a meaningful recovery in household consumption spending and a turnaround in fixed investment activity. Government expenditure, in turn, cannot come to the rescue due to fiscal constraints and consolidation commitments. In contrast, demand conditions are improving in global markets. Alongside a relatively competitive currency at the present time, this should provide significant opportunities for export development.
The geographical reach and sectoral spread of South Africa’s merchandise export basket have improved over time, but high degrees of concentration prevail. Export trade has been shifting towards emerging market economies such as China and India, with the advanced economies’ combined share of the overall export basket having declined. The rest of Africa has become one of the largest markets for South Africa’s merchandise exports, accounting for 27.8% of the overall export basket in 2016, up from a 25.4% share in 2010. The extent of South Africa’s trade concentration is higher at the sectoral level, but has also been improving. The manufacturing sector accounted for 60% of the merchandise export basket in 2016, compared to 57.1% in 2010.
Exports play an important role in terms of economic activity and employment creation. An estimated 1.23 million jobs in the South African economy, or more than 10% of total employment, are directly related to exports. The figure jumps to 2.53 million, or 21.4% of overall employment, if indirect exports (i.e. through linkages of export producers with input suppliers across the economy) are also taken into account.
South Africa should take advantage of improving conditions in global markets and the expected rebound in world trade. This is especially important in the current economic environment, which is characterised by weak local demand and low confidence levels amongst domestic consumers and businesses. Exports may thus safeguard important segments of South Africa’s production base and employment, as well as making indispensable contributions to overall economic growth and job creation, particularly during this difficult phase for the economy.
Exports are likely to be the key driver of South Africa’s economic growth in the shorter term
The South African economy is struggling to exit from the technical recession entered into in the 1st quarter of 2017.
The production side of the economy continues to reel from difficult trading conditions, particularly in the domestic market. Confidence, which fuels and sustains economic growth, is currently at very low levels amongst consumers as well as businesses, thus providing little hope for a meaningful turnaround in spending activity in the shorter term. In contrast, improving conditions in global markets and relatively competitive exchange rates of the rand support expectations of exports being the likely driver of growth in South Africa’s gross domestic product (GDP) in 2017 and 2018.
Prospects for the South African economy over the next three years remain largely unsatisfactory. Weak growth of just 0.6% is forecast for 2017, with only a modest up-tick in 2018. A somewhat faster growth momentum is anticipated in 2019, taking the projected average growth in real GDP growth over the period 2017-19 to only 1.3% per annum.
Uncertainty in the political environment, weak demand and subdued economic growth domestically, alongside the risk of further sovereign credit rating downgrades, are likely to continue to weigh heavily on business and investor confidence in the shorter term. Moreover, spare production capacity in many sectors of the economy does not yet warrant investment in additional production capacity, with capital expenditure instead channelled towards maintenance of equipment, technology upgrades and/or the pursuit of specific market opportunities. The declining trend in private sector fixed investment may continue in 2017, with its growth potentially moving to marginally positive territory in 2018.
In light of the weak demand conditions domestically, the main contributions to growth in 2017 and 2018 are likely to emanate from the export sector. South Africa’s balance of trade recorded a surplus of R15.7 billion in the 2nd quarter of 2017, one of the largest on record.
Growth in Sub-Saharan Africa is likely to remain relatively subdued in 2017 at an estimated 2.7% (up from 1.3% in 2016), as the region’s largest economies struggle to gather economic momentum. However, improving conditions on the global front, together with expectations of positive developments in commodity markets should provide an impetus to growth from 2018, with the region contributing positively to overall world growth, albeit marginally.
Increasing demand in global markets and relatively competitive exchange rates of the rand should provide export development opportunities for South African businesses. Considering the currently subdued levels of demand in the domestic market, this is particularly important. Some of these opportunities will be in the form of expanding sales of products already being sold in traditional export markets, or identifying new trading partners. In other instances, it may involve penetrating global markets for the first time.
Moreover, the broader-based recovery in industrial/manufacturing production in major industrialised economies, among others, together with increased infrastructure development and upgrading in various parts of the world are expected to provide significant impetus to the demand for commodities over the medium-term. This should not only benefit South Africa’s own export trade performance, but also augurs well for the economic performance of resource-intensive Sub-Saharan African economies, which in turn should unlock further regional trade opportunities for South African businesses.
Significant shifts in the global reach of South Africa’s export sector
The global reach of South Africa’s export sector has changed in recent years. Utilising a normalised Herfindahl-Hirschman Index, the geographic concentration index associated with South Africa’s exports improved from 21.8 in 2010 to 20.3 in 2016. Furthermore, there has been a shift towards emerging market economies such as China and India over this period, with the advanced economies’ combined share of the overall export basket declining from 40% to 38.3% over the period.
At the regional level, the rest of Africa has become one of the largest markets for South Africa’s merchandise exports, having accounted for 27.8% of the entire export basket in 2016, up from a 25.4% share in 2010. Exports to other African markets totalled R300 billion last year. The European Union as a group (especially the German, British and Dutch markets) remains an important regional destination for South Africa’s exports, accounting for 22.6% of the total in 2016. However, China has become the single largest export market at the individual country level, although its 9.3% share of the entire merchandise export basket in 2016 was considerably lower than the 12.9% high recorded in 2013.
The European Union as an external market has contributed positively to the overall growth (in real terms) in South Africa’s merchandise exports from 2014 to the 1st semester of 2017. In contrast, the drop in exports to the United States and some members of the Southern African Customs Union (SACU) in 2016 as well as in the 1st half of the current year implied negative contributions, or detractions from overall export growth.
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Minister Davies and EU Trade Commissioner Malmström mark first anniversary of Economic Partnership Agreement
South Africa’s Minister for Trade and Industry Robert Davies and EU Trade Commissioner Cecilia Malmström met in Johannesburg today to review their respective trade and investment agendas. They also took the opportunity to celebrate the one-year anniversary of putting the Economic Partnership Agreement, or EPA, between the EU and six countries of the Southern African Development Community into practice.
In their bilateral discussion, both the Minister and the Commissioner acknowledged the need to maximise the benefits of the EPA and move forward with its implementation.
The Minister and the Commissioner emphasised the importance of trade that supports development and promotes inclusive growth. For this reason, after the meeting, Minister Davies and Commissioner Malmström addressed some 150 civil society representatives from South Africa and the SADC region. They discussed the Economic Partnership Agreement’s provisions to support sustainable development, and how its impact should be monitored.
The two also discussed the upcoming 5th EU-AU Summit that will take place in Abidjan on 29-30 November 2017. The agreed on the common priority to support young people to acquire the skills they need and to secure employment, as this is a key element in delivering sustainable development.
Minister Davies said: “Both parties should work together to ensure that the EPA contributes to the structural transformation agenda of the region, enhances trade and promotes mutually beneficial outcomes.”
Commissioner Malmström emphasised that this is a partnership of equals. She said: “As partners, it is our joint responsibility to ensure that the benefits of our Economic Partnership agreement are felt by all in the region. We all have a common goal – to create prosperity for people in Southern Africa and in Europe. The EPA only delivers results if we work together.”
During her visit to South Africa, Commissioner Malmström will visit Witwatersrand University tomorrow to give a lecture on global trade issues. She will also visit an organic farm managed by a young black female entrepreneur, who intends to make use of the Economic Partnership Agreement to export organic agricultural products to Europe. More info about the Commissioner’s visit, including speeches and photo material, can be found here.
Background
2017 marks ten years of the EU-South Africa Strategic Partnership. Its trade and investment dimension is of paramount importance in the bilateral relations. Trade with the EU represents 27% of South Africa’s overall trade, while EU foreign direct investment (FDI) amounts to 77% of total FDI. This partnership has been mutually beneficial to both parties and presents further opportunities to enhance trade between them. For instance, since the entry into force of the EPA, South African exports of fisheries products and flowers have considerably increased.
The SADC-EU Economic Partnership Agreement entered into force on 10 October 2016. It provides opportunities for trade in agricultural goods and seafood, protects geographical indications such as rooibos tea and Paarl wine, and renews the regional partnership, promoting development.
The EPA applies to all Southern African Customs Union (SACU) countries, the oldest customs union in the world. It also applies to Mozambique, and contains rules that can spur further regional integration and foster regional value chains.
The EU is supporting the region and South Africa with projects aimed at reinforcing the regional market by improving transport links, facilitating trade, developing regional value chains, supporting small businesses and providing training.
Visit tralac’s SADC EPA resources page for more.
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Commissioner Malmström in South Africa to celebrate first anniversary of regional trade agreement
EU Trade Commissioner Cecilia Malmström was in South Africa on 16 and 17 October. The Commissioner attended a civil society forum in Johannesburg marking one year since the Economic Partnership Agreement (EPA) between the EU and six countries of the Southern African Development Community (SADC) came into force provisionally.
Together with ministers from the region, she opened the high-level event with more than 150 civil society organisations. Afterwards, representatives of NGOs, trade associations and trade unions had the opportunity to comment on their experiences of the trade deal, one year on.
In her speech, Commissioner Malmström pointed out that companies, environmental campaigners, trade unions and human rights advocates all need to be closely involved in the monitoring of the EPA.
“We need your input and ideas on how to make the implementation of the agreement and our cooperation on sustainable development stronger and more effective. If we do all of those things, the EU-SADC EPA will have a high chance of becoming a landmark deal for people on both sides,” Malmström said.
Whilst in South Africa the Commissioner participated in a number of meetings, including with South African Minister of Trade Rob Davies, to discuss trade policy and the implementation of the Economic Partnership Agreement. She also visited Witwatersrand (Wits) University where she gave a lecture to students and members of the public on global trade issues.
There was also a trip to Liliesleaf Farm, a site of historical importance in the political struggle against apartheid, followed by a showcase of South African regional products to celebrate World Food Day.
During her trip, Commissioner Malmström also visited an organic farm managed by a young black female entrepreneur who intends to make use of the EPA to export certified organic agricultural products to Europe.
In her speech to students at Wits University, Commissioner Malmström raised the partnership between the EU and South Africa.
“In our strategic partnership, we have shown the world that progress and fairness is possible. So let us keep working together, and let us keep in mind that we can still do so much more.”
Trade with African, Caribbean & Pacific countries – putting partnerships into practice
The SADC-EU partnership agreement will stay high on the agenda throughout the week – on Friday, 20 October, Malmström will co-host a high-level roundtable in Brussels, together with fellow EU Commissioner, Neven Mimica, the trade ministers of Jamaica and Madagascar, and vice-president Van Ballekom of the European Investment Bank.
The event, entitled ‘Partnership in practice: making EU trade work for ACP countries’, will look at the current trade relationship between the EU and the 79 countries that make up the group of African, Caribbean and Pacific (ACP) countries.
The roundtable will consider EU policy tools such as those Economic Partnership Agreements between the EU and ACP regions, as well as the External Investment Plan (EIP) for Africa, and trade-related development programmes. It will also examine how they are working at the moment to help ACP countries attract more investment, industrialise, integrate into global value chains, and create jobs in the process, as well as what lessons can be learned to further facilitate trade and investment.
The event on Friday will bring together businesspeople and representatives of civil society from ACP countries and the EU. It will include a discussion with a panel whose members are well placed to speak on these issues: for instance, the deputy executive director of Caribbean Export, the region’s export promotion agency; the director of a textiles manufacturing firm in Madagascar; the international relations adviser of lobby group BusinessEurope; and a representative of the successful fisheries industry of Papua New Guinea.
“I am determined that Economic Partnership Agreements should work for ACP and European businesses and communities – and especially for young people and women, who are often excluded from job and business opportunities,” Malmström wrote in a blog.
“I want the agreements to help the participating ACP countries to diversify their economies and industrialise, so they move up global value chains and generate more growth and jobs in the process. I want them to encourage ACP countries to enact the reforms that will help them attract more long-term investment from overseas. And I want us to overcome the challenges we face as we put the EPAs into practice.
“There have been encouraging signs already, for which EPAs can take at least some credit. One example is Madagascar’s textile and clothing industry. It has benefitted from the conclusion of the EPA with duty-free, quota-free access to the EU and improved rules of origin. After its EPA started to apply in 2012, Madagascar saw a rise in exports to the EU of almost 15% per year. In 2015, textiles and clothing were its main exports, worth more than 300 million euros. They accounted for almost one third of Madagascar’s total exports to the EU. And in South Africa, exports to the EU in sectors like fisheries and flowers have increased since the entry into force of its EPA.”
“These agreements also come with considerable aid for trade, to assist ACP governments and businesses in putting the agreements to work and make the most of them. For example, in Lesotho, the EU has funded a one-stop export application facility. It used to take seven days to complete export formalities and exporters used to have to fill in a 23 page document. Now it takes just 15 minutes.
“Of course, the EPAs are not the solution to all challenges faced. But I believe they can play an important role in enabling the participating ACP countries to integrate more fully into the global economy and fulfil the aspirations of their people. That’s a goal we must all strive for.”
Visit tralac’s SADC EPA resources page for more.
The EU-SADC EPA: monitoring of the agreement and its impact
Speech by EU Trade Commissioner Cecilia Malmström at the High Level Dialogue with SADC Civil Society Organisations, 16 October 2017
I’m delighted with the group of people we have here today on occasion of the celebration of the 1st anniversary of the entry into application of the Economic Partnership Agreement between the EU and the Southern African Development Community.
We have organisations dealing with the environment, labour and social rights…
… groups representing companies involved with trade with the EU…
…and you all came here from six different SADC countries to discuss how the Economic Partnership Agreement, or EPA, is likely to impact the region, your country and the life of the people living there.
You have already heard this morning about the EPA, its key features and what we aim to achieve with the agreement. I am here now not to talk about trade policy or to give you an overview of the EPA. I am here to talk about people and listen.
I and the EU are strongly convinced that trade policy and EPAs, indeed, are not about abstract growth figures. They are about people and how people can benefit from the rules in place.
Trade is not about politicians like me posing for photos as we sign or discuss a treaty. It’s about improving people’s lives, in the SADC region and in Europe.
And I am fully conscious that civil society here in the region, in South Africa in particular, has a lot to teach us Europeans – civil society here has been and still is a force for good, with civil rights movements having played a crucial role in the recent history of your countries.
This is why I’m delighted to have you all here, specifically for three reasons.
First, I support an open approach to trade policy that brings the full range of views on an issue together. Today’s meeting is a reflection of that approach.
Since the beginning of my mandate as trade commissioner for the EU, I’ve made openness and transparency the absolute priority for all EU trade initiatives and policies. Under my direct instructions, the October 2015 EU Communication “Trade for All: towards a more responsible trade and investment policy” clearly indicates that policymaking needs to be transparent, inclusive and the debate based on facts.
On the EU side, as a matter of principle, all stakeholders – including social partners, NGOs, business representatives and all other types of non-state actors – can channel their opinions to EU representatives in the context of regular civil society and citizens’ dialogues. And, once a free trade agreement with a partner is concluded, by participating in any body the agreement creates.
In addition, just recently on 13 September 2017, the European Commission issued a new trade package including a Communication titled “A balanced and progressive” trade policy. This policy paper, which outlines the EU’s trade priorities for the next couple of years to come, suggests that the EU as a whole – as a joint responsibility of all EU Institutions, all EU Member States and all national Parliaments – delivers effective agreements through a negotiating process that is accountable, transparent and inclusive.
In this context, the Commission has decided to create an advisory group on EU trade negotiations, consisting of representatives of a wide and balanced group of stakeholders, ranging from trade unions, employers’ organisations, consumer groups and other NGOs. They will provide policy makers with high quality advice on areas subject to trade negotiations.
I understand some forms of interaction between your governments and civil society organisations in your country have already taken place, and I strongly encourage you to continue in this direction. As I said above, we Europeans can only learn from you, what you have done and what you are still doing.
The second reason I am happy to meet you here today is that – as you understood from what I said before – I do not believe a trade agreement can deliver real benefits to people if it is not implemented with the involvement of stakeholders in all partner countries.
You would certainly concur with me that only by monitoring the operation and the impact of the EPA we can ensure that:
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the agreement is properly implemented, which in turn would ensure that…
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the objectives of this agreement are achieved, and…
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the benefits for the people, in particular the most vulnerable groups, are maximised.
The above is the EU-SADC EPA word-for-word, in which all Parties to the agreement…
…not only undertook to continuously monitor the agreement…
…but also to do it through appropriate mechanisms and timing…
…within their respective participative processes and institutions.
As you have heard this morning, the EU-SADC EPA, like all the other trade agreements concluded by the EU, includes a Chapter fully dedicated to trade and sustainable development.
This Chapter contains a comprehensive set of binding provisions, which are anchored in multilateral standards, notably International Labour Organisation conventions and Multilateral Environmental Agreements. This is aimed at ensuring that trade and investment favour sustainable development rather than undermine it.
The institutional structure of this Chapter, in the eyes of the EU, is designed to be inclusive, through platforms where civil society plays a crucial role. As a matter of principle, the EU always includes such structures in its agreements.
At domestic level, there are often Domestic Advisory Groups. They are mechanisms for each Party to the agreement to request and receive inputs from representatives of its civil society on any matter concerning the implementation of the Trade and Sustainable Development Chapters. The relevant provisions ensure a balanced representation of economic, social and environmental interests. This follows the three-pillar concept of sustainable development.
In addition, the Trade and Sustainable Development Chapters also typically establish a dedicated platform for joint dialogue of civil society organisations sides. This platform is managed and chaired by civil society, which sets the agenda and discusses all sustainable development aspects under the trade agreement in question. Civil society then proposes recommendations to the Parties of the agreement.
In the light of the above, you can understand why I am determined to build on the provisions of the EU-SADC EPA that enable and even require us to be inclusive and seek systematically the involvement of civil society.
For this reason, I have instructed my team to give utmost priority to seek agreement with other SADC EPA States on a joint platform like this. Pending this agreement, nothing prevents us from going ahead with meetings like the one we have today.
The third reason I’m happy with today’s meeting is that we are here to talk about how we can ensure – all together – that the EU-SADC EPA delivers real benefits to the people it is intended to help, both in the SADC countries as well as in the EU.
The objective today is to hear from you…
…what are the challenges that have prevented or might prevent in the future the EPA to deliver concrete benefits to the different stakeholders…
…what needs to be done to eliminate or reduce those risks…
…and what can be done to maximise the positive impact.
We all have a common goal: create prosperity for people in Southern Africa and in Europe.
Trade is a vital component in any successful development strategy. Whether in Africa, China, India, or Brazil, exports have been decisive in reducing poverty over the last four decades. Southern Africa is no exception.
EPAs like the one concluded between the EU and 6 SADC States create new opportunities for workers, consumers and entrepreneurs. That will help us rebuild struggling communities across our continents.
What we are asking you to do this afternoon is to launch a reflection on how the provisions included in the EPA can help creating these opportunities.
But our reflection cannot stop there. Because even the most die-hard free trader must acknowledge that trade agreements give us other questions to answer – in one word: sustainable development.
It is important to assess whether there are risks as regards labour and social rights, and in terms of environmental protection, and how these risks can be eliminated or mitigated.
We need companies, environmental campaigners, trade unions and human rights advocates to be closely involved in the monitoring of the EPA.
We need your input and ideas on how to make the implementation of the agreement and our cooperation on sustainable development stronger and more effective.
If we do all of those things, the EU-SADC EPA have strong changes of becoming a landmark deal for people on both sides.
I have high expectations not only on the results of the discussion you will have in a few minutes, but mainly on the process that the meeting today is aimed at triggering.
I have given instructions to take note of the conclusions and recommendations stemming from your discussion this afternoon, with the purpose of assessing them carefully afterwards and discuss them between the EU and all the SADC EPA Parties.
I have also given instructions to organise this kind of meetings every year, and next year in the presence also of EU civil society organisations so that we can successfully create a joint platform for stakeholder involvement.
Thank you for your attention and your willingness to support our work today.
I look forward to some questions and to the discussion.
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Stiglitz delivers inaugural Ndiaye Lecture, urges coordinated strategy for Africa’s economic success
The Babacar Ndiaye Lecture Series, an international series introduced by the African Export-Import Bank (Afreximbank), debuted in Washington D.C. on Sunday, 15 October 2017 with Nobel Laureate Joseph Stiglitz saying that African countries should adopt a coordinated strategy that encompassed the agriculture, manufacturing, mining, and service sectors in order to attain the same success delivered by the old manufacturing export-led strategy.
Afreximbank launched the Babacar Ndiaye Lecture series to honour the late Dr. Babacar Ndiaye, President of the African Development Bank (AfDB) from 1985 to 1995, for his many important contributions to Africa’s economic development, in particular, his critical role in the creation of Afreximbank. In addition to helping the AfDB to earn triple ‘A’ status, Dr. Ndiaye, who died in July 2017, was also behind the creation of several other continental institutions, including Shelter Afrique and the African Business Roundtable, and is credited with fostering the emergence of many young entrepreneurs who are helping to build Africa today.
In a wide-ranging presentation titled “From Manufacturing Led Export Growth to a 21st Century Inclusive Growth Strategy for Africa” at the Inaugural Babacar Ndiaye Lecture, Prof. Stiglitz, an economist and professor at Columbia University, New York, argued that while export-led growth was the basis of success of growth over the past half century, the factors that enabled manufacturing to provide that growth spurt would not be able to do so to the same extent in the future.
Another strategy that performed some of the essential roles that manufacturing export-led development did was, therefore, necessary, he said.
“Successful development policy will need to be explicitly more multi-pronged, addressing the separate ‘challenges’ that the manufacturing sector addressed simultaneously,” said Prof. Stiglitz.
According to him, governments will need to play an important role in the new structural transformation towards a modern economy. That economy would not, in general, be a manufacturing economy but a modern services economy, he noted, saying that in the next phase of Africa’s development, modern agriculture would be vital.
Prof. Stiglitz highlighted the need for robust agricultural sector to provide full employment, including by stimulating manufacturing and services, and said that countries should seek to add learning dimension to agriculture and other sectors.
Modern agriculture can be very “advanced”, he noted, saying that there should be focus on non-labor saving innovations, including better crop mix and better fertilizers.
The focus on “learning” should emphasise developing skills that are useful in modern economy and there should be transformation of farming from traditional practices to modern farming.
Earlier, Dr. Benedict Oramah, President of Afreximbank, said that the Lecture Series was being launched to “recognize and immortalize the exceptional contributions of Dr Babacar Ndiaye to Africa and, indeed, mankind”.
“Dr Babacar Ndiaye was a visionary, consummate leader and a great institution builder who served the continent of Africa in an exemplary way throughout his well-documented and celebrated career,” said Dr. Oramah, who noted that he engineered a massive transformation of the AfDB and the financial landscape of the continent.
He strategically used the AfDB’s platform and convening power to address some of the key constraints to economic development facing the African continent, emerging as a prodigious builder of development finance institutions across the continent.
Dr. Oramah extolled Dr. Ndiaye’s vision in championing the creation of Afreximbank and wondered what would have been the course of Africa today if the Bank had not been created.
“Which international bank would have been there to support the continent in the past two years of severe commodity crisis if Afreximbank was not there to disburse over $9 billion to certain banks and central banks?; which international bank would have ignored high compliance cost to be there for African economies that have lost correspondent banking relationships?; how would Africa today be dreaming of expanding intra-African trade and export manufacturing without an Afreximbank?” he asked.
Dr. Oramah noted that since inception, Afreximbank had disbursed about $50 billion in support of African trade; attracted about $60 billion into strategic sectors of the African economy; expanded the continent’s industrial capacities through the financing of value addition across several industries, including cocoa, coffee, cotton and tea as well as a number of metals and minerals; and facilitated the development of critical trade and industrial infrastructure, among others.
In a goodwill message, Charles Boamah, Senior Vice President at the AfDB, commended Afreximbank for the initiative to honour Dr. Ndiaye said that the former AfDB President charted a clear path to Africa’s economic development.
The AfDB had also honoured Dr. Ndiaye by holding a special memorial event in his honour and by naming a major auditorium after him, added Mr. Boamah.
Also speaking, Dr. Donald Kaberuka, a former President of the AfDB, said that Dr. Ndiaye’s defining characteristics included his deep belief in Africa and a conviction that Africa could achieve development through trade and investment rather than through aid.
He rejected artificial divisions imposed on Africa, instead preferring to see the continent as one unit and believing that the Africa would develop best through continental integration, said Dr. Kaberuka.
The event attracted leaders of African and global banks, development finance institutions, the business community and political leaders attending the World Bank-IMF Annual Meetings, members of the diplomatic community, policy makers, academicians, African and non-African ministers of finance, economy and development, central bank governors, and CEOs of global and African corporates.
The presentation by Joesph E. Stiglitz has been made available to download courtesy of Afreximbank.
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Members commend sustained engagement by Comoros as it approaches final WTO accession stages
At the third meeting of the Working Party on the Accession of the Comoros held on 12 October, members commended the sustained and constructive engagement of the national authorities in this process as the Indian Ocean state approaches the final stages prior to WTO membership. Members reiterated their full support to Comoros’ efforts to become a member of the organization and said they would keep working with the country with a view to conclude negotiations as soon as possible.
“I am pleased to note that the Working Party on the Accession of the Union of the Comoros is meeting for the third time since its first meeting only 10 months ago in December 2016. This is an impressive achievement and proof that this accession process has become a serious prospect and is reaching an advanced stage. We have made considerable progress and I highly commend Comoros for the sustained engagement, both in terms of political commitment, and substantive work at the technical level. Of course, credit should also go to Members who have dedicated resources and also provided financial and technical assistance to Comoros,” said the chair of the Working Party, Ambassador Luis Enrique Chávez Basagoitia of Peru.
The Comorian delegation was headed by Ambassador Sultan Chouzour on behalf of the Vice-president of Comoros, Mr. Djaffar Ahmed Said Hassani, who followed the meeting from Moroni via videoconference. Ambassador Chouzour said: “We have spared no effort to achieve our accession on the occasion of the 11th WTO Ministerial Meeting in December. But if this should not be the case, as we are also aware of the problems we still have to solve, our commitment will remain intact to overcome them in the first half of 2018 as much as possible. I base my measured optimism on the results obtained, thanks to the immense work accomplished in recent months.”
Ambassador Chouzour added that “the holding of this third meeting of the working group before the end of the year is already a huge victory, which embodies the great deal of work accomplished over the last few months.”
WTO members welcomed the substantive work done so far, while noting that some issues would require further work to bring the country’s foreign trade regime and its legislative framework into full conformity with WTO rules and requirements.
The Comoros delegation reported on the signing of three bilateral market access agreements - two in July with Brazil and Japan and the third this week with Oman - and on several bilateral meetings where further progress with other members was registered.
At a stage of the accession process where work is rapidly reaching technical maturity, members were invited to indicate clearly what technical work Comoros is intended to undertake so that the next round of documents presented to the Working Party can become a solid reference for the Accession Package which will eventually emerge. “These indications from members will be also critical in setting out the roadmap of our future work,” the chair said.
Next steps
The Working Party was invited by the chair to turn its attention to the elaboration of commitment language for the Working Party report, the final document passed on to the General Council for approval, covering the applicant country’s commitments on applying WTO rules. Members were invited to provide questions and comments in writing by 9 November.
Comoros was invited to provide a revised Legislative Action Plan and submit newly enacted trade related legislation, as it becomes available, and to submit legislation in draft form for review and comments, where appropriate. Comoros was reminded of the critical importance of completing the enactment of all WTO-related legislation before the final meeting of the Working Party.
The next Working Party meeting will take place tentatively at the beginning of 2018 “so that momentum which has been built throughout this year can be sustained as we hopefully enter the final phase of our collective undertaking,” Ambassador Chávez Basagoitia added.
Background
Comoros is a least-developed country (LDC) in the Indian Ocean, with a population of approximately 780,000. The Government of the Union of the Comoros applied for accession to the WTO in February 2007, and the working party was established in October 2007. In October 2013, the country submitted its Memorandum on the Foreign Trade Regime. The first meeting of the working party on the accession of the Union of the Comoros was held on 2 December 2016.
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tralac’s Daily News Selection
Updated World Bank macro poverty outlook reports: Botswana, Lesotho, Namibia, South Africa, Swaziland, Zambia, Zimbabwe
AU’s STC on Finance, Monetary Affairs, Economic Planning and Integration: advance documentation is posted
The meeting (23-27 October, Addis Ababa) will consider the following agenda items, with a view to making proposals for adoption by Summit: (i) Report of the F10 Ministers of Finance on the 0.2% levy on imports; (ii) Revised strategy for the harmonization of statistics in Africa; (iii) Assessment of progress on regional integration in Africa; (iv) Pan African Investment Code; (v) African Inclusive Markets Excellence Centre; (vi) Continental Free Trade Area, among others. [Downloads: event resources]
Leveraging African pension funds for financing infrastructure development (pdf, UN OSAA)
This report suggests a number of policy recommendations to address the obstacles to pension funds investment in infrastructure. First, pension reform driven by strong political leadership and ownership by all stakeholders can help improve the performance of African pension systems and develop pension assets. However, pension reform should be carefully designed so as to learn from the lessons of the mixed results of earlier experiences in Latin America, notably in Chile, as well as in Central and Eastern European countries. Second, improvements to the governance, regulation, and supervision of pension funds can help pension funds invest in infrastructure in a manner consistent with their primary goal of ensuring old-age income security. Third, even when sufficient pension assets are available and asset allocation to infrastructure investments is made, African countries will still need to develop domestic financial and capital market instruments for infrastructure investment. Finally, given the large scale of infrastructure investment, African countries will need to consider the net benefits of complementing domestic pension assets with foreign and multilateral investments through co-financing and innovative policies.
The rest of the paper is organized as follows. Section II reviews the current sources of infrastructure finance in Africa (official development finance, private sector, new and emerging partners, such as China and other emerging development partners, and government finance). Section III reviews the international experience with pension funds investment in infrastructure and discusses the potential for leveraging African pension funds for infrastructure development. Section IV analyzes the obstacles to pension funds investment in infrastructure and some concrete steps taken by the NEPAD Agency while Section V concludes with policy recommendations for African pension fund managers and governments as well as multilateral institutions and bilateral partners. [Note: This paper, by Dr Amadou Sy, builds on an earlier background paper prepared in consultation with the UN Office of the Special Adviser on Africa for the Third UN Conference on Financing for Development, 2015, Addis Ababa]
Can the AU save Africa’s mineral resources? (Southern Times)
The Windhoek symposium contained delegates from Chambers of Mines and Mining Associations in Africa and was held under the theme “Leveraging the role of Chambers of Mines and Mining Associations in Africa.” The symposium provided a platform for the establishment of continental mining body called the Association of Chamber of Mines in Africa. ACMA is earmarked to supervise and coordinate mining activities in Africa. An interim committee comprising of five members was established to make ACMA a reality. The Southern Times understands that the committee has been given a year to come up with guidelines and a constitution to be presented at the 2019 African Union heads of state and government summit. It will also be responsible to monitor the transfer of African mineral resources from the continent and most importantly to bridge the existing gaps between the mining communities, private sector and governments.
ESA-EU Interim EPA: 6th meeting joint communique (EU)
The Parties discussed progress made so far in the implementation of the iEPA and the exchange of information in respect of tariff reduction and modification of the tariff nomenclature and agreed to continue exchanging information on these matters. The Parties agreed to consider setting up an appropriate mechanism of monitoring of the implementation of the iEPA. The Parties agreed to finalize the procedures relating to the implementation of the modernization of the Protocol on Rules of Origin of the ESA-EU iEPA as agreed at the 5th EPA Committee meeting.
India, Mauritius back to negotiating free trade pact (The Hindu)
“Negotiations are expected to begin full-fledged after the next meeting in November in Mauritius,” a government official told BusinessLine. The CECPA will include trade in goods, services as well as investment facilitation. “Now that the DTAA has been signed and implemented the bitterness is behind us and the two countries are now ready to go ahead and finalise the CECPA,” the official said. India is not expected to gain much in terms of market access for goods from the free trade pact as Mauritius is a very small market. However, in the area of services, especially tourism and hotels, there is a lot of scope, the official added. “Mauritius also has trading arrangements and preferences with other countries and regions which Indian investors could take advantage of once the FTA is in place,” the official said.
Bridging the Red Sea: how to build an Africa-Gulf partnership (emerge85)
Africa’s importance is not lost on the rest of the world, and the uneven relationship that has developed between the GCC and Africa leaves room for mutual growth. While individual members of the GCC, such as the UAE, enjoy flourishing trade connections, the GCC as a whole lacks a cohesive strategy for trade with Africa. Instead of having individual countries compete with each other – and sometimes getting in each other’s way – the regional bloc is uniquely positioned to embrace a comprehensive Africa strategy. It is a win-win situation: Not only would Gulf companies benefit from better access to African markets, they would also offer tried-and-tested solutions to the development challenges facing these emerging markets. Executed properly, it could be a model example of South-South co-operation. But it needs to happen quickly – before this particular dhow has sailed. [The authors: Simon Allison, Joseph Dana] [Related: Why the UAE is leading the charge into Africa]
ECOWAS ICT ministers approve free roaming for West Africa (ECOWAS)
ECOWAS Ministers in charge of Telecommunications and ICT have approved the free regional roaming regulation for ECOWAS member countries. The ECOWAS Commissioner for Telecoms and ICT, Dr Isaias Barreto da Rosa described the decision as historic and something expected to “touch the lives of ordinary ECOWAS citizens and bring tremendous contributions to our regional integration process as we strive to establish a single digital market in the sub-region and as we move from and ECOWAS of States to an ECOWAS of people”. The approved free regional roaming regulation includes a clear implementation roadmap which will start at the beginning of 2018. A number of other important decisions were also made to foster the development of the ICT sector in West Africa. This includes a revised supplementary act on Universal Access and Service and its funding for digital access.
South Africa copyright policy issues:
(i) Draft IP Policy Phase 1: access to medicines and compulsory licensing. The keenly anticipated draft IP Policy Phase 1 (2017) was published in September 2017 for public comment. It constitutes the first phase in the implementation of a comprehensive IP policy for South Africa. One of the key issues to be addressed is the interplay between the constitutional rights relating to property (of which intellectual property is recognised as a subset) and access to healthcare. This update explores the provisions relating to access to medicines – specifically, those relating to compulsory licensing.
(ii) Department repeats mistakes of others in bid to alter copyright law. The parliamentary portfolio committee on trade and industry is debating a bill to amend the 1978 Copyright Act. The bill, which originated with the Department of Trade and Industry, is intended to give legacy industries such as publishing and civil society institutions such as libraries at least some of the concession they have sought for years, sometimes decades. While the issues at stake are clearly of paramount national importance and not always easy to resolve, the resulting bill is a backward-looking amalgam of provisions poorly aligned with the National Development Plan. Indeed, it would seem to be in contradiction with a related policy recently released by the same department, the draft intellectual property policy of 2017, recently approved by the Cabinet and under finalisation, which calls for a “greater emphasis on innovation, improved productivity, an intensive pursuit of a knowledge economy and the better exploitation of comparative and competitive advantages”.
Uganda: WCO assists URA to enhance its capacity to implement WTO’s Trade Facilitation Agreement
On request of the URA and in support of its effective implementation of the TFA, the WCO undertook a scoping mission from 18 to 23 September, 2017 to assess Uganda Customs’ current practice specifically on the trade facilitation measures. The mission included technical conversations with senior Customs officials on strategic planning, AEO, risk management, human resources management and training, Post-clearance-audit and IT application. The WCO experts briefed the Commissioner of Customs, URA of the findings and will submit a draft Mercator strategy in the coming weeks.
Economic growth in Guinea and how to accelerate it (World Bank)
This paper addresses two main questions: What are the binding constraints to Guinea’s economic growth? What would it take to accelerate growth in the country? Using the growth diagnostic approach, the paper finds three binding constraints to growth: (i) lack of good infrastructure (roads and electricity), (ii) low access to finance, and (iii) poor governance.
Tanzania: From mining to oil and gas - structural change or just big numbers? (UNU-WIDER)
This paper extends UNU-WIDER Working Paper 2016/79, which examined the economic situation in Tanzania during the resurgence of gold and diamond production after 1999, with the situation that emerged as the country began to exploit its very large resources of natural gas mainly from the Indian Ocean. The mining boom after 1999 provided the authorities with significant lessons and opportunities associated with managing natural resource wealth. The present paper additionally examines some of the specific policy and regulatory decisions taken since 2015, and tries to assess how the multiple challenges of new natural gas wealth are being addressed. It concludes that the experience thus far is not encouraging.
Intergovernmental Group of Twenty-Four: statement (IMF)
Reforming the governance of the Bretton Woods institutions: We support a quota-based, adequately-resourced IMF that is less dependent on borrowed resources. We call for at least maintaining the current lending capacity of the IMF. We look forward to the completion of the 15th General Review of Quotas, including a new quota formula, by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019. We call for a revised formula that emphasizes greater weight of GDP PPP within the GDP blend and further shifts quota shares from advanced economies to dynamic EMDCs, reflecting their growing weight in the global economy, while protecting the quota share of the poorest countries. The realignment of quota shares must not come at the expense of other EMDCs. We reiterate our longstanding call for a third Chair for Sub-Saharan Africa to enhance the voice and representation of the region, provided that it does not come at the expense of other EMDCs’ Chairs.
For the World Bank, we call for a Shareholding Review that upholds the Istanbul Principles to achieve equitable voting power between developed and developing and transition countries (DTCs) and produces an outcome that has broad support from the membership. We call for its successful conclusion by the Spring Meetings of 2018. It is essential to enhance and safeguard the financial strength of IBRD and IFC, including through capital increases, further balance sheet optimization, and review of financial transfers. We urge the WBG to put robust measures in place to ensure the effective implementation of IDA18 by the time of the mid-term review. [Note: Kenya, Ecuador are new members of the G24]
IMF Fiscal Monitor: tackling inequality
This Fiscal Monitor focuses on how fiscal policy can help governments address high levels of inequality while minimizing potential trade-offs between efficiency and equity. It documents recent trends in income inequality, including inequality both between and within countries, then examines the redistributive role of fiscal policies over recent decades and underscores the importance of appropriate design to minimize any efficiency costs. It then focuses on some key components of fiscal redistribution: progressivity of income taxation, universal basic income, and public spending policies for achieving more equitable education and health outcomes.
Today’s Quick Links: EU Trade Commissioner Trade Cecilia Malmström will host a High Level Roundtable (20 October, Brussels) on the interlinkages between EU instruments and policies on trade, investment and development. SADC Joint Tripartite Technical Meeting (16-18 October, East London) Islamic Finance Corporation, Morocco launch study to bridge Africa transport, logistics gap Ethiopia’s move towards Bt Cotton commercialization UNCTAD: Green energy could help developing countries diversify their economies GTR: Assessing India’s trade finance scene OECD: Valuing New Zealand’s digital economy (pdf) FAO: Latin America and Caribbean are falling off path to Zero Hunger by 2030 |
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Alarm bells as more developing countries become commodity-dependent
Sustainable management of the commodity sector can fuel global economic growth. Nine more developing economies became dependent on commodity exports between 2010 and 2015, bringing the total to 91, about two-thirds of all developing countries, a new UN report says.
An UNCTAD report launched today, “The State of Commodity Dependence 2016”, highlights that between 2010-2015 developing countries saw their revenue from commodity exports jump 25% to US$ 2.55 trillion.
Commodity dependence can negatively affect human development indicators like life expectancy, education, and per capita income, and about two thirds of commodity-dependent developing countries recorded a low or medium human development index in 2014-2015, according to the report.
“In the context of dramatic volatility in commodity prices, developing countries will struggle to achieve the Sustainable Development Goals unless they break the chains of commodity dependence,” UNCTAD Secretary-General Mukhisa Kituyi said in Geneva ahead of the report’s release.
“Many developing countries have been commodity-dependent for the past three decades, and it is worrying to see that the numbers are going up,” Dr. Kituyi said.
Nearly 400 million people will need to be lifted out of poverty by 2030 if the Sustainable Development Goals are to be achieved in commodity-dependent developing countries.
The rise in commodity dependence was most noticeable in Africa, where seven new countries entered the category in 2014-2015, bringing the total to 46. Over the same period, the number remained stable at 28 in Latin America and the Caribbean, while the region of Asia and Oceania saw its total increase by two to 17.
Regarding the type of exports, dependence was predominantly on agricultural goods. This was the case for 41% of the countries, while 30% depended on fuel exports and 23% on minerals, ores and metals.
More than half of the countries depending on agricultural commodity exports were African, while the region of Asia and Oceania was home to two thirds of those relying on minerals, ores and metals, and almost half of those dependent on the export of fuels.
The negative relationship between commodity dependence and human development is stronger for dependence on import commodities than for dependence on export commodities, in particular for food and fuel import dependence.
UNCTAD defines a country as dependent on commodities when these account for more than 60% of its total merchandise exports in value terms.
UNCTAD presented the report at the ninth session of the multi-year expert meeting on commodities and development, convening in Geneva on 12 and 13 October 2017.
Download: The State of Commodity Dependence 2016 (PDF, 7.2 MB)
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Intra-African investments key for economic growth
President Jacob Zuma says intra-African investments are critical to Africa’s future economic growth and South Africa is ready to contribute meaningfully to increase the levels of investments while growing intra-Africa trade.
He was addressing the Zambia-South Africa Business Forum held in Lusaka, Zambia on Thursday. The business forum was themed ‘Towards Increased Trade and Investment Cooperation’.
He said the South African government in 2016, through the Department of Trade and Industry (Dti), created Trade Invest Africa, which amongst others establishes sourcing linkages with African trading partners as its contribution to facilitating the imports of African value-added manufactured products into South Africa.
Trade Invest Africa facilitates investments by South African entities in the rest of Africa so as to increase the levels of intra-Africa trade.
Trade Invest Africa has also committed to partner with the Zambian government in hosting the “Invest in Zambia” Conference due to take place in South Africa next month.
Zambia is the second largest destination of South Africa’s direct investment in the world, after Nigeria. Available data indicates that between January 2003 and February 2016, a total of 49 South African Foreign Direct Investment (FDI) projects were recorded.
President Zuma said these projects represent a total capital investment of R37 billion, creating more than 7 000 employment opportunities in mining, manufacturing, metals, financial services, communications, and food and tobacco industries.
“It is evident that the business interactions and exchanges between the two countries are bearing fruit and that the good relations that exist continue to be strengthened.
“I remain convinced that the commercial, investment and economic relations between South Africa and Zambia are at their best. However, they have not yet reached their peak,” said President Zuma.
He believes that the two countries have only scratched the surface of the diverse investment and trade opportunities, particularly in infrastructure and industrial development.
These opportunities beckon a focused and effective engagement, he said.
“We must collaborate as equal partners in the journey of market integration, infrastructure and industrial development for a prosperous Africa.”
The forum was attended by leaders from the private sector, the development finance institutions and key public enterprises, with a common goal of developing the economies of their respective countries and the African continent.
SA, Zambia open for business
President Zuma has reiterated that South Africa and Zambia are open for business. He said there are many opportunities and the business sectors on both sides must be creative and explore.
He invited the business sector to use the opportunity provided by the warm historical relations between the two countries to advance business activities in both countries.
“We should work tirelessly to promote economic advancement so that we can bid goodbye to poverty and unemployment. We have it within our power to make Africa a better place for all our peoples. Let us achieve greatness in Zambia and South Africa, and make our liberation heroes proud in both countries,” said the President.
Remarks by President Jacob Zuma on the occasion of the Zambia-South Africa Business Forum
You have come together as leaders from the private sector, the development finance institutions as well as key public enterprises. You share the common goals of developing the economies of our respective countries and our continent.
The theme of this business forum appropriately titled “Towards Increased Trade and Investment Cooperation”. The business forum takes place exactly 10 months after President Lungu and his esteemed business delegation visited South Africa.
Those of you who participated in the December 2016 business forum would recall that President Lungu and myself appealed to the private sector to seek novel ways of boosting the productive capacity of our industries and we asked that you partner with us in developing infrastructure that leverages industrialisation.
We also recommended that all of our cumulative efforts must prioritise the beneficiation of the abundant natural resources that our two countries are endowed with. At that meeting we also committed that our two governments would continue to create environments that are conducive to attracting investment and facilitate trade between our countries and with the continent as a whole.
I am pleased to announce to you that notable strides have been made in this regard. In terms of the government-to-government engagements, yesterday our Ministers concluded a meeting of the Joint Commission for Cooperation (JCC) which is the bilateral platform that is used to strengthen political, economic and social cooperation.
I am particularly pleased that the Joint Trade and Investment Committee (JTIC) was launched on the 20th September 2017 by our respective Trade and Industry Departments. I would like to commend the officials of the two countries for the speedy conclusion of the draft implementation matrix on trade and investment.
We wish to assure you that we will closely monitor progress on the programmes that the officials have outlined in order to promote bilateral trade and investment as well as facilitate engagements between our business communities.
We have noted with appreciation continued positive growth of trade between our sister Republics, reaching R33 billion in 2016.
We cannot overemphasise the urgent need for our economies to break out of the commodity dependence towards a more diversified export base. We need to see increasing activities on the manufacturing side.
In this regard, South Africa has placed great importance on implementing an outward investment-led approach across the continent.
Intra-African investments are critical to Africa’s future economic growth and South Africa is ready to contribute meaningfully to increasing the levels of intra-Africa investments whilst growing intra-Africa trade.
It is in this context that my government in 2016, though the Department of Trade and Industry, has created Trade Invest Africa, which amongst others establishes sourcing linkages with African trading partners as its contribution to facilitating the imports of African value-added manufactured products into South Africa.
More strategically, Trade Invest Africa facilitates investments by South African entities in the rest of Africa so as to increase the levels of intra-Africa trade.
Trade Invest Africa has also committed to partner with your government, Mr President, in hosting the “Invest in Zambia” Conference due to take place in South Africa on 01 November 2017.
Zambia is the second largest destination of South Africa’s direct investment in the world, after Nigeria. Available data indicates that between January 2003 and February 2016, a total of 49 South African FDI projects were recorded.
These projects represent a total capital investment of thirty seven billion rand, creating more than seven thousand employment opportunities in mining, manufacturing, metals, financial services, communications, and food and tobacco industries.
It is evident that the business interactions and exchanges between the two countries are bearing fruit and that the good relations that exist continue to be strengthened.
I remain convinced that the commercial, investment and economic relations between South Africa and Zambia are at their best. However, they have not yet reached their peak.
I believe that we have only scratched the surface of the diverse investment and trade opportunities, particularly in infrastructure and industrial development. These opportunities beckon our focused and effective engagement.
We must collaborate as equal partners in the journey of market integration, infrastructure and industrial development for a prosperous Africa.
Let me remind you that South Africa and Zambia are open for business! There are many opportunities and our business sectors on both sides must be creative and explore.
We invite you to use the opportunity provided by the warm historical relations between the two countries to advance business activities in both countries.
Allow me to also remind you that the year 2017 is the year of OR Tambo in South Africa. We are celebrating the centenary of this great South African hero who would be turning 100 years old on 27 October this year, had he lived.
He dedicated his life to making South Africa free of racism, repression, injustice and inequality and to ensure a better life for all especially the black majority that had been in bondage.
We know that he would not be content merely with freedom and democracy.
He would urge us to continue on this mission of a fundamental transformation and to work for the prosperity of the peoples of both Zambia and South Africa.
In his memory we should rebuild that which apartheid and colonialism sought to destroy over many decades.
We should work tirelessly to promote economic advancement so that we can bid goodbye to poverty and unemployment.
We have it within our power to make Africa a better place for all our peoples. Let us achieve greatness in Zambia and South Africa, and make our liberation heroes proud in both countries.
I thank you.
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ESA-EU Interim EPA: Joint communiqué of the sixth meeting of the EPA Committee
The sixth meeting of the EPA Committee under the Interim Economic Partnership Agreement (IEPA) between the Eastern and Southern Africa (ESA) region and the European Union was held in Antananarivo, Madagascar on 02-03 October 2017. The two Sub-Committees, the Customs Cooperation Committee and the Joint Development Committee took place back to back with the EPA Committee.
The Parties reaffirmed their commitment to the iEPA as a mechanism for dialogue and partnership, as well as a tool to foster development and reinforce regional integration.
The Parties discussed progress made so far in the implementation of the iEPA and the exchange of information in respect of tariff reduction and modification of the tariff nomenclature and agreed to continue exchanging information on these matters.
The Parties agreed to consider setting up an appropriate mechanism of monitoring of the implementation of the iEPA.
The Parties agreed to finalize the procedures relating to the implementation of the modernization of the Protocol on Rules of Origin of the ESA-EU iEPA as agreed at the 5th EPA Committee meeting.
The Parties adopted a decision on the extension of the automatic derogation for preserved tuna and tuna loins from 2018 to 2022. The automatic derogation will come into effect as from 01 January 2018. A decision on the derogation for salted snoek was also adopted.
The ESA side underlined the critical shortage of raw tuna in the region and the need for the EU to display flexibility in considering the upcoming request for derogation. The ESA side requested the EU to expeditiously provide a reply to the letter sent by Mauritius following the meeting held in Brussels on 11 September 2017.
The Joint Development Committee reviewed progress relating to the accompanying measures undertaken by the four countries and the state of play of the financial support provided under the 10 and 11th EDF. The possibility of identifying additional resources to fund iEPA related projects was raised by the ESA side.
The EU agreed to mobilize TCF funds to finance hosting and participation in events/meetings related to the iEPA implementation and deepening of the agreement.
The EPA Committee adopted the decision on the accession of Croatia and the list of OCTs. Mauritius reiterated its reservation on the BIOT.
The Parties discussed the scope and objectives of the deepening of the iEPA and agreed to exchange papers with the proposal of each Party. A dedicated meeting was agreed to be subsequently held early 2018 with a view to finalizing a joint paper.
The seventh meeting of the EPA committee will take place in Brussels during the last quarter 2018 at a date to be jointly decided.
The meeting took place in a very cordial atmosphere.
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Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development: Communiqué – 2017 Annual Meetings
Ministers of the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development held their ninety-eighth meeting in Washington D.C. on October 12, 2017 with Abraham Tekeste, Minister of Finance and Economic Cooperation of Ethiopia in the Chair; Mangala Samaraweera, Minister of Finance of Sri Lanka, serving as First Vice-Chair; and Julio Velarde, Governor of the Central Bank of Peru as Second Vice-Chair.
The meeting of the Ministers was preceded on October 11, 2017 by the one hundred and tenth meeting of the Deputies of the Group of Twenty-Four, with Fisseha Aberra, Director of the International Cooperation Directorate at the Ministry of Finance of Ethiopia, as Chair.
G-24 Communiqué
- We held our ninety-eighth meeting in Washington, D.C. on October 12, 2017 with Abraham Tekeste, Minister of Finance and Economic Cooperation of Ethiopia as Chair, Mangala Samaraweera, Minister of Finance and Mass Media of Sri Lanka as First Vice-Chair, and Julio Velarde, Governor of the Central Bank of Peru as Second Vice-Chair.
Managing the Impact of Developments in the Global Economy
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We welcome the increasing momentum in global growth, trade and investment. Emerging market and developing economies (EMDEs) will continue to account for the bulk of global growth. Commodity prices are stabilizing, providing commodity exporters the opportunity to continue undertaking reforms, rebuild buffers, further diversify their economies and stimulate growth. We remain concerned about the medium-term downside risks, which include a potential increase in protectionism, sudden tightening of global financial conditions, roll back of regulatory reforms, and geopolitical risks. International cooperation and policy coordination in key areas are essential to minimize adverse spillovers on growth and financial markets. Multilateral commitment is necessary to maintain an open, rules-based trading system.
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The IMF is central to the Global Financial Safety Net. We encourage greater cooperation between the IMF and the Regional Financial Arrangements. We welcome the ongoing review of the IMF’s toolkit, including possible new instruments, to meet adequately the liquidity and precautionary needs of its member countries and look forward to its early conclusion. We call for evenhanded surveillance and lending decisions, and for the extension of the mandate of the IMF’s Evenhandedness Committee to include the Fund’s lending activities. More work is needed to address and minimize the stigma attached to IMF’s facilities. We support further work to broaden the role and use of the Special Drawing Rights (SDR) as a reserve currency.
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In the 2018 review of the IMF’s Facilities for Low-Income Countries (LICs), we support a more comprehensive engagement with LICs. This includes substantially expanding the resources of the Poverty Reduction and Growth Trust (PRGT), increasing access commensurate with countries’ needs, and introducing a precautionary instrument for LICs.
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We welcome the IMF’s review of country experiences in addressing systemic risks arising from volatile capital flows. We call for a fair assessment of the intent, content and design of macro-prudential and capital flow management measures available to and used by countries to deal with capital flow volatility.
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We call for all countries to implement the Intended Nationally Determined Contributions under the Paris Climate Agreement, reflecting the principle of common but differentiated responsibilities, in light of country-specific circumstances and in the context of poverty reduction and sustainable development. Extreme weather events have substantial adverse human and economic consequences in developing countries, in particular LICs and small island states, which have contributed very little to climate change. We call for a strong global response to the recent devastating hurricanes that hit the Caribbean. We call for supporting the efforts of developing countries to cope with and build resilience to climate-related natural disasters. We look forward to developed countries delivering on their commitment to provide US$100 billion per year new and additional financial resources by 2020 to support developing countries’ climate actions. We urge them to authorize the use of reflows to enhance financing from the Clean Technology Funds.
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We urge continued support from International Financial Institutions (IFIs) and the international community to developing countries that are disproportionately affected by the refugee crisis, including internally displaced populations, and encourage the continued pursuit of developmental approaches to address this serious challenge. We call on IFIs to monitor and address the macroeconomic and development consequences of tightening migration regulations in some countries. We call on IFIs to strengthen their support for conflict affected, fragile, and small states, including deploying innovative financial instruments and partnerships.
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While we welcome global efforts against money laundering and financing of terrorism, we call for more concrete global actions to address the decline of correspondent banking relationships in some countries. We call for stronger multilateral cooperation to effectively combat illicit financial flows.
Building the Foundations for Inclusive Growth
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Our key objective is to transform our economies to boost growth, improve job creation and reduce inequality and poverty. Improving productivity and diversifying our sources of growth are key elements of this agenda. We support the focus of the African Caucus on agricultural transformation as an essential driver of job creation and inclusive growth, and the G20 Compact for Africa. We face the continuing challenge of capturing the benefits of trade and technological change. We call on IFIs to strengthen their support for human capital development, skill building and labor market policymaking, in order to foster quality jobs and smooth labor market adjustments. We ask IFIs to support greater financial inclusion and economic opportunities for women. We encourage their stepped-up support for south-south cooperation on trade, knowledge and investments.
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We urge the IMF and the World Bank Group (WBG) to continue strengthening their assistance in improving domestic resource mobilization and enhancing its contribution to inclusive growth through progressive tax policies, as well as more efficient and better targeted public spending. Peer learning among emerging market and developing countries (EMDCs) through collaborative platforms and capacity building through regional seminars can bring value to this process. We also welcome the work of the Platform for Collaboration on Tax and look forward to its engagement with tax officials of EMDCs for enhanced technical assistance. The IMF and the WBG should also continue to assess the social and distributional impact of fiscal adjustment programs and ensure that these programs include adequate social protection measures for the poor.
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We highlight the importance of effective international tax cooperation that addresses the challenges faced by EMDCs. We support the Automatic Exchange of Information initiative and the inclusive framework on Base Erosion and Profit Shifting, and call for measures for their effective implementation in EMDCs, mindful of their country-specific circumstances. We appreciate the work of the UN Tax Committee and encourage multilateral support to upgrade the Committee to an intergovernmental body. We also call for more attention to developing fair tax rules to guide the taxation of multinational corporations and for international cooperation to prevent harmful international tax competition.
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We reiterate the importance of scaling up infrastructure investments to achieve our sustainable development goals. We welcome the support of the IMF, WBG, and other IFIs in increasing the efficiency of public investments in infrastructure, as well as their impact in improving connectivity, including at the regional level, and addressing distributional and climate objectives. Multilateral Development Banks (MDBs) need to activate financing approaches to make renewable energy affordable. We underscore the key role of MDBs in supporting policy and institutional frameworks, strengthening project preparation and catalyzing private sector financing. In this regard, we welcome the WBG’s focus on maximizing financing for development, and look forward to its effective implementation at the country level. We call on MDBs to deliver on their Joint Declaration of Aspirations on Actions to Support Infrastructure Investments, including through concrete and time-bound actions, to develop new risk mitigation instruments and infrastructure investment as an asset class.
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We welcome the reform of the Joint World Bank-IMF Debt Sustainability Framework for LICs. We stress the importance of providing the necessary time for, and support to, country authorities to prepare and ensure readiness to implement the new framework. It is essential for the debt sustainability assessments to consider the quality of public investments and the significant impact of reducing infrastructure gaps on growth.
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We support the strengthening of the work and collaboration between the WBG and the IMF, based on their expertise and mandates, in supporting countries’ efforts to improve governance and tackle corruption comprehensively. We note the IMF’s review of its role in addressing governance and corruption issues at the country level in an evenhanded manner.
Reforming the Governance of the Bretton Woods Institutions
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We support a quota-based, adequately-resourced IMF that is less dependent on borrowed resources. We call for at least maintaining the current lending capacity of the IMF. We look forward to the completion of the 15th General Review of Quotas, including a new quota formula, by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019. We call for a revised formula that emphasizes greater weight of GDP PPP within the GDP blend and further shifts quota shares from advanced economies to dynamic EMDCs, reflecting their growing weight in the global economy, while protecting the quota share of the poorest countries. The realignment of quota shares must not come at the expense of other EMDCs. We reiterate our longstanding call for a third Chair for Sub-Saharan Africa to enhance the voice and representation of the region, provided that it does not come at the expense of other EMDCs’ Chairs.
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For the World Bank, we call for a Shareholding Review that upholds the Istanbul Principles to achieve equitable voting power between developed and developing and transition countries (DTCs) and produces an outcome that has broad support from the membership. We call for its successful conclusion by the Spring Meetings of 2018. It is essential to enhance and safeguard the financial strength of IBRD and IFC, including through capital increases, further balance sheet optimization, and review of financial transfers. We urge the WBG to put robust measures in place to ensure the effective implementation of IDA18 by the time of the mid-term review.
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We call for strengthening the efforts of the IMF and the WBG towards greater representation of under-represented regions and countries in recruitment and career progression, including at managerial levels. We reiterate the importance of staff diversity and gender balance at all levels, including diversity of educational institutions and backgrounds.
Other Matters
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We welcome Kenya and Ecuador as new members of the Group.
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We thank Ethiopia for its Chairmanship of the Group and welcome Sri Lanka as the incoming Chair. We also welcome Ghana as the Second Vice-Chair. The next meeting of the G-24 Ministers is expected to take place on April 19, 2018 in Washington, D.C.
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3rd Session of the Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration
The African Union Commission is organizing the Third Session of the Specialized Technical Committee (STC) on Finance, Monetary Affairs, Economic Planning and Integration in Addis Ababa, Ethiopia from 23-27 October 2017.
The STC is being organized following the postponement of the Joint Annual Meetings of the AU STC on Finance, Monetary Affairs, Economic Panning and Integration and the United Nations Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development that were scheduled to be held in Dakar, Senegal, from 23 to 28 March 2017. It is necessary to hold the AU STC due to the need to submit Decisions for approval by Summit in January 2018.
Participants to the Conference will be from the Ministries of Finance, Economic Planning, and Integration and Central Banks of AU Member States. Other participants will be from the Regional Economic Communities, United Nations Economic Commission for Africa, and other partners.
The Third Session of the AU STC on Finance, Monetary Affairs, Economic Planning and Integration (Ministerial segment) will take place from 26 to 27 October 2017 and it will be preceded by a meeting of experts from 23 to 25 October 2017.
The Experts’ meeting will consider the following agenda items, among others, with a view to making proposals for adoption by Summit:
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Assessment of progress on regional integration in Africa;
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Revised Strategy for the Harmonization of Statistics in Africa;
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Adoption of the Pan-African Investment Code;
- African Inclusive Markets Excellence Centre;
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Report of the F10 Ministers of Finance on the 0.2 percent levy on imports;
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Continental Free Trade Area;
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Commodities strategy;
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Digital Economy: New context of economic and financial transactions; and
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Agenda 2063: implementation report – validation, monitoring and evaluation framework and domestic resource mobilization strategy.
Additionally, the Ministerial meeting will include a keynote speech and panel on “Growth, inequality and unemployment”.
The STC on Finance, Monetary Affairs, Economic Planning and Integration is expected to deliberate on items on the agenda and propose recommendations for approval by the African Union Summit in January 2018.
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tralac’s Daily News Selection
CFTA negotiations: chief negotiators conclude 7th round of negotiations (AU)
The negotiators (2-7 October) made substantial progress towards the conclusion of CFTA negotiations and agreed on the following: (i) to adhere to the deadline of December 2017 to complete the draft legal text establishing the Continental Trade Area as directed by the AU Assembly of Heads of State and Government; (ii) the title of the legal text, to be called “Agreement Establishing the African Continental Free Trade Area”; (iii) the Protocol on Trade in Services, the Protocol of Trade in Goods and the Protocol on Dispute Settlement Mechanism to be integral part of the CFTA Agreement. The Chief Negotiators provided guidance to the Technical Working Groups and instructed them to proceed with their respective work and report to the 8th Meeting of the CFTA Negotiating Forum.
During the meeting scheduled for 6 November 2017 to 1 December 2017, chief negotiators and experts are expected to prioritize the finalization of the CFTA Texts. The CFTA-NF will consider pending issues in the Agreement Establishing the African CFTA during their next meeting scheduled to take place (20-24 November) following a dedicated session on trade in goods. Any unresolved issues will be referred to the Committee of Senior Trade Officials and then to the AU Ministers of Trade. The entire legal text will be considered by the AU Ministers of Trade at the end of November 2017, prior to its consideration by the Specialized Technical Committee on Justice and Legal Affairs in December 2017. The draft CFTA Agreement will be on one of the agenda items of the January 2018 Summit to be held in Addis Ababa, Ethiopia.
A single African air transport market: meeting of experts (AU)
The Single African Air Transport Market is to be launched during the January 2018 Summit. In preparation for the launch, the Experts of the Ministerial Working Group assisted by AUC, AFCAC, UNECA and RECs, need to meet, discuss and report on the implementation of the immediate measures recommended for starting the marketing and prepare recommendations for the Ministerial Working Group Meeting tentatively scheduled in 26th November 2017 as a side event at the AU-EU Summit. The main objective of the expert meeting (16-18 October) is to assess the reports from each state on the implementation of the immediate measures and to determine activities for the launching of the Single African Air Transport Market in January 2018. The Monitoring Body of the Yamoussoukro Decision will also be convened to deliberate on draft guidelines for the negotiations of air services agreement with third countries. Benefit of full air transport liberalisation (pdf):
To raise awareness on the benefits of air transport liberalisation, AFCAC and IATA in 2015 commissioned a study on benefits of full air transport liberalisation between 12 African countries (Algeria, Angola, Egypt, Ethiopia, Ghana, Kenya, Namibia, Nigeria, Senegal, South Africa, Tunisia and Uganda). The study indicated that complete air connectivity across these 12 countries would add $1.3bn to GDP, create over 155,000 new jobs and consumer will benefit from a 75% increase in direct services, fare savings of 25-35% worth $500m, greater convenience, time savings and approximately 5 million passengers who cannot currently afford air travel would be able to do so as increased competition among airlines would result in reduced fares. A similar cost-benefit study among the five EAC countries (Uganda, Rwanda, Burundi, Tanzania and Kenya) provide compelling evidence that complete liberalisation of air transport among the EAC Member States could result in an addition 46,320 jobs, $202.1m per annum gain in GDP, traffic increase by 46%, fares reduction by 9% on average and increase in frequency by 41% on average. [Download: Concept note, pdf]
For dignity and development, East Africa curbs used clothes imports (New York Times)
Kenya, for example, had half a million workers in the garment industry a few decades ago. That number has shrunk to 20,000 today, and production is geared toward exporting clothes often too expensive for the local market. In Ghana, jobs in textiles plunged by 80 percent between 1975 and 2000. Many people in Zambia, which produced clothes locally 30 years ago, can now only afford to buy imported second hand clothes. Although many support government efforts to build national textile industries, they say that the ban on used clothing should be done incrementally. In Rwanda, where the per capita gross domestic product is $700, many people oppose the ban, saying it has thrown thousands out of jobs distributing and selling second hand clothes and has hurt the nation’s youth in particular. Since Rwandan import tariffs on used garments have been raised 12 times, clothes sellers in Kigali have watched their revenues plummet. The government decision was premature, they said, put in place before the country was able to produce clothes that are affordable. And though the ban excludes imports of second hand clothing, it hasn’t stopped the influx of more expensive new clothing from China.
Nigeria, major world economies consolidate progress on trade and investment facilitation (APO)
Nigeria, Brazil, China, the EU and a host of other leading economic powers made tremendous progress on the Investment Facilitation Initiative for Development, during the WTO mini-ministerial meeting in Marrakesh. In a breakthrough for Nigeria, the group of WTO Friends of Investment Facilitation for Development pledged support for the success of the High-Level Investment Forum to take place in Abuja on 3-4 November, co-hosted by the Ministry of Industry, Trade and Investment and the ECOWAS Commission, in partnership with IFID. The WTO Investment Coalition is made of Nigeria, Argentina, China, Australia, Brazil, Chile, Colombia, Hong Kong, Japan, Korea, Mexico, Pakistan, Russia, Singapore, Switzerland, Canada and the EU. A draft declaration is being negotiated for finalization at the WTO in Geneva, Switzerland, as part of the deliverables for the Buenos Aires, Argentina, Ministerial Conference in December. The objectives of the Investment Coalition are to:
Members review implementation of preferential rules of origin for LDCs (WTO)
WTO members reviewed efforts to implement the Nairobi Decision on preferential rules of origin for least developed countries at a meeting of the Committee on Rules of Origin on 4 October. The Decision aims to facilitate export of LDC goods to both developed and developing countries under unilateral preferential trade arrangements in favour of LDCs. The WTO secretariat presented members an updated note reporting the rates of utilization of LDC preferences. Several members informed the committee of recent developments regarding their preferential rules of origin requirements. [India opposes inclusion of new issues under WTO negotiations]
Strengthening collaboration to support world’s 32 landlocked developing countries (IRU)
The UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS) and IRU renewed their working relationship today with the signing of a memorandum of understanding to draw on their respective strengths in jointly supporting landlocked developing countries to implement the Vienna Programme of Action. Through the MoU, the two entities will advocate for key issues related to transport. These include: improving border crossings, developing regional transport corridors, private sector partnerships and trade facilitation for the world’s 32 LLDCs and their transit partners.
Zimbabwe, Zambia plan one-stop border post in Victoria Falls (News Ghana)
Neighboring countries Zimbabwe and Zambia are close to finalizing a bilateral agreement to set up a OSBP in the resort town of Victoria Falls, a senior Zimbabwe government official said Monday. The one-stop border post was temporarily operational in 2013 during the United Nations World Tourism Organization General Assembly, co-hosted by the two countries. “The Border Efficiency and Management Systems technical committee has to date initiated engagement with Zambia toward the establishment of an OSBP at Victoria Falls border and the proposed bilateral agreement and procedures manual are being finalized,” the permanent secretary in the Ministry of Industry and Trade, Abigail Shonhiwa said.
Zimbabwe: ‘Declare entire Bulawayo an SEZ’ (The Herald)
Industry and commerce executives in Bulawayo have called on the Government to declare the entire city an industrial Special Economic Zone as opposed to adopting a sectoral approach. Contributing during a pre-budget dialogue symposium organised by The Chronicle yesterday, participants said the focus on leather and textile SEZ was narrow arguing that such a move would not yield the desired revival of Bulawayo industries. They pointed out that the city had a wider spectrum of industry operations across different sectors, which should benefit from the model through a value chain system. CZI Matabeleland Chapter president Mr Joseph Gunda said while business was pleased that Bulawayo has been declared under the SEZ, they wanted an inclusive model.
Mozambique’s first inland port starts operating in 2018 (Macauhub)
Mozambique’s first inland port is due to come on stream in 2018, with a land-based intermodal terminal directly linked to two national highways and the Beira/Machipanda railway line in the provinces of Sofala and Manica respectively, according to Mozambican daily newspaper Noticias. The inland port will be installed at Inchope, where the two roads linking the southern, central and northern areas of the country meet, according to the head of that administrative post.
Kenya says high costs impede trade, foreign investment (Xinhua)
High trade facilitation costs and poor logistics services are hampering foreign direct investment and growth in the east African region, a senior Kenyan official said on Tuesday. Principal Secretary for Trade Chris Kiptoo said smooth logistics not only reduces the cost of imports but is vital to producers to be able to participate in global production circles and eventually move into new business. The 2017 Logistics Performance Survey report, released by the Shippers Council of East Africa, said the climate of conducting business has improved in the region, thanks to right policy choices, the rise in intra-regional trade, and an enabled private sector. The report noted a 40% decrease in truck turnaround time between 2014 and 2016 between Mombasa and Nairobi, to 26.4 hours; Mombasa to Kampala, 10.7 days; and Mombasa to Kigali, 12.5 days. Langat said the improvement in port dwell time, from about 68 hours in January 2015 to eight hours in December of 2016 at the port of Mombasa can be attributed to the introduction of fixed berthing and expansion of the harbor. [EA transporters secure cargo with e-tracking]
Tanzania: All is well with our ports, assures minister Tizeba (IPPMedia)
Bringing down the curtain on the two day two-day International Horticulture Stakeholders Conference jointly organised by the Tanzania Horticultural Association and the ITC in Arusha, Dr Tizeba assured players in the horticulture industry that all was well with the two exit points in exporting their harvests. Fresh from taking oath of office, the minister admitted that there were concerns at the two ports, which threatened to scare away investors of the otherwise lucrative sector. “It is true that we had some serious concerns but let me assure you that we have rectified them. The process of exporting cargo now takes less time compared to how the situation was before,” noted the minister. Earlier on, TAHAFresh general manager Amani Temu told the minister that those engaged in the horticulture business were now opting for the Mombasa port in the neighboring country of Kenya, to avoid the inconveniences and the bureaucracies they experienced at the Dar port.
Global Hunger Index 2017 (IFPRI)
The regions of the world struggling most with hunger are South Asia and Africa south of the Sahara, with scores in the serious range (30.9 and 29.4, respectively). The scores of East and Southeast Asia, the Near East and North Africa, Latin America and the Caribbean, and Eastern Europe and the Commonwealth of Independent States range from low to moderate (between 7.8 and 12.8). These averages conceal some troubling results within each region. Eight countries suffer from extremely alarming or alarming levels of hunger. Except for Yemen, all are in Africa south of the Sahara: Central African Republic, Chad, Liberia, Madagascar, Sierra Leone, Sudan, and Zambia. Many of these countries have experienced political crises or violent conflicts in the past several decades. [Report summary]
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Chief negotiators conclude the 7th round of Continental Free Trade Area (CFTA) negotiations
The 7th Meeting of the CFTA Negotiating Forum took place from 2nd – 7th October 2017 at the African Union (AU) Headquarters, in Addis Ababa. The meeting brought together Chief Negotiators and Trade Experts from African Union Member States.
The negotiators made substantial progress towards the conclusion of CFTA Negotiations and agreed on the following:
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to adhere to the deadline of December 2017 to complete the draft legal text establishing the Continental Trade Area as directed by the AU Assembly of Heads of State and Government;
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the title of the legal text, to be called “Agreement Establishing the African Continental Free Trade Area”;
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the Protocol on Trade in Services, the Protocol of Trade in Goods and the Protocol on Dispute Settlement Mechanism to be integral part of the CFTA Agreement.
The Chief Negotiators provided guidance to the Technical Working Groups and instructed them to proceed with their respective work and report to the 8th Meeting of the CFTA Negotiating Forum.
The CFTA, is a flagship project of the African Union’s Agenda 2063, and aims to boost Africa’s economic growth and development through integration by creating “One African Market”, which will boost intra-African trade and create a wider market of more than 1.2 billion people with a combined GDP of US Dollars 2.19 trillion.
The establishment of the CFTA is the first Agenda 2063 flagship project on target for completion within the roadmap established by the Agenda 2063 First Ten Year Implementation Plan. As decided by the June 2015 Summit in Johannesburg, South Africa, the second phase will comprise of negotiations on Investments, Intellectual Property Rights and Competition Policy.
During the meeting scheduled for 6 November 2017 to 1 December 2017, Chief Negotiators and Experts are expected to prioritize the finalization of the CFTA Texts. The CFTA-NF will consider pending issues in the Agreement Establishing the African CFTA during their next meeting scheduled to take place from 20th – 24th November 2017 following a Dedicated Session on Trade in Goods. Any unresolved issues will be referred to the Committee of Senior Trade Officials and then to the AU Ministers of Trade.
The entire legal text will be considered by the African Union Ministers of Trade at the end of November 2017, prior to its consideration by the Specialized Technical Committee (STC) on Justice and Legal Affairs in December 2017. The draft CFTA Agreement will be on one of the Agenda items of the January 2018 Summit to be held in Addis Ababa, Ethiopia.
Visit tralac’s CFTA resources page for more on the Continental Free Trade Area negotiations.
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Nigeria, major world economies consolidate progress on trade and investment facilitation
The group of WTO Friends of Investment Facilitation for Development (FIFD) pledged support for the success of the High-Level Investment Forum taking place in Abuja on the 3rd and 4th of November
Nigeria, Brazil, China, the European Union (EU) and a host of other leading economic powers on 10 October 2017 made tremendous progress on Investment Facilitation Initiative for Development, in Marrakech, Morocco, during the World Trade Organisation (WTO) Mini-Ministerial meeting.
In a breakthrough for Nigeria, the group of WTO Friends of Investment Facilitation for Development (FIFD) pledged support for the success of the High-Level Investment Forum taking place in Abuja on the 3rd and 4th of November, co-hosted by the Ministry of Industry, Trade and Investment and the Economic Community of West Africa (ECOWAS) Commission in partnership with FIFD.
Investment Facilitation for Development is an initiative by some WTO members including Nigeria as a core member to constructively and progressively drive trade and investment with concrete deliverables in mind.
This WTO Investment Coalition is made of Nigeria, Argentina, China, Australia, Brazil, Chile, Colombia, Hong Kong, Japan, Korea, Mexico, Pakistan, Russia, Singapore, Switzerland, Canada and the European Union.
A draft declaration is being negotiated for finalization at the WTO in Geneva, Switzerland, as part of the deliverables for the Buenos Aires, Argentina, Ministerial Conference in December.
The Objectives of the Investment Coalition are:
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Place investment facilitation as a priority for the WTO Ministerial MC11 in Buenos Aries, Argentina.
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Achieve coherence between the trade and investment policy communities and position the WTO to be more pro-development with actual deliverables for its members.
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Seek active investment opportunities in their countries.
“Nigeria is part of this coalition because we see investment and trade facilitation as a positive and pro-development agenda, and ensure that the WTO is better responsive to domestic economic priorities,” said the Minister of Industry, Trade and Investment Dr. Okechukwu
“This Investment Facilitation Initiative is potentially significant to position WTO better to respond to the investment needs of developing countries, in general and African countries in particular,” he added.
In his remarks, the Director General/Chief Negotiator of the Nigerian Office for Trade Negotiations (NOTN) Ambassador Chiedu Osakwe expressed delight at the progress made so far, saying: “This is for economic growth and recovery, creation of employment opportunities and connection to global value chains.”
The Abuja event titled “High-Level Forum on Trade and Investment Facilitation for Development” is expected to bring together African Investment and Trade decision makers as well private sector representatives to share perspectives on leveraging trade and investment opportunities on the continent. It seeks to connect actual investors within and outside the continent with African policy makers in order to produce concrete outcomes.
At the concluding session of the WTO Ministerial in Marrakech, Edward Yau, Hong Kong China Trade and Industry Secretary, in reporting to the Ministerial Meeting, invited the WTO to ensure the success of the Abuja event on trade and investment facilitation.
Signed
Constance C. Ikokwu
Strategy and Communications Adviser to Minister
Distributed by APO on behalf of Federal Ministry of Industry, Trade & Investment, Nigeria.