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Kenya forms team to negotiate international trade deals
The Government has formed a multi-agency council to coordinate bilateral, regional, inter-regional and multilateral trade.
In a gazette notice on 15 September 2017, Industry, Trade and Co-operatives Cabinet Secretary Adan Mohamed said the National Trade Negotiations Council (NTNC) will identify trade policy gaps, give guidance and advise government on key trade issues.
The development follows the recent launch of National Trade Policy to help grow both domestic and international trade. The formation of NTNC is in line with the Marrakesh Agreement of the World Trade Organisation (WTO) by 124 countries in 1994 to help improve global trade.
The terms of reference for the committee, whose members have been drawn from 60 government ministries, State departments and corporations also include analysing all concluded trade agreements.
It is hoped that the committee will be advising government on the implications of the trade agreements to the economy and how to take advantage of them to grow external trade. Kenya has been facing challenges in getting value out of trade agreements which have previously been struck without thorough analyses.
According to CS Mohamed, the council, which will be chaired by the Principal Secretary in the Ministry, will also come in handy to advise government on possible options to pursue on addressing emerging trade disputes.
Small and medium-sized enterprises will also be helped to tap into international trade.
The council will be expected to look at all trade documents, notifications, coming from bodies such as WTO, United Nations Conference on Trade and Development, Economic Partnership Agreements, Agoa, East African Community, Comesa, and make decisions.
The National Trade Negotiations Council
The Kenya Gazette, Vol. CXIX – No. 136, 15 September 2017
It is notified for the general information that the Cabinet Secretary responsible for Trade has established a Council to be known as the National Trade Negotiations Council (NTNC) pursuant to the Marrakesh Agreement of the World Trade Organization (WTO).
Composition of the Council
1. The Council shall consist of the following members:
The Intergovernmental Standing Committee on Shipping (ISCOS);
Terms of Reference
2. The Terms of Reference of the Committee are to–
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co-ordinate with government ministries, state departments, state corporations on all bilateral, regional, inter-regional and multilateral trade matters;
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identify trade policy gaps, give guidance and advise to the government on the way forward;
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analyse all concluded trade agreements and advise the government on their implications to the Kenyan economy and how to take advantage of them to increase the country’s external trade;
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analyse all received negotiating agendas/proposals and consequently generate negotiating positions and strategies;
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Undertake research and analysis required to inform negotiating proposals and the positions the country should take;
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analyse all trade documents, notifications, coming from WTO, UNCTAD, EPAs, AGOA, EAC, COMESA, CFTA and other trade organizations and advise the government as necessary;
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liaise with mandated national bodies for preparation of notifications which Kenya will notify to other countries;
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analyze received notifications from other countries and advise the Government as appropriate;
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advise government on possible options to pursue on addressing emerging trade disputes;
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join other EAC Partner States in preparation and participation in the EAC Trade Policy Reviews undertaken by the WTO in Geneva;
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advise Government on how to engage WTO, UNCTAD and ITC on implementation of trade agreements, preparation of SMEs to be export-ready as well as policy analysis and research in order to grow the country`s external trade;
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organize in consultation with the ministry responsible for trade matters and county governments, organize outreach programmes intended to sensitize the business community on the implications of concluded trade agreements and greater involvement of private sector on the way forward;
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develop fundraising strategies in consultation with the ministry responsible for trade;
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establish such subsidiary bodies/working groups as may be required;
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develop its own co-ordination framework and procedure deemed necessary;
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identify best practices and integrate them into the operations and working process of the Council; and
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liaise with Ministry responsible for Trade on the issue of monitoring and evaluation.
Powers of the Council
3. In the execution of its terms of reference, the Council shall, with the approval of the Cabinet Secretary responsible for Trade, have the power to–
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co-opt members or appoint nominees as it deems fit only for specialized aspects of its Terms of Reference;
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source additional funding for its activities; and
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do or perform such other things or acts as necessary or expedient for the execution of its terms of reference.
Institutional Arrangements of Co-ordination
4. Chairmanship
The Principal Secretary in the Ministry responsible for Trade will chair the Council. The Secretary for Trade will be the Deputy Chair while the Director responsible for International Trade will be the alternate Deputy Chair. In the absence of the substantive Chair, the Deputy Chair will assume the duties of the Chair. In absence of the Chair, Deputy Chair and Alternate Deputy Chair, members present shall nominate one from the public sector to chair the meeting.
4.1 Secretariat
The Ministry responsible for International Trade shall constitute the full time secretariat whose main functions are to–
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Mobilize resources for the Council activities;
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organize meetings and seminars;
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assist in preparing documentation;
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contribute and coordinate formulation of country negotiating positions, research and analysis, preparation of negotiating proposals and ministerial conferences and any other matters deemed necessary;
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follow-up daily on trade matters with other government ministries, state agencies, domestic and regional as well as international trade organizations;
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prepare Terms of Reference for studies, research and analysis and ensure follow-up;
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co-ordinate Standing Committees; and
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implement a communication strategy to improve institutional promotion of the Council, disseminate information on policy developments on trade matters among the Council, support public awareness of matters related to domestic and international trade.
4.2 Standing Committees
The NTNC shall establish Standing Committees comprising a small number of experts from relevant institutions to work on specific national, regional, interregional or multilateral trade issues.
Standing Committees shall meet quarterly and on ad hoc basis when deemed necessary. Output of the Standing Committee(s) shall be presented to the NTNC for endorsement and recommendation to appropriate agencies.
Operating Procedures
5. Mode of Operation
In performance of its mandate, the National Trade Negotiations Council shall regulate its own procedure.
5.1 Frequency of Meetings
The NTNC shall meet quarterly and on ad hoc basis.
5.2 Quorum
A third of the stakeholder membership shall constitute a quorum for the NTNC meetings and its Standing Committees.
5.3 Decision Making
Decisions of the NTNC shall be taken by consensus. If consensus is not realised, then the meeting shall resort to a simple majority rule based on members present. Decisions of the Standing Committees shall be taken by consensus. If consensus is not realised, then the meeting shall resort to a simple majority rule based on members present.
5.4 Work Plan and Action Plan
The NTNC shall develop a work Plan that will be revised every three years and amended whenever need arises. Aiming at completing the objectives set up in the work plan, the NTNC will propose and approve a yearly Action Plan.
Additional activities that were not proposed in the original Action Plan can be proposed by Members and endorsed by the Council. For that purpose, an agenda shall be circulated for comments by the secretariat at least fourteen (14) working days before each NTNC meeting.
5.5 Reporting
The Council shall execute its terms of reference with all due diligence and speed and shall submit to the Cabinet Secretary for the Ministry responsible for Trade its annual reports not later than 31st January of the preceding year.
Budget
6. A resource mobilization strategy will be formulated by the Council. The long-term operating costs of the NTNC will be covered by funding from national budget.
Contact Point
7. The contact point for the National Trade Negotiations Council shall be the State Department of Trade, Teleposta Towers, P.O. Box 30430 – 00100 Nairobi. Submissions of memoranda by members of the public should be addressed to the Secretariat, National Trade Negotiations Council, P.O. Box 30430 – 00100, Nairobi.
Cabinet Secretary for Industry, Trade and Co-operatives.
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WTO Ministerial Conference in Buenos Aires: What’s at stake for small, least developed and sub-Saharan African countries?
The World Trade Organization (WTO) Geneva preparatory process is sine qua non for all WTO Ministerial Conferences. It has nevertheless proven challenging for small delegations, given their limited capacity in terms of technical staff and other forms of support to effectively engage in all discussions, amid a number of other commitments.
The process toward the WTO’s 11th Ministerial Conference (MC11), to be held in Buenos Aires in December 2017, is no exception. How to ensure the inclusiveness and transparency of the process while making progress? How can the outcome of the Ministerial, amid a plethora of other issues, be reflective of the interests of the diverse membership of the WTO? What should be the approach, strategies and priorities? The success of Buenos Aires will depend to a large extent on the ability of the system to manage a fair and transparent process, as well as its capacity to cope with expectations in terms of outcomes.
In this regard, and given their unique situation, it is important for small states, least developed countries (LDCs) and other small delegations to be realistic in terms of the outcomes they are seeking at MC11, and how these can be further developed and advanced both in Geneva and at MC11. This represents an opportunity to ensure MC11 delivers on future work that is inclusive, particularly in view of the challenges these countries face to becoming integrated into the multilateral trading system.
This issue of Commonwealth Trade Hot Topics covers some key issues small states, LDCs and countries in sub-Saharan Africa (SSA) could focus on in the run-up to MC11 and beyond.
Small states, LDCs and SSA countries dependent on trade for growth and development
Small states, LDCs and SSA countries depend considerably on trade for their growth and development. It is evident that trade contributes significantly to the gross domestic product (GDP) of these countries. For small states, the average percentage contribution of trade to GDP has remained well above the world average, even though these countries face a number of challenges and vulnerabilities that constrain their fuller participation in international trade, leading to slower growth in their exports and a small share of global trade. These challenges include, among others, small domestic markets; dependency on a few foreign markets; high costs of doing business (owing to high costs of energy, transport and communication servicing); long distances from major markets; lack of export diversification and reliance on raw material exports; little resilience to natural disasters; fragile natural environments; and poor and underdeveloped infrastructure.
In this regard, small states, LDCs and SSA countries recognise the important role the WTO plays in providing a system that has the potential to support their trade interests and their economic growth and sustainable development. In addition, the WTO plays a crucial role in ensuring transparency and predictability in the global trading system. This is especially important given the continued uncertainty in the global economic and trading landscape.
Beyond MC11
As small states, LDCs and SSA countries prepare for MC11, they must also think beyond the Ministerial, particularly in terms of focusing on what may be achievable under the Doha Round, and prioritise incremental gains. Besides continuing to advance issues identified in this paper in a post-MC11 period, it is important for small states, LDCs and SSA countries to take stock of the Doha Round, which is now in its 16th year of negotiation, and assess what is possible and achievable, particularly in view of the limited success of the Round in terms of delivering development-friendly outcomes. Such an assessment would also help countries understand existing mandates in a more substantive way. A review of progress on the Doha Round is also important considering that the global economic and trade landscape has undergone considerable transformation since the Round’s inception.
In addition, it is important for small states, LDCs and SSA countries to assess the impact of new issues on their economies and to think strategically, particularly given their limited capacity to effectively engage in all WTO discussions. An assessment of the Doha Round coupled with the prioritisation of issues that are achievable would enable LDCs, small states and SSA countries not only to understand the issues under discussion but also to be more proactive, with a view to achieving incremental gains in areas of interest to them. In addition, it would allow LDCs, small states and SSA countries to provide the required policy guidance to contribute to the negotiating process.
Collin Zhuawu is Trade Adviser in the Commonwealth Small States Office in Geneva and Teddy Y. Soobramanien is a.i. Head and Economic Adviser of the International Trade Policy Section, Commonwealth Secretariat. Any views expressed in this article are those of the authors and do not necessarily represent those of the Commonwealth Secretariat.
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tralac’s Daily News Selection
Events, Thursday, in New York: (i) Flagship reforms for a more effective African Union: a conversation with Rwandan President Paul Kagame (Brookings Institution); (ii) Income inequality trends in sub-Saharan Africa: launch of UNDP’s 440-page study
Yesterday, in New York: launch of NEPAD’s Infrastructure Financing For Africa Initiative
UNCTAD’s High-level Panel at the 64th Session of the Trade and Development Board: Accelerating progress in building productive capacities in Least Developed Countries and other vulnerable economies
Trade ministers talk global developments at AU meeting (SAnews)
African Ministers of Trade on Monday met in Ethiopia on priority issues for the continent in the current Doha Development Round. SA’s trade minister, Rob Davies: “On the new issues being proposed for rule-making in the WTO, the meeting agreed that there was no negotiating mandate on the new issues. It is premature to consider multilateral rules on e-commerce and in South Africa’s view, priority should be given to cooperation, addressing the digital divide and exploring options for promoting digital industrial policy.”
10th Session of the Committee on Regional Cooperation and Integration: a focus on CFTA shared gains (UNECA)
The CRCI (31 October - 2 November, Addis Ababa) will be held under the theme ‘Implementation of the Continental Free Trade Area and Shared Gains’. The meeting will be held back-to-back with Expert Group Meetings that will review and discuss a number of crucial publications on various themes, including policy options for boosting intra-African investment through regional harmonization of investment policies and treaties; how the promotion of Africa’s industrialization can be strengthened through infrastructure development and smart industrialization through trade in the context of Africa’s transformation. Participants will also discuss policy options needed to strengthen agribusiness and agro industries as pathways to sustainable and inclusive Africa’s transformation.
Bruce Byiers: Regional organisations in Africa – mapping multiple memberships (ECDPM)
One consequence of this is the overlapping memberships of multiple organisations that characterise most African countries, now shown in this new interactive map of 39 African regional organisations developed by ECDPM. But as the map also shows, there are a whole range of other regional organisations of which countries are members where politics are key. Egypt is member of at least five African regional organisations, all of which together offer fora for diplomatic discussions around trade, water, and energy, not to mention the issues that can be raised on the margins of such fora. The map lights up when one looks at the DRC with its membership of 14 organisations, or Burundi with 13, and Rwanda with 11. These high numbers may just reflect geography – those in the centre will always be on ‘the edge’ of other arbitrarily defined regional boundaries. But is that the only factor?
ECOWAS, UNOWAS strengthen institutional cooperation with ECCAS
ECOWAS and the UN Office for West Africa and Sahel have reiterated their commitment to support the development of the institutional capacity of the Economic Community of Central African States in order to mitigate peace and security challenges in both Communities. At a three-day workshop on interregional Exchange and Good Practice in Abuja, the ECOWAS Commission’s Vice-president, Edward Singhatey stated that the gathering was yet another example of the growing international cooperation among relevant stakeholders in and around the region, in their collective resolve to collaborate and jointly confront the challenges that threaten our collective security.
Ghana commits to ECOWAS Free Movement Protocol (Ghana Business News)
Mr Charles Owiredu, the Deputy Minister of Foreign Affairs and Regional Integration, said the two Protocols together, aims to create a single ECOWAS Regional Community, devoid of obstacles and impediments to free movement of people, goods, services and capital. “Indeed, it is our steadfast conviction that free movement, constitute the cornerstone of our regional integration efforts, and serves as the basis for unlocking the dividends thereof, with an immense potential to advance the sustainable development of our Region.” The Deputy Minister said this at the inauguration of the National Steering Committee in Ghana of the Regional Monitoring Mechanisms for Free Movement of Inter-State Passenger Vehicles, Persons and Goods within ECOWAS. The two-day meeting is being organised within the framework of the ECOWAS-Swiss Agreement for the removal of harassment along ECOWAS highways and the joint ECOWAS EU funded 10th European Development Fund (EDF) -Project “Support to Free Movement of Persons and Migration in West Africa”.
Where to Invest in Africa 2018: RMB’s Investment Attractiveness Index
In this edition of Where to Invest in Africa 2018, RMB’s Investment Attractiveness Index, which balances economic activity against the relative ease of doing business, illustrates how subdued levels of economic activity have diluted several scores on the index when compared to last year, resulting in some interesting movements within the Top 10. Notable omissions from the Top 10 this year are Nigeria and Algeria, which have fallen from numbers six and 10 to numbers 13 and 15 respectively. Ethiopia and Rwanda, on the other hand, have climbed three and four places respectively. But probably the most notable change is that South Africa has fallen from first place for the first time since the inception of the report, ceding its place to Egypt which is now Africa’s most attractive investment destination. [Egypt knocks SA from top investment spot in Africa]
Ghana: Economy on positive trajectory as balance of trade to hit surplus in 2018 - Fitch (GhanaWeb)
Ghana’s economy is on positive trajectory as the nation’s balance of trade is expected to move into a surplus in 2018, the first time in at least two decades, BMI, research outfit of ratings agency Fitch has predicted. The projection will see a further strengthening of the local currency which is expected to end the year 2016 at GHS4.33 to the US dollar. The cedi began the year 2017 with a rate of GHS4.20 against the American greenback. According to BMIs report, oil growth which is expected to increase by about 60 percent this year over that of 2016 will significantly boost the country’s balance of trade. Presently, crude oil is trading at US$53.27 and is expected to end the year at US$ 54.0 per barrel. [BMI’s Ghana Trade and Investment Risk Report: request executive summary]
Ghana: ‘Address bureaucracy in granting business permits’ (Graphic)
The Turkish Ambassador to Ghana, Madam Nesrin Bayazit, has asked the government to address the perennial bureaucratic procedures that businesses go through before getting permits and licences to operate in the country. She acknowledged the stringent steps being taken to address the challenge and urged the government to expedite action to overturn the hurdle to attract investors into the country.
Tanzania: Oil, gas local content regulations almost ready (Daily News)
Oil and Gas Local content regulations will come into effect in November this year, the government has said. National Economic Empowerment Council acting Director of Local Content Esther Mmbaga said in Dar es Salaam that both the policy and law are in place and the government is only finalising the regulations. Speaking to the ‘Daily News’ on the sidelines of the first oil and gas annual congress, Ms Mmbaga said a lot of work will be needed to build local capacity skills for effective participation in the new oil and gas sector. “The government will work closely with investors to ensure successful implementation of local content in the country,” she said.
Indonesia, Namibia agree to enhance bilateral trade cooperation (Antara News)
Indonesia’s Foreign Affairs Minister Retno L. P. Marsudi held a bilateral meeting with her Namibian counterpart Netumbo Nandi-Ndiatwah, and the two ministers agreed to intensify cooperation to boost bilateral trade. “Indonesia will increase its economic cooperation with Namibia, including those under the Preferential Trade Agreement between Indonesia and SACU,” Marsudi noted in a statement here, Tuesday. The two ministers held the bilateral meeting on the sidelines of the UN General Assembly in New York on Monday. [Namibia to ratify SADC Treaty on Arms Trade]
India: State Bank of Mauritius may become first to open local subsidiary (Economic Times)
State Bank of Mauritius (SBM) is likely to become the first foreign bank to open a wholly-owned subsidiary almost four years after the Reserve Bank of India allowed overseas lenders to open local units in India. SBM is awaiting a final approval from RBI and has laid out an ambitious business plan for what will be the largest market for the government-owned lender from the island nation. “We have identified 25 to 30 SME and retail clusters and our distribution is targeted around that. We expect to start 30 to 40 branches within five years in tune with the different branch formats allowed by the RBI,” said Siby Sebastian, India CEO at SBM.
Nigeria’s $7bn cashew export target under threat – NCAN (Vanguard)
National Cashew Association of Nigeria, NCAN, has warned that unless something urgent was done to address the leadership crisis rocking the association, the Federal Government’s $7 billion cashew export target annually would be derailed. Addressing newsmen in Abuja, Vice President of NCAN, East Zone, comprising cashew-producing states in the South-East and South-South states, Mr. Chuks Nkanele, declared that currently, there was a huge demand for cashew from Nigeria, but lamented that the country was struggling to meet up with less than 1% of the demand. He also warned that unless something was done urgently to curb the activities of foreign produce buyers that had invaded the country, Nigeria’s foreign exchange earnings from cashew export would be completely eroded.
EU team assesses Ghana’s export readiness (Graphic)
A three-member team of auditors from the Food and Veterinary Office of the EU is in the country to assess the quality of Ghana’s vegetables. The audit will enable the EU office on food safety to reconsider a three-year-old embargo on vegetables export from Ghana to the EU Market. The auditors who are expected to end their duty tour by Saturday, September 21, 2017, will among other things thoroughly assess the sanitary and phytosanitary systems in Ghana required for ensuring the safety of food items and fresh produce.
Today’s Quick Links: An overview of the UN General Assembly’s annual debate, underway in New York 14th Broadband Commission for Sustainable Development: update. The State of Broadband 2017: broadband catalyzing sustainable development SWIFT Business Forum East Africa: meeting report (discussions covered compliance and cybercrime, economic growth and banking innovation) AfDB’s Climate change and green growth department: EOIs for temporary postitions in Côte d’Ivoire, Southern Africa(based in Pretoria, East Africa (based in Nairobi) Klaus Schwab: Systems strengthening - the key global challenge Christine Lagarde: Addressing corruption with clarity UNU-WIDER: Effective corporate tax burden and firm size in South Africa - a firm-level analysis OECD: Findings of the recent literature on international capital flows: implications and suggestions for further research DFID’s use of private sector contractors: Government response to the Committee’s Eighth Report of Session 2016–17 |
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Trade ministers talk global developments at AU meeting
African Ministers of Trade on Monday met in Ethiopia on priority issues for the continent in the current Doha Development Round.
The Ministers used their gathering to also discuss new issues currently being proposed in the World Trade Organisation (WTO), such as e-commerce and investment facilitation.
The Ministers’ gathering on Monday was under the auspices of the Informal Meeting of African Union Ministers of Trade on the WTO, which was jointly hosted by South Africa’s Trade and Industry Minister Rob Davies and the African Union Commission. Trade and Industry Deputy Minister Bulelani Magwanishe also joined Minister Davies at the meeting.
Monday’s meeting at the African Union headquarters in Addis Ababa was an opportunity for Ministers to consolidate Africa’s positions ahead of the WTO Mini-Ministerial Meeting, which will be held in Marrakech, Morocco, next month. The meeting also preceded the 11th WTO Ministerial Conference (MC 11), which will be held in Buenos Aires, Argentina, in December.
At the meeting, Minister Davies said there remains a level of ambiguity regarding the Doha Development Agenda (DDA) in the WTO, given that there are some countries challenging the existing mandate.
Minister Davies said there are a number of proposals on subjects under consideration in the WTO, such as domestic support, which moves away from the principles agreed to under the DDA.
The DDA is the latest trade negotiation round of the WTO, which commenced in November 2001. Its objective is to lower trade barriers around the world to facilitate increased global trade.
“We also have new issues being proposed such as e-commerce, investment facilitation and transparency, which entail new rules. We need MC11 to reaffirm multilateralism in our rule-making, but one that considers a common set of challenges and looks at higher levels of inclusive growth and not one where some members are more equal than others,” said Minister Davies.
He said the Informal Meeting reaffirmed the importance of concluding the outstanding DDA issues.
“On the new issues being proposed for rule-making in the WTO, the meeting agreed that there was no negotiating mandate on the new issues. It is premature to consider multilateral rules on e-commerce and in South Africa’s view, priority should be given to cooperation, addressing the digital divide and exploring options for promoting digital industrial policy,” said the Minister.
Support for Africa
Meanwhile, Deputy Minister Mangwanishe welcomed the analysis from the South Centre and United Nations Economic Commission for Africa (UNECA), as well as the support extended to African countries to develop and defend policy positions of developing countries ahead of MC11.
“This is particularly important in view of Africa’s development and economic growth aspirations, as espoused in the African Union’s Agenda 2063,” said Deputy Minister Magwanishe.
The Deputy Minister reiterated the need for a multilateral trading system. He said this must support the industrial development imperatives of African economies and provide the necessary policy space that will allow countries to implement measures needed for structural changes to their economies to ensure sustainable and inclusive growth.
“The preservation in the WTO of policy space for industrial development, therefore, is a key priority for South Africa and developing economies,” said the Deputy Minister.
On Investment Facilitation (IF) and Micro, Small and Medium Enterprises (MSMEs), Ministers agreed that rules on Investment Facilitation and MSMEs are not aligned to Africa’s programmes but primarily intrude on domestic policy and regulation.
The outcomes of the meeting and a draft Declaration on the WTO issues are expected to be considered by a formal sitting of the AU Ministers of Trade prior to MC11.
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Africa needs to increase production and have a skilled manpower to develop productive capacities: UNCTAD panelists
To achieve structural transformation and sustainable development, Africa needs to pay more focus on the need to build its productive capacities.
African Union Commission Deputy Chairperson H.E. Ambassador Kwesi Quartey says Africa’s transformation framework, Agenda 2063 and the global Agenda 2030, will only be realized when special attention is paid to accelerating the development of productive capacities.
Speaking during the United Nations Conference on Trade and Development (UNCTAD) High-level Panel Session on “Accelerating Progress in Building Productive Capacities in Least Developed Countries and other Vulnerable Economies”, Ambassador Quartey stated that building productive capacities is a top priority for Africa, as a means of promoting development.
The Deputy Chairperson however cautioned of the challenge of improperly planned capacity development, which he said would lead to an increase of production without corresponding skilled manpower to take on the manufacturing facet.
Ambassador Quartey also noted that to enable countries produce efficiently and competitively, having an educated population is the key to unlock the socio-economic potential in the continent.
“We must have a literate, numerate and highly skilled population that is able to build capacity retain its trained professionals and add value to our primary products, expand our infrastructure, develop and utilize ICT tools, as well as adequately explore entrepreneurial opportunities.”
The Deputy Chairperson’s observations are also in line with the African Union theme of the year 2017 “Harnessing the demographic dividend through investments in the youth” which is all about developing human capacity.
In his introductory remarks, UNCTAD's Secretary-General Dr Mukhisa Kituyi observed that more work needs to be done in building productive capacities adding that despite the creation of the category of the least developed countries 46 years ago, only 5 countries have been able to graduate, while 27 countries had to be added to the group, bringing today’s total to 47 LDCs globally.
He challenged LCD countries to prioritize education and skills development in their national policies and strategies and find a better balance in the allocation of public resources between productive sectors and social sectors.
He at the same time called on development partners to live up to their commitments in terms of aid and trade support measures adding that the net Official development assistance (ODA) to LDCs declined continuously from 2014 to 2016.
“There is no shortcut to inclusive prosperity without building productive capacity. There is need for a clear investment programme that would drive Agenda 2030,” he said.
The Vice President of the Republic of Ghana H.E Mr. Mahamudu Bawumia, in his intervention, highlighted the importance of human capacity accumulation as one of the means of enhancing capacity. He made reference to the recent roll-out of the Free Senior High School policy in Ghana, noting that nations cannot develop without equipping the people with the requisite skills, education and knowledge.
He also underscored the need for individual states to identify where their comparative advantages lie, “you cannot build productive capacity if you do not produce. For instance, for Ghana, the comparative advantage is in its agriculture sector. That is why we are launching the marshal plan for the agriculture sector to enhance productivity through industrialization and value addition to our produce,” he stated.
Africa comprises 34 of the 47 Least Developed Countries (LCDs) of the World and the majority of fragile and vulnerable countries in the World. African LDCs and other vulnerable developing countries’ productive capacity is weak for mainly three reasons; the heavy concentration in the production and export of primary commodities, representing about 80% of exports and dominated by the informal sector which contributes about 60% of the Gross Domestic Product (GDP).
Africa’s weak productive capacity is also aggregated by the limited and underdeveloped manufacturing sector. Only a few African countries, South Africa and Egypt, notably, have succeeded in developing a sizeable and dynamic manufacturing sector whose contribution to Gross Domestic Product is more than 20%.
Another factor is Africa’s stagnant or declining productivity compared to other regions, credited to a number of key constraints such as poor physical economic infrastructure, lack of highly skilled human capacity and limited access to technology.
To address these challenges and accelerate progress in building productive capacities in LDCs and other vulnerable developing countries, Africa’s focus is on prioritizing building or enhancing productive capacities at the national level focusing on human capital development.
The aim is to achieve the kind of skills revolution needed for LDCs and other vulnerable developing countries to transform their agriculture and agribusinesses, commodities; build manufacturing, trade and services, and to build and maintain their infrastructure.
At the same time, boost secondary and university enrolments in key areas such as in mining and agribusiness; strengthening science, technology, research and innovation; reinforcing linkages with industry; developing vocational, technical, and polytechnic education.
The panel discussion that also included remarks by High-Representative and Under-Secretary-General for OHRLLS Ms. Fekitamoeloa Katoa, the Vice-President and Chief Economist of the African Development Bank, Dr. Celestin Monga, the Chairman of the China-Exim Bank, Ms. Hu Xiaolian, the Deputy Director-General UNIDO Mr. Hiroshi Kuniyoshi and Dr. Robert Wade, Professor, London School of Economics and Political Science, also recommended strengthening institutions and putting in place conducive policy and an enabling environment to support development, implementation and monitoring of national and continental productive capacity enhancement policies and initiatives, and aggressively pursue access of LDCs to affordable technology.
Accelerating progress in building productive capacities in LDCs and other vulnerable developing economies
High-level Panel Session, 64th Session of the Trade and Development Board
Building productive capacities is critical for sustained economic growth and for achieving the Sustainable Development Goals, particularly in the least developed countries and other vulnerable developing economies. Over the past two decades, these developing countries have strengthened efforts to build productive capacities by mainstreaming the issue into their national developing strategies and plans. These efforts have had some positive impact, as evidenced by the improvements in trade and economic performance experienced by the least developed countries and other vulnerable developing countries over the past two decades. Nevertheless, significant challenges in building productive capacities remain in these countries. These include overdependence on a few primary commodities for exports, weak institutional and human resources capacities to formulate and implement policies, lack of financial resources, rudimentary production systems and a weak private sector.
Policy recommendations
There is growing recognition, at the national and international levels, of the critical importance of building productive capacities in the least developed countries and other vulnerable developing economies to enable them to achieve sustained economic growth and sustainable development. Therefore, fostering productive capacities in these countries should be viewed as a key strategy to promote economic growth, jobs creation, poverty reduction and achievement of the Sustainable Development Goals. Only by advancing their productive resources, entrepreneurial capabilities and production linkages can economies raise their ability to sustainably grow and develop.
To that end, macroeconomic and microeconomic policies as well as international development partnerships should be geared towards building economy-wide productive capacities to enable weaker and poorer countries to structurally transform their economies. In sum, productive capacity-building should be placed at the centre of development policies and strategies as well as international development partnerships.
UNCTAD, in collaboration with relevant United Nations agencies and other international organizations, as well as with the support of donor countries, should expand its work by seeking ways and means of mainstreaming productive capacities into policies and strategies of the least developed countries and other vulnerable developing countries. This should include ongoing efforts to measure and benchmark the conditions and levels of productive capacities with a view to assisting countries in the formulation and implementation of domestic trade and development policies that have a focus on building productive capacities.
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World hunger again on the rise, driven by conflict and climate change, new UN report says
815 million people now hungry – Millions of children at risk from malnutrition
After steadily declining for over a decade, global hunger is on the rise again, affecting 815 million people in 2016, or 11 per cent of the global population, says a new edition of the annual United Nations report on world food security and nutrition released on 15 September 2017. At the same time, multiple forms of malnutrition are threatening the health of millions worldwide.
The increase – 38 million more people than the previous year – is largely due to the proliferation of violent conflicts and climate-related shocks, according to The State of Food Security and Nutrition in the World 2017.
Some 155 million children aged under five are stunted (too short for their age), the report says, while 52 million suffer from wasting, meaning their weight is too low for their height. An estimated 41 million children are now overweight. Anaemia among women and adult obesity are also cause for concern. These trends are a consequence not only of conflict and climate change but also of sweeping changes in dietary habits as well as economic slowdowns.
The report is the first UN global assessment on food security and nutrition to be released following the adoption of the 2030 Agenda for Sustainable Development, which aims to end hunger and all forms of malnutrition by 2030 as a top international policy priority.
It singles out conflict – increasingly compounded by climate change – as one of the key drivers behind the resurgence of hunger and many forms of malnutrition.
“Over the past decade, conflicts have risen dramatically in number and become more complex and intractable in nature,” the heads of the Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD), the United Nations Children’s Fund (UNICEF) the World Food Programme (WFP) and the World Health Organization (WHO) said in their joint foreword to the report. They stressed that some of the highest proportions of food-insecure and malnourished children in the world are now concentrated in conflict zones.
“This has set off alarm bells we cannot afford to ignore: we will not end hunger and all forms of malnutrition by 2030 unless we address all the factors that undermine food security and nutrition. Securing peaceful and inclusive societies is a necessary condition to that end,” they said.
Famine struck in parts of South Sudan for several months in early 2017, and there is a high risk that it could reoccur there as well as appear in other conflict-affected places, namely northeast Nigeria, Somalia and Yemen, they noted.
But even in regions that are more peaceful droughts or floods linked in part to the El Niño weather phenomenon, as well as the global economic slowdown, have also seen food security and nutrition deteriorate, they added.
Key numbers
Hunger and food security
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Overall number of hungry people in the world: 815 million, including:
- In Asia: 520 million
- In Africa: 243 million
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In Latin America and the Caribbean: 42 million
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Share of the global population who are hungry: 11%
- Asia: 11.7%
- Africa: 20% (in eastern Africa, 33.9%)
- Latin America and the Caribbean: 6.6%
Malnutrition in all its forms
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Number of children under 5 years of age who suffer from stunted growth (height too low for their age): 155 million
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Number of those living in countries affected by varying levels of conflict: 122 million
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Children under 5 affected by wasting (weight too low given their height): 52 million
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Number of adults who are obese: 641 million (13% of all adults on the planet)
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Children under 5 who are overweight: 41 million
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Number of women of reproductive age affected by anaemia: 613 million (around 33% of the total)
The impact of conflict
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Number of the 815 million hungry people on the planet who live in countries affected by conflict: 489 million
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The prevalence of hunger in countries affected by conflict is 1.4 - 4.4 percentage points higher than in other countries
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In conflict settings compounded by conditions of institutional and environmental fragility, the prevalence is 11 and 18 percentage points higher
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People living in countries affected by protracted crises are nearly 2.5 times more likely to be undernourished than people elsewhere
Background
This is the first time that UNICEF and WHO join FAO, IFAD and WFP in preparing The State of Food Security and Nutrition in the World report. This change reflects the SDG agenda’s broader view on hunger and all forms of malnutrition. The UN Decade of Action on Nutrition, established by the General Assembly, is lending focus to this effort by motivating governments to set goals and invest in measures to address the multiple dimensions of malnutrition.
The State of Food Security and Nutrition in the World 2017 has been re-geared for the SDG era and includes enhanced metrics for quantifying and assessing hunger, including two indicators on food insecurity and six indicators on nutrition.
The heads of agencies issuing the report are: José Graziano da Silva, Director-General of FAO; Gilbert F. Houngbo, President of IFAD; Anthony Lake, Executive Director of UNICEF; David Beasley, Executive Director of WFP; Tedros Adhanom Ghebreyesus, Director-General of WHO.
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10th Session of the Committee on Regional Cooperation and Integration to focus on CFTA shared gains
The 10th Session of the Committee on Regional Cooperation and Integration (CRCI10) will be held in Addis Ababa, Ethiopia from October 31 to November 2, 2017, under the theme ‘Implementation of the Continental Free Trade Area and Shared Gains’.
The meeting will be held back-to-back with Expert Group Meetings that will review and discuss a number of crucial publications on various themes, including policy options for boosting intra-African investment through regional harmonization of investment policies and treaties; how the promotion of Africa’s industrialization can be strengthened through infrastructure development and smart industrialization through trade in the context of Africa’s transformation.
Participants will also discuss policy options needed to strengthen agribusiness and agro industries as pathways to sustainable and inclusive Africa’s transformation.
The World Trade Organisation’s (WTO) agriculture agreement and trade liberalisation in the post Bali and Nairobi era will also be discussed with the main question being ‘what’s in it for Africa’s developmental and integration imperatives?’
Brexit and Africa-UK trade is another topic of interest in the workshops and it will reviewed from an African perspective as well as trade, gender and human rights mainstreaming.
The Ninth Session of the CRCI, which was held some two years ago, focused on concrete policy actions and measures required to enhance productive integration for Africa’s structural transformation.
The meeting noted that Africa’s structural transformation had lagged behind its improved economic growth performance.
Participants agreed that four inter-related processes, notably a declining share of agriculture in GDP and employment; rural-to-urban migration that stimulates the process of urbanization; the rise of a modern industrial and service economy; and, a demographic transition from high rates of births and deaths to low rates of births and deaths, defined the current structural transformation process taking place on the continent.
“Against this backdrop, and building on the previous session, the 10th session will focus on implementation of the Continental Free Trade Area and shared Gains,” says Regional Integration and Trade Division’s Adama Ekberg Coulibaly.
Trade, regional cooperation and integration, he adds, are core pillars to ensure that Africa advances in its transformative agenda.
Mr. Coulibaly says the 10th Session of the CRCI will reiterate continued support for both the Action Plan for Boosting Intra-African Trade (BIAT) and the implementation of the Continental Free Trade Area (CFTA).
“The objectives of the meetings are to review and deliberate on recent developments, risks and prospects in specific sectorial areas as they relate to the broad area of regional integration and to make recommendations which will guide the ongoing work of Regional Integration and Trade Division (RITD) of the Economic Commission for Africa,” adds Mr. Coulibaly.
The programmatic areas that will be under consideration include international and intra-African trade and related negotiations, recent developments, risks and prospects in support of regional integration; food security, agriculture and land-management in Africa; and industrialization, infrastructure and investment in Africa.
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Ghana commits to ECOWAS Free Movement Protocol
The Government of Ghana is firmly committed to the implementation of the ECOWAS Protocol on Free Movement of Persons, the Right of Residence and the Right of Establishment as well as the Protocol on Community Citizenship.
Mr Charles Owiredu, the Deputy Minister of Foreign Affairs and Regional Integration, said the two Protocols together aim to create a single ECOWAS Regional Community, devoid of obstacles and impediments to free movement of people, goods, services and capital.
“Indeed, it is our steadfast conviction that free movement, constitute the cornerstone of our Regional Integration efforts, and serves as the basis for unlocking the dividends thereof, with an immense potential to advance the sustainable development of our Region,” Mr Owiredu stated.
The Deputy Minister said this at the inauguration of the National Steering Committee in Ghana of the Regional Monitoring Mechanisms for Free Movement of Inter-State Passenger Vehicles, Persons and Goods within ECOWAS.
The two-day meeting is being organised within the framework of the ECOWAS-Swiss Agreement for the removal of harassment along ECOWAS highways and the joint ECOWAS EU funded 10th European Development Fund (EDF) Project “Support to Free Movement of Persons and Migration in West Africa”.
The ECOWAS Commission has selected Ghana as one of the eight pilot countries to establish a National Steering Committee to operationalise the Regional Monitoring Mechanism for the Free Movement of Inter-State Passenger Vehicles, Persons and Goods within the ECOWAS sub-region.
The eight pilot countries were selected at the 46th Session of the Council of Ministers and 73rd Session of the Conference of Heads of States and Government.
The piloting countries include: Ghana, Benin, Burkina Faso, Mali, the Ivory Coast, Niger, Nigeria and Togo.
The Regional Mechanism aims to contribute in finding effective and sustainable solutions to obstacles to the free movement of persons and goods within the ECOWAS space.
It also seeks to improve the safety of the people and the free flow of interstate buses in the sub-region; strengthen regional coordination on the free movement of persons and goods; and minimize time and reduce red tape for transporters and passengers.
The launch of the National Steering Committee in Ghana therefore, completes the circle of National Steering Committees in the eight pilot countries to support the operationalisation of the Regional Mechanism based in Abidjan.
Mr Owiredu said: “It is our expectation that, the National Steering Committee, which would be the entity responsible for overseeing activities related to Regional Mechanism, would pave the way for enhanced intra-regional interactions, particularly the regional effort to facilitate movement of persons along the Lagos-Abidjan Corridor.
“This will complement arrangements put in place by the Government of Ghana to secure our international road corridors and ensure the free flow of goods and services across our borders”.
He said the event was a major achievement in their collective efforts to reduce harassment along their international road corridors and at their borders with their neighbours, while bringing them a great deal closer to the full realisation of their objective of free movement.
Mr Albert Siaw-Boateng, the Director, Free Movement and Tourism at the ECOWAS Commission, said aside the eight countries currently implementing the pilot phase, there were plans to extend the project to other countries within the ECOWAS sub-region.
He said the Regional Mechanisations aims to achieve two general objectives: “Simplify and facilitate the movement and crossing of land borders and eliminate intermediate road side checks, delays and perceived illegal benefits; while ensuring the safety of people in a safe environment”.
Madam Mojisola Sodeinde, the Coordinator/Team Leader of the International Centre for Migration Policy Development (ICMPD) West Africa Office, lauded the efforts of the Swiss Government in supporting the removal of obstacles to the free movement of persons along the Lagos – Abidjan Corridor, including Mali, the Ivory Coast, Ghana, Togo, Benin, Burkina Faso, Niger and Nigeria.
She said the project model, which was instituted by the Ivory Coast from which this Mechanism draws inspiration had proven to be a great success; and that, expanding this imitative to cover other corridors of mobility was a positive step towards the achieving of Regional Integration.
“With the full participation of Ghana, we expect the mechanism to yield even greater benefits.
“If we get it right, it will mean that millions of the citizens of ECOWAS member states will be able to exercise their rights of free movement, without any discrimination or incidence of unnecessary harassment,” she added.
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tralac’s Daily News Selection
Today, in Addis: Informal meeting of AU Ministers of Trade
The main objectives of the meeting are to: (i) take stock of recent developments in the negotiations at the WTO since the Geneva Retreat of the African Group of Ambassadors and Experts held on July 6-7, 2017; (ii) discuss and formulate common positions on current issues of offensive and defensive interest to Africa as well as new issues, with a view to guide African negotiators in their final preparations leading to the WTO MC-11; and (iii) reflect on the overall strategy Africa should adopt in the WTO multilateral trading system in order to achieve its structural transformation in the context of Agenda 2063: The Africa We Want.
Today, in New York: (i) Meeting of the Committee of African Heads of State and Government on Climate Change; (ii) Sustainable Development Impact Summit
Africa’s private sector and the CFTA: African business leaders establish the African Technical Business Advisory Committee (PACCI)
At a meeting organized by the Pan African Chamber of Commerce and Industry, business leaders and executives from Morocco to Ethiopia, Nigeria to Namibia, business leaders from 38 African countries agreed to establish an independent Advisory Committee, which will comprise the various private sector interests, such as the Chambers of Commerce and Industry, regional business councils, industry associations, women entrepreneurs and services to play an advisory role to the African Union policy organs, namely the Conference Trade Ministers and the High Level African Trade Committee comprising of Heads of States from the countries that are chairing the Regional Economic Communities. The African Technical Business Advisory Committee which will play the role assigned to the entity referred to as African Business Council in the CFTA structure, will comprise the private sector, industry associations and the wider community at the regional and national levels to ensure an inclusive and participatory approach to the integration process. Dr. David Luke, Program coordinator at the UNECA/ATPC: “Governments don’t trade, it is business enterprises that trade with each other. This is why at African Trade Policy Center we believe that the private sector must play a significant role in the negotiations leading to the conclusion of the CFTA”.
SADC Macroeconomic Convergence Indicators: recently posted by the Committee of Central Bank Governors in SADC: Budget Balance, Current Account Balance, Gross International Reserves, Inflation, Public Debt, Real GDP Growth (pdfs)
ECOWAS Convergence Council: Marcel De Souza calls for measured pace in the creation of the ECOWAS Common Currency
The President of the ECOWAS Commission, Marcel de Souza, has appealed for an unhurried creation of the West African common currency. He made this appeal in Bamako at the opening ceremony of the 10th ordinary meeting of the ECOWAS Convergence Council. Speaking to finance ministers, central bank governors and technical experts of the ECOWAS Macroeconomic Policy Committee, de Souza stated that an immediate transition to the single currency would present grave consequences for the sub-region. He requested that finance ministers serve as the regional organisation’s advocates in their respective countries, in order to create an enabling environment for the implementation of the ECOWAS monetary cooperation programme. He noted with satisfaction the significant strides in the coordination of monitoring activities and the production of the sub-region’s macroeconomic convergence reports.
Malawi time release study workshop: update (WCO)
In pursuance of the WCO National Mercator Plan for Malawi, designed to provide sustainable, tailor-made and results-based capacity building support to enable effective implementation of the Trade Facilitation Agreement, the WCO organized a 5-day training workshop to strengthen Malawi Revenue Authority’s capacities in the area of Time Release Study. In her opening remarks, Deputy Commissioner General of the Malawi Revenue Authority Mrs Roza Mbilizi, stressed that Malawi is interested in conducting TRS as Malawi wants to identify bottlenecks and trade facilitation opportunities in the clearance process and aims to build and maintain effective operational procedures that are carried out by Customs and other actors in the processing of imports, exports and transit movements of goods. The periodic use of the TRS methodology will be important in positioning Malawi Customs as a constructive leader in coordinated border management discussions.
Connecting African, Chinese businesses to boost trade and investment (ITC)
More than 260 business people participated in one-on-one matchmaking meetings in Changchun, Jilin Province, on 4 September, to discuss trade and investment opportunities in the agro-processing and light manufacturing sectors in Africa. The 200+ meetings between 21 companies from Ethiopia, Kenya, Mozambique and Zambia and 75 Chinese investors were organized by ITC, the Jilin People’s Government, the China Council for the Promotion of International Trade, and the China-Africa Development Fund (CADFund) under the Partnership for Investment and Growth in Africa project.
African countries back India-China stand on curbing rich nations’ farm sops (The Hindu)
A joint India-China paper for disciplining the so-called trade-distorting farm subsidies given by rich countries has found backers in African nations, including South Africa, Zimbabwe and Egypt. With just three months to go for the crucial Ministerial meet of the World Trade Organisation, in December, battle lines are getting drawn with those opposed to the India/China stand on subsidies and their demand for prioritising a solution on public stock-holding, too, getting a traction, a government official told BusinessLine. At the Committee on Agriculture meeting, which attempted to shortlist the agenda for the Buenos Aires Ministerial, Botswana (for the African, Caribbean, and Pacific Group of States or the ACP Group) and Egypt (for the African group), supported by South Africa and Zimbabwe, welcomed the Indía-China proposal as the starting point for negotiations. Egypt went further and suggested that norms to address blue box support and green box subsidies (permissible subsidies not linked to production) should also be introduced, as also rules to avoid “box shifting” (changing the features of a subsidy programme to make it non-actionable).
Bart Minten: Ethiopia’s coffee farmers struggle to realize benefits from international markets (IFPRI)
Yet despite its leading position in Africa and the positive changes made in the coffee trade in the last decade, the Ethiopian coffee sector is underperforming, according to recent research by IFPRI, the Ethiopian Development Research Institute, and Bonn University’s Institute for Food and Resource Economics. Ethiopian yields are slightly higher than those of Kenya and Rwanda, but lower than Uganda’s—and only one half to one third the size of major Latin American producers’. Ethiopian farmers, meanwhile, receive a smaller share of export prices compared to most other countries.
Egypt garment exports reach $941m in 8 months (Ahram)
Egypt’s garment exports reached $941m in eight months in 2017, compared to $865m in the same period last year, the readymade garments export council of Egypt announced in its monthly report on Sunday. August saw an 8% rise in exports compared to the same month last year, reaching $132m compared to $122m the previous year. The report said that exports to the United States -- which received the highest number of exports -- increased by 6%, reaching $461m in the last eight months compared to $436m in the same period in 2016.
Kenya, Ethiopia could overtake Africa’s economic heavy weights in attracting investment (New Times)
A report released by a global risk consultancy, Control Risks, on Thursday shows that Kenya and Ethiopia might soon outshine Africa’s economic giants, Nigeria, South Africa and Egypt in the competition for investment. The report Africa Risk-Reward Index, developed by Control Risks, was released in Johannesburg. The report noted that while Nigeria and South Africa have recovered, there are still some risks. Ethiopia, which is one of the fastest growing countries in the continent, outperformed all African countries in the survey.
SA banks can still thrive in Africa - EY analyst (Fin24)
Low revenue growth is behind the low growth in profit. Banks have held back on extending credit, particularly in African markets with weak economic activity, said Andy Bates EY’s financial services leader for Africa. The big four banks have a “decent” footprint in Africa. “What we see is a desire to continue to invest, but not as quick as the banks would like,” he said. There is also the pressure of costs associated with the investment. But given the average age of the population across Africa, which is quite young and the amount of unbanked people there is a great opportunity for them to join the formal banking sector, explained Bates. There is not just a demand for banking products, but also for wealth and asset management, insurance and pension products. “This is a massive opportunity not one South African bank can afford to ignore,” said Bates. [Steinhoff puts high price on Africa unit]
London looks to cement trade links with SA (Business Day)
As the 689th Lord Mayor of the City of London, I act as an ambassador for the UK’s financial and professional services sector, and have been in SA this past week to meet with senior business and government officials to discuss how we can build closer business ties between our two countries. With some of the most promising emerging markets in the world, the UK’s relationship with African nations will become ever more important, and, as a financially mature country, SA will be a key partner in the region. [The author: Andrew Parmley]
UK’s International Trade Secretary: increasing financial support for UK businesses to trade with South Africa, Mozambique
Dr Fox announced that UK Export Finance (UKEF), the UK’s export credit agency, will double support for trade with South Africa to up to £3.5bn, meaning an additional £1.75bn will be available for UK companies exporting to South Africa and for South African buyers of UK goods and services. The International Trade Secretary also announced that UKEF are offering UK businesses wider access to government-backed overseas investment insurance which will protect UK businesses investing abroad.
Human Capital Report 2017 (WEF)
The report measures 130 countries against four key areas of human capital development; Capacity, largely determined by past investment in formal education; Deployment, the application and accumulation of skills through work; Development, the formal education of the next generation workforce and continued upskilling and reskilling of existing workers; and Know-how, the breadth and depth of specialized skills-use at work. Countries’ performance is also measured across five distinct age groups or generations: 0-14 years; 15-24 years; 25-54 years; 55-64 years; and 65 years and over. With an overall average score of 52.97, sub-Saharan Africa is the lowest-ranked region in the index. Rwanda (71), Ghana (72), Cameroon (73) and Mauritius (74) have developed more than 60% of their human capital. South Africa (87), the region’s second largest economy, comes towards the middle in the region. Nigeria (114) ranks in the lower midfield and Ethiopia (127) is the lowest performer, fourth from the bottom on the index overall.
Today’s Quick Links: South Africa: Standard Bank to ask tribunal to compel competition commission to provide evidence Wandile Sihlobo: SA’s trade statistics provide good news for farmers The State of Food Security and Nutrition in the World |
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African business leaders established the African Technical Business Advisory Committee (ATBAC)
The African business community has continued to present the unified voice of business by putting in place the framework establishing the African Technical Business Advisory Committee (ATBAC) to push for the implementation of the Action Plan for boosting intra African trade, and fast tracking of the CFTA.
At a meeting organized by the Pan African Chamber of Commerce and Industry (PACCI) in Accra, Ghana, on 12th and 13th of September 2017, business leaders and executives from Morocco to Ethiopia, Nigeria to Namibia, business leaders from 38 African countries agreed to establish an independent Advisory Committee, which will comprise the various private sector interests, such as the Chambers of Commerce and Industry, regional business councils, industry associations, women entrepreneurs and services to play an advisory role to the African Union policy organs, namely the Conference Trade Ministers and the High Level African Trade Committee comprising of Heads of States from the countries that are chairing the Regional Economic Communities.
The two day meeting, under the theme: The Continental Free Trade Area (CFTA) – Exploring Possibilities for Business Engagement across Africa, took stock of the current situation regarding the Continental Free Trade negotiations and the role of the private sector in advancing the CFTA. In his opening speech, Honorable Alan Kyerematen, Minister of Trade and Industry of the Republic of Ghana, stressed the need for involving the private sector in the CFTA process.
“The potential of trade and private sector development has not been fully realized by virtue of the peculiarities of most African countries, including MSMEs and weak purchasing power. Engaging the private sector in the policy-making process at the national, sub-regional levels and continental remains pertinent”.
“I salute the organizers of this meeting: the Pan African Chamber of Commerce and Industry (PACCI) and the Ghana Chamber of Commerce and Industry (GCCI), but also the backers of this Conference, notably, the United Nations Economic Commission for Africa/Africa Trade Policy Center and the African Union Commission for associating the private sector to this effort,” said Nana Dr. Appiagyei Dankawoso, President of PACCI and GCCI.
“We all know that the role of the private sector in the CFTA negotiations has been modest. We hope such meetings will help stimulate the process of private sector engagement at the national, regional and international levels on issues of trade policy,” he said.
With just three months before the signing of the Continental Free Trade Area agreement targeted for December 2017, we are starting to enter a new phase. The PACCI is seeing businesses across the continent play a significant role in the process of economic integration.
In this regard there is a need to coordinate the participation of the private sector and establish a formal structure for its engagement in the framework of the CFTA negotiations. Insufficient and disorganized private sector engagement may lead to protracted chaos and rejection of the agreement by businesses. PACCI has, therefore, an important role to play in leading private sector participation and engagement, in identifying business challenges and solutions to build a lasting business-oriented collaboration and accelerate the implementation of the agreement once negotiated.
The African Technical Business Advisory Committee which will play the role assigned to the entity referred to as African Business Council in the CFTA structure, will comprise the private sector, industry associations and the wider community at the regional and national levels to ensure an inclusive and participatory approach to the integration process.
In this regard, AU Commissioner Mr. Albert M. Muchanga noted “as we create this harmonized, attractive, large and growing market, your end of the bargain as the private sector is to give us quality, affordable and safe products and services that will facilitate increased intra-African trade.”
He further called upon the private sector to work together in realizing the objectives of the Continental Free Area for the progress of Africa and to help in the lobbying of the legal text of the CFTA to be ratified with minimum delay by respective governments.
Dr. David Luke, Program coordinator at the UNECA/ATPC, stated this conference will stimulate the exchange of information between businesses, governments and international organizations in helping the private sector play active role in regional integration and trade initiatives.
“Governments don’t trade, it is business enterprises that trade with each other. This is why at African Trade Policy Center (ATPC) we believe that the private sector must play a significant role in the negotiations leading to the conclusion of the CFTA”. He stressed the need for the private sector to engage with policy makers at the national level.
“If anything today, we have spoken for ourselves. We have echoed that the CFTA legal texts are more than political and will require the attention of processes at grassroots level. For example, if we see the dispute resolution measures being discussed at continental level, they seem to be too political when in reality they should deal with the day to day business processes. Now, this deliberation has come up with sound recommendations, which in the opinion of business, are exactly things we want to see considered in the negotiation of CFTA,” said Mr. Karl Chokotho, Managing Director, CMA CGM from Malawi and representative and member of COMESA business council.
The 2017 Africa Prosperity Conference confirmed that business has made significant progress in presenting a united business voice by reaffirming the role of PACCI as the continent's umbrella body for the business community and by tasking it to act as the Secretariat of the ATBAC to jumpstart its implementation.
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International Trade Secretary announces increasing financial support for UK businesses to trade with South Africa and Mozambique
The UK’s Secretary of State for International Trade, Dr Liam Fox, announces increases in financial support for UK businesses to trade in Africa.
International Trade Secretary Dr Liam Fox announced increases in financial trade support for UK businesses to trade with South Africa as he flew out to South Africa and Mozambique to discuss strengthening trade relations on Sunday, 17 September 2017.
The visit will help to further develop the good bilateral trade relationships with the South African and Mozambique governments, promoting mutually beneficial support for British investment in Africa. In 2015 trade with Africa totalled £30.8 billion and the International Trade Secretary’s visit will build on the strong opportunities for trade between the UK and Africa.
Investment ties between the UK and Africa are growing with African investment into the UK increasing by 500% between 2005 and 2014, and British investment more than doubling over the same period, clearly indicating the rich range of opportunities available.
As part of the visit Dr Fox announced that UK Export Finance (UKEF), the UK’s export credit agency, will double support for trade with South Africa to up to £3.5 billion, meaning an additional £1.75 billion will be available for UK companies exporting to South Africa and for South African buyers of UK goods and services.
The International Trade Secretary also announced that UKEF are offering UK businesses wider access to government-backed overseas investment insurance (OII) which will protect UK businesses investing abroad. The enhanced support comes as the Department for International Trade looks to encourage more UK companies to invest overseas, realising the opportunities presented by fast-growing developing economies around the world.
International Trade Secretary, Dr Liam Fox said: “As we leave the EU, it is a once in a lifetime opportunity to build a more open and outward looking Britain and forge independent trading arrangements with growing economies around the world.
“That is why as an international economic department, we are making billions of pounds of additional financial support available to UK exporters and buyers of UK goods and services in South Africa and opening up further export opportunities for British businesses across Africa through overseas investment insurance.”
As part of the visit to South Africa, Dr Fox will meet Rob Davies, Minister of Trade and Industry as both seek to reaffirm the importance of the UK/SA trade and investment relationship.
He will also tour the newly opened Invest SA One-Stop-Shop, part of the SA government’s initiative to attract investment and improve the business environment. Whilst there Dr Fox will meet with leaders of WESGRO, the provincial Investment Promotion Agency for the Western Cape, seeing how investment opportunities for British companies are being promoted.
The Trade Secretary will also see first-hand how UK investment overseas is positively impacting on the local workforce when he meets apprentices at the Jaguar Landrover apprenticeship facility in Johannesburg.
In Mozambique Dr Fox will continue to promote the importance of a UK trade and investment relationship overseas as he meets with President Filipe Nyusi and Trade Minister Ernesto Max Elias Tonela.
Background: Trade statistics
South Africa
Total trade in goods and services (i.e. exports plus imports) between the UK and South Africa totalled £8.1 billion in 2015, a 5.2% increase since 2014.*
The top 5 UK goods exported to South Africa in 2016 were:**
- 84 - Machinery and mechanical appliances (18.7% of all UK goods exported to South Africa)
- 85 - Electrical machinery and equipment (12.7%)
- 87 - Motor vehicles (11.7%)
- 30 - Pharmaceuticals (6.5%)
- 22 - Beverages, spirits and vinegar (6.0%)
Mozambique
Total trade in goods and services (i.e. exports plus imports) between the UK and Mozambique totalled £284 million in 2015.*
The top 5 UK goods exported to Mozambique in 2016 were:**
- 85 - Electrical machinery and equipment (22.9% of all UK goods exported to Mozambique)
- 84 - Machinery and mechanical appliances (19.8%)
- 87 - Vehicles other than railway or tramway stock (17.5%)
- 30 - Pharmaceutical products (6.8%)
- 90 - Optical, photographic, cinematographic and medical equipment (5.8%)
** HMRC Interactive database (Data by HS Commodity code)
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Africa’s economic giants face increasing competition from upcoming Kenya and Ethiopia
New Africa Risk-Reward Index provides investors with a synthesis of risks and opportunities across the African continent
Africa’s economic giants, Nigeria, South Africa and Egypt, have been stumbling recently. Rising security risks and political instability in Egypt, economic downturn and militancy in Nigeria and escalating political risks in South Africa led to doubts whether the balance between risks and opportunities in these markets is still favourable for businesses.
Despite recent recovery in Nigeria and South Africa, Kenya and Ethiopia might soon outshine these heavy-hitters in the competition for investment, according to the newly released Africa Risk-Reward Index developed by Control Risks and Oxford Economics.
Key findings of the report:
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Nigeria and its energy sector are too big to lose their appeal – the country’s reward score is 6.0 (out of 10), ahead of South Africa and Egypt. Nigeria’s charms, however, fade against a risk score of 7.3 (out of 10), as President Muhammadu Buhari’s government struggles through its first term. A fall in oil prices and lower production due to insurgent attacks in the Niger Delta have slashed growth from 6.3% in 2014 to 2.7% in 2015 followed by a sharp contraction of 1.6% last year. Economic indicators for this year are more favourable, but still the report forecasts a real GDP growth of only 1.1% in 2017.
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South Africa’s risk score of 5.0 remains below the region’s average, but the reward score of 4.6 is also low. Whilst the country enjoys a deserved reputation as Africa’s pre-eminent constitutional democracy, several of its key institutions have gradually weakened over the past decade. Economic prospects are closely linked to the outcomes of the ANC’s national conference in December. The forecasted real GDP growth of 0.5% for 2017 is below population growth and certainly insufficient to reduce South Africa’s staggering 27.7% unemployment rate.
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Egypt will test the most ardent optimist. President Abdul Fatah al-Sisi’s political position is stable, despite a series of economic and security challenges, reflected in the country’s risk score of 6.0. Socio-economic grievances, a government crackdown on opposition and Islamist groups and persistent militancy will continue to have an impact on the business environment. The tourism sector remains depressed. The country’s reward score of 5.5 reflects the measures the government has taken since mid-2016 to address its fiscal problems. Real GDP growth is expected to slow in 2017 (to 3.8%, from 4.3% in 2016) owing to a slowdown in government and private consumption.
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Ethiopia outperforms every African peer with its high reward score of 8.0. Notably, it attracted $3.2bn of foreign direct investment in 2016 – more even than Nigeria, and double the figure for Morocco. The East African nation is one of Africa’s fastest growing economies and continues to offer strong prospects. Growth averaged 10% from 2010 to 2015 and although 2016 growth was slower at 6.5% the expansion remains impressive. However, the omnipresent role of government in the economy raises concerns relating to public sector efficiency and financial management. External debt is expected to increase to 38.7% of GDP by the end of this year, leading to a risk score of 5.8.
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Kenya has achieved a period of strong GDP growth amid relative political stability: real GDP growth averaged at 6.0% in 2010-16. The 2017 growth forecast is at 5.4%. The country’s reward score is 6.7. A well-educated workforce and an innovative service sector, the government’s continued investments in upgrading critical national infrastructure, and deepening integration with its neighbours through the East African Community (EAC) all allow the country to act as a gateway into the larger East Africa region. Current fiscal concerns and a political system that remains closely tied to ethnic affiliation contribute to a risk score of 5.6 and reflects considerable room for improvements.
Paul Gabriel, Senior Analyst for Africa at Control Risks and lead-author of the report comments:
“Experienced investors – not only in Africa, but around the world – know that risk and reward are close companions. While no serious investor should overlook the economic giants of the continent, real competitive edge can only be achieved when investors manage to stay ahead of the pack in knowing what’s next. The Africa Risk-Reward Index helps investors to identify some of the more hidden investment opportunities in times where the heavy-hitters are struggling.”
Background
Methodology
The Africa Risk-Reward Index is defined by the combination of risk and reward scores, integrating economic and political risk analysis by Control Risks and NKC African Economics (an Oxford Economics company).
Risk Scores
The risk scores replicate the scoring of each country within the joint product offering Economic and Political Risk Evaluator (EPRE) of Control Risks and Oxford Economics, the majority shareholder of NKC African Economics. Control Risks and Oxford Economics analysts rate a series of political and economic risk factors on a scale from 1 to 10, with 10 representing the highest level of risk. Each political and economic rating is assigned a default weight, based on its significance in the country context and its potential impact on business. The individual political and economic risk variables are then combined – multiplying rating by weighting – into the overall risk rating of a country.
Reward Scores
The reward scores incorporate medium-term economic growth forecasts, economic size, economic structure and demographics. The economic growth outlook has the biggest weight in the reward score, as investment opportunities multiply where economic growth is strong. But the absolute size of the economy makes a difference, too, so the score incorporates a weight for economy size.The economic structure indicator derives from the ‘economic structure risk’ component of NKC’s sovereign risk rating model, which takes into account debt metrics, the current account, financial structure (including banking sector stability) and investment. Demographics are incorporated through the formulation of a demographic dividend, which incorporates population size, urbanisation and dependency ratios.
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Connecting African, Chinese businesses to boost trade and investment
Through the Partnership for Investment and Growth in Africa (PIGA) project, companies in Ethiopia, Kenya, Mozambique and Zambia are doing business with Chinese investors.
African and Chinese entrepreneurs in agro-processing are talking business, doing business as a direct result of meetings co-organized by the International Trade Centre (ITC).
More than 260 businesspeople participated in one-on-one matchmaking meetings in Changchun, Jilin Province, China, on 4 September 2017 to discuss trade and investment opportunities in the agro-processing and light manufacturing sectors in Africa.
The 200+ meetings between 21 companies from Ethiopia, Kenya, Mozambique and Zambia and 75 Chinese investors were organized by ITC, the Jilin People’s Government, the China Council for the Promotion of International Trade (CCPIT) and the China-Africa Development Fund (CADFund) under the Partnership for Investment and Growth in Africa (PIGA) project.
Concrete investment leads resulted immediately after the event.
Pursuing business leads
A Kenyan company that grows a special variety of chillies for processing into lipstick received an invitation to visit a Chinese investor to discuss follow-up actions. The Chinese investor called the matchmaking event ‘an eye-opener that proved to be really instrumental in developing a partnership with a Kenyan company’.
A Zambian honey producer found a new market for his product and concluded a contract to ship 500,000 bottles of honey to new clients.
Soy oil processing companies from Zambia found a Chinese partner to expand production.
A Chinese company specializing in poultry breeding showed interest in investing in poultry breeding in Ethiopia, Kenya, Mozambique and Zambia.
Promoting exports, development
The matchmaking event was organized under the PIGA project, funded by the United Kingdom’s Department for International Development (DFID). PIGA is a joint United Kingdom-China partnership to increase sustainable economic growth in African countries through investment-led exports and local development in agro-processing and light manufacturing.
ITC, CCPIT, CADFUND, DFID and High-level representatives from the Jilin People’s Government and the Ministry of Commerce (MOFCOM) opened the event. Investment promotion officers from Ethiopia, Kenya, Mozambique and Zambia presented the investment climates and policies in their respective countries to the Chinese investors.
The private sector also supported the event, including two Chinese companies that are pioneers in Africa investment, CGCOC Group and Jihai Agriculture Investment and Development Group.
Investing in African businesses
To mobilize $4 billion to develop a livestock agro-processing industrial park in Ethiopia, ITC organized a side event targeting Chinese and Ethiopian companies interested in taking part in the investment project led by the CGCOC Group. Mr. Xuejun Jiang, ITC Chief of Office for Asia and the Pacific who moderated the side event, stated that PIGA was pleased to support the promotion of this project in view of its potential economic and social impact to Ethiopia.
Ms. Masarrat Quader,Regional Private Sector Adviser – Invest Africa at the United Kingdom of Great Britain and Northern Ireland’s Department for International Development (DFID), highlighted the potential of this new industrial park to be a game changer for the sector in Ethiopia and to create up to 25,000 new direct and indirect jobs for Ethiopians.
Mr. Afework Shimelis, Minister Counsellor of the Embassy of Ethiopia in Beijing, and Mr. Zhang Yuzhon, Deputy Director General, Department of Investment Promotion Agency of MOFCOM, underlined the economic and development impact of the project. The side event generated lots of investment interest among the companies which attended this event.
In preparation for the business matchmaking event, ITC organized a one-day workshop for African companies to receive practical, hands-on knowledge about negotiation skills. An ITC expert also advised African companies on making strong investment proposals for Chinese investors.
Tapping investment opportunities
The light manufacturing and agro-processing sectors in Africa remain largely untapped. Large-scale investments from China are already largely taking place through mining, oil and infrastructure projects across Africa. However, only about 10% of Chinese investment projects in Africa from 1998-2012 were in agriculture and manufacturing. Investment in export-oriented activities would help African exports become more diverse and create new opportunities.
The PIGA project focuses on attracting investment in the productive sectors of light-manufacturing and agro-processing to help develop backward linkages, processing capacities, local value addition and job creation.
Through PIGA, ITC facilitates investment in Africa by providing capacity building and advisory support to companies and investment promotion agencies in Ethiopia, Kenya, Mozambique and Zambia. ITC will continue to provide information to Chinese investors on investment climates in Africa, as well as investment-ready African companies that could be potential partners in their investment projects.
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tralac’s Daily News Selection
tralac’s Weekly e-newsletter is posted. Highlights include: Prof Gerard Erasmus asking if the court ruling on the Kenyan elections in Kenya is a precedent for inter-state disputes and an EOI request for a mid-term evaluation of Sweden’s support to the Trade Law Centre.
UNCTAD’s Trade and Development Report 2017
The Trade and Development Report 2017 (pdf) argues that now is the ideal time to crowd in private investment with the help of a concerted fiscal push – a global new deal – to get the growth engines revving again, and at the same time help rebalance economies and societies that, after three decades of hyper globalization, are seriously out of kilter. However, in today’s world of mobile finance and liberalized economic policies, no country can do this on its own without risking capital flight, a currency collapse and the threat of a deflationary spiral. What is needed, therefore, is a globally coordinated strategy of expansion led by increased public expenditures, with all countries being offered the opportunity of benefiting from a simultaneous boost to their domestic and external markets. Table of contents (all pdf):
Chapter I: Current trends and challenges in the world economy; Chapter II: Inclusive growth: issues at stake; Chapter III: Robots, industrialization and inclusive growth; Chapter IV: The gender dynamics of inclusion and exclusion; Chapter V: Inequality and financial instability; Chapter VI: Market power and inequality; Chapter VI: Annex; Chapter VII: Towards a global new deal
CFTA set to kick-off next year (Daily News)
Head of Trade Division in the AUC, Mr Nadir Merah, said during the BIAT workshop that the initiative focuses at improving Africa’s competitiveness in the global economy. “We need to fast track free trade areas as soon as possible. Towards end of January next year, we will present to the heads of the states the final paper on the initiative,” he said adding that the workshop seeks to discuss ways to improve communications and information systems on business and finance. Tanzania is effectively represented in the technical group which is discussing intensively the areas of harmonisation for increasing flow of goods and services in the continent. “We want to connect Africa businesses by collecting and analysing data on trade and finance before disseminating them to the business people to boost intra African trade,” he noted. Statistics show that Tanzania’s trade with other African countries remains very low at 3%, thus failing to harness the huge potentials of increasing volume of business in the continent.
Uganda: High Level Economic Growth Forum (UNECA)
According to Mr Andrew Mold, acting Director of UN Economic Commission for Africa in Eastern Africa, one of the main reasons for Uganda’s non-inclusive growth is that its economy has been driven by the service sector at the expense of industry and manufacturing sectors. “Around 59% of Uganda’s workforce operates in the informal economy and job creation in the formal sector has not kept up with a rapidly expanding workforce.” Mr Mold also told the Kampala Forum that ECA has been promoting the idea that Africa needs to achieve a higher level of industrialization. “The lack of manufacturing capacities in Eastern Africa causes fundamental weaknesses in the economic performance of the region” he argued. ECA’s recent study An ABC of industrialisation in Uganda: achievements, bottlenecks and challenges argues that disappointingly the manufacturing sector has played no role in accelerating structural transformation of the economy, due to its declining share in total employment, from 6.5% in 2002 to 5.7% in 2013. Extracts from Chapter 4: Changing geographic trading patterns and their implications for industrial development (pdf):
4.1 Introduction: a burgeoning regional market, but also growing competition. On the other hand, these trends also imply a much more intensified competitive environment for Ugandan manufactures. For the EAC as a block, Chinese and Indian imports now account for 44% of all imports, subjecting the region to significant competitive pressures, particularly in labour-intensive manufactured goods. Econometric evidence is increasingly lending support to this hypothesis. Giovannet and Sanfilippo (2009) found econometric support for the proposition that, with the intensification of economic relations, China has not only started flooding African markets with its low cost manufactures - often at the expense of local producers - but has also begun to crowd-out cheap African manufactures in the region’s traditional foreign markets (principally in Europe). The fact that the analysis of Giovannet and Sanfilippo was carried out on data that is now ten years old suggests the impact is now probably far more significant. A more recent study by Jeanneney and Hua (2015) also finds that manufactured goods imports from both China and other countries had an adverse effect on African industrialisation. This dimension to the challenges of industrialisation in the region clearly merits greater attention.
4.2 The EAC-EU Economic Partnership Agreement: a facilitator or impediment to industrialisation? Our simulations suggest that Ugandan imports from the EU would increase significantly by 11%. However, this would be the result of a diversion of imports from elsewhere – mainly from Asia – since total imports actually register a small decline (-0.3%). In contrast, exports from Uganda to the EU only increase marginally (0.2%). There is also a slight deterioration of the terms of trade for all countries in the EAC. With regard to GDP, the simulation suggests that the EPA reduces GDP by 0.2 to 0.5% across the four EAC countries considered in the exercise, with Uganda losing -0.2% (Table 4). Absolute changes are shown in Table 5. It is worth noting that imports from all other regions decline - the trade diversion effect. Perhaps more importantly, intra-EAC imports decline by $42m – mainly in manufacturing – while tariff revenues accruing from imports would decline by $20m in Uganda. These simulation results contrast with the results presented by the EU in a study published in February 2017:
4.3 AGOA an opportunity missed? Compared to the other 3 major EAC countries, Uganda has the highest share of used clothing imports. About 58% of clothing imports into Uganda, valued at around $23m, are classified as used clothing (COMTRADE, 2016). The rest consists of cheap clothing, mostly from China. In 2015, $1.1m of used clothing from the US entered the Ugandan clothing market (USITC, 2016). Uganda hopes that the used clothing ban would provide local garment manufactures an opportunity to increase their market share and continue to develop their product on capacities. In 2013, in anticipation of a possible revision of AGOA, UNECA prepared a report to measure the possible impact on AGOA eligible countries if AGOA was discontinued:
Phyllis Wakiaga: Why we need to strengthen trade ties in the EAC (Capital FM)
A study released by the Kenya Association of Manufacturers last month stated that Africa continues to be Kenya’s leading export destination accounting for 40.6% of our exports, with the EAC community taking up 21.1% of total exports in 2016. This means that our exports to the EAC accounted for slightly more than half of the total exports in Africa. However, our total export earnings last year decreased by 4.0% and this could be explained by a decrease to exports in Uganda and Rwanda by 9.3 and 2.5% respectively. In the past five years, we have witnessed the growth of our EAC neighbours through their efforts to industrialize and grow their economies. Kenya which has always been a trailblazer in this regard in the region, has now, at best stagnated and at worst, as I have mentioned above, lost its footing in some areas. This is a sign that we need to act fast if we want to remain a beacon and a notable investment hub in Africa. There is an urgent need to start channelling our focus towards diversifying and growing our exports in order to secure our markets. [The author is CEO of Kenya Association of Manufacturers and the UN Global Compact Network Representative for Kenya]
Dar, Kampala oil, gas firms join forces (Daily News)
The Association of Tanzania Oil and Gas Service Providers and their Ugandan counterparts, Association of Uganda Oil and Gas Service Providers, have signed an agreement that will see the two working together in the Hoima-Tanga pipeline project. The agreement will see Tanzanian and Ugandan service providers in the oil and gas industry do joint biddings for tenders in different areas of the pipeline project, including transportation of materials. [Note: the 3rd Uganda International Oil & Gas Summit will take place on 27-28 September]
Julius Musyoki: Integrated customs system game-changer in clearance of goods (Business Daily)
Customs agencies, globally, are facing the emerging dilemma of balancing demands to improve trade facilitation while at the same time meeting increasing needs for compliance. They are under pressure to deliver customer-focused services, collect accurate revenues and prevent illegal trade within the constraints of limited resources. This calls for modernisation of customs administration to deliver agility, accuracy, security, and transparency using systems that are empowering rather than restrictive. It is for this reason that the Kenya Revenue Authority (KRA) is implementing the Integrated Customs Management System (iCMS). This system consolidates all the existing customs systems into one modern, robust and more efficient system built on the latest technology with capability of seamlessly interfacing with other internal and external systems as need arises. [The author is Commissioner for Customs and Border Control at Kenya Revenue Authority] [Note: The 12th PICARD Conference will be hosted by the Tunisian Customs Administration, 26-28 September]
Mozambique and Malawi sign landmark transport corridor agreement today (Club of Mozambique)
The Mozambican and Malawian governments will sign an agreement in Maputo today to expand the Nacala Development Corridor, a 900-kilometre railroad that crosses both countries and runs to the Indian Ocean. The agreement will enable the corridor to evolve, “as well as fostering economic growth through the promotion and coordination of economically viable businesses in the transportation, agriculture, commerce, mining and tourism sectors”, the Mozambican government has announced.
Leveraging the services sector for inclusive value chains in developing countries (ICTSD)
In this paper, Judith Fessehaie presents a conceptual framework of the contribution of services to value chains, examines the involvement of services within value chains at the macro, meso, and micro levels, and discusses the sustainable development implications of services in value chains. The author further provides readers with a number of key conclusions and general policy implications.
Export quality in advanced and developing economies: evidence from a new data set (World Bank)
This paper develops new estimates of export quality, based on bilateral data, which are far more extensive than previous efforts. The data cover 166 countries and hundreds of products over 1962-2014. The analysis finds that quality upgrading is particularly rapid during the early stages of development. There is significant cross-country heterogeneity in the growth rate of quality. Within any given product line, quality converges over time to the world frontier. Institutional quality, liberal trade policies, foreign direct investment inflows, and human capital all promote quality upgrading, although their impacts vary across sectors. The results suggest that reducing barriers to entry into new sectors can allow economies to benefit from rapid quality convergence over time.
Financial globalization: a glass half empty? (World Bank)
Since the 1970s, the world has embarked on a new financial globalization era. Although the literature predicted large gains from financial globalization (such as additional funding, broad diversification, and deeper financial systems), the positive effects have been more limited. In developed and developing countries, financial globalization has manifested in increasing gross capital flows (inflows and outflows) rather than larger net flows. Capital markets are segmented and only a few large firms access international markets. International institutional investors do not seem to have played a stabilizing role, helping to exacerbate and transmit crises across countries. Although financial globalization has brought several beneficial changes, its net effects and spillovers to the overall economies participating in it have yet to be understood.
South Africa: Seifsa calls for stakeholder collaboration to reverse contraction in metals sector (Business Report)
The Steel and Engineering Industries Federation of Southern Africa said on Thursday that the contraction in the metals and engineering sector was a concern not only for the manufacturing industry, but for the whole of South African economy. Seifsa chief executive Kaizer Nyatsumba called on government, business and labour to collaborate in efforts address the challenges currently facing the manufacturing sector in general, and the metals and engineering sector in particular. Nyatsumba said challenges facing the sector include unfair competition from highly-subsidised countries, weak.
South Africa’s bulk exports decline 7.2% in August (Business Day)
SA’s bulk export volumes fell 7.2% year on year in August to 11.7-million tonnes, after surging by 34.5% in July to 15.6-million tonnes, according to Transnet National Ports Authority. This brought the increase for the first eight months of 2017 to 6.8% year on year.
Today’s Quick Links: Tunisia’s trade deficit widens 22%, Jan-Aug The path to longer and healthier lives for all Africans by 2030: the Lancet Commission on the future of health in sub-Saharan Africa UN Day for South-South Cooperation: Download the report of the Secretary-General (pdf) Brazil eyes Namibian port as trade gateway to southern Africa Noah Smith: China isn’t the only reason to question free trade |
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United Nations urges end to austerity, calls for ambition to rebalance global economy and achieve prosperity for all
The global economy appears stuck on its path to recovery. A new UNCTAD report, the Trade and Development Report, 2017: Beyond Austerity – Towards a Global New Deal, sets out an ambitious alternative policy route to build more inclusive and caring economies.
Launching the report, UNCTAD Secretary-General Mukhisa Kituyi said, “A combination of too much debt and too little demand at the global level has hampered sustained expansion of the world economy”.
The report states that people should be put before profits, calling for a twenty-first century makeover to offer a global “new deal”. Ending austerity, clamping down on corporate rent seeking and harnessing finance to support job creation and infrastructure investment will be key to such a makeover.
Good times, bad times
UNCTAD notes that the world economy in 2017 is picking up but not lifting off. Growth is expected to reach 2.6 per cent, slightly higher than in 2016 but well below the pre-financial crisis average of 3.2 per cent. Most regions are set to register small gains, with Latin America exiting recession and posting the biggest turnaround, even if only at 1.2 per cent growth. The eurozone is expected to see its fastest growth since 2010 (1.8 per cent) but is still lagging behind the United States of America (see table).
World output growth: Annual percentage change
The main obstacle to a robust recovery in the advanced economies is fiscal austerity, which remains the default macroeconomic option. According to UNCTAD findings, 13 out of 14 leading advanced economies experienced austerity between 2011 and 2015.
With insufficient global demand, trade remains sluggish. A minor improvement is expected this year, because of a recovery in South-South trade led by China. However, there is much uncertainty, especially with regard to commodities trade, where a brief recovery in prices has not been sustained.
Figure 1: Monthly prices, all commodities
(Index numbers: 2002 = 100)
Source: UNCTAD secretariat.
In the absence of a coordinated expansion led by the advanced economies, sustaining the limited global economic acceleration hinges on lasting improvements in emerging economies. But while most large emerging economies avoided austerity between 2011 and 2015, and China and India have maintained robust growth rates since, they are now facing significant downside risks.
Debt levels continue to rise without real signs of robust growth, and there are concerns about political instability, falling commodity prices, higher interest rates in the United States and a stronger dollar. Capital inflows to developing countries remain negative, albeit less so than in recent years. Furthermore, unforeseen events could knock recovering economies off balance.
Figure 2: Net private capital flow by region, quarterly
(Billions of current dollars)
Source: UNCTAD secretariat.
Age of anxiety: Inequality, indebtedness and instability spell precarious future
In the words of the lead author of the report, Richard Kozul-Wright, “Two of the biggest socioeconomic trends of recent decades have been a debt explosion and the rise of super-elites, loosely identified as the top 1 per cent.” These, the report suggests, are linked through the deregulation of financial markets, to the widening ownership gap of financial assets and a fixation on short-term returns. As such, inequality and instability are hard-wired into hyperglobalization.
The report shows that this makes for a world with insufficient levels of productive investment, precarious jobs and weakening welfare provision. This has become self-perpetuating, with the run-up to a crisis driven by the “great escape” of top incomes, while their aftermath is marked by austerity and stagnating incomes at the bottom.
A decade after sparking a massive global crisis that absorbed trillions of dollars of taxpayers’ money in bailouts, the dominant financial sector has barely changed. Indeed, debt levels are higher than ever. However, the report also examines other sources of anxiety linked to robots and gender discrimination, which are affecting job prospects in developed and developing economies alike. While automation and increased female participation should be welcome developments, they appear threatening because they coincide with a world of austerity and excessive competition, leading to a race to the bottom in job markets.
The result is a popular backlash against a system that is perceived to have become unduly biased in favour of a handful of large corporations, financial institutions and wealthy individuals. The report warns that failure to correct the excesses of hyperglobalization is not only jeopardising social cohesion but diminishing trust in both markets and politicians.
Needed: An alternative to market fundamentalism
The report argues that far too much has been made of trade and technology in explaining the troubles of a hyperglobalizing world. Instead it calls for a serious examination of market power, rent-seeking behaviour and “winner-take-most” rules of the game, which have generated exclusionary outcomes.
The growing concentration of markets is a major issue highlighted in the report, with potentially corrosive consequences for the political system.
As long as policymakers continue to brandish the austerity sword and measure policy success by asset prices and profit levels, big business will dominate in key sectors, and the already significant inequalities may worsen further.
Towards a global new deal: Summoning the spirit of 1947
Moving away from hyperglobalization towards building inclusive economies is not just a matter of making markets work better. It requires a more exacting and encompassing agenda that addresses global and national asymmetries in technological know-how, market power and political influence.
With the United States withdrawing from its role as global consumer of last resort, recycling surpluses is a key element in rebalancing the global economy. The report turns the spotlight on the eurozone – especially Germany – which is now running a large surplus with the rest of the world. The recent Group of 20 proposal made by Germany – a Marshall Plan for Africa – is welcome, but so far lacks the requisite financial muscle. The trillion-dollar Belt and Road Initiative of China is much bolder, even as its surplus has dropped sharply over the last two years.
The report draws lessons from 1947, when the International Monetary Fund, the World Bank, the General Agreement on Tariffs and Trade and the United Nations joined forces to rebalance the post-war global economy, and the Marshall Plan was launched. Seven decades later, an equally ambitious effort is needed to tackle the inequities of hyperglobalization to build inclusive and sustainable economies.
In response to the political slogan of yesteryear – “there is no alternative” – the report outlines a global new deal to build more inclusive and caring economies. This would combine economic recovery with regulatory reforms and redistribution policies, and do so with speed and at the requisite scale. The successes of the New Deal of the 1930s in the United States owed much to its emphasis on counterbalancing powers and giving a voice to weaker groups in society, including consumer groups, workers’ organizations, farmers and the dispossessed poor. This is no less true today.
In today’s integrated global economy, Governments will need to act together for any one country to achieve success. UNCTAD urges them to seize the opportunity offered by the Sustainable Development Goals and put in place a global new deal for the twenty-first century.
There is an alternative
Key measures discussed in the report include the following:
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Ending austerity with more and better public investment, with a strong caring dimension, including major public works programmes that improve infrastructure and generate employment.
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Helping to mitigate and adapt to climate change and to promote the technological opportunities offered by the Paris Agreement under the United Nations Framework Convention on Climate Change.
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Focusing more on care activities.
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Boosting government revenue (a greater reliance on progressive taxes, including on property and other forms of rent income, can address income inequalities). The report shows that even small changes to the marginal tax rate of the world’s richest cohorts would significantly close funding gaps; tackling tax exemptions and loopholes and corporate abuse of subsidies would greatly add to revenues and fairness.
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Setting up a new global financial register to record who owns financial assets throughout the world as a first step towards fair taxation.
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Giving labour a stronger voice (wages need to rise in line with productivity, and work insecurity needs to be corrected through legislative action and active labour market measures).
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Taming financial capital (appropriate regulation of the financial sector, covering the range from private banking behemoths to “toxic” financial products).
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Improving capitalization of multilateral and regional development banks (the institutional gap in sovereign debt restructuring needs to be filled at the multilateral level).
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Reining in corporate rentierism (measures aimed at curtailing restrictive business practices need to be strengthened in tandem with stricter enforcement of existing national disclosure. For example, a global competition observatory could monitor global market concentration trends and patterns and gather information on various existing regulatory frameworks, as a first step towards coordinated international best practice guidelines and policies.)
Regional growth trends
African growth engine back in second gear
Beginning in 2014, lower global oil prices and the end of the commodity boom have affected the African continent (parts of which also suffered a drought) extremely adversely, with growth in the region falling from 3 per cent in 2015 to 1.5 per cent in 2016, and projected to rise to 2.7 per cent in 2017. This masks significant differences in the growth performance of individual countries in 2016, from above 7 per cent in Côte d’Ivoire and Ethiopia, to 1.1 per cent in Morocco and 0.3 per cent in South Africa. In addition, Nigeria saw GDP contracting by 1.5 per cent, while Equatorial Guinea recorded a fall of around 7 per cent.
In the case of many of these economies, their recent predicament is the result of a long-term failure to ensure growth through diversification, and in most case overdependence on one or a very few commodities. An extreme case is Nigeria, one of the largest economies of the African region, where the oil and gas sector accounts for a little more than a third of its GDP and more than 90 per cent of export earnings. The oil price decline dampened demand through its direct effects and indirect effects on government revenues and expenditures, and so was clearly responsible for economic contraction in Nigeria. The recovery in early 2017 is still halting at best. On the other hand, the absence of adequate economic diversification and the consequent dependence on imports has meant that current account deficits have widened, leading to currency depreciation and domestic inflation. So the structure of the Nigerian economy has made it a victim of stagflation driven by current global circumstances. Other economies affected by recent oil price movements include Democratic Republic of the Congo; Equatorial Guinea, where oil accounts for 90 per cent of GDP and is almost the only export earner; and Libya, which derives 95 per cent of its export revenues from oil.
Given the overall high level of commodity-export dependence in African economies, the generalized decline and subsequent low level of commodity prices noted earlier has generated similar outcomes in many other economies. Needless to say, the extent and duration of the price change varied. Non-fuel commodity prices rose 1.7 per cent in 2016 relative to 2015 levels, partly due to the slow recovery in metal and mineral prices, as the deceleration of growth in China led to falls in demand. China accounts for 9 per cent of African merchandise exports and primary commodities account for about 92 per cent of African exports to China. As a result, countries with all kinds of commodity dependence have been affected adversely.
Meanwhile, South Africa fell into a “technical recession”, two consecutive quarters of negative GDP growth, with a drop of 0.3 per cent in the fourth quarter of 2016, followed by a drop of 0.7 per cent in the first quarter of 2017.7 This contraction was due to the poor performance of manufacturing and trade, so much so that despite marked production improvements in agriculture and mining, the contraction of the former two sectors could not be neutralized. Clearly internal demand constraints have also played a role here.
All in all, Africa has been hit badly in the current global environment, even though East Africa, led by Ethiopia, Kenya, Rwanda and United Republic of Tanzania, managed to record respectable growth in 2016.
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South-South cooperation key to overcoming inequalities, says UN deputy chief
Underscoring the importance of South-South cooperation, United Nations Deputy Secretary-General Amina Mohammed on 12 September 2017 urged sustained commitment to mutually beneficial approaches that will ensure shared prosperity and make sustainable development a reality.
“Solutions and strategies created in the South are delivering lasting results around the world,” she said at an event marking the United Nations Day for South-South Cooperation, held at the UN Headquarters in New York.
“Nearly every country in the global South is engaged in South-South cooperation,” she added, noting China’s Belt and Road Initiative, India’s concessional line of credit to Africa, the Asian Infrastructure Investment Bank, and the Strategic Association Agreement by Mexico and Chile as few examples.
The deputy UN chief, however, also cautioned that progress has been uneven and extreme poverty, deep inequality, unemployment, malnutrition and vulnerability to climate and weather-related shocks persist, and underscored the potential of South-South cooperation to tackle these challenges.
South-South cooperation not a substitute for North-South cooperation
Also in her remarks, the Deputy Secretary-General highlighted that the support of the North is crucial to advance sustainable development.
“South-South cooperation should not be seen as a substitute for North-South cooperation but as complementary, and we invite all countries and organizations to engage in supporting triangular cooperation initiatives,” she said, urging all developed nations to fulfil their Official Development Assistance (ODA) commitments.
She also urged strengthened collaboration to support the increasing momentum of South-South cooperation as the world implements the 2030 Agenda for Sustainable Development and the Paris Agreement on Climate Change.
Further, noting the importance of the upcoming high-level UN Conference on South-South Cooperation, to be hosted by Argentina on the occasion of the fortieth anniversary of the adoption of the Buenos Aires Plan of Action, she said:
“It will enable us to coordinate our South-South efforts, build bridges, cement partnerships, and establish sustainable strategies for scaling up impact together.”
To mark the importance of South-South cooperation, the UN General Assembly decided to observe this Day on 12 September annually, commemorating the adoption in 1978 of the Buenos Aires Plan of Action for Promoting and Implementing Technical Cooperation among Developing Countries.
Ahead of the upcoming UN conference, more than 120 high-level experts from government, academia, civil society, the private sector and multilateral organizations gathered in Buenos Aires recently for a three-day Development Cooperation Symposium, convened by the UN Department of Economic and Social Affairs and the Government of Argentina, to discuss challenges and opportunities for South-South and triangular cooperation for sustainable development.
“There are new challenges to all States: among them, the real threat to multilateralism. South-South and triangular cooperation can contribute to a new multilateralism and drive the revitalization of the global partnership for sustainable development,” Under-Secretary General for Economic and Social Affairs Liu Zhenmin said at the gathering.
South-South cooperation offers path to balancing growth, Deputy Secretary-General says, urging greater partnership in tackling inequity
Following are UN Deputy Secretary-General Amina Mohammed’s remarks, as prepared for delivery, on United Nations Day for South-South Cooperation, in New York on 12 September 2017:
“Today we celebrate the achievements of South-South cooperation for sustainable development.
The 2030 Agenda for Sustainable Development (Agenda 2030) and the Addis Ababa Action Agenda have heralded a new era of commitment for South-South cooperation, that is why South-South and triangular collaboration is emphasized in frameworks such as the Sendai Framework for Disaster Risk Reduction, the Paris Agreement on Climate Change and the Agenda for Humanity.
South-South and triangular cooperation offer a path to balancing growth and equity and leaving no one behind.
Sixty-two years ago, the Bandung conference was held in Indonesia.
Thirty-nine years ago today, Member States gathered in Buenos Aires and adopted the Buenos Aires Plan of Action for Technical Cooperation and Developing Countries. The Buenos Aires Plan of Action was an expression of the aspirations of developing countries to strengthen their economic, social and political interdependence, accelerate development, and correct distortions in international systems caused by the asymmetrical power relations of the colonial era.
It was a reflection of their desire to promote cooperation among themselves as a complement to North-South cooperation in fostering international cooperation for development. The adoption of the Buenos Aires Plan of Action marked the beginning of a new phase of cooperation, providing a blueprint with a well-defined mechanism for implementation and follow-up.
Since the Buenos Aires Plan of Action was adopted, there has been an expansion of the substantive focus on South-South cooperation beyond technical and economic cooperation to other partnerships at the nexus of peace and development. These include partnerships in humanitarian work, climate change, migration, peacebuilding, mediation, conflict resolution and prevention.
There has also been an expansion of actors, including subnational entities, such as municipal and provincial governments and non-State actors.
Solutions and strategies created in the South are delivering lasting results around the world. Nearly every country in the global South is engaged in South-South cooperation. Recently, the Belt and Road Initiative, championed by China, has partnered with more than 100 countries and many United Nations entities. In addition, China’s South-South Climate Change Cooperation Fund is now operational and is funding climate change mitigation and adaptation projects.
India has announced a $10 billion concessional line of credit to Africa over the next five years. It is also leading the International Solar Alliance, which supports developing countries to boost their solar production capacity. And the Strategic Association Agreement, established by Mexico and Chile, has promoted international cooperation in political and commercial areas.
In Asia and the Pacific, South-South trade accounts for 54 per cent of total exports and 53 per cent of imports. The recently established Asian Infrastructure Investment Bank will provide between 10 and 15 billion dollars in loans each year over the next 15 years, prioritizing sustainability and inclusive growth.
Across the global South, we have seen remarkable advances. However, progress has been uneven. Extreme poverty, deep inequality, unemployment, malnutrition and vulnerability to climate and weather-related shocks persist. According to the United Nations Multidimensional Poverty Index, 2.2 billion people still live in abject poverty. About 1.4 billion people, the majority in the South, still have no reliable electricity, 900 million do not have access to clean water and 2.6 billion lack adequate sanitation.
South-South collaboration and partnership offer the opportunity to turn these statistics around. The countries of the South can collectively use their growing potential to meet their infrastructural needs and target investments in green technologies and public goods that are critical for sustainable development.
Together, we must identify and encourage the critical areas where South-South cooperation can be effective. These include policy coordination, regional and economic integration, interregional linkages and the development of national productive capacity through the exchange of knowledge and technology.
I encourage the countries of the South to further deepen their cooperation to achieve the Sustainable Development Goals (SDGs). This, of course, must be accomplished with the support of the North.
South-South cooperation should not be seen as a substitute for North-South cooperation but as complementary, and we invite all countries and organizations to engage in supporting triangular cooperation initiatives. I urge all developed nations to fulfil their official development assistance commitments.
As we continue to implement the 2030 Agenda and the Paris Agreement, the increasing momentum of South-South cooperation also needs to be supported by strengthened institutionalization of these collaborative efforts.
The General Assembly has decided to bring all stakeholders together at a High-Level United Nations Conference on South-South Cooperation to formalize and link South-South cooperation to the international development architecture.
The Conference will be generously hosted by Argentina on the occasion of the fortieth anniversary of the adoption of the Buenos Aires Plan of Action. It will enable us to coordinate our South-South efforts, build bridges, cement partnerships, and establish sustainable strategies for scaling up impact together. I encourage you all to contribute to the process in your areas of expertise.
On this United Nations Day for South-South Cooperation, let us reaffirm our commitment to mutually beneficial approaches that will ensure shared prosperity and make sustainable development a reality.”
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COMESA to recruit a new Secretary General in 2018
The Common Market for Eastern and Southern Africa will appoint a new Secretary General next year (2018), through a competitive process.
With 19 countries, a geographical size of 11.6 million square kilometres, a combined GDP of $755 billion and a population of 520 million, COMESA makes up a third of Africa. It is the largest regional economic body in Africa. What is more, it has enormous potential, for instance $82.4 billion in unutilised intra-COMESA trade opportunities.
The new Secretary General will find an organisation that has robust trade framework that promotes transparency, predictability and planning; as well as policy and regulatory frameworks in areas of industrialisation, surface and air transport, energy, agriculture, information technology, and communication technology. Naturally though, as with many institutions, he or she will find challenges to mop up, especially low ownership by the countries, personnel and recruitment management, financial stewardship and resource mobilisation. Depending on his or her level of ambition, he or she might wish to position COMESA as a base in a technology and finance driven global economy. Gravitas and political influence across the region, sound analytics, courage, fair play, prudence, and complex problem-solving skills will therefore be handy. A person possessing this sort of capital is usually a former Head of Government, Minister or CEO who is savvy in intergovernmental evidence-based policy making and demonstrable development practice.
Focusing on trade and investment, COMESA established the first free trade area in Africa on 31 October 2000 and has pioneered a number of trade facilitation instruments. These include regional road standards for vehicle dimensions and axle loads, road user charges, carriers’ licence and transit freedom that create a regional transportation market. Others include the automated system for customs data, the single administrative customs documentation, regional transit bond system, regional third-party motor insurance, and flexible rules of origin, which have facilitated trade and reduced the cost of doing business. Its system of resolving trade disputes is very successful. The 204 trade disputes reported since 2008 have been resolved except five currently outstanding.
A number of its trade and investment institutions have performed beyond expectation, becoming continental or global, such as its Trade and Development Bank, the African Trade Insurance Agency, the Reinsurance Company, and the Leather Institute; as well as a regional competition Commission (being only the second in the world after the European Competition Commission) and a business council. COMESA also has a regional court of justice, which has produced important jurisprudence on regional trade in a free trade area, clarifying the rules.
The COMESA Treaty gives the Secretary General enormous powers, which can be put to good use. He or she has powers to convene high level and technical meetings of the 19 countries, and is chief executive of the organisation. The next chief executive has an opportunity to put COMESA on a new footing.
Development thinking has gone through seismic changes since the 1990s when the organisation was formed. “Minds not mines” sums up these changes. It will be appropriate to vision COMESA as a technology and financial base in a single market, and align this goal with the global sustainable development goals to be achieved over the next 12 or so years by 2030. Global knowledge doubles every 12 months. A mechanism for systematically harnessing, localising and commercialising skills and innovation from around the world, as well as patient capital, could assist achievement of this vision.
Lack of sustainable adequate resources has hobbled the organisation. Contributions from member states under a formula have not yielded enough, leaving a huge gap for donor dependence. At the same time, COMESA institutions have been financially successful and could be given the opportunity to chip in through contributing a percentage of their revenues. This will require mobilising these institutions to this effort. Other innovative sources of revenue could include establishing a regional e-market with a small charge on transactions. An equivalent of a COMESA e-bay or Amazon or Alibaba would revolutionise trade and resource mobilisation in the region, while also greatly supporting SMEs to reach a global market.
Fortunately, President Paul Kagame has proposed some reforms for the African Union, now being implemented. He has called for a lean and efficient secretariat, focussing on a few clear priorities and eliminating much bureaucracy, as well as resources mobilisation through contribution of a small percentage charged on trade taxes. These proposals form a template for Africa’s regional organisations, which should now work more coherently with the African Union.
Business processes to achieve the vision and utilise resources will be required. Staff for the secretariat should be individuals who love their job “so they never have to work another day” as Confucius advised. A premium should be put on complex problem solving and analytics. Apart from professionalism, and while having clear reporting structures and responsibilities, a culture of team work and psychological safety should mould the whole secretariat into a joyful service provided by passionate, smart and energetic individuals.
The new Secretary General will need to decisively address perennial challenges that choke the organisation, arising from waning ownership by member states that explains low implementation of key programs and donor dependence, as well as acrimonious recruitment and financial management squabbles that have characterised a number of high level meetings.
In conclusion, COMESA needs good leaders to step forward. Above all, and building on the milestones achieved so far, the new chief executive to be recruited next year should have clout and skills to reposition this important organisation so it can be a force for good in the world, creating peace and prosperity. On the basis of the principle of sublimity, best practices at national level should inform regional level processes and outcomes.
Dr Francis Mangeni is Director of Trade, Customs and Monetary Affairs at the Common Market for Eastern and Southern Africa (COMESA). The views expressed in this article are those of the author and do not purport to reflect the views of tralac.
Additional articles by the same author include:
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ECA calls Uganda to make industrial policy more effective
In the last two decades, Uganda’s economy has been performing impressively and has managed to reduce, by over half, the proportion of people living in poverty. However, in 2016 the country registered the lowest rate of economic growth in the last 30 years. This dilemma was at the central of the discussions at the High Level Economic Growth Forum held yesterday in Kampala.
Uganda’s average growth for the period 2011-2015 was 4.8 percent, lower than that of neighbouring Kenya (5.5 percent), Tanzania (6.9 percent) and Rwanda (7.0 percent). Furthermore, like many African countries, Uganda has failed to generate enough job opportunities for its young and rapidly growing population.
According to Mr. Andrew Mold, acting Director of UN Economic Commission for Africa (ECA) in Eastern Africa, one of the main reasons for Uganda’s non-inclusive growth is that its economy has been driven by the service sector at the expense of industry and manufacturing sectors. “Around 59 percent of Uganda’s workforce operates in the informal economy and job creation in the formal sector has not kept up with a rapidly expanding workforce,” explains Mold.
Mr. Mold told the Kampala Forum that ECA has been promoting the idea that Africa needs to achieve a higher level of industrialization. “The lack of manufacturing capacities in Eastern Africa causes fundamental weaknesses in the economic performance of the region,” he argued.
ECA’s recent study entitled: ‘An ABC of Industrialisation in Uganda: Achievements, Bottlenecks and Challenges’ argues that disappointingly the manufacturing sector has played no role in accelerating structural transformation of the economy, due to its declining share in total employment, from 6.5 percent in 2002 to 5.7 percent in 2013.
Having industrialization and boosting manufacturing as explicit goals in many policy frameworks of the country is not enough. The ECA study says that “Successful industrial policy must be customized and supported by an effective, flexible and pragmatic government that implement them.”
Drawing an example from Asia, Mr. Mold noted that since Uganda and Vietnam embarked on reform of their economies in the late 1980s, both countries have experienced similarly impressive growth rates. However, the outcomes in terms of poverty reduction have been quite starkly different, with Uganda reducing its poverty rate from 56 percent to 30 percent but in case of Vietnam, the poverty rate dropping from 50 percent to 3 percent.
“Part of the explanation for this difference is explainable by the fact that the manufacturing sector played a significant role in that structural change in Vietnam and has thus had a much better record in job creation and poverty reduction,” affirmed Mold.
Mr. Mold urged experts at the forum to make industrial policy more effective by learning from experiences of peers, such as Ethiopia, and coordinate with other countries across the East African Community to develop regional value chains.
This study was initially prepared for the Second-High Level Dialogue on “Realizing the Promises of Green Growth: Promoting Sustainable Industrialisation in Uganda”, organised by the School of Economics, Makerere University, the Ministry of Trade, Industry and Cooperatives and the United Nations Development Programme at the Imperial Royale Hotel on 11th April 2017.
The report was written by a team led by Andrew Mold, Acting Director of the Sub-Regional Office of the ECA, and Yemesrach Workie, Economics Advisor at UNDP Uganda.
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tralac’s Daily News Selection
Featured @AUTradeIndustry tweet (from the ongoing BIAT conference in Tanzania): Intra-Africa Trade would double from the current level of ~$170bn per year to almost $400bn by addressing availability of market information
Today, in Johannesburg: SACU and EAC trade ministers meeting
A reminder: the launch of the Trade and Development Report 2017 takes place today (in Geneva and Addis)
AU reforms update: African Union appoints Heads of the AU Institutional Reforms Unit
Sachin Chaturvedi: Asia Africa Growth Corridor aims for people-centric growth strategy (Livemint)
Trade facilitation is a major component of AAGC Framework. In a study conducted by the European Commission, it is found that the time taken for export and import activities is among the highest in Africa (excluding the northern region). Moreover, the documents required to export and import are also on the higher side in Africa. Thus, there is a need for customs modernization plan with focus on better organization and management, coupled with administrative, financial and technical autonomy as well as accountability. We also need to strengthen institutions and infrastructure for valuation through legislative framework, training of valuation officers, establishment of valuation offices and value information systems and databases. India has established the directorate of valuation, special valuation branch and National Import database, to improve custom valuation practices. Similar institutions can be established in other developing countries in Asia and Africa through technical assistance. India’s success in the single-window custom clearance through SWIFT could be replicated in African countries.
Thomas A. Shannon: US-African Partnerships – advancing common interests (US State Department)
Second, as far as the United States is concerned, Africa is already a continent of allies and partners. With a few notable exceptions, the vast majority of African states share our commitment to free markets, equitable trade, democracy and the rule of law, secure borders, and effective responses to global terrorist threats. African states’ progress towards open markets and free trade have spurred economic growth, development, and tremendous opportunity across the continent. Indeed, six of the world’s ten fastest growing economies are in Africa. By 2030, Africa will represent almost a quarter of the world’s workforce and consumers, and by 2050 Africa’s population is projected to double to two billion people. And our balance of trade with Africa is near parity - thanks to booming demand for infrastructure investment, aircraft, consumer products, and services. African states consistently attract strong investor attention from American companies. [Prepared remarks by Thomas A. Shannon, Jr., Under Secretary for Political Affairs at US Institute of Peace seminar]
Tanzania: No ban yet on ‘mitumba’ says government (The Citizen)
The government has not yet officially banned importation of second hand clothes (mitumba), a senior officer has said, reiterating that a recent import duty increase was merely a step towards nurturing the growth of the local textile industry. Speaking to The Citizen on sidelines of last week’s breakfast meeting between the Confederation of Tanzania Industry and Tanzania Revenue Authority, the Permanent Secretary in the Ministry of Industry, Trade and Investment, Dr Adelhelm Meru, said: ”This is what we told them (US trade bodies) when we met recently….We never said we are banning second-hand clothes….We only said that we are building the capacity for our local industries and that is what exactly what our team of experts said during a recent negotiation with the US trade bodies.”
Looking beyond the horizon: a case study of PVH’s commitment in Ethiopia’s Hawassa Industrial Park (World Bank)
The story of how the PVH Corp. came to lead a group of its top suppliers to build factories and a fabric mill in Ethiopia’s Hawassa Industrial Park is the study of a strong collaboration between a private company looking to optimize its business model and a government aiming to transform its economy through global strategic repositioning. The success of this story hinges upon the intersection of their goals and a shared vision of development that includes a strong commitment to social and environmental goals. PVH was motivated to invest in Ethiopia to respond to shifts in the global apparel sector, its growing desire to retool its business model and to address its concerns about compliance with social and environmental standards in its traditional sourcing locations. The case study further assesses the government of Ethiopia’s strategy, level of readiness, interest, and commitment, and sets out some key challenges that lie ahead for this partnership. The case study is structured in ten sections.
Rwanda: Developing a coherent national policy framework on agricultural trade (RNA)
To address this challenge and to assess the coherence of policy and coordination mechanisms between the Ministry of Agriculture and Animal Resources and the Ministry of Trade and Industry, FAO, with support from ECDPM and the Enhanced Integrated Framework facilitated a workshop yesterday in Kigali. Among the objectives of the meeting were the alignment of sectoral policy interventions and the promotion of strategic use of public and private resources. Speaking at the workshop, Dr Charles Murekezi, the DG of Agriculture Development at MINAGRI, provided a number of ways to improve agriculture and trade policy coherence in Rwanda. [Related: Cabinet approves National Strategy for Transformation 2017-2024; NAEB moves to enforce coffee zoning strategy to achieve export targets]
Central Africa: ICE2017 preview (UNECA)
They (Cameroon’s minister of trade, Luc Magloire Mbarga Atangana and Antonio Pedro, Director of ECA’s Sub regional Office) discussed progress made by other RECs in promoting intra-Africa trade, noting that “Central Africa is lagging behind other sub-regions, but that its success stories should be emulated and replicated for scale and transformational change.” They also concurred that “by maximizing trade in intermediate goods and fostering backward and forward integration, countries in Central Africa will benefit more from trading with each other than with the external world.” The Minister of Trade stated that with a population of more than 150 million, Central Africa provides a “big enough market” for all its member states, “especially if we effectively promote free movement of goods and services.” He cited a “positive example” of Cameroon, which imports palm oil from Gabon for its refineries that produce vegetable oils and soap. “We need to do more of this,” said Mr. Atangana who then deplored the fact that Cameroon’s textile industry does not benefit much from the country’s cotton production since, “only about 4% is transformed locally. The rest is exported.”
IGAD convenes member states and development partners for first time
IGAD has brought together Member States and IGAD development partners for the first meeting of its kind aimed at facilitating interaction between development aid end recipients and donors. The objective of the meeting was to highlight achievements by IGAD within the framework of the regional programmes and country level programmes with IGAD assistance, and also to touch on the challenges and opportunities in face of the organisation.
Unlocking the potential of trucking business in Southern Africa (NewsDay)
Operations to and from Southern Africa are governed by bilateral agreements. Unlike West and Central Africa, the Southern African agreements do not establish quotas. This enables direct contracting between shippers and transporters and creates incentives for transporters to be more efficient. The agreements contain the following provisions, among others:
South Africa: Quarterly Bulletin (Reserve Bank)
The value of exported gold and merchandise goods increased at a slightly faster pace than that of merchandise imports, resulting in a widening of South Africa’s trade surplus with the rest of the world in the second quarter of 2017. The value of both mining and manufacturing exports increased, the latter following three successive quarterly declines. The value of mining imports increased despite a decline in the value of crude oil imports, while manufacturing imports were boosted by higher values of imported machinery, transport equipment and textiles. The shortfall on the services, income and current transfer account widened further in the second quarter of 2017, resulting in the deficit on the current account of the balance of payments widening from 2.0% of GDP in the first quarter of 2017 to 2.4% of GDP in the second quarter, despite the improved trade surplus. Extract from Quarterly Economic Review (pdf): The share of manufacturing exports to total exports increased from 35.6% in 2008 to 38.3% in 2016. In 2016, the main regional destinations of South African-manufactured exports were Europe and Africa, followed by the United States. In 2016, South Africa’s largest manufactured export product category was vehicles and transport equipment (35.4%), followed by machinery and electrical equipment (22.3%), chemical products (15.0%) and food, beverages and tobacco (9.4%). That same year, Germany was the single largest destination of South African manufacturing exports, comprising mostly vehicles (62.3%) and machinery (22.6%). [Various downloads available]
UNCTAD’s Trade and Development Board meeting: profiled presentations - Investment and the digital economy (James Zhan, UNCTAD), Air connectivity in Africa, challenges and opportunities (Brian Pearce, IATA). [View the complete set of presentations, statements, updated daily, here]
Short-term impact of Brexit on the United Kingdom’s export of goods (World Bank)
The short-term impact of Brexit on goods exports is assessed using the Overall Trade Restrictiveness Index of the UK’s major trading partners. The analysis shows that in the short run, leaving the European Union may cause the United Kingdom’s exports to the European Union to decrease by 2 percent, and the prospect of a major trade collapse post-Brexit is unlikely. This is because the European Union’s Most Favored Nation tariffs are higher on products that are less responsive to tariffs, and lower on products that are more responsive to tariffs. The study assumes that there are no further compliance costs associated with the existing nontariff measures facing firms in the United Kingdom, should the United Kingdom leave the European Union.
India’s exports to Japan halve to $3.85 billion in four years (Livemint)
Amid growing bonhomie between Japan and India - Asia’s second and third largest economy, respectively- lies the dark reality that in just four years, Indian exports to Japan have almost halved to $3.85 billion in 2016-17, from $6.81 billion in 2013-14.
Today’s Quick Links: African Minerals and Geosciences Centre seeks more members as non-payment of fees bite Registration has opened for Afreximbank’s Structured Trade Finance seminar (6-9 November, Cape Verde) UNSC debate summaries: Lake Chad Basin humanitarian crisis, Somalia, Guinea-Bissau |
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Integrating SMEs into value chains can boost development
Small business comes in many different forms but for millions of people around the world it is a route out of poverty and a chance at a better life.
Small and Medium Enterprises (SMEs) contribute significantly to global income and job creation.
In developing countries, they provide 60-70% of formal employment. In sub-Saharan Africa alone, that figure rises to 80%.
The scale and diversity of small business in the global economy makes it a potentially powerful force in development efforts.
To harness this potential, it is important to strengthen the competitiveness of SMEs and enhance their contribution to the 2030 Agenda for Sustainable Development, the 15-year global roadmap adopted by the international community in 2015.
The Addis Ababa Action Agenda on financing for development lays out financing priorities for the 17 Sustainable Development Goals (SDGs) that form the core of the 2030 Agenda. The SDGs call for multiple interventions to build strong SMEs, notably in the areas of access to finance and skills; knowledge and technology transfer; and by creating linkages with regional and global value chains.
Integrating SMEs into global or regional value chains can be a potent way to strengthen small business operators through their participation in the global economy. Global value chains make up 84% of the international production networks of multinational enterprises (MNEs), meaning they have become the engine room of the global economy.
UNCTAD data shows that some 90,000 MNEs together have US$27 trillion in foreign direct investment stock invested in nearly 1 million foreign affiliates worldwide. Together, MNEs account for over a quarter of global GDP and 30% of private sector value-added. Their production networks form the backbone of trade, now accounting for 80% of all cross-border sales.
In contrast with the international reach inferred by their name, most global value chains have a distinctly regional character. Therefore, strategies to tap the potential of value chains for economic development would do well to heed a regional approach.
There is a large potential for business linkages in both manufacturing and services industries. This can include connecting local firms to value chains by linking them to leading firms and affiliates operating in their countries. These links could potentially achieve the benefits for small enterprises that the Addis Ababa Action Agenda calls for. Such connections help to create stable offset points for the goods and services produced by small suppliers, offer contact with technological innovation, and smooth access to new skills and alternative sources of capital.
However, value chain participation can hold risks. Economic dependence and power imbalance sometimes characterize these networks, and SMEs linked to value chains are not spared the demand fluctuations associated with certain sectors. Value chain participation is not a panacea for all small operators. Smaller domestic firms naturally have fewer opportunities to become part of production networks because of limited resources and bargaining power, as well as information asymmetries.
Country strategies to integrate into value chains are intricate and cut across different policy areas. A value chain participation plan for SMEs must form part of a broader national strategy. Many of the factors that underpin links with cross-border production networks are overarching, affecting firms regardless of their size.
A fundamental requirement for effective value chain integration is adequate infrastructure. Another is policies geared towards creating a sound overall business environment. These include coherent trade, investment, tax and competition policies, labour market regulation, intellectual property rights, access to land, among others. Moreover, trade and investment facilitation efforts are also needed to help make a sound business environment a reality.
Beyond these basic requirements, a focus on the following areas can help SMEs embark on the global and regional value chain development path:
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Enterprise clustering
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Linkages development
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Science and technology support and an effective intellectual property rights (IPR) framework
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Business development services
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Entrepreneurship promotion
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Access to finance for SMEs
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Digital access
The integration of SMEs into regional and global value chains can be a powerful driver of structural transformation and finance for developing countries. But this integration won’t happen automatically, or in a vacuum.
Policy makers and the international community therefore need to work closely with small business to help SMEs reach their potential as engines of the global economy.