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Afreximbank announces stellar 2016 results as President Kagame urges increased intra-African trade
The 24th Annual General Meeting of the African Export-Import Bank (Afreximbank) ended in Kigali on Saturday with President Paul Kagame of Rwanda saying that the many economic challenges confronting Africa should drive African countries to urgently increase trade among themselves.
“These factors should not just remain objects of reference,” he told delegates. “Instead, they should drive us to urgently increase trade with each other, invest more within our countries and regions, and build joint infrastructure, in order to better facilitate the movement of people and goods within Africa.”
President Kagame urged African Governments and the private sector to make the most of the possibilities offered by Afreximbank, noting that, for the last two decades, the Bank had been raising money, financing strategic projects and contributing to Africa’s pursuit of prosperity and independence.
Earlier, in his report to the AGM, Bank President Dr, Benedict Oramah, announced that the institution’s cumulative facility approvals had reached $50 billion, due to record approvals of $10 billion in 2016, and that the Bank’s total assets amounted to about $12 billion in 2016, following a 64 per cent increase from a year earlier.
“Loans growth quickened by about 65 per cent to reach $10 billion and constituted 87 per cent of total assets. Net income rose strongly by 32 per cent from $125 million in 2015 to $165 million in 2016 on sharply rising interest income, which increased by 30 per cent, from $372 million to $484 million. New equity injections and internal capital generation raised shareholders’ funds by 28 per cent to end 2016 at $1.63 billion,” added the President.
He said that since the last AGM, Sao Tome and Principe, Djibouti, Burundi, South Sudan and Madagascar had joined the Bank as Participating States, bringing the number of Participating States and Shareholder countries to 45. Togo, Econet Global, Locafrique of Senegal, Atlantic Financial Group, and MBCA Bank Limited of Zimbabwe also became new shareholders in the equity of the Bank.
Dr. Oramah said that the Bank had received one-notch increase in the its long term credit rating by Moody’s, from Baa2 to Baa1, as a result of a credit enhancement which the Bank implemented to strengthen the quality of buffer conferred by its callable capital.
Also speaking, Dr Peter Larose, Minister of Finance of Seychelles and Chairman of the General Meeting of Shareholders, said that despite the challenges, Afreximbank had continued to validate the wisdom of its founders who created an institution to assist the continent in trying times.
“A shining example was the Countercyclical Trade Liquidity Facility, which was developed to avail foreign currency liquidity to African central banks to cushion them from the impact of adverse economic conditions, and under which $6.45 billion was disbursed by end of 2016, going a long way in stabilizing the economies of beneficiary economies,” he said.
Dr. Larose announced that that the Bank’s Board of Directors had proposed a dividend declaration of $37.96 million to shareholders, a 32 per cent increase on the $28.82 million declared the previous year.
The meeting also featured the election of Claver Gatete, Minister of Finance of Rwanda, to take over as the new Chairman of the General Meeting of Shareholders
Activities related to the AGM began on 28 June with two days of seminars, followed on June 30 by the meeting of the Afreximbank Advisory Group on Trade Finance and Export Development in Africa. An investment forum, hosted by the Rwandese Government, and a trade exhibition also took place on 30 June, before the formal AGM on 1 July. The activities concluded with a conversation session with President Kagame.
More than 100 speakers, including ministers of trade, central bank governors, academics, African and global trade development experts, and business leaders, spoke during the four days of the Annual General Meeting and related events, which focused on the theme “unlocking Africa’s trade potential”.
Address by President Paul Kagame at the Afreximbank 24th Annual General Meeting
Kigali, 1 July 2017
I am very pleased to welcome you all to Rwanda. I trust that you’ve had a productive and enjoyable stay here. I also wish to thank Afreximbank for allowing and enabling us to be the host this meeting.
Let me start by acknowledging the significance of a primarily African-owned institution, serving the needs of African businesses and economies.
It is important to celebrate our successes.
For the last two decades, AfreximBank has been raising money, financing strategic projects and contributing to Africa’s pursuit of prosperity, and independence.
I thank you for your valuable partnership and support.
We still have a long way to go, and more work to do, to strengthen continental integration and raise the share of intra-African trade, which at 15%, is unacceptably low.
Africa needs to be more resilient in the face of consistent global shocks and increasing protectionism.
Too often, we find ourselves at a disadvantage when negotiating trade with other parts of the world.
And within all this, there is the ever increasing need for Africa to industrialise.
These factors should not just remain objects of reference.
Instead, they should drive us to urgently increase trade with each other, invest more within our countries and regions, and build joint infrastructure, in order to better facilitate the movement of people and goods within Africa.
Governments and the private sector should make the most of possibilities offered by Afreximbank, which has established the facilities, expertise, and productive relationships with external funding partners.
I understand that other African financial institutions are represented at this meeting. I trust that you will continue to collaborate closely to multiply the impact of your efforts.
But trade depends on more than finance. Many trade facilitation efforts require little more than political will.
We have examples in some regions where removal of barriers to trade have greatly improved the business environment.
These lessons need to be shared more widely across the continent so that Africans can reap the full benefits of integration.
Finally, the African Union, in the ongoing institutional reforms, will focus on key priorities, with other responsibilities going to regional organisations.
This presents opportunities for institutions like Afreximbank to play an even more robust role in supporting the continent’s shared goals.
However, there is a fundamental element in these reforms that the African Union is undertaking, and in general, the efforts we are all investing to develop our continent. And that is a mindset for success. Above all, there is a need for that mindset change.
We will succeed if we believe that Africa deserves it, that we have the capacity to do what needs to be done, and that unity and collaboration is the best way to get results.
Once again, I thank Afreximbank for your service to the continent and wish you success in this mission that we share with you.
Thank you.
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From tralac: Recognition and protection of geographical indications in the EU–SADC Economic Partnership Agreement; Bridges: Lighthizer lays out US trade policy agenda, NAFTA hearings get underway
Afreximbank AGM: updates
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Trade and economic transformation: meeting the test of relevance (pdf) - Dr Hippolyte Fofack (Chief Economist and Director of Research). The growth and economic fortunes of African countries are particularly tied to the dynamics of oil prices - in a region where oil-exporting countries account for about half of GDP and more than 55$ of exports; Over the years, the excessive dependency of the region to natural resources and primary commodity has exposed the region to recurrent adverse terms of trade shocks and acted as a major driver of growth volatility; In effect, the correlation between commodity prices and growth has made it extremely difficult to sustain growth episodes in the continent; In effect, a recent IMF review of stylized facts of growth turning points—(i) growth acceleration (up-breaks), (ii) growth deceleration (down-breaks), and (iii) sustained growth episodes (growth spells) is very instructive; It shows that Africa’s growth engine has been less robust — far less robust than in other regions, especially over the decades preceding the 2000s;
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Mr Denys Denya (Executive Vice President, Finance Administration and Banking Services). On Friday, the Bank will hold the 23rd Session of its Advisory Group Meeting, under the theme “Expanding African trade in a world of rising protectionism” which will conclude the series of events that precede the 24th Annual General Meeting of Shareholders. The theme of the third day is motivated by the re-emergence of rising nationalistic sentiments and creeping protectionism across the world in recent years which are posing a growing threat to globalization and international trade. Trade restrictive rhetoric and protectionism measures have been on the rise recently, most notably in the United States and Europe – regions which had previously been the leaders of free markets, and promoting the free movement of capital, goods and labour. In this regard, discussion will explore how to promote African trade in the face of these unfavorable developments.
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Obasanjo wants common currency for ECOWAS: Former President Olusegun Obasanjo on Thursday called on the leaders of the Economic Community of West African States (ECOWAS) to agree on a common currency to boost regional trade. Mr Obasanjo made the call at the ongoing 24th AGM of the African Export-Import Bank in Kigali. He spoke on: Can Regional Economic Communities work for Africa: lessons from a founding father. According to him, the currency is required to move the current level of the regional trade from 25% to more than 50%. He said the various currency zones like the Naira zone, the Cedi zone, among others should not be allowed to mitigate the flow of trade within the region. He blamed too many internal conflicts and changes in policies, among others, as some of the challenges facing the region.
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Egypt borrows $200m from Afreximbank. Banque Misr, Egypt’s second largest state-run bank, signed yesterday a $200m loan agreement with Afreximbank, Anadolu Agency reported. The agreement aims at supporting and financing Egypt’s small and medium-sized enterprises as well as strengthening the bank’s foreign currency resources. The three-year term facility will also aim to fund the light manufacturing activities in the country. The transaction paving the way for Banque Misr’s robust presence in Africa, in addition to its current representation in Lebanon, UAE, France, Germany and China.
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Rwanda’s private sector welcomes Afreximbank support. Private sector players say the $500m investment could help them expand their penetration into the regional market, as well as boost initiatives such as the Made-in-Rwanda campaign. During the ongoing Afreximbank Annual General Meeting in Kigali, the bank’s president said that they are currently in negotiations with the government on the disbursement of the funds. Stephen Ruzibiza, the Chief Executive Officer of the Private Sector Federation, told The New Times that such financing to Rwanda is timely.
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$25bn to be mobilised for intra Africa trade. African Export and Import Bank is in the next five years expected to mobilise $25bn to support intra-Africa trade. Speaking on the sidelines of the on-going Afrexim bank annual general meeting, Afrexim Bank president Benedict Oramah said of the total funds to be mobilised, $10bn will be mobilised from within the African continent. “We have set an objective of mobilising $10bn from Africa because the continent has had more than half a trillion dollars in foreign exchange reserves sitting in banks outside Africa and most times earning nothing, on the other hand, pension funds hold more than $700bn,” he said. Last year alone, the bank mobilised $4.5bn from Africa.
Private sector infrastructure investment commitments in developing countries fell in 2016 (World Bank)
Investment commitments (investments) in infrastructure with private participation in Emerging Markets and Developing Economies fell sharply in 2016. The $71.5bn committed across 242 projects in 2016 represents a 37% decline in investment compared to 2015 and a 41% decline compared to the annual average of $121.4bn over 2011 to 2015. The year-on-year drop in 2016 can be explained by a precipitous decline in investment in Turkey, which had a banner year in 2015, as well as steep declines in South Africa and Peru. Similarly, the lower investment relative to the five-year average is largely driven by declining private investment in infrastructure in three key markets, which together accounted for a majority of investment from 2011–2015: Turkey, India, and Brazil. All are countries where large programs over the last decade boosted the total number of investments in EMDEs. The Sub-Saharan Africa region (pdf) saw 11 infrastructure deals totaling US$3.3bn, or five percent of global PPI investment for 2016. This amount falls 48% below the 2015 and the five-year average investment, both at $6.4bn. Nine deals were in the energy sector, and two were in the transport sector. Uganda was the most active country with four projects, followed by Ghana and Senegal with two projects each. In 2015, the region saw considerably more projects: 22 projects in the energy sector (mostly in South Africa), and one project each in the transport and water sectors.
WTO records moderate rise in G20 trade restrictions (WTO)
A total of 42 new trade-restrictive measures were applied by G20 economies during the review period (mid-October 2016 to mid-May 2017), including new or increased tariffs, customs regulations and rules of origin restrictions. This is an average of six measures per month – slightly higher than in 2016 but below the longer-term trend observed in 2009-2015 of seven per month. G20 economies also implemented 42 measures aimed at facilitating trade during the review period, including the elimination or reduction of tariffs and the simplification of customs procedures. At an average of six new trade-facilitating measures per month, this represents a similar level compared to the previous reporting period (mid-May to mid-October 2016) and is in line with the declining trend observed in 2016.
South Africa: May trade balance figures (SARS)
SARS has released trade statistics for May 2017 recording a trade balance surplus of R9.50bn. The year-to-date trade balance surplus of R19.52bn is an improvement on the deficit for the comparable period in 2016 of R13.29bn. Top 5 countries SA exported to: China (7.8%), United States (7.8%), Germany (7.5%), India (4.8%), Japan (4.4%). Top 5 countries SA imported from: China (18.7%), Germany (12.4%), United States (6.8%), Saudi Arabia (6.0%), India (4.4%).
Zambia Economic Brief: Reaping richer returns from public expenditures in agriculture (World Bank)
International trade is rebounding, but reserves remain low (pdf): Copper provides 77% of Zambia’s exports, and as global prices of the metal fell, so did the US$ value of exports in 2015 (by 28%), and further in 2016 (by 11.6%). This opened up a trade deficit. As the economy slowed down and the price of imported goods rose (following a rapid weakening of the kwacha in the second half of 2015), the US$ value of imports also decreased steadily in 2016, reducing the size of the trade deficit (figure 9). Both exports and imports have increased in Q4 2016 (as the economy recovered, copper prices firmed and the kwacha appreciated). In Q1 2017, exports rose (the volume of copper exports rose 24% in Q1 2017, while copper prices firmed) and imports fell, thus narrowing the trade deficit. This resulted in a narrowing of the current account balance to $257.1m in Q1 2017 from $574.7m the previous quarter. This, coupled with increased portfolio debt inflows (there was keen foreign interest in government bonds), has pushed the balance of payments into a surplus of $26.3m in Q1 2017, from a deficit of $161.4m in Q4 2016.
Nigeria: In new executive order, Osinbajo gives tax defaulters nine months to pay up (ThisDay)
In a bid to boost non-oil revenue and ensure that every taxable individual and corporate citizen is captured in the tax net, Acting President Yemi Osinbajo Thursday signed an Executive Order to give bite to the Voluntary Asset and Income Declaration Scheme (VAIDS). “All of these 214 Nigerians who pay N20 million or more in taxes annually are to be found in Lagos State. I’m sure in this room (and I’m not looking at anyone), there are another 214 people who earn more than N80 million annually,” he said. Osinbajo’s comment, which drew applause from the audience who felt he was referring to the cross section of governors, ministers and other top government officials, added that “tax evasion is not limited only to wealthy Nigerians and also not limited to individuals. Many companies maintain three sets of books”.
The Minister of Finance, Mrs. Adeosun, said the government has resolved to change the narrative through vigorous pursuit of the VAIDS. She said: “During the last eight years, Nigeria has failed to reduce its debt levels despite high oil prices and nominal GDP growth. We have inherited a situation where our debt and underdevelopment are getting worse not better. This cannot continue. Neither can the behaviour of some of our richest citizens and multinationals operating in Nigeria – who seem to consider paying tax to be optional. From 2018, international law will make it easier than ever to track these evaders down and punish them. This scheme is in line with similar initiatives launched in 2016 in India, Indonesia and South Africa. We know they work, we know it’s the right thing to do and the treasury desperately needs the money. Finally, the proceeds of this scheme will not disappear. We will provide regular updates on the funds collected to date, and how those funds are being put to very transparent use.” [Kenyans filing tax returns double to 2.082 million]
Nigeria: Export Council seeks ECOWAS trade corridor (Tribune)
Towards this end, Executive Director/CEO of NEPC, Mr Olusegun Awolowo advocated the collaboration of both agencies and Manufacturers Association of Nigeria in securing a platform for trade and investment along the ECOWAS trade corridor through NEXPORTRADE and a proposed offshore warehouse in Togo, noting that it would ease the challenges encountered by exporters in terms of cost of transportation of goods, warehousing, lack of constant supply among other logistics. In his remarks, Managing Director of NEXIM Bank, Mr Abba Bello, reinstated the need to urgently kick-start the Sealink Project, saying it would promote intra and inter-African trade, thereby fostering regional integration, economic growth and development in the West and Central African sub-regions.
Nigeria to supply Walmart with $7bn worth of cashew nuts (Premium Times)
This was revealed by the Minister of Agriculture, Audu Ogbe, on Wednesday while briefing State House correspondents after the meeting of the Federal Executive Council at the State House Presidential Villa Abuja. “Their demand is a 130,000 tonnes of cashew nuts per annum, the total value is $7bn,” he said. Mr Ogbe said what Nigeria currently does is ship the nuts to Vietnam, who in turn roast and sell to the US. “This year we are going to create six cashew processing factories in Nigeria, one each to be cited in Enugu, Imo, Benue, Kogi, Kwara and Oyo states. These are the cashew belt for now,” he said.
Unpacking the economics of DRC’s proposed Inga 3 dam (International Rivers)
In debt and in the dark (pdf) is the first in-depth assessment of the economics of the proposed 4,800 MW Inga 3 Dam in the DRC. Authored by noted economist Tim Jones, the report scrutinizes the claims that project proponents have made to justify the project, namely that Inga 3 will generate revenues to fill government coffers through the sale of power to South Africa and mines in eastern DRC and will provide needed power to the country. Using empirical evidence from similar hydropower projects in Africa and globally, Jones tested the stated assumptions of the project’s performance by examining factors such as the amount of power to be generated, the risk of cost overruns, the extent of transmission losses, likely electricity tariffs, and borrowing costs. Jones then forecasted the dam’s potential performance across a range of scenarios.
ECA develops toolkit to help member states integrate Agendas 2030 and 2063 (UNECA)
Speaking in Abuja at the on-going high level policy dialogue on development planning in Africa, Bartholomew Armah, Chief of the Renewal Planning Section in the Macroeconomic Policy Division, said the integrated nature of Agenda 2063 and the SDGs calls for an integrated approach to their implementation and reporting hence the development of the new toolkit. The toolkit has already been tested in Ethiopia and is being fine-tuned ready for deployment end of June.
Looking forward, the development along the Northern Corridor will very much depend on the Kenyan elections and the extent to which they are peaceful. A.P. Moller – Maersk expects, nevertheless, a short-term reduction in the import market, followed by a very quick recovery after the August elections. Furthermore, if the interest rate cap decision is reviewed, liquidity could increase, boosting trade and increasing buying power. For the Central Corridor, A.P. Moller-Maersk does not expect to see much fundamental change for the rest of the year. On the long term, “we hope to see developments in mineral exports and we are also excited about the Rwandan market which is a buoyant economy and certainly seems to be taking a strong position in terms of becoming a key trading hub over time,” asserts Felder.
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South Africa Merchandise Trade Statistics for May 2017
South Africa trade surplus widens In May
South Africa's trade surplus widened to ZAR 9.5 billion in May 2017 from a downwardly revised ZAR 5.0 billion in the previous month and below market expectations of ZAR 10.6 billion. Exports jumped 15.4 percent to ZAR 105.0 billion, mainly due to higher sales of miscellaneous manufactured articles and vegetable products. Imports increased at a slower 11 percent to ZAR 95.5 billion, driven by purchases of original equipment components, and mineral products.
Exports rose 15.4 percent from the previous month to ZAR 105.0 billion, boosted by higher sales of miscellaneous manufactured articles (220 percent), vegetable products (46 percent), chemical products (28 percent), vehicles and transport equipment (15 percent) and base metals (14 percent). Major destinations for exports were China (7.8 percent of total exports), the US (7.8 percent), Germany (7.5 percent), India (4.8 percent) and Japan (4.4 percent).
Imports increased 11 percent to ZAR 95.5 billion, as purchases went up for: Original equipment components (33 percent); mineral products (22 percent); textiles (16 percent); chemical products (9 percent), and machinery and electronics (7 percent). Imports came mainly from China (18.7 percent of total imports), Germany (12.4 percent), the US (6.8 percent), Saudi Arabia (6 percent) and India (4.4 percent).
Excluding trade with neighboring Botswana, Lesotho, Namibia and Swaziland, the country posted a trade surplus of ZAR 1.9 billion in May compared with a ZAR 1.3 billion in April.
In the January-May period, the trade balance posted a ZAR 19.5 billion surplus compared with a ZAR 13.3 billion deficit in the same period of 2016.
The South African Revenue Service (SARS) today releases trade statistics for May 2017 recording a trade balance surplus of R9.50 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS). The year-to-date trade balance surplus (01 January to 31 May 2017) of R19.52 billion is an improvement on the deficit for the comparable period in 2016 of R13.29 billion.
Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The R9.50 billion trade balance surplus for May 2017 is attributable to exports of R105.02 billion and imports of R95.52 billion. Exports increased from April 2017 to May 2017 by R13.99 billion (15.4%) and imports increased from April 2017 to May 2017 by R9.46 billion (11.0%).
Exports for the year-to-date (01 January to 31 May 2017) grew by 6.1% from R438.01 billion in 2016 to R464.78 billion in 2017. Imports for the year-to-date of R445.25 billion are 1.3% less than the imports recorded in January to May 2016 of R451.30 billion.
On a year-on-year basis, the R9.50 billion trade balance surplus for May 2017 is a deterioration from the surplus recorded in May 2016 of R13.10 billion. Exports of R105.02 billion are 5.8% more than the exports recorded in May 2016 of R99.26 billion. Imports of R95.52 billion are 10.9% more than the imports recorded in May 2016 of R86.16 billion.
April 2017’s trade balance surplus was revised downwards by R0.11 billion from the previous month’s preliminary surplus of R5.08 billion to a revised surplus of R4.97 billion as a result of ongoing Vouchers of Correction (VOC’s).
The main month-on-month export movements (R’ million)
Section: |
Including BLNS: |
|
Vegetable Products |
+ R1 816 |
+ 46% |
Base Metals |
+ R1 638 |
+ 14% |
Vehicles & Transport Equipment |
+ R1 559 |
+ 15% |
Chemical Products |
+ R1 435 |
+ 28% |
Miscellaneous Manufactured Articles |
+ R1 305 |
+ 220% |
Prepared Foodstuff |
+ R1 290 |
+ 38% |
Precious Metals & Stones |
+ R1 231 |
+ 8% |
Machinery & Electronics |
+ R1 096 |
+ 15% |
The main month-on-month import movements (R’ million)
Section: |
Including BLNS: |
|
Mineral Products |
+ R3 094 |
+ 22% |
Original Equipment Components |
+ R2 115 |
+ 33% |
Machinery & Electronics |
+ R1 419 |
+ 7% |
Chemical Products |
+ R 786 |
+ 9% |
Textiles |
+ R 503 |
+ 16% |
Trade highlights by world zone
The world zone results from April 2017 (revised) to May 2017 are given below.
Africa:
Trade Balance surplus: R17 852 million – this is a 48.1% increase in comparison to the R12 051 million surplus recorded in April 2017.
America:
Trade Balance surplus: R 138 million – this is an improvement in comparison to the R 899 million deficit recorded in April 2017.
Asia:
Trade Balance deficit: R11 555 million – this is a 21.8% increase in comparison to the R9 486 million deficit recorded in April 2017.
Europe:
Trade Balance deficit: R4 955 million – this is a 54.6% increase in comparison to the R3 205 million deficit recorded in April 2017.
Oceania:
Trade Balance deficit: R 31 million – this is a deterioration in comparison to the R 147 million surplus recorded in April 2017.
Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The trade data excluding BLNS for May 2017 recorded a trade balance surplus of R1.89 billion. This is a result of exports of R94.31 billion and imports of R92.42 billion.
Exports increased from April 2017 to May 2017 by R12.39 billion (15.1%) and imports increased from April 2017 to May 2017 by R9.20 billion (11.1%).
The cumulative deficit for 2017 is R15.14 billion compared to R55.24 billion deficit in 2016.
The main month-on-month export movements (R’ million)
Section: |
Excluding BLNS: |
|
Vegetable Products |
+ R1 718 |
+ 50% |
Base Metals |
+ R1 504 |
+ 14% |
Chemical Products |
+ R1 278 |
+ 29% |
Miscellaneous Manufactured Articles |
+ R1 243 |
+ 363% |
Precious Metals & Stones |
+ R1 241 |
+ 8% |
Vehicles & Transport Equipment |
+ R1 227 |
+ 13% |
Prepared Foodstuff |
+ R1 226 |
+ 53% |
Machinery & Electronics |
+ R 825 |
+ 14% |
The main month-on-month import movements (R’ million)
Section: |
Excluding BLNS: |
|
Mineral Products |
+ R3 070 |
+ 22% |
Original Equipment Components |
+ R2 115 |
+ 33% |
Machinery & Electronics |
+ R1 374 |
+ 7% |
Chemical Products |
+ R 865 |
+ 11% |
Textiles |
+ R 438 |
+ 16% |
Trade highlights by world zone
The world zone results for Africa excluding BLNS from April 2017 (Revised) to May 2017 are given below.
Africa:
Trade Balance surplus: R10 245 million – this is a 77.2% increase in comparison to the R5 783 million surplus recorded in April 2017.
Botswana, Lesotho, Namibia and Swaziland (Only)
Trade statistics with the BLNS for May 2017 recorded a trade balance surplus of R7.61 billion. This is a result of exports of R10.71 billion and imports of R3.10 billion.
Exports increased from April 2017 to May 2017 by R1.59 billion (17.5%) and imports also increased from April 2017 to May 2017 by R0.25 billion (8.9%).
The cumulative surplus for 2017 is R34.66 billion compared to R41.95 billion in 2016.
The main month-on-month export movements (R’ million)
Section: |
BLNS: |
|
Vehicles & Transport Equipment |
+ R 332 |
+ 37% |
Machinery & Electronics |
+ R 271 |
+ 19% |
Chemical Products |
+ R 157 |
+ 19% |
Base Metals |
+ R 134 |
+ 22% |
Mineral Products |
+ R 114 |
+8% |
Plastics & Rubber |
+ R 112 |
+ 29% |
Vegetable Products |
+ R 98 |
+ 19% |
Textiles |
+ R 97 |
+ 19% |
The main month-on-month import movements (R’ million)
Section: |
BLNS: |
|
Precious Metals & Stones |
+ R 77 |
+ 18% |
Live Animals |
+ R 65 |
+ 19% |
Textiles |
+ R 65 |
+ 17% |
Machinery & Electronics |
+ R 45 |
+ 19% |
Prepared Foodstuff |
+ R 25 |
+ 6% |
Mineral Products |
+ R 23 |
+ 46% |
Chemical Products |
- R 79 |
- 13% |
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Climate-smart agriculture: Solutions to reducing poverty and food insecurity in Zambia
Zambia Economic Brief: Reaping richer returns from public expenditure in agriculture
Zambia’s economy has shown recovery in 2017, but stronger growth and better macroeconomic indicators have not resulted in better fiscal indicators, according to a new World Bank Economic Brief. The Brief, Reaping Richer Returns from Public Expenditure in Agriculture, says economic growth – which stood at 3.4% for 2016 – is expected to increase to 4.1% for 2017, largely because of firmer copper prices and forecasts that point to a good 2017 harvest.
The Brief notes that Zambia’s government has been making progress with its economic recovery plan “Zambia Plus,” progress that has included (i) the clearance of US$462 million in arrears; (ii) the removal of fuel subsidies; and (iii) reduced electricity subsidies.
“Efforts are needed to reduce public expenditure arrears even further and improve commitment controls,” said Gregory Smith, the World Bank’s Senior Economist for Zambia. “These could include monitoring to ensure the same problem does not reoccur. Issuing a strategy for reducing public debt, as well as better communication through quarterly debt reports, would also be positive steps.”
Other good news for Zambians includes the fact that inflation has dropped to 6.5% in May 2017 from its February 2016 peak of more than 20%. This, together with a stable kwacha, has led Zambia’s Central Bank to ease monetary policy, reversing pressure on a risky growth in credit.
Economic growth is forecast to strengthen to 4.1% in 2017, 4.5% in 2018, and 4.7% in 2019. This forecast assumes the government will continue to implement its economic recovery plan, that the agricultural harvest and production of hydro-electricity will be stronger because of wetter weather, and that copper production will increase because of new and recently refurbished mines.
But stronger growth and better macroeconomic indicators have not been accompanied by improved fiscal indicators, for example the large stock of spending arrears and growing debt burden.
“There is a need to look closely at ways to improve public spending in agriculture to promote a non-copper economy and improve rural livelihoods,” the Bank’s Zambia’s Country Manager, Ina-Marlene Ruthenberg said. “Low agricultural productivity is a stumbling block when it comes to reducing poverty, as it has knock-on effects, such as gender disparity, land degradation and deforestation.”
The report highlights that Zambia has successfully increased its crop production, mostly of maize, largely thanks to increases in the size of areas under cultivation, as opposed to better yields. This leaves enormous scope to increase productivity and reduce the vulnerability associated with a high dependence for most of the population on rain-fed agriculture alone.
Zambia could also further diversify its agricultural output, investing more in horticulture, livestock, and aquaculture, all of which would create more sustainable agricultural growth and reduce poverty. Livestock, for example, already plays a large role in agriculture, contributing close to 30% of the country’s agricultural GDP and, depending on which province you are in, as much as 6% to 30% of household income. The number of cattle in Zambia increased by 70% between 2009 and 2013.
Aquaculture could also play more of a role as Zambia is a net fish importer and has 12 million hectares of water from rivers, lakes and swamps.
Mary Tembo is small scale farmer in Chipata, about 575 km from Lusaka in Zambia’s Eastern Province. She grows maize and groundnuts, and is part of the farmers’ group that is learning about climate-smart agriculture.
The World Bank is putting the lion’s share – US$17 million – of a US$33 million package into promoting climate-smart agriculture and sustainable landscape management practices in Eastern Province. The Zambia Integrated Forest Landscape project will support farmers to help them make a better living without increasing the amount of deforestation that Zambia’s natural forest is currently suffering from. It aims to do this by helping farmers like Mary with fertilizer, tree seedlings, equipment and irrigation.
New funding for the project comes at a time when Zambia, like many African countries, faces a long-term threat to its rural economic growth as result of climate change. Already, Zambia has suffered drought, flash floods and temperature extremes. Studies commissioned by the Zambian government estimate substantial losses to Zambia’s GDP from diminishing returns in agriculture and natural resources over the next 10 to 20 years as a result of climate change, with an associated increase in levels of poverty.
With the overall poverty rate in Zambia standing at 57.5%, and at as high as 84.3% in Eastern Province, sustainable farming is critically important. The project is focusing on rural communities in the province’s nine districts: Chipata, Lundazi, Mambwe, Petauke, Katete, Sinda, Chadiza, Vubwi and Nyimba.
Dependent on both small-scale agriculture and natural forest, rural communities in Zambia’s Eastern Province are among the world’s most vulnerable. The Government of Zambia is partnering with development organizations to scale-up its efforts to help small-scale agriculture adapt. Almost 215,000 people are due to participate in the Integrate Forest project as it gathers pace, 30 percent of them women.
“This will improve rural livelihoods in Eastern Province by helping farmers increase their income through better farming and forest-based activities, better access to markets and more capacity to manage land resources sustainably,” said the Bank’s Coordinator for Climate Smart Agriculture, Ademola Braimoh. “The project will also support improved land use planning and help rural communities to reduce deforestation and improve the benefits they receive from forestry, agriculture, and wildlife,” he added.
The project will also support multisector coordination and capacity-strengthening activities that emphasize a transition to low carbon development.
Efforts to promote climate-smart agriculture are intensifying as unproductive farming and poor resiliency to drought threaten to exacerbate poverty in Eastern province. Soil nutrient levels across the province have diminished. Longer dry seasons are stunting crop growth.
“The aim is to reduce the emission of Greenhouse Gases through the sustainable management of land traditionally devoted to community-led agricultural and non-agricultural activities in Eastern Province,” said Ina Ruthenberg, World Bank Country Manager for Zambia.
“The project will also create an enabling environment for Zambia to benefit from up to US$30m from a future emissions reduction purchase agreement between the Government of Zambia and the World Bank as a Trustee for BioCarbon Fund’s Initiative for Sustainable Forest Landscapes,” she added.
The Zambia Integrated Forest Landscape project will be implemented by government line ministries in close collaboration with stakeholders under the oversight of the Inter-Ministerial Climate Change Secretariat, which is housed within the Ministry of Development and Planning. The project funds include the US$17 million in International Development Association credit, a Global Environment Facility grant of US$8.05 million, and a BioCarbon Fund grant of US$7.75 million.
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Afreximbank Advisory Group Seminar on Trade and Economic Transformation: opening statement by Mr. Denys Denya
Kigali, Rwanda, 28 June 2017
We gather is this beautiful city, at a time when the continent is embarking on a path of structural transformation for sustained growth. Indeed, the choice of Rwanda as the host of this year’s meetings is particularly apt, in part because of the growing relationship that exists between Afreximbank and Rwanda, but more importantly because Rwanda offers enormous inspiration to the continent. From the tragedy of about two decades ago, Rwanda has exemplified resilience and risen to the challenge of post-conflict reconstructing, creating the economic miracle that we see today. A country devastated by conflict and reduced to near ashes merely two decades ago, has emerged as one of the fastest growing economies in the region and a global leading in the area of governance. Over the last decade, the country has consistently been listed as one the best performing countries in the World Bank Doing Business Indicators. Indeed, through its remarkable achievements, Rwanda exemplifies the adage – “The world is moving so fast these days that the man who says it can't be done is generally interrupted by someone doing it.”
Throughout history, the pivotal role played by trade in economic development has been evident. More recently, the rapid rise of East Asian economies once again demonstrated the critical role of globalization and openness to trade in economic development. In fact, the role of trade in economic growth is evidenced by the strength and level of correlation between openness and output expansion. The impressive growth of global trade which more than tripled between 2001 and 2015, rising from US$6 trillion to over US$19 trillion, which contributed to over 50% of expansion of world output which grew by about 50 percent, from about US$50 trillion to around US$75 trillion. There is therefore no gainsaying of the fact that trade and openness are important drivers of global output and growth. These developments have, to varying extents, improved the economic fortunes of various regional groupings, including Africa. For instance, Africa’s trade rose from about US$230 billion in 2001 to about US$1.2 trillion in 2015 while the economy also expanded considerably.
However, despite these developments, the continent continues to struggle to achieve inclusive growth and accelerated development making it a home to millions of the world’s poorest. Africa remains a periphery player in global trade contributing below 3 percent to global trade – and trade has to a large extent failed to unlock development as in other regions, a contrast which has created the urgency to re-examine the continent’s economic structure, trade arrangements and export composition and re-ignited the question of how trade can be used to support the transformation and sustainable development of Africa.
It is in the context of the foregoing and the Bank’s Fifth Strategic Plan, dubbed IMPACT 202-Africa Transformed, that the overall theme for this year’s event is “Trade and Economic Transformation”. The end of the commodity super-cycle and declining demand for African commodities has once against raised the specter of Africa’s vulnerability market vagaries and external shocks. It has at the same time ignited a renewed commitment to economic diversification and structural transformation. While many African countries have previously adopted growth strategies – including industrialization-led growth strategies, import-substitution and export-led growth strategies – far too little progress has been made in weaning the continent off commodities trap or resource curse. However, this renewed focus on structural transformation and industrialization comes at a time when African economies have realized the importance of closer cooperation and regional integration as catalyst to transformation, especially in an increasingly uncertain world. Clearly, our focus on “Trade and Economic Transformation” is driven by the fact that in many respects, trade, especially thriving intra-regional trade offers tremendous opportunities for growth and sustainable development.
Over the years, some of the key challenges that have militated against progress towards economic development and structural transformation of African economies have included, among others, over-reliance on export of natural resources and primary commodities and the deficit of export diversification which limited the ability of countries to effectively develop regional value chains to enhance their integration into global value chains. This was compounded by the small size of economies and market fragmentation on the basis of low levels of integration; and low levels of intra-regional trade.
The resounding success achieved by some countries in Asia, especially China and Korea, and the critical role intra-regional trade played in their development, present us with valuable lessons to position intra-African trade as a key pillar for economic growth, sustainable development and set the continent on a path of structural transformation. Accordingly, connecting a host of small and disconnected markets in the region through deepening of intra-African trade and economic integration, essentially bringing together small economies and large ones within the region, has the potential to create an environment where firms in member countries gain access to hitherto non-existent larger markets for large-scale production and exploitation of technical, as well as research and development economies, among others.
This year, the Government of Rwanda and the Bank have put together an impressive programme. During the course of this week, several activities and events will be taking place on the sidelines of the 24th Annual General Meeting of Shareholders of the African Export-Import Bank.
These events include today’s Seminar, which is being held under the sub-theme: “Trade as a catalyst for industrializing Africa.” The choice of sub-theme for today’s Seminar reflects the recognition of the immense potential of trade in promoting industrialisation, economic growth and transformation of African economies. The focus on industrialization is borne out of the fact that in a dynamic global trade and economic environment, the contribution of manufactured goods and industrial output to global trade has consistently grown and accelerated dramatically and now contributes to over 70% of total trade.
This has set the world economy on a binary development course – either a country industrializes to reap the benefits of export diversification or it does not and perishes with sustained deterioration of commodities terms of trade which undermines long-run growth and integration into the global economy. While most countries in other regions of the world have embraced the first option, industrialization has remained elusive for many African countries. Today’s discussions will broadly review, among others, the opportunities offered by trade for the continent to industrialize, and drawing on experience, discuss how trade could be optimally deployed to accelerate the process of industrialization and structural transformation. Discussions will explore the role of trade as a catalyst for industrialization providing a historical perspective and reviewing the analytical foundations of the correlation between trade and industrial development.
Tomorrow’s deliberations will be driven by the sub-theme “Boosting intra-African trade for Regional Integration”, anchored on the established fact that strong intra-regional trade is associated with numerous benefits including economies of scale, access to larger regional markets, increased competitiveness and job creation and the development of regional value chains for integration into global value chains. Evidence suggests that dynamic intra-regional trade has the ability to absorb external shocks and insulate national economies from global market volatilities and recurrent global shocks. In this regard, African governments and private sector operators have embraced the urgency to accelerate efforts to expand intra-African trade especially in view of the recent weaknesses in commodity markets with protracted dampening effects on African economies.
Notwithstanding, the progress made, at just about 15%, intra-African trade is still at the periphery compared to other regions, most notably Europe (67%), Asia (52%) and North America (48%). Among the constraints, limited/lack of trade facilitation measures or policies constitutes one of the major setbacks to deeper regional integration and expansion of intra-African trade – reflected, among others by transit, documentation, port and customs delays; varying cross-border tariffs and standard measures and procedures due to poor implementation or absence of harmonized cross-border policies. Hence, the discussions under this sub-theme will focus on the role of trade in supporting regional integration and economic development.
On Friday, the Bank will hold the 23rd Session of its Advisory Group Meeting, under the theme “Expanding African trade in a world of rising Protectionism” which will conclude the series of events that precede the 24th Annual General Meeting of Shareholders The theme of the third day is motivated by the re-emergence of rising nationalistic sentiments and creeping protectionism across the world in recent years which are posing a growing threat to globalization and international trade. Trade restrictive rhetoric and protectionism measures have been on the rise recently, most notably in the United States and Europe – regions which had previously been the leaders of free markets, and promoting the free movement of capital, goods and labour. In this regard, discussion will explore how to promote African trade in the face of these unfavorable developments.
As we continue to stress, it is essential that as a continent we are resolute in addressing the challenges of industrialization and low-levels of intra-African trade to ensure that Africa is able to benefit from the opportunities trade provides to support economic growth and development. For us, at Afreximbank, we believe that “There is only one thing that makes a dream impossible to achieve: the fear of failure” and that “You never change your life until you step out of your comfort zone; change begins at the end of your comfort zone.”
To transform, Africa needs to move away from its comfort zone of reliance on natural resources and commodities and strive to be the next frontier for industrialization, taking advantage of resource endowments, comparative advantages, and regional trade opportunities. Our expectation is that this three-day event, graced by experts drawn from different backgrounds and regions, will broaden our knowledge and understanding of the aforementioned issues and allow us to generate new ideas and embark on new approaches towards the economic growth and structural transformation of the African continent.
Indeed, Afreximbank itself is transforming. Those of you who are familiar with Afreximbank will have noticed something a little different about the look and feel of this year’s AGM activities. The developments in technology and the advent of the digital age have meant that some elements of our overall brand have become somewhat dated and are no longer fully effective in meeting the Bank’s branding objectives.
Consequently, we have decided to refresh our logo and brand by implementing certain tweaks to bring them more in line with today’s digital environment. Our objective was to strengthen the brand and to better position the Bank as the leader in African trade matters, helping cement our role as the premier agent driving the growth of trade across the continent; promoting industrialization; transforming Africa’s trade finance structure by facilitating intra-African trade; encouraging the transformation of the export sector; and introducing new and relevant initiatives.
In conclusion, permit me to, once again, thank our hosts, the Government and people of the Republic of Rwanda for putting together excellent arrangements to ensure the success of our programmes here in Kigali. The warm reception we have enjoyed since our arrival bears testimony to the business-friendly environment and hospitality of the people of Rwanda. We are also appreciative of the attendance of H. E. Hon. Claver Gatete, Minister of Finance and Economic Planning, Republic of Rwanda and his team for the enormous technical and material support they and their staff have provided in in the planning of the Programme. I also wish to place on record, Afreximbank’s deep appreciation of the work of the local organizing committee for their excellent logistic arrangements for this event. Special thanks to you all for your hard work and unflinching support for the Bank’s activities here in Kigali.
Thank you all for your attention.
» Related: Opening address by Hon. Claver Gatete, Rwanda Minister of Finance and Economic Planning (PDF, 279 KB)
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Joint ACP-UNCTAD Guiding Principles for Investment Policymaking approved
The Joint African, Caribbean and Pacific Group of States (ACP)-UNCTAD Guiding Principles for Investment Policymaking were approved by the ACP Committee of Ambassadors meeting in Brussels.
These Principles were jointly developed by UNCTAD and the ACP Secretariat in the framework of the partnership between the two institutions and after consultation with ACP Members States and Regional Organizations. They draw on UNCTAD’s Core Principles that form an integral part of UNCTAD’s Investment Policy Framework for Sustainable Development (2015 version) and reflect ACP countries’ specificities and priorities for investment policymaking.
Highlights
The Joint Guiding Principles come at a time of mounting economic, social and environmental challenges, which highlight the critical role of investment in achieving the Sustainable Development Goals (SDGs). They build on UNCTAD’s Core Principles that have established themselves as a key reference point for national and international investment policy making across the globe, and on UNCTAD’s technical assistance and capacity building activities to ACP countries.
The principles also build on key ACP policy documents, notably the Georgetown Agreement establishing the African, Caribbean and Pacific Group of States, the Declaration of the 8th Summit of ACP Heads of State and Government of the ACP Group of States, the Strategic Framework for ACP Private Sector Development. The Principles are in support of existing ACP initiatives, such as the ACP Private Sector Development Strategy, the new approach to ACP Group support for the development of agriculture value chains, and the ACP Investment Facility.
The non-binding Guiding Principles provide guidance for investment policymaking with a view to:
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promoting inclusive economic growth and sustainable development;
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promoting coherence in national and international investment policymaking;
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fostering an open, transparent and conducive global policy environment for investment; and
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aligning investment promotion and facilitation policies with sustainable development goals.
They consist of the following eleven principles to provide guidance for ACP investment policymakers:
“0”. Investment for sustainable development
1. Policy coherence
2. Public governance and institutions
3. Dynamic policymaking
4. Balanced rights and obligations
5. Right to regulate
6. Openness to investment
7. Investment protection and treatment
8. Investment promotion and facilitation
9. Corporate governance and responsibility
10. Regional and International cooperation
» Download: Guiding Principles for ACP Countries Investment Policymaking, May 2017 (PDF, 150 KB)
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ECA develops toolkit to help member states integrate Agendas 2030 and 2063
The Economic Commission for Africa (ECA) is developing a toolkit that will help African countries develop an integrated approach in implementing the 2030 Agenda for Sustainable Development (SDGs) and Agenda 2063, Africa’s 50-year development plan.
Speaking in Abuja at the on-going high level policy dialogue on development planning in Africa, Bartholomew Armah, Chief of the Renewal Planning Section in the Macroeconomic Policy Division, said the integrated nature of Agenda 2063 and the SDGs calls for an integrated approach to their implementation and reporting hence the development of the new toolkit.
The toolkit will harmonize the domestication of the SDGs and Agenda 2063 to enhance efficiency and reduce transaction costs of reporting, facilitate integration of both agendas in national development plans and track performance on the two agenda.
“The toolkit idea emanated from the work we have been doing with our partners on the post-2015 agenda and now we have Agendas 2063 and 2030. So last year we requested funding to support member States integrate the two agendas into their national development plans and to support evidence-based policymaking allowing us to develop this platform,” said Mr. Armah, adding the toolkit is comprehensive and flexible.
The toolkit is an electronic platform which can be accessed on the web. It is also portable and can be downloaded onto desktops and can be used both online and off-line.
“The toolkit puts the SDGs on the electronic platform together with Agenda 2063 and walks policymakers through a series of questions on whether they have integrated the two agendas into their plans, and if so whether this has been done fully using the exact or proxy indicators,” Mr. Armah added.
“We do this because we want to be able to identify if there are some challenges that the member States are meeting in mainstreaming the SDGs and Agenda 2063 into national development plans so the ECA can then follow-up with the member States and try to work with them in trying to address those challenges and gaps.”
After going through the processes on the platform, it generates a report summarizing the responses and shows what type of integration a particular country would have reached, whether it met the economic, social or environmental dimensions of the SDGs.
“Essentially it gives you a mapping of whether the integration is at the three levels such that there’s no skew towards one dimension or the other. Basically it validates the quality and extent of integration,” he said, adding the tool also tracks progress on any given country’s national development plan.
The tool also identifies reasons for non-integration, providing the opportunity for the ECA and its partners to have further discussions with the member States for support.
It can also serve as an input into country preparations for national voluntary reporting to the High Level Political Forum and for national policy dialogue on the implementation of national development plans.
“Of course ours is not the only toolkit around but our distinguishes itself from existing ones in that it looks at the two agendas and its flexible to track progress in other agendas,” he said, adding SDG convergence with 2063 is high hence integration is made easier by the toolkit.
Mr. Armah, whose presentation to the meeting was titled: “An integrated Approach to the Implementation of International Commitments: Features of ECA’s Integrated Planning and Reporting Toolkit”, said the target for the tool is Africa’s national planning commissions.
The toolkit has already been tested in Ethiopia and is being fine-tuned ready for deployment end of June.
In Africa, SDGs are being implemented concurrently and in an integrated manner with the First 10-year Implementation Plan of Agenda 2063, Africa’s 50-year strategic framework for socio-economic transformation which seeks to accelerate the implementation of past and existing continental initiatives for growth and sustainable development.
High level policy dialogue kicks off in Abuja with ECA recommitting to strengthening support for Africa
The High Level Policy Dialogue on development planning in Africa opened Wednesday in Abuja with the ECA recommitting to strengthening its support to development planning and statistical development, among other areas, towards ensuring the effective mainstreaming of the SDGs in Africa and their realization in an efficient and effective manner.
Capacity Development Division (CDD) Director, Stephen Karingi, said the ECA recognizes the need to provide tailored capacity building and advisory services to member States in the area of development planning and statistics, including SDG mainstreaming to support Africa’s quest for inclusive and sustainable transformation and development.
“The Commission has a long-standing history in capacity development, through which it has continued to make distinct and recognized contributions to addressing Africa’s development challenges and aspirations,” he said, adding that given its dual role as the regional arm of the United Nations and an integral part of the African institutional landscape, its capacity development strategy was anchored within relevant frameworks of the African Union (AU) and the UN.
Mr. Karingi applauded the fact that member States have embarked on the process to domesticate the Agenda 2030 for sustainable development in earnest.
“In this connection, we have noted an increasing number of requests from countries for capacity building and advisory services in the areas of development planning and statistical capacity development, including SDG mainstreaming,” he said.
The 2017 HLPD seeks to explore relevant content and modalities that will help member States mainstream the SDGs into national development planning processes across the policy cycle; that is design, implementation, monitoring, evaluation and reporting.
Mr. Karingi said Africa cannot achieve its aspirations without proper development planning.
“Development planning provides a systematic approach to identifying, articulating, prioritizing and satisfying the economic and social needs and aspirations of a country within a given resource envelope,” he said, adding planning was therefore an essential means of achieving a country’s development objectives or vision.
The challenge confronting Africa, said Mr. Karingi, is not only to attain and maintain, but also to translate rapid economic growth into sustained and inclusive development, based on economic diversification that creates jobs, contributes to reduced inequality and poverty rates, enhances access to basic services and corrects market failures that undermine environmental sustainability. Important enablers, he said, include deepening regional integration and improving Africa’s standing in the global arena, accelerating the establishment of the Continental Free Trade Area (CFTA) and developing trade-related transboundary infrastructure.
In this regard, the attainment of the SDGs in Africa will necessarily hinge on the extent to which they have been mainstreamed into the national development planning process, he said.
Time for action
In her welcome remarks to participants, Nana Fatima Mede, the permanent secretary of the budget and national planning ministry of Nigeria, said it was time for Africa to take action on the ground as it seeks to promote policies that will change the lives of the ordinary people.
She said it was not for lack of knowledge that the continent was not implementing policies that can change the people’s lives, adding commitment to implement Africa’s plans is what is required.
“As we make efforts to mainstream the SDGs in our respective national plans, let us not forget to do the same for the Africa-focused Agenda 2063,” said Ms. Mede, who spoke on behalf of her Minister, Senator Udoma Udo Adoma.
“The point of emphasis must be social development of our people, inclusive economic development for prosperity, inclusive societies and responsive institutions for peace and environmental sustainability of the planet,” she added as she challenged participants to think through the possible connections and synergies that can be formed across African countries in mainstreaming SDGs in national plans.
UN Resident/Humanitarian Coordinator and UNDP Resident Representative, Edward Kallon, said the HLPD offered participants an opportunity to dialogue on development planning in different countries and situational contexts with the ultimate goal of realizing sustainable development in Africa.
“While the challenges facing SDG mainstreaming in Africa are many and varied, a useful entry point for tackling these challenges is to address the seemingly co-joined problem of weak statistical capacities and dearth of comprehensive, reliable and up-to-date data for objective policy and programme design as well as tracking progress on specific SDG indicators,” he said.
“We must halt the steady slide of many African countries towards poverty and deprivation as well as widening inequality. We know what needs to be done. What we might not know, and if we know may not always agree on, is how to do it. I remain optimistic that this session will focus on the how question as opposed to the what questions.”
In his welcoming remarks, Adeyemi Dipeolu, Special Advisor to the Nigerian President on Economic Affairs, explained his country’s economic policies and what the country has done so far towards mainstreaming the SDGs into its plans and related issues.
The three-day HLPD has brought together about 60 top African planners and chief executives of planning bodies to discuss development planning on the continent under the theme: Mainstreaming the Sustainable Development Goals into National Development Plans.
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WTO records moderate rise in G20 trade restrictions
The WTO’s seventeenth monitoring report on Group of 20 (G20) trade measures, issued on 30 June, shows that trade restrictions in G20 economies have risen at a moderate rate similar to that of previous years, despite the uncertainty facing the global economy. The report calls on G20 governments to show leadership in supporting open and mutually beneficial trade as a driver of economic growth and development.
A total of 42 new trade-restrictive measures were applied by G20 economies during the review period (mid-October 2016 to mid-May 2017), including new or increased tariffs, customs regulations and rules of origin restrictions. This is an average of six measures per month – slightly higher than in 2016 but below the longer-term trend observed in 2009-2015 of seven per month.
G20 economies also implemented 42 measures aimed at facilitating trade during the review period, including the elimination or reduction of tariffs and the simplification of customs procedures. At an average of six new trade-facilitating measures per month, this represents a similar level compared to the previous reporting period (mid-May to mid-October 2016) and is in line with the declining trend observed in 2016.
It is notable that the estimated trade coverage of trade-facilitating measures implemented by G20 economies (US$163 billion) significantly exceeded the estimated trade coverage of trade restrictive measures (US$47 billion). In addition, liberalization associated with the 2015 expansion of the WTO’s Information Technology Agreement (ITA) continues to feature as an important contributor to trade facilitation
Commenting on the report, Director-General Roberto Azevêdo said:
“The moderation and restraint that we have seen in trade policies shows that the trading system is doing its job in keeping global commerce flowing and resisting protectionism. Nevertheless, there is a high level of economic and policy uncertainty, and therefore we need to remain vigilant. Efforts should be stepped up to avoid implementing new trade-restrictive measures and to reverse existing measures.
I urge G20 economies to continue showing leadership in supporting open and mutually beneficial trade, and in further strengthening the rules-based trading system. The G20 should seek to continue improving the global trading environment, including by implementing the WTO Trade Facilitation Agreement, which entered into force in February this year.”
The initiation of trade remedy investigations (which the report does not classify as restrictive or facilitating) remained the most frequently applied measure, representing 50% of all trade measures taken during the review period. However, the amount of trade covered by these is relatively small (US$25 billion for trade remedy initiations and US$6 billion for terminations of duties). The main sectors affected by trade remedy initiations were wood and articles of wood; vehicles; and furniture, bedding material, and lamps. Main sectors where trade remedy duties were terminated were articles of iron and steel; machinery and mechanical appliances; and aluminum and articles thereof.
The G20 economies are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Republic of Korea, Japan, Mexico, the Russian Federation, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States, as well as the European Union.
Key findings
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G20 economies applied 42 new trade-restrictive measures during the review period (mid-October 2016 to mid-May 2017), including new or increased tariffs, customs regulations and rules of origin restrictions. This equates to an average of six measures per month which is slightly higher than in 2016, but below the longer-term trend observed from 2009-2015 of seven per month.
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G20 economies also applied 42 measures aimed at facilitating trade over this review period, including eliminated or reduced tariffs and simplified customs procedures. This equates to an average of six new measures per month which is similar to the previous period and in line with the declining trend in the application of trade facilitating measures observed in 2016.
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During the review period, the estimated trade coverage for trade facilitating measures (US$163 billion) significantly exceeded the estimated trade coverage of trade restrictive measures (US$47 billion).
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This Report harmonizes the approach taken to trade remedies in the G20 Monitoring Report with that of the WTO-wide Report by introducing a separate annex for trade remedy measures. It is of interest to note that initiations of trade remedy investigations represented 50% of the total trade measures taken during the review period; although the amount of trade covered is relatively small (US$25 billion for trade remedy initiations and US$6 billion for terminations).
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Transparency and predictability in trade policy remains vital for all actors in the global economy. The G20 should show leadership in reiterating their commitment to open and mutually beneficial trade as a key driver of economic growth and a major engine for prosperity.
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Faced with continuing global economic uncertainties, the G20 should seek to continue improving the global trading environment, including by implementing the WTO Trade Facilitation Agreement, which entered into force in February this year, and working together to achieve a successful outcome at the 11th WTO Ministerial Conference in December.
Seventeenth UNCTAD-OECD Report on G20 Investment Measures
The joint UNCTAD-OECD Report indicates that, for the first time in years, the regular inventory of G20 Members' investment policy measures records a relatively greater proportion of restrictions to international investment.
During the reporting period (from mid-October 2016 to mid-May 2017), seven G20 Members have introduced investment policy measures specific to foreign direct investment (FDI). Among those, four countries took liberalisation measures in a variety of sectors. On the other hand, two countries restricted certain outward investment for public policy reasons and one country introduced a cap on foreign capital participation in payment transaction processing.
G20 Members (Argentina, Japan, Saudi Arabia and Turkey) concluded six new bilateral investment treaties (BITs). In addition, Argentina and Brazil concluded an Intra-MERCOSUR Cooperation and Facilitation Investment Protocol; the United States a Trade and Investment Framework Agreement (TIFA) with Paraguay; and the EU and Canada concluded a Comprehensive Economic and Trade Agreement (CETA). The termination of at least 10 BITs concluded by G20 Members entered into effect.
The Report cautions that, given the relatively low number of FDI-related policy measures that were taken in the reporting period, it is too early to interpret the comparatively higher ratio of restrictive measures as foreshadowing a trend. Nonetheless, these findings should focus policymakers’ attention to the commitments by G20 Leaders in favour of an open world economy, the promotion of global investment, and the thrust of the G20 Guiding Principles for Global Investment Policymaking, which call for open, non-discriminatory, transparent and predictable conditions for investment.
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tralac’s Daily News Selection
Boosting trade and investment in Sub-Saharan Africa: Wilton Park roundtable, 28-30 June. The purpose of this roundtable is to identify and develop channels that facilitate greater trade and investment within, between and beyond the borders of the leading Sub-Saharan economies. It aims to map out areas where developed and emerging states can partner with a range of countries in the region to share best practice in developing trade and investment policy with the long term goal of doubling both in a decade. [Download: Programme]
Concluding today: 30th Civil Society Pre-Summit Consultative Meeting on gender mainstreaming in the AU and Member States
Starting today: 4th AU High Level Panel on Gender Equality and Women’s Empowerment. Speech by AUC Chairperson, Mr Moussa Faki Mahamat
Nigeria: 2017 Resource Governance Index (Natural Resource Governance Institute)
Nigeria scores 42 of 100 points and ranks 55th among 89 assessments in the 2017 Resource Governance Index. It has the largest oil and gas reserves in sub-Saharan Africa with an estimated 37 billion barrels of oil and 188 trillion cubic feet of gas. Nigeria is one of the world’s most resource-dependent countries – oil and gas contributed the majority of government revenues and constituted 90 percent of Nigeria’s exports in 2015. Licensing is the weakest link in Nigeria’s value realisation component, with a score of 17 of 100, placing it 77th among 89 country licensing assessments. This score and ranking reflect high levels of opacity in key areas of decision-making, including qualification of companies, process rules and disclosure of terms. [Downloads: The complete Resource Governance Index, including data visualizations, a global report, country profiles and a downloadable data viewer]
Export controls and competitiveness in African mining and minerals processing industries (OECD)
The four case studies selected for the analysis concern the manganese sector in Gabon, the primary and secondary lead sector in South Africa, the copper sector in Zambia and the chromium sector in Zimbabwe. These cases cover a variety of conditions: they concern different types of minerals (base metals, minor and technology minerals), employ different kinds of export control policies, and the number of potential downstream activities differ significantly. The report describes developments in the industries over a 20-year time span from 1992 through 2013. Extract from the conclusion (pdf): In the light of the findings, it is hard to defend export restrictions as a tool for stimulating local mineral processing. There was no improvement in the comparative advantage of semi-processed products, which would have benefited from the measures taken. South Africa, Zambia and Zimbabwe all have developed smelting and refining competences and positioned themselves as exporter of certain semi-processed products, but these achievements cannot be attributed to the export control measures studied, which did not improve the relative export performance of these products.
A “dark side” to the commodity boom in Africa: new evidence on the resource curse (American Economic Association)
Afreximbank AGM: Speakers highlight need for regional integration
Activities marking the 24th Annual General Meeting of Afreximbank opened in Kigali with Claver Gatete, Minister of Finance and Economic Planning of Rwanda, calling for the building of regional value chains which have the potential to generate enormous benefits for African economies. “The creation of regional value chains in Africa along several product lines could ease the integration of African economies into global value chains,” said Mr Gatete in an opening address (pdf) during the seminars of the Afreximbank Advisory Group on Trade Finance and Export Development in Africa. “In this context, ongoing efforts to deepen regional economic blocks within Africa offers tremendous opportunities to draw on economies of scale to transcend the natural and environmental constraints imposed by geography,” he continued.
Build critical mass of experts to push economic integration agenda – BoG Governor (GNA)
Ernest Kwamina Yedu Addison, Governor of the Bank of Ghana, says a monetary union is a critical component of regional integration and urged central banks and finance officials across West Africa to build a critical mass of experts in this area. He said building a critical mass of experts was needed to enable the sub-region pick up its pace in its regional integration efforts. He made the statements in a speech delivered on his behalf by Ms. Catherine Ashley, Advisor to the Bank of Ghana, at the opening of a regional course on financial and economic issues in regional integration in Accra on Wednesday. Dr Addison bemoaned the lagging behind of Anglo West Africa in establishing a monetary union with a single currency as seen in francophone West African countries with the CFA zone, despite numerous efforts.
US-Africa Business Center: new reports
(i) US-Africa policy recommendations for the Trump Administration (pdf): The administration should push for an increase in focused bilateral dialogues with key markets and formalize a schedule with existing ones such as Nigeria, South Africa, and Morocco. These dialogues have proven to be beneficial to the business community, as they present opportunities to raise regulatory issues and allow for parties to voice challenges around the ease of doing business. Examples of successful dialogues can be found in the US-India Strategic and Commercial Dialogue and the US- China Joint Commission on Commerce and Trade. Furthermore, nations such as China and Brazil have had success in Africa because their presidents lead business missions to key partner countries. We recommend the following as a way to strengthen our commercial ties across Africa:
(ii) Inaugural Investor Confidence Indicator for Africa: The ICIFA assigns an overall score to each nation based on their performance in 12 bellwether international evaluations on essentialities for promoting security, development, and good governance rooted in the rule of law – the cornerstones of a strong society and vibrant business environment.
Ghana: Traders unaware of trade-related fees and charges – USAID study (News Ghana)
The study, which examined Ghana’s compliance with the WTO’s Trade Facilitation Agreement’s Fees and Charges, found out that a consolidated list of trade-related fees and charges was not easily accessible. “Traders are unclear of what ends up being paid to the Ministries, Departments and Agencies, what is paid in unofficial fees and how much goes directly to the freight forwarder,” the report stated. Mr Robert Jackson, the US Ambassador to Ghana, launched the study dubbed ‘The cost of trading in Ghana’ at the monthly luncheon of the American Chamber of Commerce. Extract from Amb. Robert Jackson’s speech: American companies are excited about the possibilities. But they will need to see action and tangible results. We are looking to the government to hold people accountable when laws are broken. We need to see a court system that works more efficiently and is willing to prosecute and convict guilty parties. We hope to see greater use of technology — technology that will: (i) facilitate business registrations and payment of fees; (ii) provide clear standards of service; (iii) help ensure transparency in the procurement process and in business transactions.
The mounting debt at East Africa’s top supermarket chains is souring a rising middle class narrative (Quartz)
Analysts at Nairobi-based Cytonn Investments attribute the poor performance of retailers in Kenya to messy corporate governance practices and financial constraints related to rapid expansion and weak sales volumes. Although, the worst affected are Nakumatt and Uchumi, others such as Tuskys (the second largest in East Africa) and Naivas are not only facing herculean moments in servicing debt but also feeling the heat from rising competition by new players. Local suppliers produced a stinging report that showed retailers owed them around $400m of debt that had breached the usual 60-day payment agreement.The retailers (numbering over 100 with over 600 outlets in Kenya) were unwilling to share information on the scale of debt instead. Suppliers have complained of unfair trade practices practiced by retailers “due to an imbalance in the bargaining power between the retailers and the suppliers”.
Tanzania accuses Kenya of unfair trading practices
The government yesterday pointed an accusing finger at neighbouring Kenya for unfair trading practices in imposing both tariff and non-tariff barriers against some Tanzanian goods, describing the move as contrary to the regional integration treaty. Kenya has been deliberately imposing trade barriers by blocking imports of liquefied petroleum gas from Tanzania and slapping taxes on wheat flour from the country, the permanent secretary in the Ministry of Industry, Trade and Investments, Adolf Mkenda, said in a statement. “The Tanzanian government has lodged an official complaint to Kenya on this matter,” Mkenda added in the statement. The PS said Tanzania will also take its own measures against the trade restrictions, although he did not specify further on that course of action.
Central Corridor performs badly in the first quarter of this year (The Citizen)
The Central Corridor’s container trade contracted by 12% in the first quarter of 2017 despite overall growth in East Africa, a report has shown. The corridor connects the Dar es Salaam Port with Rwanda, Burundi, Zambia and the DRC. However, trade through the Northern Corridor that links the Mombasa Port with Uganda, South Sudan and parts of Rwanda expanded by one per cent year-on-year, according to Steve Felder, managing director at Maersk Line Eastern Africa. He says in the 2017 First Quarter East Africa Trade Report that aggregate trade levels in the region improved slightly since 2016.
Rwanda: Govt bans import of poultry products from South Africa, Zimbabwe over bird flu (New Times)
The ban that applies to chicken and other poultry products, is likely to affect hotels and airlines, who are among the buyers of imported poultry products. “The importation of chickens and poultry products (eggs and meat) from Southern African countries are temporally banned,” reads part of a statement signed by Minister Gerardine Mukeshimana. [Neighbours ban South African poultry over bird flu]
Zambia: No export ban will be imposed – Mutati (Daily Mail)
Minister of Finance Felix Mutati yesterday assured traders and buyers of grain that Zambia will no longer impose export bans and permits will be simplified to promote trade in the region. Mr Mutati said from the Zambian perspective what has caused challenges in trade with other countries in the region in the past is the issue of policy and documentation. Speaking at the Zambia Commodity Exchange hosted-regional grain trade facilitation forum yesterday, Mr Mutati urged Zambians to take advantage of the vast trade opportunities for grains in East Africa.
Western Cape on its way to becoming a halaal export hub (Business Day)
Earlier in June, Wesgro, the Western Cape’s trade and investment promotion agency, undertook a trade mission to Senegal. Five of the 12 companies that joined the mission are involved in the halaal goods sector. Michael Gamwo, Wesgro’s head of Africa unit, told Business Day this week that the agency was aiming to establish the Western Cape as a major exporter of halaal goods, and hence the launch of a programme focusing on that particular market. “We chose Senegal because it has a 90% Muslim population and it is a springboard to enter other countries in the subregion, such as Mali and Guinea,” said Gamwo. He said the halaal goods export strategy also focused on Nigeria, Cameroon, Asia and the Middle East. In 2015, the provincial government announced that a total of R1bn would be set aside for a halaal food park, which could generate up to R5bn for the local economy each year. Western Cape economic opportunities MEC Alan Winde said a feasibility study was being finalised.
Ravi Kanbur: The World Bank in the Era of Trump (Vox EU)
With the World Bank now far from the only game in town in providing development finance, this column argues that it should focus on issues which are truly global in scope, but questions the suitability of the World Bank’s signature instrument, the sovereign loan. The international community does rely on the Word Bank for one global public good – global consensus building – but the current situation of veto power in the hands of a US government which does not acknowledge global public good issues, as evidenced by its withdrawal from the Paris accord, is potentially lethal for perceived and actual independence in consensus building.
Robert Z Lawrence’s Punuka Annual Lecture 2016, Lagos (pdf)
Conclusions: (i) There are opportunities in the current global environment but Nigeria is poorly equipped to achieve them. (ii) It needs policies that facilitate structural change. (iii) In principle industrial and trade policies can help. (iv) But an appropriate macroeconomic environment with a competitive exchange rate is essential.
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Sixty-six countries struggling with governance of oil, gas and mining sectors
New index shows promise in some developing countries, but raises alarms over sovereign wealth funds and citizens’ freedom to hold governments to account
The majority of governments inadequately govern their oil, gas and mining sectors, according to the 2017 Resource Governance Index. Sixty-six countries were found to be weak, poor or failing in their governance of extractive industries. Less than 20 percent of the 81 countries assessed achieved good or satisfactory overall ratings.
The cross-country study of extractives governance, released yesterday by the Natural Resource Governance Institute (NRGI), is the most comprehensive of its kind to date. It is based on new research into how countries’ governance affects their potential to realize value and manage revenues from their resources. It also incorporates existing assessments of countries’ “enabling environments” – a measure of how well citizens can access and use information, freely work together to voice their concerns and hold their governments to account, and of the quality of institutions in the areas of administration, rule of law and corruption control.
Index data show that Norway exhibits the best governance of natural resources, followed closely by Chile, the United Kingdom and Canada in the top-most “good” performance category. Eritrea exhibits the worst resource governance and receives a failing grade in the index, with Turkmenistan, Libya, Sudan and Equatorial Guinea among others also rated failing. Some middle-income countries – such as Colombia, Indonesia, Ghana, Mongolia, Peru, Mexico and Botswana – achieve good or satisfactory overall ratings. Burkina Faso places highest among the low-income countries studied; its mining sector ranks 20th overall.
“Good governance of extractive industries is a fundamental step out of poverty for the 1.8 billion poor citizens living in the 81 countries we assessed in the Resource Governance Index,” said Daniel Kaufmann, NRGI president and CEO. “It is encouraging that dozens of countries are adopting extractives laws and regulations, but often these are not matched by meaningful action in practice.”
The gap between law and practice is larger in countries where corruption is systemic, the index found. This gap occurs in many policy areas of extractive industries – including environmental and social impacts, and the sharing of resource revenues by national governments with local authorities – and is particularly problematic for communities living near extraction sites.
The index also assesses the governance and transparency of sovereign wealth funds in 33 countries. Colombia’s Savings and Stabilization Fund is the best-governed of the assessed funds, followed by the Ghana Stabilization Fund. The Qatar Investment Authority, with USD 330 billion in assets, and Nigeria’s Excess Crude Account were found to be the worst-governed funds. At least $1.5 trillion is currently managed by the 11 sovereign wealth funds NRGI researchers rated as failing.
Chile’s Codelco state mining company was listed as the best-governed of 74 extractive sector stateowned enterprises that were assessed for their disclosures and corporate governance. The Oil and Natural Gas Corporation of India came second. Forty-eight countries’ state-owned companies received unsatisfactory ratings. The index identifies weak governance in the China National Petroleum Company, and finds failing governance in the Abu Dhabi National Oil Company, the Gabon Oil Company, Turkmengas and Saudi Aramco.
“The Resource Governance Index shows us that if they are to contribute to their countries’ development, state-owned enterprises require serious reform,” said Ernesto Zedillo, former president of Mexico and chair of NRGI’s board of directors. “But effective governance of the oil, gas and mining sectors is not an insurmountable challenge – the index provides many examples of developing countries defying expectations and stereotypes.”
In recommendations released with the data, NRGI calls upon governments to support key transparency measures (including compliance with open data standards) and for them to adopt and implement laws requiring the disclosure of the identities of the true beneficiaries of oil and mining companies.
NRGI also calls for a reversal of the trend toward closing civic space in many resource-rich countries. “Where freedoms of citizens and journalists are under attack, governance of the extractives sector is fundamentally impaired,” said Kaufmann. “Access to information on contracts, revenues, state companies and sovereign wealth funds is only valuable when citizens can hold authorities and companies to account.”
Nigeria (oil and gas)
Nigeria scores 42 of 100 points and ranks 55th among 89 assessments in the 2017 Resource Governance Index (RGI). It has the largest oil and gas reserves in sub-Saharan Africa with an estimated 37 billion barrels of oil and 188 trillion cubic feet of gas. Nigeria is one of the world’s most resource-dependent countries – oil and gas contributed the majority of government revenues and constituted 90 percent of Nigeria’s exports in 2015. Nigeria also has the largest population on the African continent, so the oil and gas sector’s governance issues impact the wellbeing of a large number of people. Governance challenges are present throughout the extractive decision chain. Value is lost particularly in licensing and in the Nigerian National Petroleum Corporation’s (NNPC) sales of government oil, as well as when revenues from oil and gas are shared and saved. Furthermore, a history of scandals involving top officials and the NNPC has plagued the sector and drawn public attention to corruption and asset recovery. Given NNPC’s central role in all stages of the decision chain, improving governance of the state-owned enterprise (SOE) is crucial.
Index summary results
Improving transparency could help mitigate Nigeria’s failures in licensing
Licensing is the weakest link in Nigeria’s value realization component, with a score of 17 of 100, placing it 77th among 89 country licensing assessments. This score and ranking reflect high levels of opacity in key areas of decision-making, including qualification of companies, process rules and disclosure of terms.
The Nigerian government does not regularly publicly disclose government officials’ financial interests in the extractive sector or the identities of beneficial owners of extractive companies, though it has made some early commitments to do so with the Extractive Industries Transparency Initiative (EITI) and the Open Government Partnership (OGP). The government has committed to disclosing all oil, gas and mining contracts in its “seven big wins” policy strategy and as part of its OGP action plan, but thus far, it has not disclosed contracts.
Despite some progress in transparency of revenue collection over the past five years, tracking payments from oil and gas companies remains challenging. According to Nigeria’s 2014 EITI data, just over half of public revenues from oil and gas were distributed to the federal government and the rest were shared between the state and local governments. In terms of revenue sharing, Nigeria ranks 11th, alongside the United States (Gulf of Mexico) and Ecuador. The public lacks access to audited information on revenue flows to lower levels of government, and this contributes to the gap between the quality of the legal framework and actual implementation.
State-owned enterprise governance
Despite some improvements in transparency, NNPC’s performance and accountability challenges persist
NNPC, the largest SOE on the continent, achieves a poor governance score of 44 of 100. The corporation mainly scores well on indicators that measure elements of transparency required by EITI reporting, such as transfers to government and production volume disclosure. NNPC has recently strengthened some of its reporting practices, particularly for high-level financial data. However, the company does not disclose detailed annual reports on its finances, despite top officials having made a commitment to do so. Little information is publicly available, particularly concerning some of NNPC’s least efficient and most questionable activities, notably earnings by its subsidiaries, the costs of its operations and its significant spending on non-commercial activities. Government agencies and external auditors have disputed NNPC’s interpretation of rules set in the constitution and the NNPC Act governing monetary transfers between NNPC and the government. Officials exercise significant discretion around how NNPC sells the government’s share of oil production – for example, when selecting buyers, pricing exports or transferring sales proceeds to the government.
Sovereign wealth fund governance
Nigeria performs poorly in oversight of key revenue collection, sharing and savings practices
Nigeria’s Excess Crude Account (ECA) is the most poorly governed sovereign wealth fund assessed by the index, ranking last alongside the Qatari Investment Authority. The government discloses almost none of the rules or practices governing deposits, withdrawals or investments of the ECA. Nigeria also has other natural resource funds, some of which are more transparent than the ECA. As the largest fund by asset balance, the ECA constitutes a vast governance concern at the end of the oil sector value chain.
What is the RGI?
The 2017 RGI assesses how 81 resource-rich countries govern their oil, gas and mineral wealth. The index composite score is made up of three components. Two measure key characteristics of the extractives sector – value realization and revenue management – and a third captures the broader context of governance – the enabling environment. These three overarching dimensions of governance consist of 14 sub-components, which comprise 51 indicators, which are calculated by aggregating 133 questions.
Independent researchers, overseen by NRGI, in each of the 81 countries completed a questionnaire to gather primary data on value realization and revenue management. For the third component, the RGI draws on external data from over 20 international organizations. The assessment covers the period 2015-2016.
Full results from the Resource Governance Index are available here.
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Speakers highlight need for regional integration as Afreximbank AGM opens
Activities marking the 24th Annual General Meeting of the African Export-Import Bank (Afreximbank) opened on 28 June in Kigali with Claver Gatete, Minister of Finance and Economic Planning of Rwanda, calling for the building of regional value chains which have the potential to generate enormous benefits for African economies.
“The creation of regional value chains in Africa along several product lines could ease the integration of African economies into global value chains,” said Mr. Gatete in an opening address during the seminars of the Afreximbank Advisory Group on Trade Finance and Export Development in Africa.
“In this context, ongoing efforts to deepen regional economic blocks within Africa offers tremendous opportunities to draw on economies of scale to transcend the natural and environmental constraints imposed by geography,” he continued.
Mr. Gatete noted that although African trade had witnessed remarkable growth, especially over the last two decades, rising from $210 billion in 1996 to $1.2 trillion in 2015, its share of global trade had barely changed, remaining at about 15 per cent, compared to 67 per cent in Europe, 53 per cent in Developing Asia and about 37 per cent in America
He commended Afreximbank’s support to Rwanda’s economic transformation, noting that the Bank had provided direct financing amounting to $155 million in support of development projects in Rwanda.
Also speaking, Denys Denya, Afreximbank’s Executive Vice President in charge of Finance, Administration and Banking Services, said that the resounding success achieved by some countries in Asia, in particular China and Korea, and the critical role played by intra-regional trade in their development, presented Africa with valuable lessons for positioning intra-African trade as a key pillar for economic growth, and sustainable development.
Noting the challenge posed to Africa by small size of economies and market fragmentation; to Mr. Denya argued that connecting the host of small and disconnected markets through deepening of intra-African trade and economic integration, would create an environment where firms gained access to hitherto non-existent larger markets.
He said that Africa’s progress toward economic development and structural transformation had been hindered by over-reliance on export of natural resources and primary commodities and a deficit of export diversification which limited the ability of countries to effectively develop regional value chains to enhance their integration into global value chains.
In a presentation, Dr. Hippolyte Fofack, Afreximbank’s Chief Economist, said that the Bank’s, Fifth Strategic Plan, known as “Impact 2021: Africa Transformed”, had been designed to address the challenges facing African countries on their path to development.
Its first two pillars, Promoting Intra-African Trade, and Industrialisation and Export Development, would support the economic diversification and trade openness, which had been identified as the key to attaining and sustaining growth, he said.
More than 100 speakers, including academics, African and global trade development experts, are scheduled to speak during the four days of the Annual General Meeting and related events, with a focus on unlocking Africa’s trade potential.
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Export controls and competitiveness in African mining and minerals processing industries
The minerals and metal sector in Africa is heavily affected by export control measures of raw materials. Export control measures are amongst the tools which governments employ with the aim to encourage local processing and capture more of the value flowing from minerals extraction.
By putting restraints on the export of raw materials, governments hope to divert these materials to the domestic market, thereby supporting local activities to process these materials and employment. But export restrictions can also have costs for countries employing them; in particular, they can lower the returns on raw materials production and entail efficiency costs for the economy overall.
The four case studies selected for the analysis concern the manganese sector in Gabon, the primary and secondary lead sector in South Africa, the copper sector in Zambia and the chromium sector in Zimbabwe. These cases cover a variety of conditions: they concern different types of minerals (base metals, minor and technology minerals), employ different kinds of export control policies, and the number of potential downstream activities differ significantly.
The report describes developments in the industries over a 20-year time span from 1992 through 2013. It examines the revealed comparative advantage and uses structural break methods to determine whether changes have occurred in the relative competitiveness of raw and related processed products and whether these could be attributed to export control measures. The focus of the analysis is on the processing at the early stages of the value chains of these industries.
The selected countries differ in the level of vertical diversification achieved in the course of the twenty years studied. All of them have a comparative advantage in the mined metal, but their export performance in processed products is weak or at best very narrow. This report finds that export control measures on raw materials have not promoted downstream processing activities in either of these countries, and in some cases have led to substantially negative effects on the primary sector.
In the minerals and metal sector the availability and price of the primary (and secondary) raw materials are key determinants of production at subsequent stages of the value chain. However, availability and price alone are not sufficient conditions for processing to take place on a globally competitive basis. Minerals processing industries typically consume large amounts of energy and water and employ a high skilled labour force. Proximity of sales markets and the state of infrastructure influence transport costs, another important co-determinant of global competitiveness.
A growth and jobs strategy founded on export restrictions on raw materials risks to overlook other domestic factors that are equally important to achieve global competitiveness on a sustainable basis. A systematic stocktaking and comparative analysis of the overall enabling environment seems well advised.
Conclusions
The analysis finds that the export control measures may have affected the mining industries, and that the effects have been adverse overall and the processing industries have not benefited.
The export control measures studied consist of export taxes, export licence requirements and outright export bans. The export tax policies pertained to the copper industry (Zambia), chromium industry (Zimbabwe) and manganese industry (Gabon). For Gabon’s manganese industry there is no evidence that the export tax has impacted the levels of comparative advantage of the mining or processing activities. In the case of Zambia’s copper industry, the revealed comparative advantage of copper ore and concentrate decreased, suggesting that the mining sector may have been hurt by the export tax. Zimbabwe’s chromium ore sector has witnessed a similar deterioration.
While these findings are in line with what trade theory would predict to be one of the consequences of export taxes, the export performance of the countries’ downstream processing sector has also not benefited. Diversification within the Zambian copper industry’s value chain predates the 15% export tax of 2008. After the export tax was introduced, the RCA index rose for only one semi-processed copper product, anodes, to which the export tax also applied. For Zimbabwe, the effect of the export tax is difficult to disentangle from the effect of the preceding and subsequent bans, but the RCA of chromium dropped sharply whereas ferro-chromium exports have not seen any improvement in relative competitiveness. The rates of the export taxes were relatively high in Zambia and Zimbabwe (15% and 20%, respectively), which could help explain the pronounced decline of the revealed comparative advantage of their extractive sectors. The fact that this decline has not been offset by competitiveness gains for the processing industry does not bode well for the countries’ respective copper and chromium industries and their contribution to economic growth and development.
Zimbabwe’s export ban has backfired and some important lessons can be drawn from this case. It is reported that when the ban was introduced producers of chromite ore had difficulties finding local processors. Unable to sell abroad and locally, some mining operations closed down completely. This is not in the interest of the economy, which depends on the mining sector for foreign exchange, and not a circumstance that the government appears to have thought of when it imposed the export ban – the strictest of all export control measures – hoping to attract investment in the country’s smelting capacity and further up the value chain. Furthermore, the Zimbabwe case illustrates that the actual trade effects depend crucially on the enforcement of trade measures.
South African lead industry is the only country case where producers have to obtain a licence in order to be able to export lead and a wide range of other minerals. Like with the export tax in Zambia, the export licence requirement applies to mined output as well as to some semi-processed products. The requirement was implemented in 2008 followed by a structural decline in the comparative advantage of lead ores in 2010, but this is a relative long time lag for a cause and effect relationship for an export control measure. Neither is there evidence that export of lead waste and scrap or any other lead products included in the control list, as administered prior to 2013, was effectively restrained. The structural decline in the competitiveness of several semi-processed products appears to be related to cost and possibly other factors depressing demand for scrap on the part of the South African lead using industry.
In the light of the findings, it is hard to defend export restrictions as a tool for stimulating local mineral processing. There was no improvement in the comparative advantage of semi-processed products, which would have benefited from the measures taken. South Africa, Zambia and Zimbabwe all have developed smelting and refining competences and positioned themselves as exporter of certain semi-processed products, but these achievements cannot be attributed to the export control measures studied, which did not improve the relative export performance of these products. On balance, the export restrictions may have undermined the overall performance of the industries in Zambia and Zimbabwe because the relative export performance of their mining sectors weakened.
From the description of the industries provided by this paper it is apparent that factors other than export control measures have also shaped the situation in the countries’ minerals sector. The finding that the export control measures have not helped the processing industries raises the question of what mix of basic conditions are needed for strong processing sectors to develop in these countries.
For industries strung along the value chain, raw materials are a necessary input and availability and price of the primary (or secondary) raw materials is a key determinant of the cost and levels of production at subsequent stages of intermediate products. However, this is neither a sufficient condition for processing to take place nor is it the only factor that determines whether processed products can compete on the global market.
This study was prepared under the OCED Working Party of the Trade Committee by Ernst Idsardi and Riaan Rossouw of the North-West University in South Africa.
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tralac’s Daily News Selection
Starting today: In Kigali, Afreximbank’s Annual General Meeting on the theme Promoting African trade and economic transformation. In Cotonou: The Africa Carbon Forum.
AU Summit update from 34th Session of the Permanent Representative Committee. The Chairperson highlighted the main issues to be considered during the PRC meeting, which include: Reform of the African Union, for which the follow-up of the implementation, in accordance with the July 2016 and January 2017 summit decisions, has been jointly entrusted to the Presidents Paul Kagame of Rwanda, Idriss Deby Itno of Chad and Alpha Conde of Guinea. This is in addition to migration, peace and security, and implementation of the decision of the 0.2% levy on imports of eligible products in order to ensure in predictable, sustainable and equitable financing of the AU. Mr Mahamat also highlighted the partnerships of the AU, noting “our strategic partnerships merit a new examination in order to make them more relevant to the requirements of our Agenda 2063, and to the pillars of the reform of our Union”. He called on the PRC to finalize the study on the evaluation of the AU strategic partnerships and to present it to the deliberative bodies. [Full text, in French], [Ethiopia nominates Neway Gebreab for AUC Economic Affairs Commission post]
Dance of the lions and dragons: how are Africa and China engaging, and how will the partnership evolve? (McKinsey)
Yet to date it has been challenging to understand the true extent of the Africa–China economic relationship due to a paucity of data. Our new report provides a comprehensive, fact-based picture of the Africa–China economic relationship based on a new large-scale data set. This includes on-site interviews with more than 100 senior African business and government leaders, as well as the owners or managers of more than 1,000 Chinese firms spread across eight African countries that together make up approximately two-thirds of sub-Saharan Africa’s GDP. Behind these macro numbers are thousands of previously uncounted Chinese firms operating across Africa. In the eight African countries on which we focused, the number of Chinese-owned firms we identified was between two and nine times the number registered by China’s Ministry of Commerce, until now the largest database of Chinese firms in Africa. Extrapolated across the continent, our findings suggest there are more than 10,000 Chinese-owned firms operating in Africa today (Exhibit 2).
We evaluated Africa’s economic partnerships with the rest of the world across five dimensions: trade, investment stock, investment growth, infrastructure financing, and aid. China is among the top four partners for Africa across all these dimensions (Exhibit 1). No other country matches this depth and breadth of engagement. On balance, we believe that China’s growing involvement is strongly positive for Africa’s economies, governments, and workers. However, there are areas for significant improvement.
At a national level, we focused on eight large African economies, and identified the following four distinct archetypes of the Africa–China partnership: (i) Robust partners: Ethiopia and South Africa have a clear strategic posture toward China, along with a high degree of economic engagement in the form of investment, trade, loans, and aid. (ii) Solid partners: Kenya, Nigeria, and Tanzania do not yet have the same level of engagement with China as Ethiopia and South Africa, but government relations and Chinese business and investment activity are meaningful and growing. (iii) Unbalanced partners: In the case of Angola and Zambia, the engagement with China has been quite narrowly focused. (iv) Nascent partners: Côte d’Ivoire is at the very beginning of developing a partnership with China, and so the partnership model has yet to become clear.
Kenya China Economic and Trade Association: We’re doing good work, Chinese companies in Kenya say (Daily Nation)
Large Chinese companies operating in Kenya want the public to know that they are doing good, operate on principles and want to help Kenyans and be model partners for communities. That was the message from the launch last Wednesday of a Chinese Enterprises in Kenya corporate social responsibility report (pdf) by the Kenya China Economic and Trade Association. China’s ambassador to Kenya, Dr. Liu Xianfa, said this was the first such report ever commissioned by a group of Chinese companies operating in any country in the world. The KCETA report highlights the efforts of 73 large companies to achieve partnership milestones with Kenyans. They include cultivating local talent and management, transferring technology, responsible business practices and working with communities. [Atlantic Council report: Chinese FDI in Latin America: new trends with global implications]
Report to the Ugandan people: American funding impacts Uganda’s health sector (The Independent)
The US Embassy report shows that in 2016, the US provided more than $840m (Shs 2.9 trillion) in assistance to Uganda and more than half; $488.3m (Shs 1.7 trillion), went to the health sector. The assistance makes Uganda one of the largest recipients of US aid in the world. Extract (pdf): It’s also why the bulk of our assistance – nearly $500 million (UGX 1.7 trillion) last year – is dedicated to the health sector. These programs are reducing mortality rates among mothers and newborns; helping HIV-positive Ugandans live longer, more productive lives; and training a new generation of health professionals to care for their fellow citizens. At the same time, we’re helping Ugandans become more prosperous. We encourage bilateral trade and U.S. investment in Uganda, as well as opportunities for Ugandan products to reach American consumers. Our programs seek to keep Uganda and its young entrepreneurs competitive in a rapidly changing global market. [Note: Section 3 in the report deals with economic issues]
DFID’s approach to supporting inclusive growth in Africa: a learning review (ICAI)
A new generation of centrally managed programmes has helped to boost delivery capacity. Having correctly identified that programming must be context-specific, it introduced the inclusive growth diagnostic to support country planning. Its approach has evolved through several strategy documents, leading to the 2017 Economic Development Strategy. At country level we found a more mixed record (pdf). The diagnostic work was of variable quality and did not always lead to greater prioritisation of effort and resources. Country portfolios show a clear focus on the poorest and include some innovative approaches to economic transformation, but their strategic focus is not always clear. Monitoring, evaluation and learning practices are not yet strong enough to support experimental programming. Our sampled programmes lacked an explicit approach to economic inclusion and to monitoring whether marginalised groups were being reached. Overall, we find DFID’s focus on economic transformation to be an appropriate response to the development challenges facing Africa and a welcome increase in the ambition of its economic development work.
European Investment Bank to announce largest private financing program in Ethiopia
The European Investment Bank is to announce a new multi-billion Ethiopian birr private enterprise financing program in Ethiopia. According to a statement issued by the Bank, Vice President of the European Investment Bank Pim van Ballekom who will be paying a two day official visit to Ethiopia this week will announce the financing program. The EIB delegation will discuss ongoing activity and future investment with Prime Minister Hailemariam Desalegn and Minister of Finance and Economic Cooperation, Dr. Abraham Tekeste, as well as meet business leaders.
Ghana Economic Update: Shifting Ghana’s competitiveness into a higher gear (World Bank)
Ghana’s business environment and competitiveness fall short of their potential. Ghana has been generally stagnant or declining in areas of competitiveness and business reform over the last few years. The World Bank’s Doing Business Report and the Word Economic Forum’s Global Competitiveness Index tell a similar story of Ghana’s relatively good performance against the West Africa average but a significant drop compared to its own performance 8 years ago or benchmarked against comparator countries. Although Ghana is one of the regional leaders in overall Doing Business rankings, its inability to sustain reforms severely affects its competitiveness globally.
Central Corridor ministers commit to reduce delays (Daily Monitor)
Transport ministers of the Central Corridor have signed a $30m (Shs108 billion) external fund which is expected to eliminate some of transport hurdles that have been causing delays. The Central Corridor route connects the Port of Dar-es-Salaam by road, rail and inland waterways to Burundi, Rwanda, Uganda and the Eastern part of the DRC and all of central and northern western Tanzania. Uganda’s transport minister, Ms Monica Azuba Ntege, speaking at the signing ceremony of a joint commitment at their 8th Interstate Ministerial meeting held in Kampala last week, said: “The economic success of all member countries and the subsequent well-fare of the people will depend on how well leaders will address the issues of infrastructure development in the Central Corridor.”
Kenya commits to SGR reaching Malaba (Daily Monitor)
Mr James Macharia, the Kenyan Cabinet Secretary for Works insists that Kenya has no intention of terminating the SGR in Kisumu. “We’ve agreed that we need to sit with the financiers and have these joint commitments that we’ve agreed upon. That way, the issue of a hanging railway – Kampala to Malaba or Nairobi to Kisumu – will be no more. It will be a joint seamless connected railway. We must synchronise the completion of the project. In terms of viability, we see it as one project - A to Z -, initially being Mombasa to Kampala,” he told reporters last week. Last week, the SGR cluster of the Northern Corridor Infrastructure Projects met in Kampala and on the sidelines, the Works ministers for Uganda and Kenya issued a joint statement on the project. The financiers of the project, EXIM Bank of China, are said to only be considering granting Kenya more financing for to Kisumu, only if there is a commitment to reach Malaba.
COMESA Annual Research Forum: Invest more in research to spur trade and devt, COMESA urged (New Times)
Speaking at the event, Robert Opirah, the director general of trade and investments at the Ministry of Trade, Industry and East African Community Affairs, cautioned that commitments made by member states to implement regional integration programmes may be overtaken by events, if not fast-tracked. “Regional integration is not a static process. Therefore, agreed commitments require evidence-based policy redirection in order to achieve the intended goal,” Opirah said.
Relief as 100 cleared trucks enter Namibia (New Era)
About 100 trucks which were among the approximately 400 haulage trucks seized in Zambia in January and February, and were recently cleared, yesterday left Zambia and entered Namibia via the Wenela border post, ending a long stand-off between Zambia and truck owners. The release of the trucks followed President Hage Geingob’s intervention after he personally telephoned his Zambian counterpart Edgar Lungu to resolve the deadlock. The trucks were held while the Zambian authorities verified permits and other relevant documentation, after they learnt that some companies were illegally harvesting mukula timber in Zambia, then transporting it illegally to the DRC and then to Namibia, South Africa or Tanzania for possible export to China. [Malawi: Govt to impose curfew on night buses, trucks]
Ghana and Polish trade Chambers sign MoU (Ghana News)
The MoU was signed on Tuesday at a one-day Ghana-Poland Business Forum in Accra. The forum, jointly organised by the GNCC and the Polish Chamber of Commerce, is to strengthen the co-operation between the two countries. Statistics from the International Trade Centre showed that Ghana’s exports to Poland stood at GH¢33.3m in 2016, while imports from Poland stood at GH¢37.4m.
To achieve $900bn export target, India needs to overhaul its trade policy (The Wire)
As the mid-term review of India’s foreign trade policy is on and a revised policy is expected to be announced on July 1, the country confronts multidimensional challenges – falling global aggregate demand, weakening linkage between global income and trade growth, the rise of protectionism and halted progress in mega regional trade agreements to name a few. As against a few changes here and there, addressing these challenges requires a radical shift in its trade policy. This is because most of these challenges demand structural changes in our trade policy to achieve the export target of $900 billion by 2020. For India to achieve this stated policy objective, concerted efforts are required to realign its foreign trade policy with the new global trading system. Currently, India’s trade policy faces several policy-related challenges – inadequate export diversification, rationalisation of the tariff regime and export promotion schemes, insignificant involvement of a majority of states in exports and factor market reforms which are critically linked with export performance. These challenges not only affect the productivity and competitiveness of domestic firms but also restrict them from participating in global production networks. [The authors, Bipul Chatterjee and Surendar Singh, are CUTS International staffers]
Today’s Quick Links: An interview with the EABC chairperson: We can produce competitive products Kenya: Interpol Uganda establishes business advisory units at border posts Nigeria set to surpass Ghana in annual yam export - Minister |
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Economic transformation and job creation in Africa – a review of DFID’s work
DFID is showing a welcome increase in ambition as it aims to improve economic development and create jobs in Africa, a new ICAI review has found.
The UK’s Department for International Development has pursued a well-considered approach to building up its knowledge and expertise in the area of inclusive growth, doubling its global investment in economic development – from £934 million in 2011-12 to £1.8 billion in 2015-16.
With some 10 to 12 million young Africans entering the jobs market each year, ICAI’s review said this was a positive commitment.
For example in Ethiopia, DFID is supporting access to finance for poor households and businesses, particularly female-led firms, and is investing in specific areas – textiles, leather, and horticulture – which have the potential to transform parts of the country’s economy in ways which benefit the poorest.
However aspects of the department’s work to bring about inclusive growth are of variable quality.
DFID’s approach to supporting inclusive growth in Africa: A learning review
In recent years, DFID has been rebalancing its aid portfolio towards economic development. Its investments have doubled from £934 million in 2011-12 to £1.8 billion in 2015-16. In January 2017, it published a new Economic Development Strategy, announcing a focus on economic transformation and job creation as the key to achieving inclusive growth and sustainable poverty reduction. This represents a major shift in the orientation of DFID’s portfolio, which is still underway.
This learning review assesses how well DFID has gone about learning what works in the promotion of economic development. We have chosen to focus on Africa. While the continent has enjoyed a period of economic growth since 1998 (slowing in the last two years), this has not generated enough jobs to achieve large-scale poverty reduction. With 10 to 12 million young Africans entering the labour force each year, job creation in Africa is an urgent challenge. We have chosen to conduct a learning review, in recognition that global evidence on how to promote job creation on the scale required is still emerging. We explore the learning processes at both central and country levels that have contributed to DFID’s evolving approach. We then assess whether DFID has arrived at a credible overall approach to promoting economic development.
This is a high-level strategic assessment of a very broad portfolio. We have focused on the evolution of DFID’s strategy, its growth diagnostics and its portfolios in three case study countries: Ethiopia, Tanzania and Zambia (we visited the latter two). We have not covered DFID’s development capital portfolio (loans, equity and guarantees) or its development finance institution, CDC, as these were the subject of a recent National Audit O ce review. We also chose not to look at conflict-affected countries, in order to focus on Africa’s core development challenges.
How well has DFID’s research and diagnostic work informed its approach to inclusive growth and job creation?
In 2013, DFID conducted a stocktake of its readiness to scale up its economic development work, providing a useful baseline against which to measure its learning. At that point, DFID had no economic development strategy. Its wealth creation portfolio was described as deeply heterogeneous, with a good focus on reaching the poorest but limited ambition towards tackling constraints on economic growth. The stocktake concluded that, to scale up successfully, DFID would need to strengthen its organisational capacity, its in-country analytical work and its ability to measure results.
In 2014-15, DFID conducted an inclusive growth diagnostic across 25 countries to identify the constraints on growth and opportunities for DFID to influence them. This was DFID’s first such diagnostic exercise, based on a common conceptual framework. We encountered mixed views on the quality of the work. The analysis was led by country economists. Participation from other professional disciplines varied across countries, resulting in weaknesses in areas such as political economy analysis, social inclusion and climate change. Country offices used different data and analytical techniques to reach their conclusions, and it was not always clear how consistent or robust their answers were. The diagnostics were nonetheless an important learning tool for DFID, showing the strengths and weaknesses of the economic development portfolio and indicating areas where country offices needed further guidance. This informed the development of DFID’s research portfolio and sectoral strategies.
The diagnostics revealed a number of gaps in DFID’s economic development work, in areas such as energy, trade and job creation. Some of these have since been addressed through the development of new centrally managed programmes. While past ICAI reviews have pointed out problems of coherence and coordination between country-level and centrally managed programmes, the new centrally managed programmes are designed in a more strategic way to address gaps in delivery capacity in country offices.
DFID has developed a large research portfolio on economic development, with a total investment of £282 million over the period from 2011 to 2022. The research corresponds well to the knowledge and evidence gaps identified by DFID, and is designed to contribute both to the global pool of knowledge in the area and to DFID’s own programming. There are challenges, however, in applying such a complex body of research. The Research and Evidence Division has produced some useful summaries of emerging findings, but staff in country offices prefer to learn directly from other DFID staff and programmes.
Individual research programmes have uptake reporting requirements, but it is difficult to quantify the uptake of findings across a research portfolio. This means that at this point we are unable to reach a conclusion as to how much the research has contributed to learning.
DFID’s approach to economic development has evolved through successive strategy documents. A series of papers from the chief economist have made the case for a more ambitious portfolio aimed at transformational growth. DFID has developed sectoral strategies on agriculture, infrastructure, sustainable cities and energy (the latter two are not yet approved). The 2017 Economic Development Strategy reflects this process of learning, with a much clearer articulation of DFID’s objectives and overall approach. It also contains some new policy commitments – such as changing international trading rules, leveraging commercial investment through ‘patient capital’ and helping firms from developing countries raise funds in London – that are not grounded in past learning.
Overall, we find that DFID has engaged in a concerted effort to build its knowledge and expertise on economic development, and that its strategy has become progressively clearer and more ambitious as a result, meriting a green-amber score.
Are DFID’s country economic development portfolios informed by evidence?
The Economic Development Strategy correctly states that there is no standard recipe for promoting economic development and that programming must be context-specific, based on in-country diagnostics. In our three case study countries, the impact of the inclusive growth diagnostics on country portfolios has so far been limited, for several reasons. They were out of sync with the programme cycle, coming after the main scale-up of country portfolios in 2012-14 when funds had already been committed. We encountered a few examples of new initiatives that emerged from the diagnostics, amid a wider concern that they were often used to justify existing portfolio choices. However, we recognise that aligning country programmes with diagnostic work necessarily takes time to achieve.
Given differences in country context, the three case study countries show varying levels of ambition towards economic transformation. Ethiopia has identified a clear set of strategic investments with the potential to support both transformational growth and economic inclusion. In Tanzania and Zambia, economic transformation is a more distant prospect. The two offices are experimenting with some potentially transformative interventions, while continuing to invest the bulk of their resources into agriculture, where most poor people work.
We found that all the portfolios have a strong focus on reaching the poor, with a range of interventions targeting different socio-economic groups. However, few programmes are specifically designed to address the exclusion of women and girls, youth or marginalised groups (although there are signs of an increased focus on the economic empowerment of women in more recent programmes). We also found that programmes were not monitoring their distributional impacts to make sure that intended beneficiaries were being reached. We found that monitoring and evaluation practices were not strong enough to support and learn from the level of experimentation that is underway. Along with other donors in this area, DFID lacks standard methods of measuring the results of its economic development programming, particularly on job creation (although it has a partnership with the World Bank to address this). DFID has made some effort to apply value for money analysis to its portfolio, but progress so far is limited in the face of some substantial technical challenges.
Overall, while recognising that the inclusive growth diagnostics were an important step forward, we find that DFID still has some way to go in developing country portfolios that reflect robust in-country diagnostics and learning from programming. This area merits an amber-red score.
Does DFID have a credible approach to promoting inclusive growth and jobs in Africa?
The core objective of DFID’s approach, as it has evolved in recent years, has been to refocus the portfolio towards economic transformation in Africa in order to achieve poverty reduction on a larger scale through job creation. This is a major change in the orientation of DFID’s portfolio, which will take time to work through into programming. We find the new focus on economic transformation to be an appropriate objective and a welcome increase in the ambition of DFID’s economic development work. It responds well to research and evidence on the causes of jobless growth in Africa.
We found a broad consensus among external stakeholders, including academic experts and development non-governmental organisations, that this was the right direction of travel. However, this increased level of ambition for the portfolio raises a set of complex challenges that will need to be addressed over the coming period.
There are concerns among some stakeholders and in the literature about the extent to which the Asian model of mass job creation through industrialisation can be replicated in Africa. DFID will need to be realistic about the pace of change and open to the idea that job creation in Africa may take different forms, including a higher level of informality.
Some external stakeholders expressed a concern that DFID is not prioritising its investments based on its comparative advantage relative to other development actors. The current strategy correctly identifies that prioritisation should occur at the country level. The inclusive growth diagnostic is an important step in this direction. The first round of diagnostics, however, did not do enough to push country offices to make strategic choices. We saw some evidence, particularly in Tanzania, that investments were spread too widely for strategic impact. While a period of experimentation may be necessary in some contexts to identify what works, DFID should move as quickly as it can towards more focused investment in specific sectors, value chains or issues.
The Economic Development Strategy recognises the importance of the state in driving economic transformation and calls for a politically smart approach to economic development. We welcome this focus on the political dimension of economic transformation. Politically smart programming should be part of DFID’s comparative advantage in this area. While political economy analysis forms part of DFID’s diagnostic work, it was not a strong feature of the portfolios we reviewed. In our case study countries, DFID had identified areas where it hoped to influence government policy. However, several stakeholders in Zambia were concerned that DFID is too detached from government to be influential. We therefore welcome the commitment in the Economic Development Strategy to a stronger focus on the political and institutional constraints on economic transformation.
The strategy makes a clear statement on the importance of economic inclusion. Looking across the portfolio, we see three main strands to DFID’s approach to inclusion: supporting mass job creation through economic transformation; promoting income growth for the poor in existing livelihood areas; and ensuring that particular social groups (women and girls, youth, people with disabilities) are reached through DFID programming. At the country level, we found that country portfolios had a strong focus on the rural poor (the second form of inclusion). Most programmes did not target particular social groups, although there is increased attention to women’s economic empowerment in more recent programmes. Although the strategy makes a clear statement about the importance of providing improved jobs for the poorest, most DFID programmes in our sample are currently focused on the quantity rather than the quality of jobs created.
Overall, we welcome DFID’s increased ambition towards economic transformation, and we dind that the new strategy sets out some good foundations, including politically smart approaches, context-specific programming and economic inclusion. While there are substantial challenges ahead in implementing these commitments, we dind the approach to be a relevant and credible one, meriting a green-amber score.
Conclusions and recommendations
We find that DFID has taken a structured and considered approach to building up the learning required for a more ambitious economic development portfolio, meriting an overall green-amber score. A number of the concerns we raised in past ICAI reports have been addressed, but others remain outstanding. We have made recommendations in a number of areas where we believe the portfolio could be improved.
Recommendation 1
DFID’s diagnostic and planning tools should more clearly support and encourage country offices to prioritise and concentrate their investments into areas with the greatest potential for DFID to contribute to transformative growth.
Recommendation 2
DFID should provide more guidance on how to build a portfolio that balances investments in long-term structural change and job creation with programming to increase incomes for the poor in existing livelihood areas, taking into consideration the time required for economic transformation in each country context.
Recommendation 3
Recognising the centrality of the state to economic transformation alongside the private sector, DFID should prioritise learning on how to combine politically smart and technically sound approaches to economic development.
Recommendation 4
To meet the commitments in its Economic Development Strategy and drawing on broader learning on inclusion, DFID should ensure that, in each of its partner countries, opportunities for addressing the exclusion of women, young people and marginalised groups are identified and built into programme designs and results frameworks wherever feasible, and that distributional impacts (whether intended or unintended) of its programming are routinely monitored and assessed.
» Read the full report online or download the document here (PDF).
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We’re doing good work, Chinese companies in Kenya say
Large Chinese companies operating in Kenya want the public to know that they are doing good, operate on principles and want to help Kenyans and be model partners for communities.
That was the message from the launch last Wednesday of a Chinese Enterprises in Kenya corporate social responsibility report by the Kenya China Economic and Trade Association (KCETA).
China’s ambassador to Kenya, Dr. Liu Xianfa, said this was the first such report ever commissioned by a group of Chinese companies operating in any country in the world.
He added that a World Bank report had stated Chinese companies operating in Kenya have an average of 360 employees, compared to 147 for other foreign companies here, and that media “should tell Kenyans and the world about female drivers on the standard gauge railway (SGR) trains”.
The KCETA report highlights the efforts of 73 large companies to achieve partnership milestones with Kenyans. They include cultivating local talent and management, transferring technology, responsible business practices and working with communities.
Not harming the environment or wildlife, such as the way the Standard Gauge Railway built bridges and tunnels to mitigate against trains encountering wildlife in the parks, is also an important part of their efforts.
There is another angle to this. Unlike historical foreign relationships that young Kenyans only read about in school textbooks, such as Kenya’s foreign policy engagements with Britain and the United States or South Africa and Russia, this history is being made right now.
Sports stadiums in the eighties
The KCETA report notes that China is now Kenya’s largest trading partner and while the first Chinese enterprises came here to build sports stadiums in the 1980s, Chinese enterprises are now contracted for over 50 per cent of the infrastructure projects in Kenya.
The enterprises are also increasing their influence, transforming from contractors to investors and from constructors to operators.
The 2017 Economic Survey notes that Kenya now owes China Sh313 billion in debt to be repaid, and Kenya imports Sh337 billion from China but only exports Sh10 billion back. The relationship is already skewed, and is going to get even more so unless local companies here start to readjust.
The ambassador said that at the recent Belt and Road Summit, China and Kenya decided to upgrade their bilateral relationship to a comprehensive strategic partnership
But the imbalance is not sustainable and Chinese companies, with their government, seem to be becoming the diplomats who explain how they are integrating positively in a win-win way for Kenya's economy, not just China's.
Yocean Group
So this is a new phase of Chinese companies in Kenya, showing they have had a massive impact.
Wu Yi and other road companies have built the Thika Highway and many cross-country highways between Mombasa and Marsabit. Now China Road and Bridge Company has built the Standard Gauge Railway, infrastructure that will transform rural Kenya and local trade.
These projects have generated thousands of jobs and dozens of local subcontracts in many projects. Another company here, Yocean Group, started out by repairing Kenya electricity transformers when they broke down. Now Yocean designs and builds transformers here in Kenya.
Notice for the report had been signalled at a separate media briefing, when Huawei Kenya explained their zeal to excel in the world of communications and that they try to combat the impression that Chinese products equate with low quality. Huawei was the largest filer of patents in the world in 2015.
Huawei powers phone networks for Safaricom and Telkom Kenya's telephone network, which has improved service and coverage as they supply affordable smartphones.
» Download: 2017 Chinese Enterprises in Kenya Social Responsibility Report (PDF, 5.05 MB)
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Are Chinese investors in SGR project neo-colonial predators?
Chinese investors in Kenya's standard gauge railway (SGR) project generally responded fairly to challenges, and should not be regarded as “neo-colonial predators,” a study by US-based researchers has found.
The Kenyan government and the country's political culture are seen, in contrast, as the source of many of the problems and conflicts that arose during construction of the Nairobi-Mombasa rail line.
Government decisions on the planning, financing and contracting of the SGR “were made with little concern for economic benefits or for maintaining accountability to the public at large,” says the study published on Monday by the Washington-based China-Africa Research Initiative.
It is affiliated with the Johns Hopkins University School of Advanced International Studies.
Concerns
“In most places, the ethnic and neo-patrimonial political culture is behind the controversies and the occasional violence,” the assessment states. “This is compounded by a deeply entrenched problem of corruption, rent-seeking and nepotism.”
Officials of the Chinese Road and Bridge Corporation, the builder of the Sh327 billion railway, “made a visible effort to set up mechanisms to help them engage with local communities and address their concerns,” says the 33-page working paper.
The Chinese corporation hired liaison officers and established a vocational training facility. “But the company has demonstrated less flexibility on the main contract provisions, explained in part by the Kenyan government’s pressure to finish construction on time and within budget,” the paper adds.
Unilateral decision
The study is entitled “African Politics Meets Chinese Engineers: The Chinese-built Standard Gauge Railway Project in Kenya and East Africa.”
The authors are Dr Uwe Wissenbach, an official with the European Union's European External Action Service, and Yuan Wang, holder of a degree from Harvard University's Kennedy School who has worked in China and Kenya.
Dr Wissenbach and Ms Wang reviewed project documents and conducted what they say were “in-depth interviews” during three visits to SGR construction sites in 2014 and 2015.
The contract for initial maintenance and operation of the SGR was awarded to the China Communications Construction Company (CCCC) “without a tender, which was apparently made possible by a unilateral decision by the Kenyan president,” the authors write.
Political elites
“The award of the contract to CCCC is not surprising,” they add. “Without a new Chinese credit line, financing costs would have had to be found from the national budget in an election year.”
Kenyan political elites are widely perceived as having “pocketed large sums as kickbacks from the SGR,” the paper observes.
“Controversies surrounding the planning, financing and implementation of the SGR, albeit rooted in the Kenyan political culture, in turn reflect negatively on Chinese developers who are often seen as colluding with corrupt politicians.”
Chinese employees sometimes encountered hostility from local communities, the authors report. They suggest, however, that this may have been due to insufficient Kenyan government budget allocations for resettlement and compensation related to the project.
“In general terms,” the paper states, “local communities were often not informed about the SGR.”
Local labour
Chinese overseers of SGR construction hired large numbers of Kenyans to work on the project, Dr Wissenbach and Ms Wang point out.
They cite figures compiled by the China Road and Bridge Corporation indicating that Chinese management and technical personnel numbered 2,000, while nearly 20,000 Kenyans were employed as ordinary labourers, technical workers and managers.
Steel parts such as the rails, railway engines and construction machines were imported from China, as were “many other products that cannot currently be produced in Kenya,” the report notes.
China agreed to reverse a previous decision to import cement for the project after Kenyan cement manufacturers successfully pressured President Uhuru Kenyatta to ensure supplies would come from local sources, the working paper says.
Bulging budgets
Some construction services, as well as the telecom, banking and additional service aspects of the project, were also sourced locally. But the Chinese corporation “had to cope with frequent lack of capacity among local providers,” the paper notes.
As a broad finding, the authors warn that unless Kenya overhauls its governance framework on issues cited in their report, “infrastructure projects risk overshooting initial budgets and reducing the willingness of neighbouring countries or foreign investors to engage in future initiatives in Kenya.”
This observation “counters widespread rhetoric that cites China's assumed predatory behaviour as to blame for many problems,” Dr Wissenbach and Ms Wang comment.
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Shifting Ghana’s competitiveness into a higher gear: Ghana economic update 2017
This edition of the Ghana Economic Update is the second edition of the annual series on Ghana’s economic prospects. Every issue includes both a broad overview of the country’s macroeconomic, political, and structural dynamics, and a section dedicated to one particular issue. This update focuses on Ghana’s international competitiveness and the policies that will help it to shift it into a higher gear.
Overview
Ghana missed its 2016 fiscal target by a large margin, reversing the progress made in fiscal consolidation in 2015. The fiscal deficit rose from 6.3 percent of GDP in 2015 to an estimated 8.7 percent in 2016, which was significantly higher than the target of 5.3 percent. The fiscal slippage was due to revenue shortfall and to overspending ahead of the December 2016 elections. This worsened an already exacerbated debt situation, as Ghana’s public debt stock reached US$29.2 billion, or 73.1 percent of GDP, in 2016, with significant exchange rate risks due to its high external debt (40.1 percent of GDP) and liquidity and rollover risks from its high short-term debt (11.9 percent of GDP). In addition to the fiscal deficit, new arrears of GH¢5.1 billion (3 percent of GDP) were accumulated during 2016, pushing the stock of domestic arrears to an estimated GH¢7 billion (4 percent of GDP). These additional fiscal liabilities were accumulated while the Government was still grappling with a large stock of financial deficit in the state-owned energy sector.
The 2017 budget announced by Ghana’s newly elected government aims to achieve gradual fiscal consolidation in 2017 and a sharper expenditure adjustment in 2018. The budget target for the 2017 fiscal year is set at 6.5 percent of GDP and is supported by an ambitious revenue increase, including from oil revenue, of 2.1 percent of GDP. Tax revenue is projected to rise because of a reduction in import exemptions, improved tax compliance, and overall increased economic activity. Public expenditures are expected to be slightly higher in 2017, driven mainly by the higher allowance made for the clearance of arrears and projected higher interest payments. Hence, the projected rebound in economic growth and revenues will be essential to achieve the targeted fiscal balance.
The medium-term growth outlook is positive and mainly driven by the expected rise in oil prices and increase in oil production. Economic growth is projected to rebound to 6.1 percent in 2017, as the Tweneboa, Enyenra, Ntomme (TEN) oil field has its first full year of operation, and as oil and gas production in the Sankofa field starts later in the year. Growth in the services sector is expected to remain robust in 2017, supported by improved and more stable power supply. Nevertheless, reduced government consumption and lower capital spending under the planned fiscal consolidation, along with weakness in cocoa prices, could hinder non-oil sector growth. The growth rate is forecasted to remain around 6 to 7 percent in the medium term.
However, Ghana’s economic prospects depends decidedly on whether the new government can restore fiscal discipline and regain investor confidence. Fiscal discipline and transparency will be needed to achieve macroeconomic stability, debt management and market credibility. Restoring the fiscal consolidation process is essential for ensuring Ghana’s public debt sustainability. To curb the accumulation of new debt, the Government will need to achieve a sufficient primary fiscal surplus. Improving macroeconomic conditions should also reduce financing costs over the medium term.
A difficult external environment may complicate the stabilization process. Ghana’s medium-term growth prospects are still subject to external risks, including a further deterioration of commodity prices. Recent terms-of-trade shocks have highlighted the country’s macroeconomic vulnerabilities. They have also underscored the urgency of building fiscal buffers and promoting economic diversification to improve the economy’s resilience to further terms-of-trade shocks and help to mitigate the negative impact of an anticipated decline in oil production after 2021. Stronger efforts are needed to unleash the private sector’s potential outside the extractive sector to enhance Ghana’s economic resilience.
Ghana’s business environment and competitiveness fall short of their potential. Ghana has been generally stagnant or declining in areas of competitiveness and business reform over the last few years. The World Bank’s Doing Business Report and the Word Economic Forum’s Global Competitiveness Index (GCI) tell a similar story of Ghana’s relatively good performance against the West Africa average but a significant drop compared to its own performance 8 years ago or benchmarked against comparator countries. Although Ghana is one of the regional leaders in overall Doing Business rankings, its inability to sustain reforms severely affects its competitiveness globally.
The country’s macroeconomic challenges have had a significant impact on the private sector’s competitiveness. Over the past five years, the primary constraints to growth within Ghana’s private sector have remained consistent, with low access to credit, unreliable power supply and high utility tariffs being the consistent of the top five constraints. The private sector performance was further weakened by lower key export commodity prices and a severe energy crisis in 2014. In the last 3 years, energy rationing, high inflation, high borrowing cost, energy costs and higher value-added taxes (VAT) have increasingly crowded out the private sector.
Despite a focus on private sector development Ghana’s national development strategy, international as well as national surveys indicate significant challenges to private sector growth. The complex challenges faced by the private sector in Ghana are exasperated by the lack of an effective dialogue between the private and public sectors on how best to prioritize dynamic constraints, identify practical solutions and monitor the progress of reforms. Low levels of coordination and inclusiveness in the policymaking process have limited opportunities to demand that the Government undertake the types of wider growth-supporting reforms that the private sector needs to become and remain competitive in the global economy.
The success of the business regulation reform relies on establishing dialogue mechanisms with clear rules of accountability and systematic monitoring of progress. Inviting inputs on priority reforms from private sector stakeholders will be essential to build confidence and trust in the public-private dialogue.
Political commitment to the business reform agenda is a first-order priority. A positive early step would be to reenergize Ghana’s dialogue and reform mechanisms for private sector development; this would be widely welcomed by the private sector. Ghana also needs to develop the ability to prioritize, design, plan and implement business reform programs based on broad stakeholder engagement.
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29th AU Summit kicks off with the 34th Session of the Permanent Representative Committee
The 29th African Union Summit opened on Tuesday, 27 June 2017, at the African Union (AU) Headquarters in Addis Ababa, Ethiopia under the theme of “Harnessing the Demographic Dividend through Investments in the Youth”, with the Thirty Fourth (34th) Ordinary Session of the Permanent Representatives’ Committee (PRC).
The opening ceremony took place in the presence of the Chairperson of the AU Commission, Deputy Chairperson, AUC Commissioners, all the Ambassadors of the 55 African Union member states based in Addis Ababa, representatives from the diplomatic corps, the international community, civil society, private sector and invited guests among others.
In his first address to the PRC as Chairperson of the AUC, H.E. Mr. Moussa Faki Mahamat, emphasized on the relations between the PRC and the new Commission. “Dealing with emergencies, and trying to identify the strategic lines of our action, we have acquired a serious awareness of the need to change certain crucial aspects of the Commission's working methods. The result is the necessity of addressing the relations between our two organs,” he added.
The Chairperson reaffirmed the Commission’s commitment to work with the PRC, in order to give full measure to the desirable cooperation and synergy between the two institutions. “We have a lot to achieve with limited means,” he said, adding, “our success depends on the coherence of our actions and our commitments, whatever the level of our responsibilities”.
The Chairperson highlighted the main issues to be considered during the PRC meeting, which include: Reform of the African Union, for which the follow-up of the implementation, in accordance with the July 2016 and January 2017 summit decisions, has been jointly entrusted to the Presidents Paul Kagame of Rwanda, Idriss Deby Itno of Chad and Alpha Conde of Guinea. This is in addition to migration, peace and security, and implementation of the decision of the 0.2% levy on imports of eligible products in order to ensure in predictable, sustainable and equitable financing of the AU.
H.E. Mr. Mahamat also highlighted the partnerships of the AU, noting “our strategic partnerships merit a new examination in order to make them more relevant to the requirements of our Agenda 2063, and to the pillars of the reform of our Union”. He called on the PRC to finalize the study on the evaluation of the AU strategic partnerships and to present it to the deliberative bodies.
In her remarks during the opening ceremony, H.E. Mrs. Fatoumata Kaba Sidibe, Chairperson of the PRC and Ambassador of the Republic of Guinea, expressed appreciation for the efforts already made by the AUC Chairperson in the search for solutions to the crises and conflicts on the continent.
She noted, “upon his entry into office, he undertook missions to areas of tension as well as to the United Nations to find durable solutions to these conflicts. The mission to New York, during which AU-UN cooperation was evaluated and culminated in an agreement, will undoubtedly strengthen the AU cooperation with these institutions”.
She called on the PRC members to be comprehensive and clear when taking decisions and recommendations on the various reports, so as to facilitate the work of the policy organs, noting that the PRC report will take the form of draft decisions on matters relating to strategic issues, the AU theme of this year, and peace and security in Africa.
For three days, the 34th Session of the PRC will consider the reports of the various activities of their sub-committees, reports of the AU organs and their activities. The PRC will further exchange views on the draft agenda, as well as the draft Decisions and Declarations of the 31st Ordinary Session of the Executive Council, and those of the 29th AU Assembly, before adopting its report.
The PRC session is one of three statutory meetings of the AU Summit, which include the 31st Ordinary Session of the Executive Council, and the 29th AU Assembly.
This summit is historic, as it is the first summit with the full participation of all the fifty five African countries, after the admission of the Kingdom of Morocco during the 28th AU Assembly in January this year. It is also the first summit for the new Commission of the AU, which was elected in Jan 2017.
The 34th Ordinary Session of the PRC will conclude on 29th June 2017, with the adoption of its report to be submitted to the 31st Ordinary Session of the Executive Council scheduled to hold from 30 June to 1 July 2017.
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tralac’s Daily News Selection
Featured infographic, shared via @LopesInsights: AU reform proposals in one graph (Institute for Peace and Security Studies)
Starting today, in Addis: The Permanent Representative Committee meeting is the first statutory meeting of the 29th Ordinary Session of the Summit of the AU (27 June to 4 July). The PRC meeting will prepare the agenda of the AU Summit with appropriate recommendations for consideration by the Executive Council (30 June – 1 July).
African Ministers of Trade agree on level of ambition of 90% for trade in goods (Rwanda News Agency)
During discussions in Niamey, RNA’s André Gakwaya had an interview with the Commissioner of Trade and Industry at the African Union, Albert M. Muchanga talking about trade on the continent. RNA: The eight countries accepted the agreement? AM: No, the level of ambition is 90 %, that’s why we start from the liberalization process but there are eight countries who feel like we should have started at 85 %. And they are made their reservations. Now, we work with on this negotiation is the principal of variable geometry, but that we mean, countries which are not in the position to join the process can be given time for adjustments, so they can be given time to join us later. RNA: Is there a time frame for those countries to join? AM: That’s a sovereign decision, they’ll consider the possibilities and when they are ready, then they can be part of the negotiations. As I said, we’re in the negotiation, but we are going to submit the legal text to the ministers on the 1st of December. We are meeting from 30th Nov-1st Dec. But between now and December, there are going to be several meetings of negotiations and senior official. Everything must be finalized by Dec 31st this year.
The jobs gap: Making inclusive growth work in Africa (Tony Blair Insitute for Global Change)
The Jobs Gap (pdf) draws on our work in ten African countries over the past decade advising governments on how to make market-based sector development work in practice. The paper also provides four essential elements and a roadmap for governments and their international partners seeking to foster inclusive growth and create the jobs needed by Africa’s growing population. These are:
African politics meets Chinese engineers: The Chinese-built Standard Gauge Railway Project in Kenya and East Africa (pdf, SAIS CARI)
This paper examines the way local Kenyan politics have affected implementation of the Standard Gauge Railway. It points to initial and immediate development opportunities for local content, jobs, and skills while arguing for a more rigorous assessment of the SGR’s economic development potential. Unless Kenya overhauls its governance framework on the issues outlined in this paper, infrastructure projects risk overshooting initial budgets and reducing the willingness of neighboring countries or foreign investors to engage in future initiatives in Kenya. [The analysts: Uwe Wissenbach, Yuan Wang], [Will SGR deliver on cost-cutting goal?]
South Africa: Musina Intermodal Terminal launched (dti)
The terminal, which is aimed at the containerised cargo market and the transportation of mineral ores such as coal, iron ore, chrome, copper and sulphur, is a stepping stone to bigger projects within and around the newly-designated Musina-Makhado SEZ. “The SEZ will significantly increase industrial production in the region. This will include steel and related inputs for producing steel and stainless steel, as well as increasing mining development and production. The SEZ will thus increase trade between South Africa and its neighbours. Regional integration will also be deepened,” said SA’s Minister of Trade and Industry, Dr Rob Davies. He stated that the project was designed to improve trade which is key to the regional integration agenda. According to him, it further speaks to the goals of moving up the value chain and industrialisation of the country. Davies also announced that the SADC tariff agreement with the east corridor would be finalised in July 2017 and said it was going to present new trading opportunities and open new markets for trading.
SA-DRC Bi-National Commission: a push for strengthened trade relations
South Africa and the DRC have reaffirmed their willingness to improve and strengthen their economic relations. This will be done through facilitating trade and removing all impediments constraining bilateral trade and investment. As such, President Jacob Zuma and President Joseph Kabila’s treaty on the avoidance of double taxation should be implemented soon as all legal requirements have been fulfilled. The BNC also saw the signing of the MoU between the Cross Border Road Transport Agency and the Office for the Management of Multimodal Freight. [Full text: BNC communiqué], [dti, KNCCI seminar: Exploring trade and investment opportunities between Kenya and SA]
Nigeria, Mexico trade hits $600m in 14 years (Business Day)
Mexican Embassy, Deputy Head of Mission, Rodrigo Tenorio, said the volume of trade between Nigeria and Mexico has grown exponentially from $166.5m in 2012 to $600m in 2016. He noted that Mexico sees Nigeria as a natural spring board to stand for the entire Africa and main goal is to make sure that Nigeria is known as number one economy in Africa. He said that the major challenge in the relationship between the two countries was that they did not know each other well. The Vice President of NMCCI, Chukwuemeka Elele, said that the Chamber was launched in December 2014 as part of efforts to further strengthen the bilateral trade relations, between the two countries. He said that the chamber had organised its first trade mission to Mexico in May 2015 with 35 Nigerian entrepreneurs participating. The Nigerian Investment Promotion Commission, Nigerian Export Promotion Council and the Nigerian Export-Import Bank also participated in the trade mission. [Nigeria raises $300m from its first ever diaspora bond]
Tanzania: Govt bans sale of maize outside the country (IPPMedia)
Prime Minister Kassim Majaliwa yesterday banned the sale of maize outside the country, saying export licences will from now on be sparingly issued on maize flour only. Premier Majaliwa warned those who export food produce for trade, saying stern measures will be taken against them since the country doesn’t have enough food. According to him, there had been increased cases of exporting food especially in borders of Tarakea, Horororo and Mwanga, saying that more measures should be taken to curb the incidents. He also ordered top police officials to take appropriate measures against policemen who facilitate the trade at the borders. [Govt impounds over 160 tonnes of maize en route to Kenya]
Three-day timeframe for investors’ permits in the pipeline (Daily News)
TIC Executive Director Geoffrey Mwambe made the revelation over the weekend in Dar es Salaam, hinting that by July next year, the permits will be issued within a day. He was speaking during a joint meeting with all public entities responsible for investment activities. According to latest figures, TIC registered a total of 242 projects worth $2bn between July 2016 and March 2017. Of these, 105 (43%) are Foreign Direct Investment sourced from China, India, Kenya, UK, Mauritius, Oman, UAE, Canada and the US, while 76 are joint ventures between local investors and their foreign counterparts.
The Third COMESA Annual Research Forum: implementation of COMESA University high on the agenda
Anchored under the theme: ‘Boosting intra-African trade through REcs: perspectives from COMESA Regional Integration Programme’, the forum (26-30 June, Kigali) seeks to strengthen the participation of governments and key stakeholders in the regional integration agenda by sharing and discussing research findings. Further, it seeks to create a common understanding on the region’s research priorities for COMESA as the largest REC in Africa. The other prime topic of the Forum is the implementation of the COMESA Virtual University of Regional Integration. The teaching programme is poised to start in September this year with the admission of the pioneer students at the Kenyatta University of Kenya for a Masters of Regional Integration. A total of 22 universities from COMESA Member States are collaborating in this programme and also participated in the review of 30 teaching modules in March this year. [60 experts attend the 3rd COMESA Annual Research Forum]
SADC ES reinvigorates cooperation with SADC-CNGO (SADC)
They deliberated on the need to meet more frequently to discuss, among other things, the operationalisation of the SADC Regional Poverty Observatory; the main elements of the SADC C-NGO campaign – the SADC WE WANT; roll-out of the SADC Monitoring and Evaluation system; implementation of the MoU and Common Plan of Action, as well as C-NGO’s contribution to the implementation of the conclusions of the Ministerial Retreat, to mention a few. Meanwhile, the SADC Secretariat continues to engage SADC Member States in sessions to explain the main features and objectives of the draft framework of engagement between SADC and non-state stakeholders. SADC C-NGO urged the two sides to involve civil society in policy-making at all levels and reinvigorate the overall cooperation between civil society and SADC policy organs. As a starting point, CNGO invited SADC to the CNGO Forum scheduled for 14th August, 2017.
Chokepoints and vulnerabilities in global food trade (pdf, Chatham House)
This report offers a first-of-its-kind analysis of chokepoints in the global food system, combining trade data from the Chatham House Resource Trade Database with a purpose-built model to map bilateral commodity flows on to trade routes. It identifies 14 chokepoints that are critical to global food security. Among low-income food-deficit countries (LIFDCs), a cluster of African countries have high exposure to maritime chokepoints with no alternative routes [Burundi, Djibouti, Eritrea, Ethiopia, Kenya, Liberia, Mozambique, Rwanda, Sudan, Tanzania, Uganda]. Many LIFDCs are also dependent on US exports and thus heavily exposed to US inland and coastal chokepoints. For example, Honduras sources 77% of its maize imports and 88% of its wheat imports from the US, and in Ethiopia the shares are 36% and 27%. [The analysts: Rob Bailey, Laura Wellesley]
Ghana public expenditure review: Fiscal consolidation to accelerate growth and support inclusive development (World Bank)
Despite the key role of the extractive industries, recent growth has been relatively inclusive, and Ghana achieved its Millennium Development Goal of halving the poverty rate by 2015. However, macroeconomic conditions have deteriorated since 2012, giving rise to substantial domestic and external imbalances. Although external shocks have underscored Ghana’s vulnerability to global commodity and financial markets, the recurring nature of its imbalances reflects deeper structural deficiencies in its macroeconomic policies and public financial management framework. A heavy focus on commodity exports has accelerated Ghana’s recent growth, but the country’s economic outlook increasingly hinges on a narrow range of volatile commodity prices.
Balancing financial stability, innovation, and economic growth: new WEF White Paper
In an effort to understand better the implications of the Fourth Industrial Revolution – a technology-led transformation that is fundamentally altering the way people work, live and relate to one another – the World Economic Forum has prioritized a review of the financial system through the launch of a new initiative: Balancing Financial Stability, Innovation, and Economic Growth. As part of this initiative, the Forum has held a series of roundtable discussions and completed interviews with industry executives and experts to examine the technological transformation taking place in financial services. This White Paper (pdf) provides a summary of findings identified during the ongoing discussions and interviews, which at a very high level can be condensed in the following four points:
Today’s Quick Links: Zimbabwe: Gideon Gono appointed as SEZ Board chair Egypt officially joins Trade Facilitation Agreement Reconsider stand on EPA – EU envoy tells Nigeria Madagascar is Afreximbank’s newest participating state World Bank: DRC diagnostic of water, sanitation, hygiene, and poverty OECD: Summary of discussions of Freedom of Investment Roundtable, 17 October 2016 (pdf) |
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Infographic on AU reform: Hard-pressed to embrace change
Since even before the first waves of independence, the African continent was already striving toward a peaceful, developed and politically integrated continent founded on the common past of its people and their shared destiny.
To this end, the Organization for African Unity (OAU), later the African Union (AU), was created with the aim to facilitating the path to these aspirations. However, different evaluations of the continental organization questions the body’s abilities to efficiently and effectively deliver on those aspirations. At a retreat organized by the AU Commission for the Heads of State in January 2017, Rwandan president Paul Kagame presented a set of recommendations to resolve the institutional challenges that often impede the AU from meeting its goals.
Titled “The Imperative to Strengthen our Union: Report on the Proposed Recommendations for the Institutional Reform of the African Union”, the report noted that the continent is in need of an efficient continental organization that can fulfill its mandate. President Kagame stressed that an unfit AU has made Africa ill-prepared to adequately respond to global events. The inability to implement decisions, inadequate funding, an overstuffed AU Commission, a weak Pan-African Parliament, lack of clear priorities and weak linkages between the AU and Regional Economic Communities were listed as challenges that hindered the progress of the AU. These challenges, the report stated, resulted in a “dysfunctional organization in which member states see limited value, global partners find little credibility, and citizens have no trust”.
The report also suggested that leaders will need to engage on four action areas to strengthen the AU:
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Focus on key priorities with continental scope.
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Realign institutions to deliver continental priorities.
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Manage the AU efficiently at both political and operational levels.
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Provide sustainable finance from resources within the continent.
Each action area enclosed detailed recommendations to serve as guidelines in the reform.
The report further stressed that the choice to change and to provide citizens with a continent in which they can thrive ultimately lies in the decisions of the leaders. “Reform does not start with the Commission. It starts and ends with the leaders, who must set the right expectations and tempo. The effectiveness of the African Union, after all, is our business and responsibility,” the report stated.
President Kagame's report signaled the third effort by leaders of the continent to reform the AU. Previously, the 2007 Adedeji report and the 2016 Mekelle report on the AU's organs and institutions presented detailed studies of the challenges faced by the AU and provided recommendations on how to resolve them. However, lack of willingness and ability left the reports unimplemented and thus the challenges unresolved.
The Kagame report acknowledged this gap in implementation and called upon leaders in the continent to follow up on decisions taken at summits or otherwise risk implying that their decisions do not really matter. “We are indeed hard-pressed to embrace change and in fact, seen from the vantage point of the present, we are already too late. We cannot avoid reckoning with the hard truth of previous failures; otherwise the same mistakes will keep coming back. But acknowledging where we have fallen short does not mean being bound by it. The only mistake would be to allow the situation to become cyclical,“ President Kagame further added.
Downloads
Report on the Proposed Recommendations for the Institutional Reform of the African Union (PDF)