Search News Results
New ACP policy targets transformation of agricultural commodities sector
A new policy approach to commodities is expected to focus efforts by the African, Caribbean, and Pacific (ACP) Group of States Secretariat and its partners, in order to reap maximum impact in the transformation of the agricultural commodities sector in ACP regions.
The document, entitled Investment and Transformation in the ACP Agriculture Sector: A new approach to ACP Group support for the development of agriculture value chains, was endorsed by the ACP Council of Ministers during its 105th session in May. It was presented to partners this week in Brussels, at the ACP Secretariat.
Agricultural commodities represent a key driving force for private sector development in ACP states, accounting for approximately 90% of total exports. Moreover, the agricultural sector continues to employ the majority of the working population in ACP countries, and contributes an average of 20% of GDP (ranging from over 50% in Chad to 0.8% in the Caribbean).
In fact, the World Bank believes that grown in the agricultural sector is more than twice as likely than any other sector to be effective at reducing poverty.
The new approach focuses on value chain development, targeting small producers including youth and women, as well as other value chain operators, and connecting them to the market. The Approach advocates for investment in agriculture, fisheries and livestock farming as well as integration of the agro-industrial sector into national, regional, and international value chains, thereby attaining the goals employment and wealth creation.
It is based on four (4) Pillars namely: Finance, Capacity Building, Trade and Investment and Climate Change. Finance is the main sector of concentration for intra-ACP intervention as it is the main constraint that weighs heavily on ACP farms and prevents the modernisation of the sector.
The New Approach confirms the role of the Secretariat as a facilitator not only of implementation of interventions, but also of knowledge sharing and lessons learning.
The validation of this policy document will now facilitate mobilisation of resources to support development of value chains in ACP Countries and regions, based on modalities that are being finalized.
It is proposed that the New policy be reviewed every three (3) years, including any modifications of coverage.
Related News
Urgent policies required for inclusive tourism growth, intra-Africa trade and visa openness, says Africa Tourism Monitor
More than ever before, African countries need to craft economic and trade policies that will foster inclusive and green tourism growth, intra-Africa trade, and contribute to visa openness for a borderless and interconnected continent, according to the latest edition of the Africa Tourism Monitor.
The report, just released by the African Development Bank, stresses why it is now more important than ever to draw on the collaboration and expertise of public and private sector practitioners to foster a resilient travel and tourism sector.
“Let us help Africans to move freely and make Africa a more open, prosperous and truly connected continent,” Akinwumi Adesina, President of the African Development Bank (AfDB), advocated in the report.
The Africa Tourism Monitor is a yearly research publication by the AfDB that grew out of a three-year collaboration with New York University (NYU) Africa House and the Africa Travel Association (ATA). This latest edition focuses on “Sustainable Tourism through Innovation, Entrepreneurship, and Technology”.
The African Union Commission’s Agenda 2063 proposes the creation of an African passport and an end to visa requirements for all African citizens. Specifically, visa openness is seen as having great potentials to improve interconnectivity, boost economic growth and trade, and spur investment, bringing massive benefits for the travel and tourism industry.
Visa openness also harmonizes with AfDB’s High 5s ‘Integrate Africa’ agenda, which seeks to make Africa more open, prosperous and interconnected.
“It is clear that tourism is one of Africa’s most promising sectors in terms of development, and represents a major opportunity to foster inclusive development, increase the region’s participation in the global economy, and generate revenues for investment in other activities, including environmental and cultural preservation,” Taleb Rifai, Secretary-General, United Nations World Tourism Organization (UNWTO), said in the report.
To give impetus to this new direction, the United Nations General Assembly declared 2017 the International Year of Sustainable Tourism for Development.
“With this renewed global focus on sustainable tourism, now is the time for all African countries to craft economic and trade policies that will foster inclusive and green tourism growth, intra-Africa trade, and contribute to visa openness for a borderless and interconnected continent,” an extract from the Africa Tourism Monitor stated.
The report called attention to the latest data from 2015, which globally saw the highest level of tourism arrivals to date, but noted that Africa’s international tourism receipts also fell to US $39.2 billion from US $43.3 billion during the same period.
“A more positive outcome was witnessed in the employment sector for Africa, which grew in line with global trends. Direct travel and tourism employment in Africa in 2015 totaled 9.1 million, rising to 21.9 million jobs if we include direct, indirect and induced employment. In light of the tourism decline in Africa in 2015, it is now more important than ever to draw on the collaboration and expertise of public and private sector practitioners to foster a resilient travel and tourism sector.”
In response to this, the AfDB, in partnership with McKinsey & Company and the World Economic Forum (WEF) Global Agenda Council on Africa, has developed the Africa Visa Openness Index, which it launched in February 2016.
“Interconnectivity requires more than common passports and more open borders. What is equally important is investment in Africa’s infrastructure. The AfDB has for many years highlighted infrastructure development as one of its focal priorities to facilitate accessibility and trade across the continent,” said Charles Leyeka Lufumpa, Director of Statistics at the African Development Bank Group.
Indeed, the Bank’s assistance has ranged from modernizing air transport systems in Morocco to supporting the Nairobi-Addis road corridor to improve access between Kenya and Ethiopia, to cite just two examples. The AfDB also seeks, through the Africa Tourism Monitor in particular, to provide a forum for all stakeholders in Africa’s tourism and travel industry to come together and present new ideas and initiatives that can revolutionize the sector and make it an engine of progress for Africa’s socioeconomic transformation.
“The facts, figures, articles, and case studies in this issue illustrate how sustainable travel and tourism involve local populations and community stakeholders to engage and thrive in this dynamic sector in Africa,” Yaw Nyarko, Director of New York University Africa House, said in a preface to the report.
The African Development Bank (AfDB) in collaboration with New York University Africa House has also developed the “Africa Tourism Data Portal,” a user-friendly tool dedicated to providing professionals with access to tourism-related data from a range of international and national sources. This portal is part of the AfDB’s “Africa Information Highway” initiative aimed at improving data collection, management and dissemination in Africa.
Data from the report suggests that even with declining tourist arrivals, the employment figure for the tourism sector in Africa was strong in 2015, in line with world market trends.
Najib Balala, Cabinet Secretary of the Ministry of East Africa Affairs, Commerce, and Tourism, Republic of Kenya, described tourism as an international economic activity that many countries in the world depend on to anchor their Gross Domestic Products (GDP).
“Technology is key in driving the tourism sector and Kenya recently addressed the ease of travel through availing an e-visas facility. This has proved useful in addition to the availability of online information on the destination through the magical Kenya website and other social media channels,” she stressed.
The Africa Tourism Monitor also highlighted the place of Africa common passport as a catalyst to boost intra-Africa travel and trade.
In a CNBC Africa interview in September 2016, African billionaire businessman Aliko Dangote lamented his frustration with visa procurement in Africa: “Despite the size of our [Dangote] group, I need 38 visas to move around Africa. You go to a country that is looking for investments; that particular country will give you a run around just to get a visa. They are giving you visas as if it is a favor.”
It is well documented that strict visa regulation brings about differentiated negative socio-economic spin-offs. The share of intra-Africa total trade is very unfavorable when compared with other trading blocs. Intra-Africa trade is about 12%, slightly higher than Western Asia which stands at 9%. The rest of the intra-regional trade at the global level enjoys high volumes, with North America and the European Union trading within their blocs at 61% and 62%, respectively.
But the lack of free movement of people, goods and services on the continent impacts negatively on economic growth and job creation.
» Download: Africa Tourism Monitor 2016 (PDF)
Related News
BORDERLESS 2017: Optimizing trade opportunities – the role of trade facilitation
The 6th Borderless Alliance Annual Conference, dubbed BORDERLESS 2017, was held in Ouagadougou (Burkina Faso), on 10, 11 and 12 May 2017 on the theme: “Optimizing Trade Opportunities: The Role of Trade Facilitation”.
Organized by the executive secretariat of Borderless Alliance in collaboration with the Chamber of Commerce and Industry of Burkina Faso (CCI-BF) and the Burkinabe Shippers Council (CBC), the meeting was attended by 150 private and public sector players from 12 different countries, namely Benin, Burkina Faso, Côte d’Ivoire, Ghana, Mali, Nigeria, Togo, Senegal, Cameroon, Switzerland, the United Kingdom and Germany.
Technical and financial partners, namely GIZ, USAID, JICA, Global Alliance for Trade Facilitation, Regional and Subregional Organizations such as ECOWAS, UEMOA also took part in the meeting. Several sector ministries (Transport, Trade, Customs, Police and Gendarmerie) and companies from various activity sectors were also represented.
The meeting was held in plenary and organized in three panels:
-
The first Panel on the “Trade Facilitation Agreement: Opportunities and Challenges for West Africa”, provided an opportunity to present the reforms needed to simplify, harmonize and standardize commercial transaction procedures. Light was shed on the benefits of the agreement and its challenges for the private sector;
-
The second Panel brainstormed on the Promotion of Efficiency of Corridors and Borders in West Africa. Various modern approaches to making West African borders efficient have been evaluated with successful examples and steps taken in specific sectors. The greatest difficulties of landlocked countries were shared and deliberated on with a view to developing concrete measures;
-
Finally, the “Community Rules: trade facilitation tools for agricultural products”, constituted the focus of the third panel. The panel outlined Community regulations adopted with a view to achieving economic integration. Challenges of the private sector to better capitalize on the benefits of the ECOWAS CET and the ECOWAS Trade Liberalization Scheme (SLE) were discussed.
The exchanges gave rise to several concerns. The major ones are as follows:
-
Inadequate harmonization and coordination of trade facilitation initiatives in the sub region;
-
Multiple barriers and illicit practices;
-
Institutional deficit in managing facilitation issues, including the ineffectiveness of corridor management committees and facilitation committees in the sub region;
-
Low level of professionalization of transport operators and unsuitable means of transport;
-
Inadequate collaboration among border agencies;
-
Multiplicity of technical problems that negate the benefits of facilitation initiatives;
-
Multiplicity of tracking systems without possibility of interoperability;
-
Low involvement of key actors in the transport chain and trade in the implementation of regional facilitation measures;
-
Non-implementation of facilitation related protocols and regulations;
-
No concomitant and harmonized application of UEMOA Regulation 14 on weight and axle load control;
-
Inadequate political will in the application of Community texts;
-
Obstacles to free movement of approved products and optimal implementation of the ETLS;
-
Low involvement of the private sector in the implementation of regional measures; and
-
Weak organization of the private sector to defend its general interests in taking regional measures.
In the light of the said concerns, specific cross-cutting recommendations were formulated.
Major recommendations
Cross-sectional Recommendation:
- Identification of the role of each actor and involvement in the implementation of the Trade Facilitation Agreement.
Specific recommendations to:
1. Public Administration:
-
Promotion of initiatives to reduce transit time at borders;
-
Interconnection of Customs administrations’ computer systems;
-
Dematerialization of administrative procedures;
-
Continuation of initiatives to modernize customs procedures and tools;
-
Taking on board the socio-economic impacts of Community facilitation projects;
-
Harmonization of electronic transit monitoring systems in the countries of the region;
-
Implementation of the provisions of the Trade Facilitation Agreement and other regional measures;
-
Concomitant implementation of UEMOA Regulation 14 on weight, axle load and gauge control by all West African States;
-
Revamping of the institutional structures responsible for the management of transport corridors;
-
Taking on board the problems related to licensing means of transport;
-
Effective application of the certificate of origin rules;
-
Elimination of obstacles to free movement of approved products and the optimal implementation of regional measures, just like the TLS;
-
Integration of information and awareness-creation phases in the process of implementing Community measures; and
-
Improvement of the license issuing system.
2. Private sector:
-
Involvement of the private sector in the implementation of regional measures (ETLS ...), and
-
Better organization with a view to greater leverage on Community decisions.
3. Technical and Financial Partners:
- Partnering the States and private organizations in the implementation of Community texts and the facilitation of regional trade.
4. Single guarantors
- Implementation of the Single Inter-State Road Freight Guarantee of goods on the various corridors of the sub region.
5. Executive Secretariat of Borderless Alliance
-
Mobilization of resources to establish border information centres in all West African countries including ports;
-
Improving the development of statistical data on transparency at borders (transparency in terms of fraudulent and honest traders), which will promote the analysis of the real causes of the bad practices observed; and
-
Advocacy with the States to reduce road transit costs and delays.
At the end of the meeting, the Executive Secretariat of Borderless Alliance was mandated to monitor the implementation of the recommendations.
Additional presentations from the conference are available to download here.
Related News
tralac’s Daily News Selection
Profiled trade and regional integration conferences:
Digital Economy, trade and development (21 June, Stockholm)
5th Annual Secretary General’s Forum for Private Sector, Civil Society and Other Interest Groups (22-23 June, Bujumbura) on the theme: 15 Years of The EAC - towards a borderless community. This year’s forum will see the launching of Incubator for Integration and Development in East Africa (IIDEA) as one of the key events. IIDEA was developed as a joint initiative between the EAC Secretariat, Regional Dialogue Committee (RDC) and GIZ in order to demonstrate the tangible benefits of integration to citizens.
37th SADC Summit (19-20 August, Pretoria). The summit will be preceded by the Senior Officials’ Meeting on 11–14 August, the Ministerial Meeting on 16 August and the Double Troika on 18 August.
Association of African Central Banks: Ordinary Annual Meeting, Governors Symposium (12-16 August, Pretoria). At this annual meeting, the SARB will assume the chairmanship of the AACB. During our tenure as chair, we will continue to enhance cooperation among African central banks on cross-border banking supervision and payment systems, continental training on issues relating to banking supervision and regulation, and the collection of data needed to support bank supervisory activities.
African countries endorse ECA’s programme of work for 2018-2019
This follows the adjournment in March 2017 of the Bureau of the 10th Joint Annual Meetings of the African Union Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration and the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development. Acting Executive Secretary of the ECA, Abdalla Hamdok presented the 2016 Annual Report of the Executive Secretary to the Ambassadors. Ingrid Cyimana, Director of the Strategic Planning and Operational Quality Division, unveiled the annual report of the ECA.
Merkel calls for some EU-Africa trade contracts to be renegotiated (Reuters)
German Chancellor Angela Merkel on Monday called some of the EU’s trade agreements with Africa unfair and said they should be renegotiated. “We’ll speak again at the EU Africa summit in autumn about how we need to renegotiate them,” Merkel said at an event for non-governmental organisations in Hamburg before the G20 summit, which she will host there next month. She said some trade contracts with Africa were “not right”. [Germany to focus on free, fair trade at G20 summit]
Related: EU ministers pledge more efforts for Africa partnership: The nine-page Council conclusions adopted yesterday stress that the EU and its member states are Africa’s main partner in the fields of foreign investment, trade, place of origin for remittances, development and humanitarian assistance, and security and defence. [Joint Africa – EU Partnership Strategy: CSOs Intercontinental Forum (28–30 June, Tunis)]
Tanzania, Zambia seek $380m for TAZARA facelift (IPPMedia)
During the visit by the Chinese delegation, China’s Foreign Affairs Minister Wang Yi expressed interest in taking over the operations of the financially strapped TAZARA through a 30-year concession arrangement. This, however, is against the desires of the Zambian and Tanzanian governments for the project to be taken over for facelift by China under a three-to-five-year management contract arrangement. Yi stated that the request by his country was coming amid calls by mining companies that wanted to run the railway project, which is the major form of transport for their haulage of copper and other related products to the port of Dar es Salaam enroute to Europe. “Chinese firms who have interest in mining want to run the railway to move mining products and equipment through the railway but we can only allow that through a management contract arrangement with specific terms and conditions unlike the 30-year concession contract,” added Yi.
Price effects of borders between Lesotho and South Africa (pdf, AfDB)
Crossing the national border increases price differences between South Africa and Lesotho by 21.5% over the full 2006 to 2009 period. This average masks a border effect that is rising over time from 17% in 2006 to 26% in 2009. The structure of relative prices also differs markedly, revealing a lack of convergence to a common set of internal relative prices. These results are robust to the choice of alternative production centres in South Africa and the imposition of distance thresholds between region pairs. The results indicate that the border between South Africa and Lesotho remains an impediment to trade flows and price competition, despite their joint membership in a customs union and monetary area. Trade agreements and monetary unions alone may not be sufficient to eliminate border-related impediments to international trade and competition. Additional mechanisms to enhance the efficiency at ports of entry, such as one-stop border posts, need to be considered. [The analysts: Mamello A. Nchake, Lawrence Edwards, Tresor N. Kaya]
South Africa: Quarterly Bulletin (Reserve Bank)
The shortfall on the services, income and current transfer account widened in the first quarter of 2017, largely due to a widening in the net income deficit following a significant decrease in dividend receipts from abroad. Combined with the broadly unchanged trade surplus, this led to a widening in the deficit on the current account of the balance of payments, from 1.7% of GDP in the fourth quarter of 2016 to 2.1% of GDP in the first quarter of 2017. The financing of the current account shortfall through the financial account of the balance of payments mainly took the form of net portfolio and other investment inflows in the first quarter of 2017. South Africa’s net international investment position retreated further to 3.6% of GDP at the end of December 2016, as the market value of the country’s foreign assets declined at a much faster pace than that of its foreign liabilities.
To zero and beyond? Estimating South Africa’s structural trade balance (pdf, SARB)
The South African trade balance has improved significantly over the last three years from a 2.1% of GDP deficit in 2013 to an estimated 0% in 2016. According to the model developed in this note, roughly three-quarters of this improvement is cyclical and one quarter structural. If the export and import drivers were at their equilibrium (or structural) levels in 2016, the trade balance would have been -1,3% of GDP – instead of the estimated 0%. The trade balance could therefore deteriorate again should export and import values return to their trend values. [The analysts: Theo Janse van Rensburg, Erik Visser]
Swaziland: IMF completes 2017 Article IV visit
Strengthening public financial management and improving the management of public entities outside the central government is critical to implement fiscal adjustment plans. To this end, the IMF team welcomes the authorities’ intention to consider additional actions to contain the 2017/18 fiscal deficit within the original budget limit (8.2% of GDP) and start fiscal adjustment in next year budget.
2017 WCO ITC concludes with expert insights on the Power of Data
Another session that raised particular attention was the one on Blockchain technology. Mr. Georges Al Medawar from Humaniq stated that we are now in what the 90s were for development of Internet. The speakers talked about the use of Blockchain technology in banking, agrifood, supply chain management, as well as for property registration. The advantage of Blockchain technology is that stored data is impossible to delete, alter, rewrite or illegally manipulate. The Single Window session also attracted a lot of attention, bearing in mind that Single Window represents another commitment under the WTO Trade Facilitation Agreement which entered into force in February 2017. The panel discussed governance issues and how to ensure that a Single Window system actually brings facilitation to the trade. Data has a critical role and data standards such as the Data Model can help. However, speakers pointed out to the multiple standards and multiple single windows as an obstacle to trade facilitation. Namely, the private sector has its own data standards and regulatory data has its own standards and the challenge is how to bring those two together so that the systems understand the same data in the same way. [WCO research paper: Implications of Big Data for customs (pdf)]
Services trade policies and the global economy (OECD)
This book synthesises recent work by the OECD analysing services trade policies and quantifying their impacts on imports and exports, the performance of manufacturing and services sectors, and how services trade restrictions influence the decisions and outcomes of firms engaged in international markets. Based on the OECD Services Trade Restrictiveness Index - a unique, evidence-based tool that provides snapshots of regulations affecting trade in services in 22 sectors across 44 countries (representing over 80% of global trade in services) - the analysis highlights the magnitude, nature and impact of the costs entailed by restrictive services trade policies. The new evidence uncovered is meant to inform trade policy makers and the private sector about the likely effects of unilateral or concerted regulatory reforms and help prioritise policy action.
Call to action on gender and trade in South Asia (World Bank)
Despite current challenges, South Asia also presents unique opportunities for women. At the Delhi workshop (27-28 April) experts put forward several proposals to improve the environment for women following a very successful two-day discussion. These included plans to: (i) Build the capacity of women traders and their associations, and increase their awareness on trade requirements and border procedures; (ii) Collect gender-disaggregated data on cross-border trade flows; (iii) Enhance women’s use of ICT - especially to provide them with better networking opportunities and easier access to information, and (iv) Improve security and introduce gender-friendly facilities at the border.
Today’s Quick Links: Mozambique’s Trade policy review: minutes of the meeting are now available AU Summit January 2017: Executive Council decisions, recommendations (pdf) Nigerian-American Chamber of Commerce becomes recognised AGOA Trade Resource Centre Bill McKibben: The race to solar-power Africa Dr Jaya Shukla: Manufacturing vs service sector: which way for Rwanda? Allan Gichuhi: How Rwanda and Africa can attract more FDIs, spur growth WEF White Paper: Advancing human-centred economic progress in the Fourth Industrial Revolution India becomes 71st country to ratify the United Nations TIR Convention |
Related News
EU ministers pledge more efforts for Africa partnership
EU foreign ministers in Luxembourg Monday (19 June) committed to working closely with their African partners for an “ambitious and successful” EU-Africa summit in Abidjan, Ivory Coast, on 29 and 30 November, with “Investing in Youth” as the central theme.
Faced with an unprecedented migration crisis, ministers devoted part of their time in an effort to streamline policies aimed at building more resilient states and societies in sub-Saharan Africa, as well as creating more and better jobs, especially for young people.
The “Africa-EU Partnership: a renewed impetus” joint communication adopted last May stated that in the changing global context, it is in the EU’s strategic interest to deepen and adapt its long-standing partnership with Africa.
A stronger political relationship is envisaged, as well as turning strategic objectives into actions and taking on board Africa’s vision. A series of flagship initiatives has been spelled out.
The nine-page Council conclusions adopted yesterday stress that the EU and its member states are Africa’s main partner in the fields of foreign investment, trade, place of origin for remittances, development and humanitarian assistance, and security and defence.
The general view is that better partnerships in all fields, from climate change to security, economic development, migration and humanitarian support are the best way to manage migration and prevent radicalisation.
Ministers said that they welcome initial proposals for actions focused on “more and better jobs, especially for youth”. However, the statements of support sound quite general.
Gianni Pittella, leader of the European Parliament’s S&D group, said the conclusions on the Africa-EU Partnership show that member states finally recognise that the EU has a genuine strategic interest in deepening and reinforcing its relations with its African partners. But he insisted that “a more constructive approach is needed based on a long-term strategy”.
“A new partnership means that Europeans shift their focus to development through investments, democracy, good governance, and education, whilst Africans also have their share of responsibility. To this end, the implementation of a long-term EU development plan for Africa is essential,” Pittella said.
The S&D leader also said that the EU and Africa must step up efforts to forge a partnership on migration. “It must start by addressing the root causes through creating better livelihoods and decent work in order to avoid that young people risk their lives attempting to flee to Europe,” he added.
Related News
Third Trade Policy Review of Mozambique: Minutes of the Meeting
The third Trade Policy Review of Mozambique was held on 3 and 5 May 2017, allowing Members to have a better understanding of Mozambique’s trade and investment policies as well as the changes introduced to them since the previous review.
At the previous TPR in 2009, Members had congratulated Mozambique on its positive economic performance, but had also noted that Mozambique was among the poorest LDCs, due mainly to supply-side constraints such as poor access and high costs of utilities. At the same time, administrative hurdles had undermined the business environment and the economy’s competitiveness. Mozambique had been therefore urged to continue its reform process, so as to promote private sector development and improve the functioning of its public sector. During this review period, important changes to the legislation and institutional arrangements had indeed been introduced. They affected a wide spectrum of trade-related policies and economic activities, such as competition policy, government procurement, intellectual property rights, mining and energy, tourism and telecommunications. What exactly did these changes mean to foreign traders? Could they expect greater ease of doing business and better investment conditions? Many advance written questions had been raised in this regard, suggesting that elaboration by the Mozambique delegation at this meeting would be helpful.
Members recalled that, at the last TPR, two others factors crucial to Mozambique’s sustainable development had been highlighted, namely economic diversification and technical assistance for capacity building. In its latest report, the Secretariat had observed strong growth in Mozambique’s economy, fueled by FDI inflows into the extractive industries and supported by sound macroeconomic management. However, the economy was still relatively undiversified and vulnerable to swings in commodity prices. Recently, FDI and donor aid had both decreased, whereas inflation, as well as current account and trade deficits were on the rise. It was therefore timely that Members had this TPR, so that the Mozambique delegation could share with them the country’s long-term economic and development strategies to address these challenges.
With regard to specific trade policies and measures, the last TPR had seen improvements in customs procedures. During this review period, there had been further efforts to speed up border clearance, such as putting in place a single window, an authorized economic operator scheme and new transit regulations. And having ratified the Trade Facilitation Agreement, the authorities were ready for its implementation. Members who were interested in these new developments would have a chance to learn more about them at this meeting.
Comments on the tariff regime at the last TPR had been mixed. While Members had commended Mozambique for its unilateral reduction of tariffs, they had been concerned about the low level of bindings, and the gap between bound and applied MFN rates. As the tariff regime saw no significant changes during this review period, it might be helpful to know if the authorities had any plans to enhance its predictability in the near future.
Another area in which Members might like to see action taken was compliance with WTO notification requirements. This was a long-standing issue that had come up repeatedly in Mozambique’s last two TPRs. As it remained a concern affecting several aspects of WTO work, it still merited Members attention at this meeting.
Statement by the Discussant
H.E. Ambassador Christopher Onyanga Aparr (Uganda)
Mozambique is a least developed country in the south eastern part of Africa, bordering the Mozambique Channel, between South Africa and Tanzania, with a mean elevation of 345 metres. It has a geographical area coverage of 799,380 sq.km, 13,000 sq.km of which is water. Mozambique has a population of slightly less than 26 million people most of whom are indigenous African people; with a youth dependency ratio of 88.2%. The country has not only suffered a phase of prolonged internal conflict, but also continues to experience calamities arising from natural hazards like floods, prolonged drought and other climatic factors. As a nation, Mozambique is only 42 years old, having emerged from five centuries of colonialism and exploitation.
To my understanding, Mozambique is a country that is moving on the post conflict road towards growth and development spurred by desire for structural transformation, industrialization and diversification. The Government’s approach has been to devise regulatory and institutional frameworks in nearly all sectors of the economy, all aimed at this particular objective. In doing this, the Government hopes to secure employment for its people, promote household incomes, and ultimately guarantee stability in the country. It has, therefore, devised an investment regime that is certain to attract Foreign Direct Investment in the sectors considered to be of priority interest to its people. Mozambique has drafted measures that are aimed at the promotion of value addition. The orientation of the Government is the promotion of exports with the view to, inter alia, reduce its deficit and manage its balance of payment challenges riding on the wave of industrialization. We need to encourage the Government of Mozambique to continue the implementation of domestic reforms which will definitely contribute sustainable economic growth and development.
This is the perspective with which I expect Members to conduct this review. With the above background in mind, my presentation will largely follow a three-pronged approach: first, the overall economic environment; second, trade and investment regime; and third, sectoral policies.
Economic environment
The economy of Mozambique had shown strong growth since the end of its civil war in the 1990s. Real annual GDP growth averaged around 8% over the past two decades. This strong growth was attributed to sound macroeconomic management in an environment of relative political stability, which allowed for a number of large-scale foreign investment projects, and significant donor support. However, between 2009 and 2015, the average GDP growth rate slowed down and was projected at 6.9%. In fact, in 2015, the real GDP grew by 6.6% and the GDP per capita was US$601. In the same period, the average recorded inflation was 7.1%. The Government has attributed this slow-down in growth to major factors, namely: the fall in international prices of the country’s main export products, prolonged droughts, and periodic floods in the country.
It should be noted that trade in goods and services accounted for over 100% of GDP in 2015, up from 68% in 2008. With a limited export basket in 2015, in which four items (aluminum, coal, gas and electricity) accounted for almost 63% of the export commodities. Mozambique’s imports are mainly manufactured goods comprising 67% of imports, especially machinery and equipment for use as megaproject inputs, foodstuffs and other agricultural products (13%), and then fuel and mining products. In 2015, the exports accounted for US$3.2 billion, while imports were valued at US$7.9 billion, giving an export-import deficit of US$4.7 billion. In terms of product composition: extractive commodities and raw materials comprised more than 70% of the exports. This would mean there is need for value addition to, and diversification in the export products of Mozambique.
While agriculture accounted for about 25.4% of the GDP, it had a modest average growth rate of only 3.6%. Meanwhile, the extractive industry sector grew with an average 24.1%, but contributed only 2.4% on average in the GDP structure.
On the other hand, it has been reported that with US$3.3 billion of services imports, Mozambique has remained a large net importer of services, in particular in the freight transport services, construction, and professional consulting and trade-related services. Tourism has become a significant services export sector for Mozambique, although at a modest level. I am sure Members would be interested to know what strategies the Government of Mozambique is putting in place to realize the full potential of its tourism sector.
Trade policy objectives
The trade policy objectives, as contained in the current five year Plan of the Government of the Republic of Mozambique (for the period 2015-2019) are to create an appropriate environment to promote the competitiveness of Mozambican products. These include strengthening international cooperation at bilateral, multilateral and regional levels; diversifying export products and destinations; promotion of export-orientated industrialization; maximizing local content and value-addition in the processing of Mozambique’s natural resources and promote infrastructure development. In addition, the five year plan proposes to protect domestic industries, establish export processing and special economic zones, and above all improve the business environment.
It is worth noting that the Government adopted an Industrial Policy and Strategy for the period 2016-2025. There is no doubt that as an LDC, Mozambique would require the support of the international community to implement this important strategy whose overall objective is to make industry the main vehicle for economic growth, increased employment, improved living standards, and development of the country’s natural resources.
Trade and investments
Mozambique came to the quick realization of the fact that it could not do it alone to develop the country. With its vast natural resources of untapped raw materials, the Government decided to enact an Investment Code (which excludes the petroleum, natural gas and mining sectors), that would provide the legal framework for investment promotion and protection. This would include a package of incentives and tax guarantees to both national and foreign investors. The Secretariat reports that the fiscal incentives include customs duty and VAT exemptions, corporate income tax exemptions, reductions and deductions; investment tax credits; accelerated depreciation and reintegration; and personal income tax deductions. It grants more incentives for tourism promotion, and extends the corporate income tax exemption period for Industrial Free Trade Zones (IFZs) to 10 years.
It would be interesting to know the impact of current investment framework on private investment and if there are any challenges that might need to be further addressed.
As part of its industrialization agenda, Mozambique continues to operate an Industrial Free Zone (IFZ) regime, and a Special Economic Zone (SEZ). The SEZs and IFZs are considered to be central to the Government’s industrialization strategy.
Furthermore, we commend the Government for streamlining investment and export promotional activities, by merging the Investment Promotion Centre (CPI), the Office of Economic Zones for Accelerated Development (GAZEDA), and the Institute for the Promotion of Exports (IPEX) into a one stop shop now famously known as the Agency for the Promotion of Investments and Exports (APIEX).
With regards to the remittance of funds, the Secretariat notes that in order for foreign investors to remit profits out of the country and to re-export invested capital, a minimum value of foreign direct investment (FDI) of metical 2.5 million is required. Without that, foreign investors must meet one of the following three requirements: (a) generate an annual sales volume of not less than three times metical 2.5 million as from the third year of operations; (b) register annual exports of goods and services with a value equivalent to metical 1.5 million; or (c) create and maintain from the second year of operation direct employment for at least 25 Mozambican nationals who are registered with the social security system. In my view, the objective of this is to ensure increased production and productivity; improved balance of payments position through exports; job creation and improved household incomes for the local population.
Whereas the Government has put in place the requisite regulatory and institutional framework, a number of issues have been identified as being problematic for doing business in Mozambique, including access to finance amongst others.
In addressing the concerns of the business community, the Government has put in place a coordination mechanism with the private sector to promote public-private dialogue where solutions for problems that hinder the development and competitiveness of the private sector are jointly discussed with the view to identifying the needed reforms. This interaction takes place periodically and at the highest level of the Government on a bimonthly basis between sector Ministers and their private sector counterparts, and then quarterly and yearly with the Prime Minister and the President, respectively.
Additionally, as part of a 2013-2017 Strategy to Improve the Business Environment, an Inter-Ministerial Group for the Removal of Barriers to Investments has been set up to assess, implement and monitor the implementation of the action matrix contained therein on a quarterly basis.
What is important, however is that Mozambique may wish to provide more support to the question of security. Without security of life and property, foreign direct investment will be shy to visit the country. Security issues may create a chilling effect for foreign direct investment.
Trade measures and practices
On trade measures and practices: the Secretariat’s report indicates that Mozambique’s applied MFN tariff has remained largely unchanged over the review period. Its simple average tariff rate is 10%, with a higher simple average tariff on agricultural products (13.4%) than on non-agricultural products (9.5%). It is noted that Mozambique has only bound 686 tariff lines out of its schedule of 5,063 tariff lines (just over 13%). Bindings on non-agricultural products are very limited. Only 19 lines at the eight-digit level (HS 1996 nomenclature) were bound, at either 5% or 15%.
Overall, only 14.2% of Mozambique’s tariff lines are bound. Other duties and charges on all bound items are bound at 100%. All rates are ad valorem. Mozambique does not apply tariff rate quotas. As at the time of Mozambique’s previous Review, the highest average tariffs by HS chapter continue to be applied on basic food products such as meat, fish, fruits, vegetables (and products thereof), beverages, and clothing. Agriculture remains the most heavily protected sector (average tariff of 12.4%), followed by manufacturing (10%) and mining (3.7%).
It should be noted that Mozambique’s tariff shows mixed escalation overall: it is negative from raw materials to semi-processed products (with an average protection of 10.1% and 7.5%, respectively) and then positive from semi-processed to finished products (with an average level of protection of 11.6%).
While we can understand the need to balance the requirement to increase revenue, as was noted before, such a tariff structure may discourage investment in processing industries because the heavy taxation of imported inputs adds to production costs or reduces the competitiveness of products manufactured in Mozambique. There may therefore be a need for a careful balance in order to attract investment in this area.
On export taxes and surtaxes: we have noted that Mozambique continues to levy import surtaxes on cane sugar, cement, and iron or non-alloy steel and iron or non-alloy steel tubes. These affect 10 tariff lines at the HS eight-digit level. Furthermore, Mozambique imposes an export tax of 18% of the f.o.b. customs value on raw or unprocessed cashews. There is no export tax levied on processed cashews. Export taxes are also levied on all raw and processed timber. The fee rate varies according to the level of processing. Other items that are also subject to charges at export are: cotton (Cotton Development Tax of 3.5-5%), fisheries products (fisheries license fees), and mining products (production taxes).
The objectives of these charges as has been reported ranges from encouraging value addition through value chain domestic processing, with the view to promote employment; and also ensuring environmental protection and sustainable use of the forests. While the objective of value addition with the view to industrialization and job creation is applauded, some Members have raised questions on the role of fees in promoting sustainability. It is our hope that the measures on forests and timber are consistent with the Government’s commitments under the Paris Climate Change Agreement.
With regard to customs procedures: we commend Mozambique for the trade facilitating measures it has put in place. During the review period, Mozambique established a Single Electronic Window System for customs clearance, launched an Authorized Economic Operator scheme, liberalized transit regulations and then created a one-stop boarder post with South Africa. On 6 January 2017, Mozambique submitted its instrument of acceptance of the Agreement on Trade Facilitation. While the WTO does not have aggregated data to indicate the cost savings in terms of time and money, these measures are certainly a welcome development.
We note, however, in the report that Mozambique still maintains the practice of the use of Customs Brokers of all commercial imports, exports and goods in transit. Authorities have observed that this practice will be phased out during the implementation of the Trade Facilitation Agreement. It is also important to note that Pre-Shipment inspections (PSI) also remain in place although on a reduced list of goods, as has been noted in the Secretariat report. We are pleased to note that the Government is said to be considering phasing out PSI and is currently training its officials. As an LDC, Mozambique can surely take advantage of the S&DT provisions for LDCs in the TFA.
It is noted that regional integration is an important component of Mozambique’s trade policy. Preferential tariffs are in place for SADC members. 99.6% of duties on goods originating from SADC members are now at zero. The remaining 0.4% of dutiable lines (22 tariff lines at the HS eight-digit level) has been exempt from tariff reductions. Tariff liberalization under the SADC-EU EPA will be implemented upon the entry into force of the Agreement. There is no doubt that regional integration initiatives will contribute in the expansion and diversification of export markets for Mozambique products.
As an LDC, Mozambique is a beneficiary of all non-reciprocal preferential arrangements such as Duty Free and Quota Free Market, and Preferential Rules of Origin granted by developed countries, and developing countries in a position to do so. This would include Everything But Arms and AGOA. In its national report, Mozambique reports that, on 10 June 2016, it signed the Economic, Final and Comprehensive Partnership Agreement with the EU. In my view, Mozambique is still trying to find its landing zone in terms of industrial development. We have seen how Mozambique has embedded export taxes in its regime not only as a way to promote value addition but to promote domestic industries. We would want to know to what extent this action is consistent with the Government’s long-term vision of structural transformation and industrialization.
On Government Procurement: it has been reported that the estimated total value of Government procurement was metical 47.9 billion (21.6 billion for goods, 16.1 billion for services and 10.2 billion for works). Over the review period, the Government of Mozambique has continued to reform its procurement regime. New Public Procurement Regulations entered into force on 6 June 2016. The objectives of legislative reform were meant to, inter alia, increase transparency reduce the use of direct procurement, increase business opportunities for foreign competitors, remove barriers to the submission of complaints by competitors, and increase the thresholds for the application of limited tenders. It has been reported that these regulations do not apply to public enterprises or to enterprises in which the State has an equity share. A new and separate legislation is being developed towards this end.
We commend Mozambique for the reform in this sector, though. This is a prudent exercise of its policy space. We would be happy to learn the extent to which foreign competitors can engage in procurement processes in Mozambique. We are yet to know if there are certain thresholds to which they can bid, and others reserved for the nationals. Are there local content requirements? We understand that there is no immediate obligation to accede to the Plurilateral GPA of the WTO.
Sectoral policies
I would like to look a little more closely at Government policies concerning certain crucial sectors of the Mozambican economy.
On agriculture: as the case is in many African countries, the Secretariat reports that 86% of the people in Mozambique depend on agriculture as their primary means of subsistence. The contribution of agriculture to GDP was an estimated 25.5% in 2015. While the contribution of agro-commodities to overall exports was 22.7% in the same year. Mozambique aims to commercialize agriculture, shifting production away from mainly subsistence activities and promoting access to international markets. This would not only promote poverty reduction but also enhance the attainment of food security. The Government would therefore require to employ innovative measures to increase production and productivity. 62% (49 million hectares) of the total land area of Mozambique is suitable for agriculture, but only 16% of that is estimated to be cultivated and only 3% is estimated to be irrigated. Therefore, the immediate and positive implementation of the Strategic Plan for Agricultural Development (PEDSA) would be a step in the right direction.
On fisheries, we note that Mozambique has considerable potential for fisheries as well, but the sector faces some challenges. It has a 2,750 km of coastline. Its Exclusive Economic Zone (EEZ) is 200 miles off the coast, covering 586,000 km2 of ocean water masses.
The Secretariat has noted that while fisheries increased from 34,000 tonnes in 2000 to almost 288,000 tonnes in 2015, commercial production and exports have not grown since the turn of the century. The Government has now shifted emphasis from exports to production for the domestic market through the promotion of artisanal fisheries and aquaculture, while also taking measures to contain overexploitation. It may therefore be important for Mozambique to follow the negotiations on fisheries (subsidies) in the WTO with a view to ensuring that the policy space required for the growth and development of this sector, and its subsequent integration into the global value chain of this industry, is preserved.
On manufacturing: the Government adopted an Industrial Policy and Strategy, which sets out the broad guidelines of industrial development in the country. Furthermore, the National Development Strategy (2015-2035) seeks to promote industrialization. The main strategic objectives for the development of the sector are: increasing production and productivity, promoting industrialization oriented towards modernizing the economy and increasing exports, the promotion of employment, value chain promotion of national primary products, ensuring incorporation of local content, and improving the business environment.
In Mozambique, it is reported that manufacturing accounts for only 10% of GDP. The Mozal aluminium smelting plant dominates the sector, while the rest of the sector has significantly under-performed over the last decade. Mozal contributed to 48% of Mozambique’s industrial output and further represents 75% of manufacturing exports with the view to avoiding over concentration.
Generally, tariff protection in the manufacturing sector has not changed significantly from 2010 to 2016. It ranges from 0% to 20%, depending on the activity. Apart from customs duties, imported manufactured goods which compete with products manufactured locally are subject to surcharges, as in the case of sugar, cement, and certain galvanized steel products. The Government should explore measures to ensure a diversified range and increased export of value added manufactured products.
On tourism: Mozambique has significant potential in tourism based on its range of beach holiday products, ecotourism, cultural diversity, and extensive coastline. The Government has made tourism a development priority since 2000. The relevance of tourism to economic growth and poverty reduction is also acknowledged by the Strategic Plan for the Tourism Sector 2004-2014. According to the authorities, tourism earnings consistently increased from 2009 to 2012. During 2009-2013, an average of 1.9 million persons per year arrived in the country. It is my conviction that a lot can be done in the tourism area. The delegation of Mozambique may wish to look at some of the notifications that the LDCs group has received pursuant to the LDC Services Waiver. Some Members have indicated readiness to allocate specific and targeted technical assistance aimed at the development of tourism related infrastructure. This would help to operationalize the Tourism Strategic Plan by taking advantage of the preferential treatment made available to LDCs.
On transport and logistics: Mozambique is responsible for 70% of SADC’s transit traffic, with logistics corridors such as the Maputo, Nacala, and Beira Corridors. These provide the link between the deep-water coastal ports with neighboring countries. It therefore plays a major role in regional trade, as it provides important transportation corridors for cross-border businesses for exporters and importers of goods. The main challenge remains the state of the infrastructure in Mozambique. Most of the country’s transport network was destroyed during the civil war. It is therefore important that the Government takes steps to address this issue with the view to facilitating trade, agricultural and other critical economic developments, and human activities.
In conclusion, Mozambique, as an LDC, has made, and continues to make important steps towards structural transformation and industrialization. Mozambique wants the same things for its people as we do for ours: jobs, improved household incomes, peace, security and stability, among others. The challenges facing the country remain enormous but these are not insurmountable. The challenges include: social economic infrastructure, good governance, limited liberalization in some sectors of the economy, lack of finance and limited attractiveness in the banking sector. However, we must congratulate Mozambique for the major and positive steps it has taken towards its own political and economic development.
In terms of recommendations, we might make the Government might need to on a few specific and targeted sectors that would drive the economic development of the country. It must deal with the issue of security, and mobilize the requisite funding. There must be deliberate efforts to increase production and productivity, and thereby make maximum use of all the preferential treatment that is available to LDCs within the WTO.
Members of the WTO should also give maximum exercise to restraint in requiring LDCs such as Mozambique to undertake commitments that are not consistent with their level of development, like financial and trade needs.
Related News
African countries endorse ECA’s programme of work for 2018-2019
Representatives of African governments met in Addis Ababa recently and endorsed the ECA 2018-2019 programme of work.
This follows the adjournment in March 2017 of the Bureau of the 10th Joint Annual Meetings of the African Union Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration and the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development.
Ambassadors from African States accredited to the Federal Democratic Republic of Ethiopia attended a special meeting to deliberate on the proposed progamme of work, the 2016 Annual Report of the Executive Secretary and came up with recommendations and resolutions on how to move the work of the ECA forward as it continues to promote the economic and social development of its member States.
Acting Executive Secretary of the ECA, Abdalla Hamdok presented the 2016 Annual Report of the Executive Secretary to the Ambassadors. Ingrid Cyimana, Director of the Strategic Planning and Operational Quality Division, unveiled the annual report of the ECA.
Mr. Hamdok praised the permanent representatives for the work they do in supporting the ECA to ensure the organization fully supports Member States in their developmental needs.
“The meeting gave us an opportunity to meet with the permanent representatives to discuss various issues that needed to be tackled and we are glad, as always, the Member States are always with us, in particular in the way they guide us so we come up with outputs that support their quest for development on the ground,” he said after the meeting.
“It is through credible and trusted knowledge products and delivery services that the ECA has succeeded to influence national policies, development plans and strategies but we need the endorsement of the Member States to know that we are giving them what they want.”
The meeting was chaired by Senegal’s Ambassador to Ethiopia and the African Union and Permanent Representative to the ECA, Baye Moctar, as current chair of the Bureau of the Conference of Ministers.
Mr. Moctar thanked the Ambassadors for deliberating on the key statutory issues of the ECA and endorsing the proposed programme of work for subsequent submission to the United Nations Economic and Social Council (ECOSOC).
tralac’s Daily News Selection
The 5th SACU Summit takes place on Friday in Swaziland. Swaziland as the current Chair of SACU has successfully led a process that facilitated discussions within SACU on the transformation of SACU towards a developmental integration agenda. The Summit will receive and consider a report from Council on its activities with the purpose of providing strategic direction on development integration in SACU and to ensure that the SACU Agreement facilitates the implementation of this agenda.
CFTA Modalities on Goods and Services adopted in Niamey (UNECA)
The preceding technical discussions in the CFTA-NF and the STO paved the way for the AMOT to adopt the CFTA modalities or framework for goods and services liberalization. For the liberalization of trade in goods, it was agreed to liberalize 90% of tariff lines with flexibility accorded in the remaining 10% for sensitive and excluded products. Further disciplines will be established through negotiations for the timeframe for liberalization, qualifications for sensitive products, and for a method to review excluded products. The modalities for services encompass a common positive list approach for progressive services liberalization. The priority sectors for liberalization will be determined without any prior exclusion of any service sector or supply mode. Further work is envisaged to establish the new tariff schedules, to apply the disciplines on excluded and sensitive products, and on the terms of services liberalization in the priority sectors.
Minister Rob Davies on CFTA’s next steps: The President of the Republic of Niger has been mandated to report on the outcomes of the AU Ministers of Trade and progress made in the CFTA negotiations to the AU Summit next month. The meeting also discussed the preparations for the 11th Ministerial Conference of the WTO and agreed to have a dedicated informal session of African Ministers of Trade to engage and coordinate Africa's position on the WTO. Ministers further welcomed the offer of the Republic of Togo to host the 16th session of the AGOA Forum in August this year and agreed to assess future US-Africa relations in line with the new USA administration's Trade Policy released in March 2017.
(i) ECOWAS Authority reduces size of the Commission. The 51st Ordinary Session of the ECOWAS Authority of Heads of State and Government has approved the recommendation for a reduction in the size of the Commission from 15 Commissioners to 9, and for a reduction of the number of Statutory Appointees to 17 in all Community Institutions as proposed by the Council of Ministers. The Authority called on the Ad hoc Ministerial Committee to ensure that each Member State gets at least one statutory position and instructed the President of the Commission to extend the reform to other Community institutions and take necessary measures to finalize the process. The Authority endorsed the seven-member Ministerial committee established by Council that will, with guidance from the Commission, propose modalities for the allocation of Statutory positions to Member States based on a credible, equitable and rotational system as well as existing Community Rules.
(ii) ECOWAS Authority directs Commission to reflect on the implications of Morocco’s request for membership. The Authority considered the request for membership to ECOWAS from the Kingdom of Morocco, the application for observer status from the Republic of Tunisia as well as the request for Associate Membership from the Islamic Republic of Mauritania. Regarding Mauritania, the Authority noted that pursuant to the directives of the Yamoussoukro Summit held on March 29, 2014, the President of the Commission provided an update on the initialing of the Association Agreement between ECOWAS and the Islamic Republic of Mauritania in Nouachott on May 5, 2017. Taking note of the initialing, the Summit called on Member States to sign the Association Agreement and directed Mauritania, being a former member of ECOWAS, should speed up the process for full membership to be able to enjoy all the rights and benefits of a Member State. For Tunisia, the Authority directed that the country be granted an observer status to ECOWAS, but directs the Commission to ensure that all necessary rules and procedures governing the granting of observer status to Community Institutions are in place. It directed the Commission to present this matter at its next Summit in Lome, Togo.
(iii) Economic performance and implementation of regional integration programmes. Concerning the free movement of persons and goods, the Authority took note of the country reports of the Task Force on free movement, which highlighted the continued impediment to the free movement of persons and goods within the ECOWAS region. The Heads of State and Government reaffirmed their strong commitment to the implementation of the provisions of the Protocol on Free Movement of Persons, Residence and Establishment. In this regard, the leaders agreed to speed up the introduction of the biometric identity card and removal of non-tariff barriers, to facilitate intra-community trade and enhance security in the region. With respect to the Customs Union, the Heads of State and Government welcomed the progress made in the implementation of the ECOWAS Common External Tariff by Member States and the development process of the Community Customs Code. They reaffirmed their commitment to the smooth and timely implementation of the ECOWAS CET, and thereby urged Member States yet to implement the CET to fast-track the process. [An interview with Kalilou Traore, ECOWAS Commissioner for Industry and Private Sector Promotion]
Hubs and Spokes Initiative for promoting ACP trade extended (InDepthNews)
The Hubs and Spokes Programme, an innovative trade initiative for expanding opportunities for business, employment and prosperity in ACP countries, is to be extended until February 2019. Through the Programme, which is a joint initiative of the EU, ACP Group Secretariat, Commonwealth Secretariat and Organisation Internationale de la Francophonie, trade advisers are placed in government ministries and regional organisations to provide support and build local capacity to develop trade policies. Six regional advisers (the hubs) and 16 national advisers (the spokes) are currently deployed by the Commonwealth Secretariat under the Hub and Spokes Programme. The OIF has also deployed 4 hubs and 16 spokes in Africa, resulting in a total of 10 hubs and 32 spokes deployed under the programme. Advisers are placed in the following countries and regional organisations:
Corporate Council on Africa’s US-Africa Business Summit: profiled speeches
(i) Wilbur Ross (US Commerce Secretary). I believe that, the more African nations partner with U.S. businesses, the better off both the United States and Africa will be. In 2016, US exports to Africa were approximately $21.81bn – nearly double the $10.96bn in US exports in 2000. Total trade between Africa and the US was approximately $48.3bn last year, up nearly $10bn since 2000. And our trade deficit declined in that period from $16.7bn to $4.7bn. All of these numbers are moving in the right direction, so let's work hard to have those trends continue. Our trade relationship is vital to the security and stability of both the United States and Africa. But our relationship with Africa has to continue its transition from being "AID-based" to "TRADE-based." To that end, having two-way trade agreements, not just temporary trade preferences, would create long-term, sustainable improvements to quality of life on both sides of the Atlantic. Bilateral trade agreements, rather than large, multilateral ones, can be very effective tools in meeting the long-term interests of the partners involved. And studies show that developing countries with liberalized trade tend to grow faster than those that don't. In the meantime, we must ensure countries currently benefitting from trade preferences granted by our AGOA continue complying with the eligibility requirements established in US law. The Administration takes these congressional requirements very seriously.
(ii) President Filipe Nyusi. Last week during the National Forum on Infrastructures, we stated that it is now time to look forward. Mozambique is sending vital signals of overcoming obstacles. During this month we launched the South Coral floating LNG project in the Ruvuma Basin, an investment which attracted 15 international banks and five credit agencies for exports. This is a major vote of confidence in Mozambique and in our Government. Hence our statement that Mozambique is back, foreign investments are secure. Mozambique possesses land for irrigation of about 3 million hectares, in more than eight priority river basins. The major advantage is the existence of a secure market of agriculture products at national, regional and international level.
(iii) Dr Akinwumi Adesina. We must all look at Africa differently. As Josh Becker, US co-founder and CEO of Impele, said of US companies' approach to Africa, "companies take their notebooks but not their checkbooks". Let me say to you today that Africa needs your checkbooks! To accelerate business investments in Africa, the African Development Bank will launch later this year the Africa Investment Forum –a totally transactional Forum to unlock global and regional institutional investors to Africa. And Africa funds must invest in Africa – this is a crucial point. We look forward to working with the US Government, the Corporate Council on Africa, and all of you on this.
G20 Africa Partnership – investing in a common future: address by Federal Chancellor Angela Merkel
We in the industrialised countries have to consider whether we have always taken the right path in providing our traditional development aid. I don't think we have. We have to focus more strongly on each specific country's own economic development. That's what gave rise to the idea – proposed first and foremost by our Finance Minister and our Development Minister – of saying we need an initiative through which we don't speak about Africa, but speak with Africa. The result was the G20 Compact with Africa Initiative. We want to lend support for regional market integration, not least in order to enhance the transfer of technology and know-how. We also want to ensure that trade flows between Europe and African countries really benefit everyone. We still have a lot to do in this regard.
COMESA: Moving towards a seamless upper airspace
Subject to approval by COMESA Council of Ministers, the region will next year start implementing a seven year programme which will eventually culminate in the establishment of a seamless upper airspace based on harmonized civil aviation rules and procedures. The implementation of the first phase of the COMESA Seamless Upper Airspace Project has been agreed to by the experts from Member countries most of whom are currently working as individual countries when it comes to the aviation sector. Director of Infrastructure and Logistics Mr. Jean Baptiste Mutabazi described the project as critical for the regional economic bloc and its people. A team of experts from the Project Consultants EGIS AVIA of France led by Mr Thierry Debord made various presentations on the technical and financial feasibility study of establishing the project.
Rwanda to join regional anti-money laundering body (New Times)
Parliament has ratified Rwanda's membership of the Eastern and Southern Africa Anti-Money Laundering Group. The draft law was last week presented before lawmakers by Dr Uzziel Ndagijimana, the minister of state for economic planning. "Our region is prone to money laundering. We need to be prepared, exchange information with other countries and support each other in updating regulations and laws on money laundering as it is a dynamic trend," he said.
CEMAC: Strengthening competition and consumer protection (UNCTAD)
UNCTAD is embarking on a two-year project aimed at strengthening competition and consumer protection for the Economic and Monetary Community of Central Africa, funded by the EU within the wider Trade and Economic Integration Programme (PACIE). The new programme will focus on the following countries: Cameroon, the Central African Republic, Chad, the Democratic Republic of the Congo, Gabon, the Republic of the Congo, Equatorial Guinea and São Tome and Principe. It will carry out the following activities:
Business Africa: Andrew Le Roux, president of the Swaziland Employers and Chamber of Commerce, has been elected as the new second Vice President of Business Africa
East African Business Council AGM: new chairman and executive committee
Africa Renewal articles: Pension funds, insurance firms as key drivers of regional integration; Africa's quest for a cashless economy gains momentum
Trademark owners rush to register .africa domains
ECOWAS health, environment ministers meet in Abuja to adopt approach to emergencies
Brahima Coulibaly: Africa's race against the machines
Nominee for USAID administrator, Mark Green, sails through Senate hearing
Mauritius: Ranks 1st, in Africa, on 2017 Global Cybersecurity Index
Arab countries get 30% of Brazil's dairy exports
- - - - -
CFTA Modalities on Goods and Services adopted in Niamey
The sixth meeting of the Continental Free Trade Area Negotiating Forum (CFTA-NF) was held from the 5th to 10th of June 2017, in Niamey, Niger, followed by the third meeting of the Senior Trade Officials (STO) and the African Ministers of Trade (AMOT) from 12th to 14th and 15th to 16th June 2017, respectively.
The meeting was co-organized by the African Union Commission and the Government of Niger.
Mahamadou Issoufou, President of the Republic of Niger, who is the African Union Champion for the CFTA, in a stirring opening address to the AMOT invoked Kwame Nkrumah’s vision of Pan-Africanism and cooperation, noting that the CFTA will enable African economies to overcome the limitations of small fragmented markets in a single economic space.
The CFTA will create a market of over a billion people with an aggregate GDP of close to US $4 trillion. Industrial development is only possible if Africa’s markets are viable, the President said, declaring “Africa must unite”.
Other speakers at the opening ceremony, including the AU Trade and Industry Commissioner, Albert Muchanga and South African Trade and Industry Minister Rob Davies, echoed the same views.
Commissioner Muchanga noted that the CFTA will stimulate investment flows and the development of supply chains across the continent. But trade liberalization must also be accompanied by infrastructure development, improved trade facilitation and efforts to overcome non-tariff barriers, he emphasized.
For his part, Minister Davies said the CFTA is integral to Africa’s “development regionalism” as a key pillar of structural transformation in an era of rapid technological change.
The preceding technical discussions in the CFTA-NF and the STO paved the way for the AMOT to adopt the CFTA modalities or framework for goods and services liberalization.
For the liberalization of trade in goods, it was agreed to liberalize 90 per cent of tariff lines with flexibility accorded in the remaining 10 per cent for sensitive and excluded products. Further disciplines will be established through negotiations for the timeframe for liberalization, qualifications for sensitive products, and for a method to review excluded products.
The modalities for services encompass a common positive list approach for progressive services liberalization. The priority sectors for liberalization will be determined without any prior exclusion of any service sector or supply mode.
The African Trade Policy Centre (ATPC) at the ECA helped to facilitate the goods modalities discussion through three technical presentations that highlighted the problem of nuisance tariffs, that is tariffs that are fairly low and generate little revenue; the risk associated with sensitive and excluded products in cases where trade is highly concentrated in these products; and the expected impact of exclusions.
Following the adoption of the modalities, further work is envisaged to establish the new tariff schedules, to apply the disciplines on excluded and sensitive products, and on the terms of services liberalization in the priority sectors. The remaining CFTA agenda also includes work on a draft text to establish commitments in a range of disciplines including rules of origin, trade remedies, customs cooperation and trade facilitation. Additional meetings have been scheduled to conclude this work by the end of the year which is the deadline set by the AU Summit for the conclusion of the CFTA negotiations.
In addition, to the milestone that was reached in the adoption of the CFTA modalities, the ATPC facilitated STO and AMOT discussions of the issues under consideration for the 11th WTO Ministerial Conference (MC 11), to be held in Buenos Aires in December this year. The forthcoming mid-term review of the US-Africa Growth and Opportunity Act (AGOA) to be held in Lome in August was also discussed.
For legal texts and other documents from the CFTA negotiations, please visit our CFTA resources page.
Related News
Minister Davies concludes AU Ministers of Trade meeting in Niger
The Minister of Trade and Industry, Dr Rob Davies has arrived back in South Africa from the Republic of Niger where he participated in the 3rd African Union (AU) Ministers of Trade Meeting from 15-16 June 2017. The AU Ministers of Trade was officially opened by H.E. Mahamadou Issoufou, President of the Republic of Niger and Champion of the Continental Free Trade Area (CFTA).
The Ministerial meeting, which was preceded by the 6th CFTA Negotiating Forum and the 3rd meeting of Senior Trade Officials, adopted the Modalities for Tariff Negotiations and Trade in Services.
Minister Davies says this will facilitate the exchange of tariff and services offers, as well as the finalisation of the CFTA Agreement. Minister Davies emphasised the importance of enhancing intra-Africa trade and investment, and regional economic integration through the CFTA. The CFTA negotiations were launched by the AU Heads of State and Government during their Assembly in June 2015 in Johannesburg, South Africa.
Minister Davies says the CFTA that is currently under negotiation can be a driver of structural transformation for sustained economic growth and enhanced intra-Africa trade and investment in the continent.
“South Africa is, therefore, committed to a coordinated strategy to boost intra-Africa trade and to build an integrated market in Africa that will see a market of over 1 billion people and approximately US$2.6 trillion,” said Davies.
The 2nd meeting of the AU Ministers of Trade held in November 2016 in Addis Ababa, Ethiopia, adopted the Terms of Reference for the Technical Working Groups for the of the Continental Free Trade Area (CFTA).
The meeting also discussed the state of play and preparations for the 11th Ministerial Conference of the World Trade Organisation (WTO) and the implications on Africa’s developmental priorities and the CFTA. The ministers agreed to have a dedicated informal session of African Ministers of Trade to engage and coordinate Africa’s position on the WTO.
Ministers further welcomed the offer of the Republic of Togo to host the 16th session of the African Growth and Opportunity Act (AGOA) Forum in August this year and agreed to assess future US-Africa relations in line with the new USA administration’s Trade Policy released in March 2017. The 15th AGOA Forum was held in Washington last year under the theme “Maximizing US-Africa Trade and Investment: AGOA and Beyond”.
Earlier in the week, during the US-Africa Business Summit held in Washington D.C, African Ministers requested the USA Government to provide clarity on its policy approach to US-Africa relations. This was the first engagement that was held with President Donald Trump’s administration.
The President of the Republic of Niger has been mandated to report on the outcomes of the AU Ministers of Trade and progress made in the CFTA negotiations to the AU Summit next month.
For legal texts and other documents from the CFTA negotiations, please visit our CFTA resources page.
Related News
ECOWAS Authority highlights economic performance and implementation of regional integration programs
The ECOWAS Authority of Heads of State and Government has commended the Liberian political parties for their support towards ensuring a violence free presidential election in the country and urged them to be fully committed to their Resolution of September 21-23, 2016 in Ganta, Nimba County, as well as the Farmington Declaration signed on the margins of the 51st Ordinary Session of the ECOWAS Authority.
According to a Foreign Ministry release, the commendation was contained in the Final Communique of the 51st Ordinary Session of the ECOWAS Authority held at the Farmington Hotel in lower Margibi County on Sunday, June 4, 2017.
The Authority also applauded the role of the United Nations in the maintenance of peace in Liberia and took note of the draw-down of UNMIL and its eventual end of mandate in March 2018.
The Authority further called on the international community to continue its robust engagement in Liberia beyond UNMIL departure, the establishment of a stand-alone peace-building/political office in Liberia to support the in-coming administration and facilitate a smooth transfer of the facilities to ECOWAS.
Meanwhile, on economic performance and implementation of regional integration programs, the Authority noted that West Africa was severely affected by the slowdown in the continent’s overall economic activity in 2016 with ECOWAS real GDP growth standing at 0.2 percent in 2016 compared with the 3.3 percent in 2015 and 6.1 percent in 2014.
The Authority urged Members States to initiate the necessary structural reforms in order to be more resilient to exogenous shocks arising from commodity price fluctuations. The Authority also encouraged Member States to undertake the necessary measures that would enable them attain the Sustainable Development Goals particularly in the area of poverty reduction and job creation.
Concerning the free movement of persons and goods, the Authority took note of the country reports of the Task Force on free movement, which highlighted the continued impediment to the free movement of persons and goods within the ECOWAS region.
The Heads of State and Government reaffirmed their strong commitment to the implementation of the provisions of the Protocol on Free Movement of Persons, Residence and Establishment. In this regard, the leaders agreed to speed up the introduction of the biometric identity card and removal of non-tariff barriers, to facilitate intra-community trade and enhance security in the region.
With respect to the Customs Union, the Heads of State and Government welcomed the progress made in the implementation of the ECOWAS Common External Tariff (CET) by Member States and the development process of the Community Customs Code. They reaffirmed their commitment to the smooth and timely implementation of the ECOWAS CET, and thereby urged Member States yet to implement the CET to fast-track the process.
On agricultural development and infrastructure, the Authority welcomed the results achieved in the implementation of the ECOWAS Agricultural Policy (ECOWAP), in particular, its 2025 strategic orientations through regional and national agricultural investment plans, as well as food and nutrition security. They equally welcomed the strengthening of cooperation with various technical and financial partners.
Convinced of the need to accelerate the implementation of regional interconnection projects, the Authority welcomed the progress made in infrastructure development, notably road and maritime and commended the signing of the Dakar-Abidjan Corridor Supplementary Act, which provides a legal framework for the construction of the Lagos-Dakar Highway.
The Authority designated His Excellency Mr. Macky Sall, President of Senegal, as the President to champion the supervision of the implementation of the Dakar-Abidjan Corridor Highway Development Project and His Excellency Mr. Alhassane Ouattara, President of Cote d’Ivoire, as the President to champion the supervision of the implementation of the Abidjan-Dakar Corridor Highway Development Project.
It further reiterated its commitment for the infrastructural development, particularly the Sealink project which achievement will bring positive impact on regional integration.
The Authority reiterated its commitment to continue coordination and advocacy actions to resolve the energy deficit in the region.
Related News
G20 Africa Partnership Conference: Speech by German Chancellor Angela Merkel
G20 Africa Partnership – Investing in a Common Future Conference
On 12-13 June 2017, the German G20 Presidency gathered together Heads of States and Ministers of African countries, Ministers and Deputies of interested G20 and other partner countries, Heads and representatives of International Organisations, private sector investors, and experts on Africa to strengthen the dialogue and partnership between African and G20 decision-makers. Central to the conference was the G20 finance track initiative, Compact with Africa, which aims to increase private investment, including in infrastructure, in Africa.
Africa has tremendous potential, being the youngest continent in the world. By 2035, more than half of young people entering the global labour market will be in Africa. This offers a promise of more jobs, higher incomes, and greater prosperity going forward. However, Africa faces challenges to reaching this potential, keeping the poor and giving rise to greater political and economic instability, migration pressures, violence, and terrorism.
Sharing a common objective of a stable and dynamic continent, Africa and the rest of the international community agreed that a partnership is necessary. The conference highlighted the key elements of the Compact with Africa initiative: (1) a demand-driven and open process that emphasizes African ownership; (2) a closer dialogue and better coordination among all stakeholders; and (3) collective action, building on strong commitments from all sides to create the right framework conditions for private investment.
The official website for the Compact with Africa initiative was launched during the conference.
Speech by Federal Chancellor Angela Merkel at the G20 Africa Partnership Conference, 12 June 2017
Some of you have travelled a very long way to be here today. So let me wish you all a very warm welcome to this partnership conference entitled “investing in a common future”. We hope that this conference will help ensure that these are not just nice words on paper. We really want to work during this conference to put cooperation into practice.
Our economic relations form an ever closer-knit web around the globe. Thanks to the Internet, we now know more about each other than ever before. Distance has lost its import when it comes to making new contacts and maintaining them. Developments like these of course bring tremendous opportunities. However, they also mean that we have to work towards sustainable and inclusive economic development for the entire world. A single country acting alone cannot make much headway on such a project. Yet globalisation is not a destiny to which we must yield without demur. On the contrary, it is something we must forge in partnership with others.
The Agenda 2030 is a great achievement, because all the countries on our planet have agreed on a common pathway for development. In contrast to the Millennium Development Goals, which defined targets for the developing countries, this time all countries – developed and developing nations alike – are part of this Agenda 2030.
It is on this basis that we have adopted the motto, “shaping an interconnected world”, for our G20 Presidency. The G20 Summit will take place in Hamburg. We have chosen a maritime image – a reef knot – as the symbol of our Presidency. The harder you pull on it, the better it holds. It symbolises the ties between our countries.
We know that pan-global development can only succeed if all continents share in such development. This also means, first and foremost, that the African continent has to make progress on its development pathway over the next few years. Even today, the economies of some African countries are remarkably dynamic. Some are even growing faster than the industrialised and newly industrialised economies of the G20. Success stories like those should inspire others. They reveal the potential that lies in African countries – for example in the field of renewable energy and digital development. There are many good examples of decentralised energy supply and much more besides. But much still remains to be done.
We in the industrialised countries have to consider whether we have always taken the right path in providing our traditional development aid. I don’t think we have. We have to focus more strongly on each specific country’s own economic development. That’s what gave rise to the idea – proposed first and foremost by our Finance Minister and our Development Minister – of saying we need an initiative through which we don’t speak about Africa, but speak with Africa. The result was the G20 Compact with Africa Initiative.
The countries of Africa have also set their own targets in their Agenda 2063 and have clearly stated what they believe development should bring. That’s why it’s called the Compact with Africa, not the Compact for Africa. The idea is for each country to say what development steps it considers necessary and how it thinks we can help and how, together, we can make available suitable instruments, so that the relevant development projects do succeed. You will talk about this in more detail today and tomorrow.
We want to lend support for regional market integration, not least in order to enhance the transfer of technology and know-how. We also want to ensure that trade flows between Europe and African countries really benefit everyone. We still have a lot to do in this regard.
The next European Union-African Union summit will take place in November. Today’s meeting, which we are hosting as part of our G20 Presidency, will also serve to prepare the ground for that summit. We are aware that our achievements of the past years are not yet enough. In many countries, development lags behind what is needed given the speed of population growth. Africa’s population is expected to double by 2050.
We also know that development is only possible if security is given. However, in many parts of Africa security is not yet sufficiently guaranteed – be it due to fragile sovereignty, conflicts, terrorism or humanitarian crises. Numerous human tragedies are being played out as we speak. For this reason, boosting the economy does not top the agenda in some African countries. They need to deal with day-to-day survival first.
As a result, the G20 Africa Partnership is concerned on the one hand with economic development, but on the other with fostering peace, stability and security – i.e. in creating the basic conditions for economic activity. There, too, we have to learn to think anew. For many years development policy-makers did not pay sufficient attention to security issues. For many years, we felt virtuous when we were not dealing with military equipment. But some of you have said to me that you are expected to combat terrorism, but are not given any support to do so.
I thus think we have to be more honest and admit that only where security is given can development take root. I consider it very courageous of some countries to take responsibility upon themselves in the fight against terrorism in Mali and its neighbourhood. France now wants a Security Council mandate in this connection. I can only say that Germany will support this.
Special attention will have to be devoted to the youth of Africa – as highlighted in the Agenda 2063. More than half of all Africans are under 25 years old. As I keep saying in Germany, the average age here in Germany is 43 years. The average age in Niger, Mali and other countries is less than 15 years. This just goes to show the very different situations we have to deal with. If we don’t give young people prospects for the future, if we don’t invest in education and skills, if we don’t strengthen the position of girls and young women, the development agenda will not succeed.
In other words, as part of our work in the G20 we will do everything we can, through the compacts with African countries and through special initiatives for women’s education and female entrepreneurship, to improve the prerequisites that should enable Africa to develop and grow as we need it to.
If hopelessness is too widespread in Africa, young people are also more likely to seek a better life elsewhere in the world. Thus, by working together with you for your countries, we are also enhancing our own security and will be able to put a stop to the activities of criminals who are toying with refugees and migrants’ fates and extracting large sums of money from them. Many refugees have terrible tales to tell of human smuggling and trafficking in human beings. States thus have to work together. We have to create legal options for movement and must not permit people to make money from the suffering of others.
Ladies and gentlemen, this conference also serves to draw attention to the differences between your countries, to the diversity of challenges faced in Africa. For this reason, too, let me thank you for coming. Many people in Germany are not yet as well informed about either the good or the difficult aspects of life in your countries as we would wish. Getting to know each other better, learning more about each other, and assuming responsibility together are all also aspects of shaping an interconnected world.
I hope that this conference will make a contribution to this end. And so let me ask all of you here today not to mince your words, to talk “tacheles”, as we say in Germany. Simply saying nice things doesn’t achieve anything. We have to learn from one another. And we need results. That’s what we’re here for.
A very warm welcome to you all.
Related News
After AGOA: SA must prepare for two-way free trade agreements with US
US Commerce Secretary Wilbur Ross says America’s relationship with Africa “has to continue its transition from being ‘AID-based’ to ‘TRADE-based’”.
“To that end, having two-way trade agreements, not just temporary trade preferences, would create long-term, sustainable improvements to quality of life on both sides of the Atlantic,” Ross told the Corporate Council for Africa’s business summit in Washington on Thursday.
The temporary trade preference he was referring to is the African Growth and Opportunity Act (AGOA) which, since 2000, has given eligible African countries duty and quota free access to the US market, without having to reciprocate. In 2015 it was extended to 2025 but it is not clear that it will be extended again.
South Africa has benefited more than other African countries from AGOA but experts on US-SA relations said Ross’s speech signalled that South Africa had better start negotiating with the US soon for a two-way free trade agreement to replace AGOA.
Ross said that bilateral trade agreements, rather than large, multilateral ones, could be very effective tools in meeting the long-term interests of the partners involved.
“And studies show that developing countries with liberalised trade tend to grow faster than those that don’t.”
Meanwhile the US must ensure countries currently benefiting from trade preferences granted by AGOA continued complying with its eligibility requirements, Ross said.
He added that the African countries which met these requirements would include the continent’s major success stories in the future.
“They are the countries that have opened their economies – not restricted access to their market. They are the countries that have: fought corruption, promoted good governance and business ethics, and sought to enforce intellectual property protections. All of which are critical for generating growth and innovation,” Ross said.
He noted that when President Donald Trump had met African leaders in Italy at the G7 meetings, he said, “Africa is a place of opportunity.”
And Ross recalled that at his confirmation hearing, he himself had said that the US could not ignore “such a large, dynamic and vital part of the world.
“This year, six African nations are on pace to be among the top 10 fastest growing countries in the world. Visitors to African cities see cranes dotting the skyline and investors arriving from all over the world.
“Visitors also notice web-based apps, such as Hello Tractor – an Uber-Like platform that allows rural farmers to access tractors. Over the next five years, 19 sub-Saharan African countries are expected to achieve average growth rates of 5% or higher.”
Address by Secretary of Commerce Wilbur Ross at the US-Africa Business Summit, 14 June 2017
I am honored to welcome President Nyusi, African Development Bank President Adesina, and the many other ministers and dignitaries here with us today…
And welcome to the esteemed group of business leaders participating in the summit.
When President Trump met with African leaders in Italy for the G7 meetings, he said, “Africa is a place of opportunity.”
And as I said during my confirmation hearing, we cannot ignore such a large, dynamic and vital part of the world.
We have received great feedback from American companies and members of our Advisory Council on Africa regarding the economic landscape of the continent.
This year, 6 African nations are on pace to be among the top 10 fastest growing countries in the world. Visitors to African cities see cranes dotting the skyline and investors arriving from all over the world.
Visitors also notice web-based apps, such as Hello Tractor – an “Uber-Like” platform that allows rural farmers to access tractors.
Over the next five years, 19 sub-Saharan African countries are expected to achieve average growth rates of five percent or higher.
And over the last five years combined, Ethiopia’s growth rate has been second highest in the world.
Africa is moving steadily on a trajectory of economic growth and increasing self‐reliance – a vision this Administration supports.
In realizing that vision, African and international efforts to promote peace and implement economic reforms are bringing a new generation into a new consumer class.
Studies by McKinsey estimated that, by 2025, an additional 90 million African households will enter the consumer class, contributing to a total household purchasing power of $2.1 trillion.
This buying power is essential for sustained economic growth.
That growth is generating demand for new infrastructure, new machinery and equipment, and new consumer products and services.
The critical question that decision makers in Africa, including many of you, must ask is this:
As these upward growth trends continue, with what types of partners do you want to collaborate?
I believe that, the more African nations partner with U.S. businesses, the better off both the United States and Africa will be.
In 2016, U.S. exports to Africa were approximately $21.81 billion – nearly double the $10.96 billion in U.S. exports in 2000.
Total trade between Africa and the U.S. was approximately $48.3 billion last year, up nearly $10 billion since 2000.
And our trade deficit declined in that period from $16.7 billion to $4.7 billion.
All of these numbers are moving in the right direction, so let’s work hard to have those trends continue.
Through our dedicated Commerce representatives on the ground, we hear African customers are actively seeking out American goods and services.
This is not only due to the quality of American products – It is also because American businesses have a great reputation for local engagement and corporate responsibility.
Our trade relationship is vital to the security and stability of both the United States and Africa.
But our relationship with Africa has to continue its transition from being “AID-based” to “TRADE-based.”
To that end, having two-way trade agreements, not just temporary trade preferences, would create long-term, sustainable improvements to quality of life on both sides of the Atlantic.
Bilateral trade agreements, rather than large, multilateral ones, can be very effective tools in meeting the long-term interests of the partners involved.
And studies show that developing countries with liberalized trade tend to grow faster than those that don’t.
In the meantime, we must ensure countries currently benefitting from trade preferences granted by our African Growth and Opportunity Act (AGOA) continue complying with the eligibility requirements established in U.S. law.
The Administration takes these congressional requirements very seriously.
And in applying our laws, we will vigorously protect the rights of U.S. companies and workers in the global arena.
Since its inception in 2000, AGOA has given duty‐free and quota‐free access to the U.S. market on approximately 6,000 products from qualifying African countries.
And so, I would contend that the countries that meet the AGOA Eligibility Requirements will include the continent’s major success stories in the future.
They are the countries that have opened their economies – not restricted access to their market.
They are the countries that have: fought corruption, promoted good governance and business ethics, and sought to enforce intellectual property protections.
All of which are critical for generating growth and innovation.
One excellent opportunity that African countries currently face is the new WTO Trade Facilitation Agreement, or TFA.
This agreement streamlines customs operations, enhances transparency, removes red tape, and reduces costs to exporters and importers.
It came into force in February of this year.
U.S. business leaders engaged in Africa recently advised the President:
“Full implementation of the TFA is a ready‐made opportunity to support the changes that Africa needs to address administrative burdens that raise trade‐related transaction costs to unsustainable levels.”
And WTO estimates that, if the least developed countries fully implement this agreement, it would reduce costs and enhance competitiveness, generating a 35 percent increase in exports.
Trade facilitation already forms a key part of the reform agenda of African regional economic communities.
The TFA strengthens these efforts and provides avenues for technical assistance. I challenge the leaders in this room to fully implement the TFA.
This brings me to a broader point. As Commerce Secretary, I work to ensure American businesses face favorable operating environments in the countries they conduct business.
This is key to ensuring the current U.S.-Africa commercial relationship has a solid foundation for future growth based on mutual interests.
And so, I want to take a moment to speak directly to my colleagues from African governments.
It is important to make sure that U.S. companies are in the best position possible to enter new markets in Africa – and that those companies already there are successful.
I hope that when U.S. companies seeking to do business in your country encounter obstacles, you will give them the consideration they deserve and work constructively to resolve any issues.
As a former global investor myself, I appreciate how important an open and transparent business climate is to any company looking to operate in a given country or region.
Access to markets, recognition of truly international standards, due process in procurement and protection of intellectual property:
These are the factors that help foster mutually beneficial relationships between U.S. companies and African governments seeking to attract investment and create jobs.
To illustrate my point, the need for infrastructure development is huge. And the way projects are procured plays a major role in their success.
There have been many failed infrastructure projects that can be traced back to the procurement stage.
In many countries in Africa, and around the world, for that matter, procurement is decided on the basis of the lowest price.
But while many may think they are saving money, we have seen repeatedly that when life cycles and quality factors are not considered in the procurement process, projects frequently face large cost overruns, safety or performance issues, and delays.
In short, you get what you pay for.
And so low cost procurement has not always been good for Africa.
Nor has it been good for U.S. companies, who tell us they can’t or won’t enter markets where low cost procurement is the norm.
In all, I am encouraged about the U.S.-Africa economic relationship.
We’ve recently witnessed several very positive developments regarding our trade relationship with Africa that give us hope for the future.
Since January 2014, the Commerce Department’s Advocacy Center has helped American companies win 29 separate major tenders in Sub‐Saharan Africa.
The value of these “wins” was approximately $7.6 billion, with $2 billion in U.S. export content.
We have also seen an ever-increasing number of small and medium sized American businesses exporting to Africa.
U.S. firms are actively bidding on an additional 147 tenders in the region valued at more than
$44 billion.
We’ve witnessed more and more American businesses pursing projects across the entire continent – not just in a few targeted markets.
And we’ve started to witness a small but incrementally growing number of African companies investing and creating jobs in the United States.
For example, Sasol (SAH-Sole), the South African energy firm, is fast approaching completion of a $9 billion ethane plant in Westlake, Louisiana.
The project is creating more than 500 full-time, high-paying manufacturing jobs, more than 5,000 in construction, and thousands more support jobs in Louisiana and across the United States.
We all can benefit from more of these exchanges in both directions.
I hope you will consider the Department of Commerce and the numerous Africa experts on our team as a resource as you continue your great work.
We do everything from providing market analysis and research, to assisting firms in identifying local partners or customers.
Beyond that, I look forward to gaining further insight from our Advisory Council on Africa members – all of which are private companies successfully doing business in Africa and supporting job creation in the United States.
U.S. companies continue to make their presence known in Africa because American ingenuity, premium brands, life cycle support, and technology transfers are key differentiators that we bring to the table.
We are headed in the right direction, but there is always room to improve. I look forward to seeing what the future holds.
Thank you again for having me today.
Related News
New phase for Hub and Spokes trade initiative which aids Africa, Caribbean and Pacific
An innovative trade initiative which is expanding opportunities for business, employment and prosperity in African, Caribbean and Pacific countries will be extended to February 2019.
The Hub and Spokes programme is a joint initiative of the European Union, ACP Group Secretariat, the Commonwealth Secretariat, and Organisation Internationale de la Francophonie. Through the programme, trade advisers are placed in government ministries and regional organisations to provide support and build local capacity to develop trade policies.
To kick-start the ambitious next phase of the aid for trade programme, 40 of the programme’s main stakeholders including 16 trade advisers gathered for a workshop in Bridgetown, Barbados, between 22 and 23 May.
As 2017 is shaping up to be an uncertain year for global trade, the workshop comes at a time when economic and political unpredictability is being felt all across the globe. The two-day event saw participants review the changing trade landscape, exchange best practices and establish a sustainable foundation for the design of national and regional trade policies.
Commenting, Commonwealth Deputy Secretary-General Deodat Maharaj said the Caribbean workshop presented an ideal opportunity to learn from regional experiences to ensure that developing countries and small and vulnerable states are not left behind.
Mr Maharaj said: “The Hub and Spokes programme is helping countries to use trade as a mechanism to advance human development and create prosperity. It has been an invaluable resource for Commonwealth member countries and in particular for small and capacity-constrained states. The work undertaken by these trade experts is second to none, ensuring that countries can effectively participate in global trade and that trade policies deliver on national development priorities.”
Chekou Oussouman, Head of the Hub and Spokes programme at the Organisation Internationale de la Francophonie (OIF) said: “The long-term technical assistance provided by the programme has given credibility to the partnership between the Commonwealth, OIF, EC [the European Commission] and the ACP Secretariat who have responded to requests from the ACP regions for the deployment of a network of high level advisers on trade policies.
“Beyond the reforms undertaken to make trade a lever for growth and successful structural transformation, several countries and regions have been involved in the ownership of the programme’s efforts and have also contributed to the financing of activities. Thus, the consolidation phase of the programme will enable key structuring activities to be transferred appropriately to the beneficiaries.”
Background
The first stage of the programme, Hub and Spokes I, ran from 2004 to 2012. The second phase, Hub and Spokes II, ended on 27 May 2017. The new consolidation phase will extend the Hub and Spokes programme until at least February 2019.
Six regional advisers – the hubs – and 16 national advisers – the spokes – are currently deployed by the Commonwealth Secretariat under the programme. The Organisation Internationale de la Francophonie (OIF) has also deployed 4 hubs and 16 spokes in Africa, resulting in a total of 10 hubs and 32 spokes deployed under the programme.
Advisers are placed in these countries and regional organisations:
-
Caribbean: Belize, Guyana, Jamaica, St Vincent & the Grenadines, CARICOM Secretariat and OECS Secretariat
-
Eastern and Central Africa: Botswana, Kenya, Lesotho, Malawi, Zambia, AU Commission, COMESA Secretariat, EAC Secretariat and SADC Secretariat
-
Western and Central Africa: Benin, Burkina Faso, Cameroon, Chad, Congo, Democratic Republic of the Congo, Gabon, Guinea, Guinea-Bissau, Islamic Republic of Mauritania, The Ivory Coast, Mali, Republic of Niger, Republic of Sierra Leone, Senegal, Togo, CEEAC/ECCAS, CEMAC, ECOWAS and UEMOA
-
Pacific: Federated States of Micronesia, Fiji, Kiribati, Republic of Marshall Islands, Samoa, Tonga, PIF Secretariat
Related News
tralac’s Daily News Selection
CFTA negotiations: The 3rd Meeting of the African Ministers of Trade began today in Niamey, Niger. It concludes tomorrow.
Featured visualisation: Market potential of West African agglomerations
‘Legacy’ problems, corruption and unfinished projects mar India’s aid diplomacy (The Wire)
The total amount of soft loans that India has committed in the past 14 years is about $24.2bn, in over 60 developing countries. As per government figures, India’s lines of credit stood at about $10bn as of April 2014. Since then, another $14.2bn has been added with 52 new lines of credit. This amount of $24.2bn, however, does not include the $10bn soft loan that Prime Minister Narendra Modi offered to African countries at the third India Africa Forum Summit in 2015. The fact that India has loaned out capital amounting to nearly 1% of its current GDP is a clear indicator of the primacy of ‘aid’ as a diplomatic tool. With the Indian economy continuing to show faster signs of growth compared to its peers, MEA officials believe that lines of credit commitments will continue to rise. Therefore, putting the right policy in place at this time becomes crucial. The success of the new guidelines will only become apparent if the projects start to be finished as per schedule. “We want to actively promote our soft loans to more and more countries. But we need to be confident that we will get good companies and that our credibility to implement projects is not harmed,” said a senior official.
AfDB Group’s Strategy for the New Deal on Energy for Africa 2016–2025 (AfDB)
The New Deal focuses on seven strategic themes that are holding back the development of the energy sector. These strategic themes are: (i) setting up the right enabling policy environment, (ii) enabling utility companies for success, (iii) dramatically increasing the number of bankable energy projects, (iv) increasing the funding pool to deliver new projects, (v) supporting ‘bottom of the pyramid’ energy access programmes, (vi) accelerating major regional projects and driving integration, and (vii) rolling out waves of country-wide energy ‘transformations’. The Bank will implement these themes through a series of flagship programmes such as:
Sending money home: contributing to the SDGs, one family at a time (IFAD)
The first-ever study, Sending Money Home: Contributing to the SDGs, One Family at a Time, highlights the role these funds - more than $445m in 2016 - play in helping development countries attain the UN Sustainable Development Goals. ”About 40% of remittances – $200bn – are sent to rural areas where the majority of poor people live,” said Pedro de Vasconcelos, manager of IFAD’s Financing Facility for Remittances and lead author of the report, which notes that over the past decade, remittances have risen by 51% – far greater than the 28% increase in migration from these countries. Extract (pdf): Over the past decade, remittances to and within Africa have grown by 36%, close to the migration growth pace (29%). Out of the $60.5bn received in 2016, close to 80% of remittances went to five countries: Nigeria ($19bn), Egypt ($16.6bn), Morocco ($7bn), Algeria and Ghana ($2bn each). For 19 receiving countries, remittances are critical, as they rely on these flows for 3% or more of their GDP. For six countries, remittances make up more than 10% of their GDP: Liberia (31%), The Gambia (22%), Comoros (20%), Lesotho (18%), Senegal (14%).
World Employment and Social Outlook Trends for Women 2017 (ILO)
Reducing gender disparities at workplaces by 25% by 2025 could inject nearly $5.8 trillion into the global economy and boost tax revenues, a new report released by the ILO reveals. ”Helping women access the labour market is nevertheless an important first step,” said ILO in a news release, noting that in 2017, the global labour force participation rate for women – at just over 49% – is nearly 27 percentage points lower than for men. Extract (pdf): The labour force participation gap in sub-Saharan Africa remains almost unchanged from a decade earlier, at 11.7 percentage points. Furthermore, little change is anticipated through 2021. With a participation rate of 64.6%, a higher share of women in sub-Saharan Africa are active in the labour force than in any other region. However, this reflects both a prevalence of poverty and a lack of access to social protection, leaving both men and women little choice but to work out of necessity. This effect – in addition to limited access to education and vocational opportunities – is also responsible for more women working in vulnerable forms of employment, namely as own-account workers or contributing family workers (see section 1.4).
Experts back report on land, ethnicity and conflict in Africa (UNECA)
A two-day Experts’ Group Meeting to validate a study on Land, Ethnicity and Conflict in Africa ended in Addis Ababa on Wednesday with participants endorsing the draft report as an authentic piece of work that reflects the current land situation on the continent. COMESA Senior Private Sector Development Officer, Innocent Paradzayi Makwiramiti, applauded the LPI for commissioning the study, adding it will help the continent deal with land and ethnicity conflicts, paving the way for the creation of a conducive environment that will boost investment, economic growth and sustainable development in Africa. The experts will soon present their findings, recommendations and policy guidelines to the continent’s leaders through the AU, the United Nations, Regional Economic Communities and related entities.
Coal is Mozambique’s biggest export in first quarter (Macauhub)
Coal exported in the period, which accounted for 33.4% of all exports, generated revenues of $326.1m, an increase of 200.5% over the first quarter of 2016. Coal and aluminium (with exports of 249 million euros, a year-on-year increase of 29.5% and a weight of 25.5%) accounted for 58.9% of Mozambique’s exports in the quarter.
Zambia extends ban on timber exports to all species (Xinhua)
The Zambian government on Tuesday extended its ban on timber exports to all types of timber in the country. The government has already banned to harvest and export of the Mukula species, an endangered species as well as in-transit of the logs from other countries in the region. Minister of Lands and Natural Resources Jean Kapata said the ministry will however allow concession licenses to continue operating and supplying timber to the local market. According to her, authorities impounded 466 trucks laden with timber logs during the period, adding that so far 272 trucks had valid documentation to transit through Zambia. She said the trucks will soon be released to proceed to respective destinations while the remaining 194 trucks, which have no supporting legal documentation, will be dealt with on a case by case basis. [Willemien Viljoen: When good intentions go awry – timber transit through Zambia]
Tanzania: Barrick meets with GoT to commence negotiations
Barrick Gold Corporation executive chairman John L. Thornton met with the President of the United Republic of Tanzania, His Excellency Dr. John P. Magufuli, to discuss issues pertaining to Acacia Mining plc, and the country’s current ban on mineral concentrate exports. The meeting was constructive and open, with the parties agreeing to enter into negotiations to seek a resolution that is in the best interests of all stakeholders, including Tanzania, Barrick, and Acacia. [Parliamentary committee meets over the second mineral sands saga report]
Tanzania Investment Centre gets new board chair (The Citizen)
President John Magufuli has appointed Professor Longinus Rutasitara the new chairman of the Tanzania Investment Center board with effect from May 31 this year. In a statement released on Wednesday by the Ministry of Industry, Trade and Investment, it also says that Minister Charles Mwijage has appointed six members of the board. They include, Prof Winester Anderson, Dr Khatib Kazungu, Mr Godfrey Simbeye, Dr Taus Kida, Mr Seif Seif and Mr Peter Chisawilo.
Kenya: We have adjustments to make on spending on project (Daily Nation)
When it (the SGR) was launched, there were promises that it would cement our regional hub status; it would bring down our high costs of transport and thirdly, that it would be run efficiently and economically. Regarding the first one, the new railway has the potential to reinforce the country’s important hub position but that will be dependent on both the other two promises being carried out. The acid test will be ensuring that the SGR finds and retains a role as a competitive and efficient transporter. One big if will be whether it will need subsidising? Certainly the rates it is offering at present do not look as if they will bring in adequate revenue. The government is between a rock and a hard place. If it reduces rates further it will have to subsidise more and if it increases the rates it will find it harder to win over much new business from the road transporters, in particular. [The author: Robert Shaw]
Zambia: USTDA supports Bwengwa River geothermal resource (ESI Africa)
The US Trade and Development Agency has signed a $1.5m grant with Zambian geothermal development company, Kalahari GeoEnergy Limited, for a feasibility study supporting the development of a 10-20MW geothermal power plant. California-based Geologica Geothermal Group has been selected to carry out the study, which will provide technical and environmental analyses needed to advance the project, the development agency noted. “This grant is an endorsement of the work Kalahari GeoEnergy has conducted to date, and of the Bwengwa River geothermal resource, which we can now validate as a source of stable sustainable power,” Vivian-Neal said.
Containers and globalisation: estimating the cost structure of maritime shipping (VOX)
Container shipping is considered to be one of the drivers of globalisation. This column uses micro-level data to show evidence that confirms the role of ‘the box’ in the global economy: it implies significant cost savings and explains a significant amount of the global trade increase since its inception. The results also suggest that most of its trade-increasing effect has already been realised.
Today’s Quick Links: Egypt: Trade balance deficit dropped 43.1% in March Egyptian court suspends food inspection system meant to ease trade SADC 7th River Basin Organizations’ meeting (22-24 May): summary COMESA develops seed labels and certificates for intra-regional seed trade Senegal seeks improved trade, investment ties with Nigeria Dutch trade investors collaborate with Ghana’s horticultural sector |
Related News
AfDB Group’s Strategy for the New Deal on Energy for Africa 2016-2025
Energy – its availability, reliability, affordability and sustainability – is critical for Africa’s transformation. Modern energy services enable economic growth and have a central role in sustaining inclusive growth: they drive employment and increase productivity across the value chain in agriculture and other sectors. However, shortages, high cost and poor access to energy remain major impediments to Africa’s social and economic progress.
The African Development Bank’s Energy Policy (2012) and the African Development Bank’s Strategy for 2013-2022 (also referred to as the Ten Year Strategy) recognise the opportunities and challenges in the energy sector. The Bank’s operations have responded to these opportunities and challenges by addressing a variety of needs across the continent ranging from sector level interventions to project preparation support and transaction advisory work. While these efforts have yielded results much more needs to be done.
The aspiration of the Bank’s New Deal on Energy for Africa is achieving universal access to energy across the continent by 2025 – 100 per cent access in urban areas and 95 per cent in rural areas, leveraging on- and off-grid solutions and related technological advances.
The New Deal on Energy for Africa is a partnership-driven effort. To achieve and drive towards this goal, the AfDB is working with governments, the private sector, bilateral and multilateral energy sector initiatives to develop a Transformative Partnership on Energy for Africa – a platform for public-private partnerships for innovative financing in Africa’s energy sector. The design of the New Deal draws on consultations with African countries, utilities, private sector investors and financiers and foundations in various forums such as (i) the high-level consultation meeting in Abidjan in September 2015 – at which the concepts and flagship programs were co-developed with public and private stakeholders; (ii) the World Economic Forum – at which the Transformative Partnership on Energy for Africa was launched with African heads of States and Governments and global Partners; (iii) the African Union Summit in January 2016 where several heads of state expressed their full support for this effort and affirmed the appointment of the African Development Bank as the Trustee for the African Renewable Energy Initiative and the host of its Independent Delivery Unit; and (iv) several energy sector meetings, including the PIDA Week; and (iv) several consultative meetings between the Bank’s President and Senior Management and Heads of States and Governments, relevant ministers and stakeholders in Africa and beyond.
The New Deal is built on five inter-related and mutually reinforcing principles: raising aspirations to solve Africa’s energy challenges, establishing a Transformative Partnership on Energy for Africa; mobilising domestic and international capital for innovative financing in Africa’s energy sector, supporting African governments in strengthening energy policy, regulation and sector governance, and increasing the African Development Bank’s investments in energy and climate financing.
This Strategy for the New Deal on Energy for Africa sets out the priorities for the Bank’s interventions in the energy sector from 2016 to 2025. The Strategy will contribute to the transformation of Africa’s energy sector and promote inclusive growth and the transition to green growth by increasing energy production scaling-up energy access improving affordability, reliability and energy efficiency while improving the sustainability of energy systems.
The New Deal focuses on seven strategic themes that are holding back the development of the energy sector. These strategic themes are: (i) setting up the right enabling policy environment, (ii) enabling utility companies for success, (iii) dramatically increasing the number of bankable energy projects, (iv) increasing the funding pool to deliver new projects, (v) supporting ‘bottom of the pyramid’ energy access programmes, (vi) accelerating major regional projects and driving integration, and (vii) rolling out waves of country-wide energy ‘transformations’. The Bank will implement these themes through a series of flagship programmes such as: the rolling out of an Independent Power Producer (IPP) Procurement Programme (IPP), power utility transformation, early stage project support facilities, funding catalyst programmes, bottom of the pyramid energy financing facilities, mobile payment programmes, regional project acceleration programmes, country wide energy sector turnarounds and transformative partnerships.
The New Deal supports the implementation of other relevant policies and strategies of the Bank. The achievement of other standing policies and strategies of the Bank require significant improvements in Africa’s energy systems, access and security. The New Deal was designed to support the effective implementation of the Bank’s Private Sector Development Strategy (2013-2017), the Regional Integration Policy and Strategy (2014-2023), the Governance Strategic Framework and Action Plan (2014-2018), the cross-cutting Gender Strategy (2014-2018), and to achieve the twin goals of the Bank’s Ten Year Strategy – inclusive and green growth in Africa.
The New Deal supports the implementation of the new strategic goals of the Bank, the High 5s: Energy is the lifeblood of the economy. To successfully Feed Africa, Industrialize Africa, Integrate Africa, and Improve the Quality of Life of Africans, we must first Light up and Power Africa. The New Deal was designed to unlock productivity potentials across agribusiness zones and hubs, as well as industrial value chains in all economic sectors in rural and urban areas with a focus on reaching the unserved populations across the continent.
The New Deal on Energy for Africa contributes to the achievement of the Sustainable Development Goals (SDG) in Africa. It directly contributes to achieving in particular, ensuring access to affordable, reliable, sustainable, modern energy for all (SDG 7); ending poverty in all forms (SDG 1); combating climate change and its impact (SDG 13); improving health and well-being (SDG 3); SDG achieving gender equality and empower all women and girls (SDG 5); and reducing inequality within and among countries (SDG 10). By improving access to clean energy, the New Deal will also contribute to social and economic growth and environment sustainability in Africa.
The New Deal on Energy for Africa will assist African countries in achieving the COP21 Agreement on climate change, especially their Intended Nationally Determined Contributions (INDCs). While the energy sector contributes a major share of greenhouse gas (GHG) emissions in most industrialized countries, historical green-house gas emissions in Africa have been driven by land use change, agriculture and forestry. However, the energy sector has risen to prominence in the past decade. Without transformative actions to accelerate access to affordable, reliable, sustainable, modern energy – for lighting homes, clean cooking, and base load energy for industrialization and wealth creation – population growth will engender increased deforestation and GHG emission in Africa.
African countries have demonstrated political will and leadership and have submitted ambitious plans to curb GHG emissions in their INDCs, amounting to a reduction in emissions by 2030 of more than 40 per cent against a business as usual baseline. Many INDCs include ambitious plans and policies to scale up renewable electricity generation, increase energy efficiency and reduce emissions from the energy sector. Adaptation in the energy sector is a key component in many Africa’s INDCs to ensure that both existing and new energy infrastructures take into account climate impacts which, in turn, can play a crucial role in increasing general societal resilience todisasters and climatic extremes). While some of the emission reductions strategies proposed in the INDCs are unconditional, others are conditional on support from the international community. The New Deal will contribute to the twin goals of the African Development Bank’s Ten Year Strategy by prioritising coordinated transformative actions that accelerate the achievement of universal access to affordable, reliable and modern energy services (SDG 7) and enhance the capacity of countries to achieve other SDGs, including climate action (SDG 13).
» Download: The Bank Group’s Strategy for the New Deal on Energy for Africa 2016-2025 (PDF, 2.23 MB)
Related News
Migrants send home 51 per cent more money than a decade ago lifting millions out of poverty, says new report
The amount of money migrants send to their families in developing countries has risen by 51 per cent over the past decade – far greater than the 28 per cent increase in migration from these countries, according to a new report released by the International Fund for Agricultural Development (IFAD).
Sending Money Home: Contributing to the SDGs, One Family at a Time is the first-ever study of a 10-year trend in migration and remittance flows over the period 2007-2016. While the report shows that there have been increases in sending patterns to almost all regions of the world, the sharp rise over the past decade is in large part due to Asia which has witnessed an 87 per cent increase in remittances.
Despite the decade-long trend, Gilbert F. Houngbo, President of IFAD, said the impact of remittances must first be viewed one family at a time. “It is not about the money being sent home, it is about the impact on people’s lives. The small amounts of $200 or $300 that each migrant sends home make up about 60 per cent of the family’s household income, and this makes an enormous difference in their lives and the communities in which they live.”
More than 200 million migrant workers are now supporting an estimated 800 million family members globally. It is projected that in 2017, one-in-seven people in the world will be involved in either sending or receiving more than US$450 billion in remittances. Migration flows and the remittances that migrants send home are having large-scale impacts on the global economy and political landscape.
Total migrant worker earnings are estimated to be $3 trillion annually, of which approximately 85 per cent remains in the host countries. The money migrants send home averages less than one per cent of their host country’s GDP.
Taken together, these individual remittances account for more than three times the combined Official Development Assistance (ODA) from all sources, and more than the total foreign direct investment to almost every low- and middle-income country.
“About 40 per cent of remittances – $200 billion – are sent to rural areas where the majority of poor people live,” said Pedro de Vasconcelos, the manager of IFAD’s Financing Facility for Remittances and lead author of the report. “This money is spent on food, health care, better educational opportunities and improved housing and sanitation. Remittances are therefore critical to help developing countries achieve the Sustainable Development Goals.”
Transaction costs to send remittances currently exceed $30 billion annually, with fees particularly high to the poorest countries and remote rural areas. The report makes several recommendations for improving public policies and outlines proposals for partnerships with the private sector to reduce costs and create opportunities for migrants and their families to use their money more productively.
“As populations in developed countries continue to age, the demand for migrant labour is expected to keep growing in the coming years,” said de Vasconcelos. “However, remittances can help the families of migrants build a more secure future, making migration for young people more of a choice than a necessity.”
Other key findings from the Report:
-
Remittance flows have grown over the last decade at a rate averaging 4.2 per cent annually, from $296 billion in 2007 to $445 billion in 2016.
-
One hundred countries receive more than $100 million in remittances each year.
-
It is projected that an estimated $6.5 trillion (at no growth) in remittances will be sent to low- and middle-income countries between 2015 and 2030.
-
The top ten sending countries account for almost half of annual flows, led by the United States, Saudi Arabia and the Russian Federation.
-
Eighty per cent of remittances are received by 23 countries, led by China, India and the Philippines.
-
Asia receives 55 per cent of all remittance flows.
The report was released ahead of the International Day of Family Remittances commemorated annually on 16 June. Its analysis and recommendations set the stage for discussions at the Global Forum on Remittances, Investment and Development 2017 on 15-16 June at UN Headquarters in New York.
Related News
‘Legacy’ problems, corruption and unfinished projects mar India’s aid diplomacy
India has now moved away from its hands-off approach towards projects under lines of credit to foreign countries, the outcome of which is yet to be seen.
In 2012, India offered a loan of $250 million to Mozambique to improve the electricity supply to its capital, Maputo. Five years on, the project is in limbo as New Delhi has quietly urged the host government to remove the existing Indian contractor and float a new tender.
This is one of a handful of projects across Africa being executed with Indian soft loans where the Indian government has communicated its disquiet over the work of current contractors.
These projects are seen within the Ministry of External Affairs (MEA) mainly as ‘legacy’ problems from the previous system of issuing lines of credit – or loans at concessional rates – to developing countries.
For the past one year, the ministry’s development project assistance (DPA) division has been putting in place a new method of streamlining the completion of projects under lines of credit. This was also, effectively, a much-required spring cleaning. The aim, according of MEA officials, was to get out of the previous system – which they said awarded contracts to only a handful of Indian firms, especially in Africa.
It is important for India to ensure that lines of credit are used effectively – they have been the principal instrument for New Delhi’s aid diplomacy, adopted systematically since 2003. Largely administered by the MEA’s territorial divisions in the first decade, an Indian development aid project once even led to the controversial transfer of a joint secretary who was allegedly being forced to accommodate the whims of a ministerial aide.
After the DPA division was carved out in 2012, it was given charge of administering all lines of credit that India offered to foreign countries.
At stake, 1% of Indian GDP
The total amount of soft loans that India has committed in the past 14 years is about $24.2 billion, in over 60 developing countries.
As per government figures, India’s lines of credit stood at about $10 billion as of April 2014. Since then, another $14.2 billion has been added with 52 new lines of credit.
This amount of $24.2 billion, however, does not include the $10-billon soft loan that Prime Minister Narendra Modi offered to African countries at the third India Africa Forum Summit in 2015.
The fact that India has loaned out capital amounting to nearly 1% of its current GDP is a clear indicator of the primacy of ‘aid’ as a diplomatic tool.
“If you are seen by most people as playing a benign developmental role, then you strengthen your credentials of contributing to global good…If you want to be seen as a leader, then you must act like one,” said a senior MEA official.
Opening up doors for Indian firms is another reason for distributing soft loans – whether it is to get access to new markets or resources. Procurement rules stipulate that about 70% of the goods to be used in projects under lines of credit have to be sourced from India or Indian companies.
“Many of India’s investments are in extractive sectors, where they face problems of infrastructure, logistics or the regulatory system is weak. We provide aid which will improve those sectors like build a rail line for offloading coal – which would obviously help Indian companies,” the official said.
With China’s Belt and Road Initiative snaking its way around the world with its $1-trillion purse, Indian officials feel the need to diplomatically leverage India’s lines of credit even more intensively.
Though India started to seriously deploy lines of credit from 2003, New Delhi has had a rather hands-off approach to the process itself. “The borrowing government identifies a project in accordance with its own development plan. We don’t try and impose and say that we will do this or for that, like what the Chinese do,” said a MEA official.
Once a proposal comes through, it is examined by the MEA and the finance ministry’s Department of Economic Affairs, before getting another layer of scrutiny from a standing committee.
However, after the approval process, the Indian government had been taking the path of least supervision, giving a very long leash to the borrowing country.
“We realised that the success of the project depends on a good DPR [detailed project report]. When you don’t have a good DPR or it is vague or not a detailed one, then the project would be delayed and have cost overruns,” said a senior MEA official.
A quality DPR is at the heart of smooth, efficient implementation of a project. However, most foreign projects did not have one when they were offered to the Indian government.
The process of converting a soft loan to a complete project should ideally be simple. However, more often than not, delays start occurring at the DPR level, after the Indian government has signed off on the loan.
When a borrowing country doesn’t have the capacity or technical capability to come up with a DPR, there are a number of options that can be taken. For one, India’s Exim Bank can float a tender asking for various private parties to come up with a DPR. Or the Indian government has in the past handed the responsibility of creating a DPR to a public-sector enterprise or undertaking (PSE/PSU) without floating a tender.
However, the practice of appointing a PSU for creating a DPR has been problematic in the past. According to a number of MEA officials, Indian PSUs often tweak project specifications to benefit certain private-sector contractors. “We could not overrule them as we are not technically equipped, but we know that there is something dubious,” explained a diplomat.
This suspected nexus has resulted not just in higher costs, but poor execution quality. “We found that projects which didn’t go well at the implementation stage started to unravel once we handed them over,” said an official. A few years ago in Afghanistan, local authorities refused to hand over a completion certificate for two mini hydel projects because of how botched the project ended up being. India then had to lean on the authorities to get this certificate, an official recounted.
This article was first published by The Wire. Read the full article here.
Related News
tralac’s Daily News Selection
Underway, in Berlin: inaugural ITC/ATI Tax and Development conference, hosted by Germany as part of its G20 Presidency
Related, recent African conference outcomes on illicit financial flows: (i) Promoting international cooperation in combating IFF and enhancing asset recovery: keynote presentations from PACAC conference (5-7 June, Abuja), (ii) African Organisation of Public Accounts Committees: conference declaration (24-26 May, Yaoundé)
Diarise: 1st East African Economic Conference on Continental Free Trade Area and Regional Integration (7 July, Nairobi)
The Vision Document for the Asian Africa Growth Corridor: Partnership for Sustainable and Innovative Development (RIS, EIRA, IDE-JETRO)
India and Japan bring a shared repertoire of development cooperation strengths for Africa. The strengths of India and Japan development programmes need to be fine tuned with development needs of Africa, and also its development priorities. The Special Strategic and Global Partnership between India and Japan adds further value to this vision. In view of the above-mentioned background, the AAGC will deliberate on the following aspects: (i) The existing mechanisms for cooperation between Asia and Africa; (ii) The broad based agenda for synchronised growth of Asia-Africa for sustainable and innovative development; (iii) Establishment of optimum linkages and cooperation among the sub-regions of Asia and Africa; (iv) Establishment of industrial corridor and industrial network. The AAGC is focused on expanding the manufacturing base and expand trade of Africa and Asia. The objective will be to create manufacturing centres backed by appropriate human resource development with a view to increasing value addition within the relevant African countries, partly for domestic consumption and partly for export. Next steps: Organisation of the AAGC Vision Study. The initial step is to comprehensively survey the existing cooperation and partnership mechanisms between Asia and Africa, including those between their sub-regions. The study will list out the current demands, and challenges of economic, socio-cultural and political partnership and overall growth. The vision study will bring out the existing challenges and barriers to AAGC. The vision study will spell out the cooperation aspects of sustainable growth and development, and the mechanisms for exchange of best practices. Based on all these aspects, the AAGC Vision Study will make recommendations to the governments of India and Japan, and to governments in Africa, South Asia, Southeast Asia, East Asia and Oceania on the way forward for deepening Asia Africa Partnership. [Ruchita Beri: AAGC commentary]
Abuja RECs Roadmap: update (ECOWAS)
A strategic planning and capacity development retreat on the role of African Regional Economic Communities in the implementation of the First Ten Year Action Plan of the African Union Agenda 2063 has ended in Abuja, Nigeria. The retreat (8-9 June) was organized by the ECOWAS Liaison Office to the AU, with the International Institute for Democracy and Electoral Assistance and the ACBF. When finalized, the Abuja RECs Roadmap will also enhance inter-RECs cooperation through joint planning, programming and execution to better equip the RECs to individually and collectively implement their specific agenda and that of the AU 2063. The Roadmap covers the identification of joint Strategic priorities of RECs, IDEA and ACBF, areas for programmatic, technical and substantive assistance, common institutional, organizational, human resource, knowledge learning and management programmes. It also has a Work plan and Statement of Declaration of Commitment to implement joint activities around the identified priorities including the Joint Resource Mobilization Plan.
Posted: SADC Statistical Yearbook 2015 (pdf)
The SADC Statistical Yearbook provides time-series and summaries of statistical information and data to stakeholders and other users pertaining to various aspects SADC and its Member States including population, society, government, economy, and cross cutting issues such as poverty, environment and gender. The socio-economic information from the SADC Statistical Yearbook can be used to discern the baseline situation and profiles of the SADC region and its Member States. To facilitate comparability of indicators across countries and the region and over time, the annual data from Member States, complemented by international data sources, were used. Given the diversity of SADC countries, the SADC Statistical Yearbook placed emphasis on indicators expressed as ratios, percentages, rates, or in per capita terms, with absolute numbers presented only to a limited extent.
ECOWAS Investment Climate Scorecard Roundtable: update (World Bank)
The purpose of the event (13-14 June, Abuja) is to launch the ECOWAS Investment Climate Scorecard, an innovative instrument that enables both the ECOWAS Commission and national policymakers of the Member States to identify investment barriers both nationally and regionally; track the progress of national investment-climate and investment-policy reforms; share good practices and proposed investment reforms both nationally and regionally; and encourage the creation of a transparent and attractive investment climate to enhance private sector-led development in West Africa. The objective is to incentivize the Member States to adhere to the good-practice standard benchmark criteria/indicators by integrating the same into their investment-reform agendas in line with the regional ECOWAS Investment Policy (IP) Framework. The Scorecard tool supports and monitors the implementation of the ECOWAS investment reforms in Member States by aligning national reform initiatives to the regional ECOWAS IP Framework.
Zambia: World Bank reports on employment, value chains policy issues
The analysis, released yesterday, contains three reports: the Zambia Jobs Diagnostic, a policy Action Plan, and the Zambia Jobs in Value Chains. The reports stress the need for Zambia to take comprehensive action at a macro level, through institutions and labor markets, and through targeted interventions to create more demand for good jobs. The studies explicitly highlight the potential of growth in agribusiness and agro-processing to connect more Zambians, especially those that are young, rural and poor, to jobs through value chains. The Zambia Jobs Diagnostic report contains two volumes on analytics and a policy framework for jobs. “Volume 1: Analytics” outlines the main challenges to Zambia’s jobs agenda at the macroeconomic, household, and firm levels. “Volume 2: A Policy Framework for Jobs” presents a set of policies that may be prioritized by policymakers under a jobs strategy. [Related: African agrifood youth employment and engagement study: blog update by Julie Howard, Conference on Land Policy in Africa 2017 (14-17 November, Addis)]
National Committees on Trade Facilitation: current practices and challenges (WTO)
The purpose of this publication is to disseminate information on national experiences, best practices and recommendations with respect to the establishment and functioning of NCTFs. It is based on the experiences shared by more than 35 speakers during a workshop that took place on 8 June 2016 at the WTO and on the results of an electronic survey by the WTO Secretariat, which collected information on the practices of and challenges faced by more than 100 WTO Members.
Kenya grants SA visitors 90-day visa free stay (Business Daily)
Nairobi has granted South Africans additional time to visit Kenya without visas, pointing to a thawing of diplomatic relations between the two nations. Interior secretary Joseph Nkaissery says in a legal notice published last Friday that South Africans can now visit and stay in Kenya without a visa for up to three months, up from the previous 30 days. The notice says South African “civil servants, holders of diplomatic, official or ordinary passports” can visit Kenya without visas “for a period exceeding (sic) ninety (90) days”. The Ministry of Interior later clarified that there was an error in the notice, and that it ought to have read a period “not exceeding ninety (90) days”.
Kenya, Indonesia plan to sign trade deal inches closer (Business Daily)
Indonesian Trade ministry officials will travel to Nairobi next month to begin the PTA negotiations with their Kenyan counterparts. The PTA aims to enhance market access, reducing tariff and facilitate trade between the two countries. Indonesian Foreign Affairs vice minister Abdurrahman Mohammad Fachir said the deal would transform the current political cooperation into economic ties and exchanges.
Tanzania: No respite for officials behind mineral looting (IPPMedia)
State security organs have been instructed to keep close tabs on past and present public officials implicated in the latest damning report on mineral concentrate exports and ensure they do not cross the country’s borders without special permission. The report by a second presidential probe committee into the mineral concentrates matter, which was formally delivered to President Magufuli yesterday, openly implicated a number of past and present government officials in alleged collusion with multinational mining companies to facilitate massive tax evasion causing the nation to lose trillions of shillings in unpaid royalties. Among prominent names mentioned were those of three former ministers responsible for minerals - Nazir Karamagi, Daniel Yona and William Ngeleja – plus two former attorney generals - Andrew Chenge (1995-2005) and Johnson Mwanyika (2006-2009).
Today’s Quick Links: Rwanda: Minister Nsengimana appointed chair of global forum on SDGs World Bank: Does Namibia’s fiscal policy benefit the poor and reduce inequality? African Union’s July 2017 Summit: what to expect? Pinto Consulting: Final evaluation of the SADC Regional Economic Integration Support Programme Enterprise Mauritius partners with Durban Chamber to reach out to SA apparel stakeholders Zimbabwe and the 2017 Enabling the Business of Agriculture Report UNSC briefing: ‘Security vacuum’ in Central Africa may be exploited by armed groups Open borders will bolster aviation in the region, says IATA president IATA AGM: Airlines commit to air cargo modernization PIIE’s Caroline Freund: Streamlining Rules of Origin in NAFTA ICTSD’s Wallace S. Cheng: To open up global trade we need to understand ‘protectionism’ International IDEA: Southern Africa Policy Dialogue on Money in Electoral Processes |
Related News
Zambia needs more, better jobs to reduce poverty and inequality
The World Bank has launched new reports confirming that Zambia needs a lot more jobs and created at a much faster pace. They also need to be of jobs with higher wages for the majority of Zambians still trapped in poverty. We call them good jobs because they promote inclusive growth. The youthful population cannot wait.
“The Zambia Jobs Diagnostic and the Jobs in Value Chains reports are an important contribution because Zambia remains one of Africa’s youngest countries. Faster job creation for youth, women, and rural communities is crucial to reducing poverty,” said Ina Ruthenberg, World Bank Country Manager for Zambia. “
New comparable results on poverty and inequality between 2010 and 2015 in Zambia are a wake-up call. The troubling fact is that for the majority of Zambians living in rural areas, life got harder and living conditions got worse.
“As this Government starts the cycle of the new 5-year National Development Plan, its top priority is to create more and better jobs, especially for youths living in the rural areas,” said Dr. Roland Msiska, Secretary to Cabinet. He added, “Government therefore welcomes the input of the Lets Work Partnership into its job creation agenda, and will continue to engage on the policy actions needed for jobs.”
According to the reports, the gaps in labor market outcomes and earnings across Zambia are widening: between formal and informal workers, between rural and urban workers, between regions, and between unskilled and skilled workers. With the workforce growing rapidly, Zambia will only benefit from its demographic advantage over the next two generations if the economy can generate faster growth of jobs with higher productivity, particularly in agriculture and agro-processing, and in secondary towns.
The report recommends smoothening the effects of copper price fluctuations on the economy so as to facilitate investment and job creation; designing labor regulations to support the growth of formal sector jobs, and skills development to raise the productivity of farming and informal enterprises; and undertaking sectoral and regional policies to increase labor demand in high potential agro-processing and manufacturing value chains in regions with high poverty density.
These reports were presented to policymakers, and representatives from the private sector, development community, and civil society organizations. The event was hosted by the World Bank in collaboration with the International Labour Organization as part of the Let’s Work Program, a global partnership that unites organizations dedicated to providing effective solutions to harnessing the potential of the private sector in job creation. The Secretary to Cabinet, through the Jobs Office in Cabinet under the Private Sector Development Reform Program (PSDRP), coordinated representation by Government across Ministries to discuss policy actions for jobs.
The Zambia Jobs Diagnostic report contains two volumes on analytics and a policy framework for jobs. “Volume 1: Analytics” outlines the main challenges to Zambia’s jobs agenda at the macroeconomic, household, and firm levels. “Volume 2: A Policy Framework for Jobs” presents a set of policies that may be prioritized by policymakers under a jobs strategy. The “Zambia Jobs in Value Chains: Opportunities in Agribusiness“ report looks at jobs at a sectoral level, with a focus on backward linkages into value chains.
In Zambia, a need for faster and more productive job creation
The population of Lusaka, Zambia’s capital city, has grown tremendously from one million people in 2000 to an estimated 2.3 million in 2016. Much of this growth is attributed to the influx of large numbers of young people, who have fled the rural life of farming and poverty. In search of economic opportunities, Jonas Phiri 24, travelled 300 km from Katete to Lusaka, to look for a job. Unfortunately for him and many others in his shoes, it has been challenging to find a good job. For two years now, Phiri has resigned himself to selling cellphone air time on the streets of Lusaka, while he boards with a relative who lives in one of Lusaka’s over crowded peri-urban areas.
“The competition with others to sell talk time on this street has intensified. There are too many of us. Income is also irregular. But I would rather be here, than go back to the village where poverty is worse, and the order of the day,” says Phiri as he waves a wad of air time vouchers, to attract customers.
Phiri is optimistic that he will find a job with good wages in Lusaka. Such jobs however, are inaccessible to large groups of rural Zambians, especially Phiri’s age group and women. Many young Zambians and women share Phiri’s story, particularly those with little or no education.
Despite economic growth, the number and distribution of jobs did not improve
Zambia experienced rapid economic growth between 2000 and 2014. The economy grew by an annual average of 7.3 percent between 2000 and 2014, and per capita GDP grew by 4.3 percent. But at the same time, employment grew by only 2.81 percent per year. The problem is mineral-driven growth brought about by the copper-driven boom was not labor intensive enough. Wage employment has not kept up with Zambia’s fast growing workforce, productivity and hours worked for people like Jonas Phiri in the urban informal sector has not improved substantially, and smallholder farmers aren’t better off. Zambia’s growth was not shared.
New poverty analysis by the World Bank in fact shows that per capita consumption only rose for the top 3 deciles of income earners in Zambia between 2010 and 2015. The bottom 6 deciles of income earners actually got worse off in real per capita consumption. In particular, rural workers, youth and women are struggling to find the improved farm productivity and off farm jobs they need to escape poverty.
In the new National Development Plan and under the National Strategy for Industrialization and Job Creation, Government of Zambia wants to create one million jobs in 5 years, through economic diversification. Government aims to create waged jobs in non-mining sectors, including agriculture, manufacturing, and tourism. It will be a tall order to dramatically increase the number of good jobs in Zambia compared with what has been achieved during a decade of rapid growth. It will require careful prioritization of policy reforms, and strong implementation of investments under a focused jobs strategy. But the reality is, it has to be done for Zambia to maintain prosperity and stability, because over 300,000 young people like Jonas Phiri are set to join the workforce every year in the next generation.
Growth potential in sectors
On June 13, 2017, in Lusaka, the World Bank published a comprehensive study of jobs in Zambia. The study contains three reports: the Zambia Jobs Diagnostic, a policy Action Plan, and the Zambia Jobs in Value Chains. The reports stress the need for Zambia to take comprehensive action at a macro level, through institutions and labor markets, and through targeted interventions to create more demand for good jobs. The studies explicitly highlight the potential of growth in agribusiness and agro-processing to connect more Zambians, especially those that are young, rural and poor, to jobs through value chains. Policies and programs on jobs must support linking the poor working as self-employed in agriculture or unpaid family work to where the jobs are: along the central corridor from Copperbelt to Livingstone.
Source: Dino Merotto. 2017. “Zambia Jobs Diagnostic: Volume 1 - Analytics.” World Bank, Washington, DC.
The World Bank supports Zambia’s ambitious jobs plans, as articulated in the Vision 2030 and National Strategy on Industrialization and Job Creation. The forthcoming World Bank Systematic Country Diagnostic emphasizes that inclusive growth in Zambia requires faster growth in labor incomes of the poor through jobs. As a result, the World Bank’s portfolio will be increasingly focused on supporting Zambia’s jobs agenda.
The World Bank reports emphasized that Zambia will need to invest in raising smallholder agricultural and informal productivity, supporting urbanization in secondary towns for off-farm jobs, and improving labor mobility among women and young people. The study also recommends strengthening monetary and fiscal policy to mitigate the effects of copper price fluctuations on investment and job creation; liberalizing input and product markets to reduce production costs and allow freer cross-border trade for farmers and agro-processing firms; strengthening technical training to improve productivity for the self-employed and to reduce formal sector skills gaps; and designing labor regulations to support the creation of more formal sector jobs.
The World Bank Country Manager Ina Ruthenberg is emphatic about the need to create more and better jobs for poverty reduction. “Jobs need to be at the heart of economic development policies in Zambia,” she says, “faster job creation for youth, women, and rural communities is crucial to reducing poverty. The analysis presented will help identify how Zambia can achieve its goal of creating a million jobs in five years.”