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UN poised to open summit on world’s oceans; outcome will ‘call for action’ on ocean health
Warming oceans, depleting sea life and plastic pollution are on the agenda for this week’s ocean summit at the United Nations, which will call for urgent action to improve the health of the oceans, while also creating jobs and raising people out of poverty.
“Human activities are having major impacts on the ocean, affecting everything from the viability of marine habitats to the quality and temperature of the water, the health of marine life, and the continued availability of seafood,” the UN organizers said about the event being held 5 to 9 June.
The Ocean Conference, the first ever such summit convened by the UN, will focus on the targets outlined in the 2030 Agenda for Sustainable Development, adopted by Governments in 2015. In particular among the Sustainable Development Goals (SDGs), Goal 14 highlights the need to conserve and sustainably use oceans, seas and marine resources to benefit present and future generations.
“Ocean deterioration has broader implications as it affects poverty eradication, economic growth, sustainable livelihoods and employment, global food security, human health and climate regulation,” the organizers said.
Thousands of people are expected to attend – including heads of State and Government, civil society representatives, business people, as well as actors, and ocean and marine life advocates.
Strong showing likely from Pacific Islands, African coastal States
A big showing is expected from small island developing States, particularly from the Pacific Islands, and from African coastal States, which are on the frontlines of climate change and whose economies are particularly vulnerable to changes in the oceans and marine life.
The current President of the UN General Assembly, Peter Thomson, said he is “very confident” that there is an appetite to take action to aid oceans and marine life.
Mr. Thomson, whose home country, Fiji, is co-hosting the Conference along with Sweden, said people had been “selfish” about their children’s and grandchildren’s future – but now are more cognizant of the need to sustainably use natural resources.
“Every second breathe you take comes from ocean-produced oxygen. Without a healthy ocean we’re in deep trouble; whether it’s food, whether it’s our climate, we have to have the integrity for the ocean, the source of life,” Mr. Thomson told journalists yesterday in New York.
The main areas of work at The Ocean Conference will be a political call to action, a segment on partnership dialogues and voluntary commitments.
The Secretary-General of The Ocean Conference, Wu Hongbo, who is also the UN Under-Secretary-General for Economic and Social Affairs, said Member States have already hammered out the final text of the conference – which will include 22 specific actions to be taken.
He noted that climate change action taken by the international community is unstoppable, and needs global support: “If you drop a plastic bottle anywhere near your sea, it may end up in some other places. So all these seas and oceans are connected; so regional or individual action seems very weak. We need global solutions to the global challenge.”
Ocean March
On the eve of the Conference, New York City, which has about 520 miles of coastline, will host the inaugural World Ocean Festival.
New York’s festival will feature a first-of-its kind grand “ocean march,” which will be a parade of sailing vessels around lower Manhattan and along 10 nautical miles of Manhattan and Brooklyn waterfront from the Hudson to the East River.
The second main event will be the Ocean Village, which will be set up at Gentry State Park in Long Island City as a “hub for all things ocean,” and will celebrate art, innovation and exhibits on ocean and climate action.
Related tralac Trade Briefs by Gavin van der Nest
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13th CAADP Partnership Platform calls for stronger accountability on continental commitments on agriculture
Meeting pushes for the realisation of the AU Malabo commitments on agriculture through mutual accountability for results and impact
African Union Member States have been urged to enhance mutual accountability for results and impact towards the CAADP (Comprehensive Africa Agriculture Development Programme) and the AU 2014 Malabo Declaration on Africa Accelerated Agricultural Growth and Transformation (3AGT). The call was made at the 13th CAADP Partnership Platform, held on the theme ‘Strengthening Mutual Accountability to Achieve CAADP/Malabo Goals and Targets.’
Mutual accountability for results and impact is a key determining factor for Africa’s development as pointed out in the Malabo Declaration which contains seven key commitments on agricultural transformation, which the AU Heads of State and Government committed to at their 2014 AU Heads of State and Government Summit.
The African Union Commission (AUC) and NEPAD Agency, working with Regional Economic Communities (RECs) and technical partners developed a set of 43 indicators based on the Malabo commitments that will enable Member States to report progress biennially. Consequently, the AUC and NEPAD Agency have been capacitating Regional Economic Communities by holding training workshops to provide information on the Biennial Review Mechanism and to train Member States on the technical guidelines to track progress towards the Malabo targets, involving standard country performance-reporting templates.
The Biennial Review Mechanism aims to provide a platform for mutual accountability, and peer review that will motivate increased performance by AU Member States to deliver on targets set by the Malabo Declaration, through a well-designed, transparent and performance based Monitoring and Evaluation and Biennial Sector Reporting to the AU Assembly that will in turn trigger evidence based planning and implementation for the expected agricultural growth and transformation in Africa; and ultimately lead to the Africa We Want, as embodied in the African Union’s Agenda 2063 and in particular, to Aspiration 1 of Africa’s Agenda 2063; a prosperous Africa based on inclusive growth and sustainable development. The first report to the African Leadership will be presented in January 2018.
Officially opening the PP on 31 May, Uganda State Minister for Agriculture, Hon. Christopher Kibanzanga assured the meeting that Uganda was committed to mutual accountability saying, “We are here for accountability, we are implementing the Malabo Declaration commitments and we are focused on agriculture to transform our country to a middle income economy.”
Speaking at the opening session, AUC’s Commissioner for Rural Economy and Agriculture, H.E Josefa Sacko, said “With the awareness that the Malabo Declaration sounded a call for action towards delivery of results and impact, we should, jointly and as individual actors and as Member States, respond to this call through a focus on implementation of concrete actions on the ground and report on progress attained.”
The AU Business Plan for CAADP-Malabo implementation, the AU Agribusiness Strategy and Country Agribusiness Partnership Framework, were further launched; as tools to support Member States to mobilize private sector investments in country agriculture, proposing the right coordination mechanisms of the key stakeholders and accounting for actions.
Commissioner Sacko urged all stakeholders to support AU Members States to produce credible biennial review reports, on the basis of which the continental report will be produced, emphasising that, “Renewed partnerships built on mutual accountability will help governments, the private sector, civil society, farmers and farmers organizations as well as development partners to deliver on results and impact for a transformed Agriculture to reach the targets set by the Malabo Declaration.”
In addition, the AUC’s Department of Rural Economy and Agriculture (DREA), Dr. Godfrey Bahiigwa emphasised that, “The continental biennial report will be based on validated country reports by all stakeholders, including governments, civil society, the private sector and development partners.”
“The theme of this year’s CAADP PP speaks volumes. We are noting with satisfaction that for the first time in history, African leaders have set themselves up for checks and balances to be instituted in Africa’s collective agricultural development efforts, through the Malabo Declaration. Indeed, calling for a Biennial Review mechanism to be put in place to track performance and report progress, both by countries and collectively as a Continent, gives us cause for hope for a better future of governance in Africa,” said Mrs. Estherine Fotabong, Director of Programmes, representing NEPAD CEO, Dr. Ibrahim Assane Mayaki.
Giving a keynote presentation during the opening session, Dr. Agnes Kalibata, President of the Alliance for a Green Revolution in Africa (AGRA), underscored the role of agriculture in driving inclusive economic growth.
“Agriculture is Africa’s surest path to prosperity. Achieving meaningful agriculture transformation requires strong coordination between partners in a countries-led process,” she said. “AGRA is delighted to work with the AUC and the NEPAD Agency in supporting countries to meet their Malabo Declaration commitments which are key to the success of the transformation push,” she added.
The CAADP PP, brings together over 400 leaders from African Governments, including parliamentarians from AU Member States, leaders from international organisations; development partners; private agribusiness firms, farmers, NGOs and civil society organizations.
Preceding the CAADP PP, an Agriculture Policy Learning event was organised by AUC, NEPAD Agency and AGRA to reflect, share and learn about the progress achieved and actions required in the development of national agricultural policy priorities. The Event reviewed successes and challenges in implementing national policy support programmes designed to advance the goals and targets of CAADP as outlined in the 2014 Malabo Declaration and implemented through the respective Regional and National Agriculture Investment Plans (RAIPS and NAIPS).
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Republic of Malawi Poverty Assessment
Poverty and Shared Prosperity in Malawi, 2004-2010
Malawi’s monetary poverty is high and did not lessen in rural areas between 2004 and 2010. The over-representation of poverty in rural settings kept national poverty stagnant. Furthermore, the majority of the rural population, especially the bottom 40%, remained deprived of access to key durable assets and key public services including electricity and running water. In contrast, wealthier households and those located in urban areas tended to enjoy higher access to key assets, services, and opportunities. These gaps associated with socioeconomic status and location can impair a person’s ability to perform well later in life and are likely to perpetuate poverty in rural Malawi. It is imperative that Malawi provide services and opportunities more inclusively.
Snapshot of Poverty in Malawi
Monetary poverty
Malawi is a land-locked country in southern Africa with high population density and a young, rapidly growing population. The 2015 United Nations Human Development Index (HDI) ranked Malawi 173 of 188 countries. According to the World Development Indicators (WDI), in 2012 the country had a GNI per capita of US$320. In relation to its neighbors and the average for Sub-Saharan Africa, Malawi’s income per capita has stagnated over the past three decades since 1980.
Poverty in Malawi remains widespread. According to the Third Integrated Household Survey, the IHS3 2010, 50% of the population is poor, and 25% lives in ultra (extreme) poverty. Furthermore, from 2004 to 2010, poverty declined only marginally from 52.4% to 50.7%, respectively. In contrast, the depth (how far the poor are from the poverty line) and the severity (how distant the poor are from the poverty line and how unequal consumption is distributed among the poor) of poverty increased. The extent of poverty in Malawi is exceptionally broad when compared against a line of international extreme poverty, even when compared to other Sub-Saharan African countries. The poverty incidence measured by the population living below $1.90 per day of purchasing power parity (PPP) in Malawi was 74% in 2004. When doing international comparisons based on PPP rates, this percentage puts Malawi almost on a par with countries such as Burundi and Madagascar. Malawi’s neighboring countries such as Mozambique and Zambia exhibit lower poverty rates, although not by much.
More worrisome, during the second half of the 2000s, Malawi exhibited close-to-stagnant poverty reduction in comparison to this PPP line. Contrasting Malawi’s poverty trends with those of Sub-Saharan African and other countries, from 2004 to 2010, Malawi’s poverty headcount dropped from 74% to 71%. In contrast, countries with a higher poverty rate between 2000-05, such as Mozambique and Tanzania, exhibited considerable reductions in poverty. Sub-Saharan countries with a lower poverty rate at baseline, such as Rwanda, and Uganda, also made important progress against poverty.
However, national averages mask Malawi’s progress against urban poverty between 2004 and 2010. In this period, poverty fell significantly in urban areas from 25.4% to 17.3%, as did ultra-poverty from 7.5% to 4.3%. During the same period, the depth and severity of poverty also decreased in urban areas.
Unfortunately, rural areas have not seen corresponding drops, resulting in considerable and increasing geographic disparities in terms of poverty. While poverty already was lower in urban areas and had fallen significantly since 2004, it remained stagnant in rural areas, in which it rose very slightly from 55.9% to 56.6%. Extreme poverty rates in rural areas increased at a greater rate, from 24.2% to 28.1%, widening the urban-rural income divide. The depth and the severity of poverty, which declined in urban areas, rose considerably in rural areas. Urban areas not only have fewer poor people, but also are closer to the poverty line. In contrast, in rural areas, not only did more people fall into poverty, but also the average consumption of the poor moved farther below the poverty line. Incidentally, stagnant-to-moderate increases in monetary poverty are consistent with the drop in rural per capita caloric intake observed during the same period from 2,333 in 2004 to 2,192 in 2010; and from 1,606 to 1,532 for the bottom 40% (see chapter 4 on food security and nutrition).
Has the actual number of monetary poor people fallen? The number of poor can decrease or increase depending on the size of the population and its rate of growth over the period in question relative to the changes in the poverty rate. IHS population projections indicate that, between 2004 and 2010, the rural population increased from 10.8 million to 11.9 million; and the urban population rose from 1.4 million to 2.1 million. High population growth during the past decade and stagnant progress in monetary poverty meant that the absolute number of people living in poverty increased by 700,000 (from 6.4 million to 7.1 million). The growth of the urban population outpaced slightly the significant drop in poverty incidence in cities, resulting in 16,000 more poor people in urban areas. Therefore, almost all of the increase in the number of poor people in the country came from rural areas in which the population grew and the proportion of poor increased.
Shared Prosperity
Incidence of growth of consumption and monetary poverty
Malawi has experienced significant growth in recent years. From 2004 to 2011, GDP grew on average 5.9% per year. From 2004 to 2010, consumption per person increased 13%. During this period, however, GDP per capita growth did not outpace population growth: they both averaged 2.9%. Although some improvements have been made, particularly in health and education, the fact that rural monetary poverty has remained high raises the question of why. Perhaps not all Malawians experienced income growth during this time. This section evaluates the changes in the distribution of consumption in the country from 2004 to 2010 and examines the roles of growth and redistribution in the poverty trends. However, such strong growth performance has not been shared equally across population groups. Growth Incidence Curves (GIC) plot consumption per person growth rates against percentiles ranked by consumption per person from poorest to highest.
GIC provides an intuitive picture of how much growth has favored different population groups. Between 2004 and 2010. Growth was positive and stronger among those with higher incomes but relatively weak for those with lower incomes. In fact, consumption growth of the rural population has not favored the poor. For Malawi as a whole, the consumption of the bottom 40% fell by 5%, but it grew for those in the top 60% by 17%. Those in the top 10% experienced a considerable increase because their incomes rose by 30%. Thus, Malawi’s growth did not increase the incomes of most of the poor or, for a few of them, rapidly enough to lift them out of poverty. In urban areas, growth rates were similar across the distribution: 19% for those in the bottom 40%, 26% for the top 60% and 24% for the top 10%. The poorest in urban areas enjoyed relatively lower, but still positive, growth rates. However, in rural areas, the pattern was much different. Only one-third of the population experienced some positive growth, whereas approximately two-thirds of the population experienced negative real consumption growth. Consumption fell by 8% for those in the bottom 40%, it barely grew 1% for the top 60% and rose significantly by 10% for those in the top 10%. In other words, prosperity as defined by the World Bank, was not shared in rural Malawi (and therefore nationally) between 2004 and 2010.
In addition, from 2004-2010, economic growth was driven largely by growth in urban-oriented sectors such as services. In contrast, agriculture, a ruralbased sector, did not grow much. Between 2004 and 2011, table 1.3 shows that GDP grew by 51.7%. From the industry side, the most dynamic sectors were mining and quarrying, construction, and manufacturing while the service subsectors included wholesale and retail trade, real estate, information and communications, transport and storage, and professional and other services (See chapter 7 for a discussion on the income returns on different economic sectors). These sectors explain approximately two-thirds of overall economic growth. Notably, the rate of growth of agriculture was below the national average, which could partly explain the stagnant poverty rates in rural areas, where agriculture is the main sector.
Over the period analyzed, poverty in Malawi was relatively irresponsive to the strong growth. While consumption per capita increased by 12.8%, the incidence of poverty decreased by 3.4%, resulting in a growth elasticity of poverty of –0.3. The growth elasticity of poverty measures the percentage change in the poverty headcount for each percentage change in consumption. In other words, during the second half of the 2000s, a 1.0% increase in average household consumption was associated with a 0.3% decrease in the poverty headcount. According to the $1.25 international poverty line, during the same period, the growth elasticity of poverty in Malawi was –0.2, which compares poorly with an estimated average global elasticity of –2.0. Over the same period, poverty was more responsive to growth in Mozambique, Rwanda, Tanzania, and Uganda. Sierra Leone had a similar growth-elasticity-to-poverty ratio to Malawi, and Senegal performed worse against poverty. Over the same period, had Malawi displayed a growth-elasticity-to-poverty similar to Uganda’s, the poverty headcount of Malawi would have dropped by 14.5 percentage points (about two percentage points per year) instead of 1.8 percentage points.
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tralac’s Daily News Selection
A reminder: The ECOWAS Heads of State summit takes place on Sunday
Africa Regional Forum on Sustainable Development (17-19 May): presentations are now available for download
Advance notice: 13th Annual Meeting of the Infrastructure Consortium for Africa will take place in Rome, 19-20 October 2017. The theme: “Toward the promotion of smart and integrated infrastructure for Africa - an agenda for digitalisation, decarbonisation and mobility”
Delhi Declaration: A micro, small and medium enterprises co-operation framework to support intra-Commonwealth trade and investment (Commonwealth Secretariat)
The road blocks to trade for SMEs have been a focus of this inaugural summit. After hearing about the challenges being faced by SMEs at the high-level policy makers’ plenary session on the first day, organisers set up a working party. The group included policy makers, senior politicians and SMEs from across the Commonwealth, including Sekandi Abdul Hakim who spoke about his experiences of the global obstacles facing businesses like his. Within hours, it came up with the ‘Delhi Declaration’, a set of ten practical points which the group hopes will help remove the challenges preventing smoother trade relations and opportunities. The Indian Commonwealth Small Medium Enterprise Association will champion the proposal at the next Commonwealth trade ministers’ meeting and hopefully on to next April’s Commonwealth Heads of Government Meeting. But there are many hurdles to jump before that happens.
East African Legislative Assembly updates:
(i) The EAC Cross Border Trade in Professional Services Bill. The EAC Cross Border Trade in Professional Services Bill, 2017, which is expected to be a boost to the Common Market Protocol, was moved by Hon Fred Mukasa Mbidde. The Bill is premised on Article 104 of the Treaty for the Establishment of the EAC under which the Partner States undertook to adopt measures to achieve free movement of persons, labour and services and to ensure the enjoyment of the right of establishment and residence of the citizens within the Community. The EAC Mining Bill 2017, moved by Hon Chris Opoka-Okumu hopes to provide legal framework for the regulation of mining operations in the Community. It seeks to implement the EAC Vision 2050 and specifically to operationalise Article 114(2) (c ) (iv) of the EAC Treaty which calls for harmonisation of mining regulations to ensure environmentally friendly and sound mining practices.
(ii) EALA longs for equal treatment of citizens in East Africa. The East African Legislative Assembly has resolved to have the EAC member states accelerate the harmonisation of laws, policies, curricula and certifications to equally treat the region’s citizens. The EALA members passed the resolution after receiving and debating a report on sensitisation activities in partner states, themed: ‘EAC Integration Agenda: accessing the gains”. [EALA shelves plans to inaugurate 4th assembly as Kenya delays picking its MPs]
WCO leads discussions on freedom of transit for landlocked countries: Global Transit Conference (10-11 July, Brussels)
WCO Secretary General Kunio Mikuriya emphasized that “the key to unlock the potential of LLDCs is the implementation of international standards for efficient transit regimes, thus boosting international and regional trade for all countries.” He added that “the WCO Transit Guidelines, consisting of 150 guiding principles for efficient transit regimes, will be launched during this event. A wide range of subjects will be discussed, such as bridging Asia and Europe, accelerating regional economic development in Africa, American and other regions, and overcoming challenges of landlocked countries.” [Landlocked Developing Countries: Facts and Figures 2017, pdf]
Namibia: Fifth National Development Plan NDP5 (National Planning Commission)
Extract from President Geingob’s launch speech: The same story applies to income distribution. Average Namibian is seen to be rich, but in reality top 1% have the same income as the bottom 50%! International bodies, in particular the Bretton Woods Institutions, however, continue to classify countries by per capita income regardless of the type of income distribution. Based on averages, Namibia is currently rated as an upper middle income country, and will be on track to eventually become a high income country, perhaps even before the year 2030. I hope that from my earlier example it will be evident, why this does not speak to our developmental ambitions which are grounded in the principle of inclusivity. It will not be an achievement if by 2030 we reached high income status, but the majority of our people continued to be structurally excluded from meaningful participation in the economy and wealth creation. That is why we speak about inclusive development where individuals’ needs have meaning. That is why we say, inclusivity builds capability and spells harmony, while exclusivity spells conflict. Development based on exclusivity will, therefore, always be short-lived. That is why we keep on referencing to Professor Joseph Stiglitz, who postulates that sustained prosperity is shared prosperity. [Download, pdf (49 MB)]
Barclays makes early African exit with $2.8bn share sale (Reuters)
Barclays cut its stake in Barclays Africa Group to 15% sooner than expected on Thursday, ending more than 90 years as a major presence in the continent. The British bank, which under Chief Executive Jes Staley is firmly focused on Britain and the United States, said it was selling $2.83bn worth of shares in its African business due to strong investor demand. Barclays had said on Wednesday it would sell shares worth 1.5 billion pounds in its second rapid share sale since saying it would largely get out of Africa. [Malawian bank snaps up Barclays Zim]
Import controls in Zimbabwe: Statutory Instrument 64 of 2016 and more (tralac)
A year after the promulgation of SI 64, the Minister of industry and Commerce Mike Bimha has publicly announced that the government of Zimbabwe is now scrapping the legislation, and will replace it with Local Content Policy. The cabinet minister is quoted saying SI 64 has “achieved its objectives of boosting industrial capacity utilisation, stimulating retooling and investment into new technologies in industries”. He also said the SI 64 ran into implementation challenges in terms of threat of retaliation from trading partners, trade-off between balancing existing employment within the retail and distribution outlets that import, and protection of the local manufacturing industries. Perhaps this is the appropriate time to look back and reflect on trade policy governance in Zimbabwe, and unpack what’s really happening to the economy. Very soon after this, a statement was issued to say that SI 64 was not scrapped. [The analyst: Brian Mureverwi]
One Belt One Road (OBOR) and Africa (Standard Bank)
More than ever before the onus is on African projects to remain relevant. It seems reasonable to argue that any African infrastructure projects that can fit into the still fluid OBOR narrative will be fast-tracked. Thereby, OBOR may build an additional framework – complementing FOCAC – for which Chinese government and corporate leaders and their counterparts can align their engagements. This means that Africa needs to provide a more systematic coordinated and industry-specific plan to remain at the centre of China’s foreign policy. At the same time, African governments must also focus sustainable development and determine the best policy mix and governance structures to China true to its often stated commitment to job creation and industrial upgrading of Africa. [The analyst: Jeremy Stevens]
Mozambique: Standard Bank and China’s ICBC set up local partnership
Standard Bank and the Industrial and Commercial Bank of China have established a partnership to foster investment by Chinese companies in Mozambique, “through innovative financing solutions or banking services,” said António Macamo, director of Standard Bank. “ICBC is China’s largest commercial bank and the Standard Bank group is the largest in Africa and this partnership will make investment in Mozambique more comfortable and easier, given the experience of both institutions,” said ICBC representative Lubin Wang. The value of Chinese investment in Mozambique is $6.7bn, with trade between the two countries growing 4.98% to $424.88m in the first quarter of 2017.
Kenya’s SGR: Loans not a burden to Kenya — China (Daily Nation)
Chinese Vice Foreign Minister Zhang Ming, who was in the country for the launch of the new railway, said the construction was an investment that would bring rewards to Kenya in the long run. “When a debt is put in the right project, it is not a burden,” Mr Zhang said in a statement. “The investment will give the money back since SGR is the largest infrastructural project in Kenya and it will lead to economic growth of the whole region, which means that the debt will be paid.” [Jaindi Kisero: There is still value to be unlocked from RVR]
Tanzania: ‘Smelting plant inevitable - with or without investor’ (Daily News)
Construction of mineral concentrate smelter is scheduled to start soon to discourage export of raw minerals, Prime Minister Kassim Majaliwa said here yesterday. He told the National Assembly that there are investors who have expressed interest in construction of the smelters in the country, affirming that the government is determined to either invite them or construct the facility on its own.
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One Belt One Road (OBOR) and Africa
Africa a mere marginal player in OBOR
One Belt One Road (OBOR) aims to revitalize the ancient Silk Road that ran from China to Europe through Central Asia. To this end, OBOR involves a series of interconnected infrastructure projects in more than 60 countries. The end game is a regional production chain of advanced manufacturing and innovation, furnished by First World infrastructure networks, with China at the centre.
First mooted in 2013 as a counter-weight to the Obama administration’s pivot to Asia, it is now being repackaged as China’s response to de-globalisation trends believed to be enveloping the global economy. Since then, Chinese domestic media have branded the OBOR initiative as the brainchild of Xi Jinping, essentially tying his legacy to its success. Therefore, putting it plainly OBOR is the new spearhead for China’s foreign policy for the next five to ten years, usurping all other initiatives such as FOCAC and BRICS.
OBOR is more than simply a diplomatic branding exercise; the OBOR initiative also makes perfect commercial sense for China. Indeed, trade between China and countries along the land and sea-based routes exceeded USD1 trillion in 2016 – a quarter of China’s total trade value. In 2016, Chinese exports to OBOR countries tallied USD596bn, which is around 38% of China’s total global sales. Moreover, from 2013 through April 2017, sales to these countries have expanded by an average of 5.8% y/y each month, whereas China’s exports elsewhere have increased by an average of 0.6% y/y each month. In fact, sales to South East Asian countries – the largest market for Chinese exports in OBOR – jumped by 50% y/y in 2016, led by sales to Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
OBOR potentially gives China access to developing countries in the region. Until recently, led by China, the global macroeconomic landscape over the last twenty or so years has been exemplified by emerging markets’ outperformance. This macroeconomic outperformance has resulted in a surge in internationally competitive and globally minded multinationals (MNCs) and business leaders in China. It is without doubt these companies are armed with low-cost structures, appealing and relevant products, and, perhaps most importantly, very ambitious leaders. OBOR countries offer enormous potential markets for their wares.
Impact on China-Africa ties
China’s role in supporting African development obviously pre-dates official OBOR by many years. Over the past decades, China has built up a strong brand in Africa. For instance, a survey of 54,000 individuals spanning the continent by Afrobaraomter found that 63% of respondents believed China was either a somewhat or very positive influence on their country.
As a cause and consequence, China has proven to be incredibly successful both diplomatically and commercially. As a result, Africa’s economic trajectory has increasingly aligned to China’s. Consider: China is the source for 21% of Africa’s total imports, and 17% of Africa’s total exports; China’s policy banks have extended nearly USD100bn in loans to African sovereigns and corporates; and Chinese FDI stock in Africa is close to USD30bn.
Given China’s rising importance across Africa, many African nations are still metabolising the medium- to long-term implications of the “New normal”. Envisioned here is an economy that is expanding more slowly; one that is less factor- and investment-driven. Of course, lower output growth in China has spilt over onto sub-Saharan Africa through direct and indirect channels. Now it seems another question must be posed: what further impacts will OBOR have on China-Africa ties?
Promisingly, it seems that the downward momentum of China-Africa investment and trade has bottomed. China’s non-financial direct investment to Africa jumped 64% y/y in the quarter. Interestingly, Djibouti – one of three African countries embedded in OBOR – saw an increase of over 100% y/y in the quarter. Furthermore, China-Africa trade increased 16.7% y/y in Q1:17, from USD32bn in 2016 to USD38bn in the first three months of this year, which is the first quarterly rise since 2015.
Chinese imports from Africa increased from USD12bn in Q1:16 to 18bn in Q1:17. Unfortunately, since peaking in 2013 and 2014, Africa’s largest exporters to China are well below their peaks. Granted, much of that reflects lower commodity prices; however, despite relative economic stability in China’s economy last year and a recovery in commodity prices from lows of 2015, African exports to China declined to USD56bn in 2016 – a third consecutive fall. In addition, China’s purchases from the rest of the world reversed the fall of 2015, importing more coal (+15.3%), crude petroleum (+14%), iron ore (+9%) and steel (+1%) in 2016.
Looking ahead, on a more positive note, OBOR projects may place a floor under raw material demand inside China (even as the economy rebalances) given the projects envisioned in China’s Western and Central regions. Furthermore, the infrastructure projects across OBOR are certainly potentially sizable. That said, over the near term, given that China’s domestic fixed asset investment tallied USD8.5trn in 2016, it would be difficult for OBOR fully offset the ongoing slowdown in investment growth in China.
Of course, given five years of below-trend economic growth in advanced economies, China has been recalibrating the destination of its sales abroad. And Africa has proven to be an obvious market because it still needs China’s well-made but low-cost products. Indeed, for a two and half year period after the global financial crisis, Africa was actually China’s fastest-growing market.
Worryingly though, for the first time, African imports from China declined in 2016. The slump has been particularly precipitous in some key economies such as Angola (-60%), Nigeria and South Africa (-25%), and Mozambique (-37%) and Tanzania (-13%). Of course, Africa’s softer economic growth has had a sizeable explanatory role in declining sales to Africa – especially in key markets such as Nigeria and South Africa. Thus, it is reassuring that Chinese sales to Africa were flat in Q1:17 at USD20bn.
As yet, rising consumer demand in Africa is reflected in the growth of total imports. African countries need to begin to selectively manufacture these products in partnership with Chinese firms. In recent years China’s manufacturing investment has increased significantly. China faced with increasing labour costs manufacturing firms have begun relocating to countries with lower wage rates, including several in Africa. Looking ahead, OBOR casts some doubt over what was seen as a logical progression of outbound investment following Chinese sales in Africa.
More than ever before the onus is on African projects to remain relevant. It seems reasonable to argue that any African infrastructure projects that can fit into the still fluid OBOR narrative will be fast-tracked. Thereby, OBOR may build an additional framework – complementing FOCAC – for which Chinese government and corporate leaders and their counterparts can align their engagements.
This means that Africa needs to provide a more systematic coordinated and industry-specific plan to remain at the centre of China’s foreign policy. At the same time, African governments must also focus sustainable development and determine the best policy mix and governance structures to China true to its often stated commitment to job creation and industrial upgrading of Africa.
The author, Jeremy Stevens, is an international economist for the Standard Bank Group, based in Beijing, China. Access the full analysis, published on 19 May 2017, here.
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Delhi Trade Declaration: Commonwealth leaves no-one behind
From the heat of Africa to the humidity of India via the arid desert state of Qatar, Sekandi Abdul Karim has made a 3550-mile journey to Delhi. It is his third trip to India this year.
The 49-year old entrepreneur from Kampala in Uganda flew the nine hours to the first India-Commonwealth Small and Medium Enterprises (SME) Trade Summit in search of new partnerships, new trade and new technologies. As the proprietor of Elgon Leather, he employs 75 skilled and unskilled staff in his private tanning and processing plant.
“What I have found out over the past two days is that the challenges faced by SMEs in Uganda, in India and other parts of the Commonwealth, are exactly the same,” Mr Abdul Karim said. “There is institutional disconnect between governments and private sector SME businesses. The regulatory policies, instead of helping and being a catalyst, are impediments to progress. The financing is another problem.”
These are not the only challenges he says he faces.
“The cost of doing business in Uganda is very, very high. Interest on dollar loans can range from 11 to 13 per cent. I also have a problem with skilled labour. Because I am a tanner I need people who can help me in the production area. I can’t get them easily. As I speak, I have three Indians in my tannery.”
The road blocks to trade for SMEs have been a focus of this inaugural summit. After hearing about the challenges being faced by SMEs at the high-level policy makers’ plenary session on the first day, organisers set up a working party. The group included policy makers, senior politicians and SMEs from across the Commonwealth, including Sekandi Abdul Hakim who spoke about his experiences of the global obstacles facing businesses like his.
Within hours, it came up with the ‘Delhi Declaration’, a set of ten practical points which the group hopes will help remove the challenges preventing smoother trade relations and opportunities.
The Indian Commonwealth Small Medium Enterprise Association (ICSA) will champion the proposal at the next Commonwealth trade ministers’ meeting and hopefully on to next April’s Commonwealth Heads of Government Meeting (CHOGM). But there are many hurdles to jump before that happens.
“If the declaration is adopted by CHOGM, it really gives the Commonwealth Secretariat the mandate to boost specifically cooperation among SMEs to increase intra-Commonwealth trade and investment,” said Dr Rashmi Banga, head of trade investment at the Secretariat. “We know that SMEs contribute to a country’s GDP (gross domestic product). They boost employment and lead to gender empowerment. So this declaration has the potential to link SMEs to regional and global value chains creating more trade within the Commonwealth family, leading to growth. That is one of the objectives of this declaration.”
The Federation of Indian Micro and Small and Medium Enterprises (FISME) was one of those who supported the need for a declaration. It has 750 SME associations, reaching five million enterprises.
“Now we are moving from just an idea to doing something together,” its secretary-general, Anil Bhardwaj said. “Currently the Commonwealth imports US$ 2 trillion but the intra-Commonwealth trade is barely 14 per cent, and that to only a handful of nations. The Commonwealth is trying to increase this to 25 per cent and all nations, small and large, developing and vulnerable, will have access to global markets, thanks to initiatives like this.”
The beauty of this idea is that progress, as a direct result of adopting the declaration, can be specifically measured through the new jobs created, money invested and growth in trade and partnerships intra-Commonwealth. Commonwealth Deputy-Secretary General, Deodat Maharaj believes the key to the declaration is that everyone in the Commonwealth family will benefit.
“This declaration doesn’t talk about just SMEs but micro-SMEs (MSME),” he said. “Everyone will have an opportunity to be linked. That means whether you’re a developing or developed country, whether you’re a small island state or whether you’re a vulnerable nation, you will not be left behind. The success of this summit is that we have concrete examples where we have managed to link micro-firms with people from other continents, including developed countries. This would never have happened had it not been for the India-Commonwealth summit in Delhi.”
With the 2017 summit over, thoughts have already begun for next year’s high-level meeting which will be hosted in Nairobi, Kenya. While she is pleased that there has been a start to cut trade obstacles, Usha Dwarka-Canabady, the Mauritius secretary of foreign affairs wants even more to help SME trade.
“Perhaps this is a start to something which can only get better. I hope by the time we reach Nairobi people will be bolder in their proposals and the outcomes we can take forward,” she said. “What we look forward to is a collective political will at the level of the Commonwealth. It’s not enough to have a 10 year action plan at a national level, you also need to see these MSMEs also have an opening internationally.”
The path to recognise the potential for better trade began two years ago. Research by the Secretariat suggested that India could increase its exports to developed and developing countries (LDC) by US$ 22 billion and market access to least developing countries (LDC) could rise by $12 billion by exploiting the global value chains. India’s micro, small and medium enterprises secretary, KK Jalan agrees more can still be achieved.
“There’s always scope for improvement. But India-Commonwealth summit will take the agenda forward. The declaration is important because for the first time it recognises the cooperation which is required between the SMEs and all the Commonwealth countries,” he said. “You see, what are we looking for in the various companies in the world today? Employment. And the MSMEs are the main employment providers in these countries.”
Sekandi Abdul Karim is hoping the declaration will have a smooth transition to next year’s CHOGM.
“This declaration means a lot to me,” he said. “If it succeeds then the future of my business will be bright. If the challenges I and other SMEs are facing are addressed by governments then it can only help us. SMEs contribute a lot to the economy, but I’m not sure governments realise that.”
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WCO leads discussions on freedom of transit for landlocked countries
The economic developments of many countries that are ‘locked’ by lands are often hindered by the lack of access to the sea. Even if their industrial or agricultural products are attractive and affordable for their domestic consumers, they will eventually lose their competitiveness after long journeys to global markets.
The World Customs Organization (WCO) is fully aware of these challenges and believes that the key to unlocking the potential of landlocked countries is to adopt an efficient transit regime. In this regard, the WCO will organize, on 10 and 11 July 2017, its first Global Transit Conference with the aim of leading the discussions on transforming Landlocked Developing Countries (LLDCs) into Land-linked countries.
In 2014, the average cost to export one container from an LLDC was US$ 3,444 and US$ 4,344 to import. Comparatively, transit countries recorded much lower average costs with only US$ 1,301 to export and US$ 1,559 to import a container[1]. One of main factors contributing to an increase in the transport cost is cumbersome transit procedures. Customs transit operation tends to be very complex and complicated because it inevitably involves a wide range of stakeholders. The transit procedures for every country have not been fully harmonized due mainly to the lack of strong international standards on transit. There is an urgent need to simplify current transit operations, eliminate unnecessary border requirements and harmonize different transit systems to support international trade of LLDCs.
Efficient transit regimes may radically change the landscape of international trade. Nowadays, with the constant need to fuel the fast-growing economies of Asia, goods are being increasingly transported from Europe to Asia by railways or roads. Even though the goods crossed several border points, transit operations by railways or roads are relatively quick as compared to major transportation routes such as sea transport. In Africa, transit corridors have stimulated the growth of regional economy and accelerated economic integration. In the era of globalization, Customs transit has become a common transportation mode to connect different regions and countries.
WCO Secretary General Kunio Mikuriya emphasized that “the key to unlock the potential of LLDCs is the implementation of international standards for efficient transit regimes, thus boosting international and regional trade for all countries.” He added that “the WCO Transit Guidelines, consisting of 150 guiding principles for efficient transit regimes, will be launched during this event. A wide range of subjects will be discussed, such as bridging Asia and Europe, accelerating regional economic development in Africa, American and other regions, and overcoming challenges of landlocked countries.”
This Conference will be a unique platform for Customs administrations, governments, international organizations and the private sector to exchange views and experiences regarding efficient and effective transit regimes.
Please visit the Global Transit Conference event’s webpage for the latest information about the registration, agenda, speakers and other issues.
[1] Landlocked Developing Countries: Fact Sheet 2017, UNOHRLLS.
Reference document from the WCO (2014): Transit Handbook To Establish Effective Transit Schemes for LLDCs (PDF)
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Launch of Namibia’s Fifth National Development Plan (NDP5)
Extracts from the Keynote Address by President Hage Geingob on the occasion of the launching of Namibia’s Fifth National Development Plan, 31 May 2017
Development is often defined as the process by which a country improves the economic, political, and social well-being of its citizens. Measures of such development are aggregates or averages, such as, GDP per capita. Our objective is to go beyond just the aggregates and subjective well-being.
Obviously, such calculations are flawed as they do not take into account the benefits accruing or not accruing at individual level.
The same story applies to income distribution. Average Namibian is seen to be rich, but in reality top one percent have the same income as the bottom 50 percent!
International bodies, in particular the Bretton Woods Institutions, however, continue to classify countries by per capita income regardless of the type of income distribution. Based on averages, Namibia is currently rated as an upper middle income country, and will be on track to eventually become a high income country, perhaps even before the year 2030.
I hope that from my earlier example it will be evident, why this does not speak to our developmental ambitions which are grounded in the principle of inclusivity. It will not be an achievement if by 2030 we reached high income status, but the majority of our people continued to be structurally excluded from meaningful participation in the economy and wealth creation.
That is why we speak about inclusive development where individuals’ needs have meaning. That is why we say, inclusivity builds capability and spells harmony, while exclusivity spells conflict.
Development based on exclusivity will, therefore, always be short-lived. That is why we keep on referencing to Professor Joseph Stiglitz, who postulates that sustained prosperity is shared prosperity.
As things stand today, we have made significant progress in classical terms in a whole range of areas. However, the problem of poverty continues to be a challenge. We have sought to provide relief in crisis but we need to find a durable solution that helps everyone achieve the kind of lives they have reason to value.
Poverty eradication has indeed continued to be our focus. From day one, we have been forward looking.
At the end of the first decade of independence, we articulated our shared Vision 2030. In order to give expression to this shared vision, we launched and completed four National Development Plans. Today, we are here to launch the Fifth Development Plan. Progress of development under the National Development Plans has been steady but gradual. As we launch the Fifth Plan, it will not be amiss to conduct an audit of our Fourth National Development Plan in order to know what we sought to achieve and how far we have succeeded in achieving the stated objectives.
Notwithstanding the steady development of the country with the implementation of the National Development Plans, I felt that we needed to prioritize action on certain areas. With that in view, we launched the Harambee Prosperity Plan as a complement to the National Development Plans’ efforts, to fast track some of the issues that are important for improving the quality of life of all Namibians.
Let me emphasize that HPP is not a replacement of Vision 2030 or NDP’s, but it is to fast-track their realization.
I strongly believe that, nearly three decades after Namibia gained independence, NDP5 will bring us much closer to our destination of concretizing our vision, Vision 2030. I have great hope that NDP5 would go a long way towards propelling our country towards an advanced development stage with the capacity to design and produce sophisticated technologies.
Initially, this would involve modernizing and upscaling our production sectors and systems including agriculture, manufacturing, fisheries, mining and tourism. By focusing on these sectors, we should be able to create more jobs to absorb new entrants in the labor market.
By 2030, Namibia’s population is expected to reach 3.5 million. Overall, majority of the citizens will be young.
Young population provides an opportunity and a challenge. We would need to increase investment in education, health, housing and integration of disadvantaged persons into mainstream economy. This is exactly what we will seek to do during the NDP5 period. Our budgetary outlays will continue to deliberately discriminate in favor of our social sectors, including education, health and housing.
In terms of opportunity, given appropriate education and training, the young men and women of tomorrow could propel Namibian society towards Vision 2030.
Namibia is endowed with an abundance of natural resources such as wildlife, fisheries, forestry, land, minerals, as well as extensive sunlight and strong wind with high potential for renewable energy generation. Namibia vows to sustainably manage its natural resources, and its environment. During the NDP5 implementation period, Namibia will employ a number of specific strategies aimed at strengthening sustainable land management; safeguarding ecosystems, species and genetic diversity; and enhancing value addition and sustainable utilization of biodiversity.
I believe that effective governance, responsive institutions and an engaged citizenry are the bedrock of sustainable development. Effective governance is a binding thread around economic, social and environmental objectives. People are at the center of our national development. Our governance outlined in many of our development frameworks centers around three pillars; namely, peace, security and rule of law; accountability and transparency; and public service performance and service delivery.
During NDP5 period Government will also improve crime prevention efforts through enhanced cooperation and participation of all stakeholders; improve justice administrative efficiency, and strengthen national security and territorial integrity.
With regard to Accountability and Transparency government will continue to strengthen anti-corruption measures, auditing services, corporate governance of public enterprises and monitoring and evaluation systems.
With regard to public service performance and service delivery, the government will encourage a “service mentality” or work ethic, ensure availability of public service information to the public, and build capacity of regional and local authorities.
It is only through the adoption of a high standard of work ethic and a culture of service delivery that we can bring to fruition our national developmental aspirations. Desire without effort will not take us to the promised land of shared prosperity.
As Archibald Marwizi once said, “Choices and decisions must be supported by your passion, resolve and a productive work ethic. If these meet opportunity – your success has finally come!”
As Namibians, we have made our decision to take our country to a developed nation status by 2030.
We have made our decision to bring about shared prosperity. We have also made choices as to how we will go about achieving these goals. Now we must support these choices and decisions with passion, resolve and a productive work ethic. In so doing Namibia’s success will finally come.
It is now my great pleasure to launch the National Development Plan 5.
» Download: pdf Namibia’s 5th National Development Plan (NDP5), 2017-2022 (49.06 MB) (PDF, 49 MB)
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tralac’s Daily News Selection
Featured tweet, @HEQuarteyKwesi (AUC Deputy Chairperson): In Africa, levies on imports are being used by ECOWAS, ECCAS & CEMAC and have proven reasonably effective. The 0.2% levy will serve Africa.
Starting today, in Berkeley: The challenges and opportunities of transforming African agriculture. Download the presentations from the WB’s Annual Conference on Africa.
Conclusions of the Retreat of the AU Peace and Security Council on the implementation of the conclusions of successive PSC retreats and PSC decisions from 2007 to 2016 (3-5 May, Kigali)
Extensive summary of yesterday’s ECOSOC special meeting: Innovations for infrastructure development and promoting sustainable industrialization
Measuring and monitoring intra-African trade: IFPRI and partners to develop expert technical network (IFPRI)
With the cooperation of the AU and African Regional Economic Communities, and through funding by USAID, IFPRI has been helping to establish a technical network of experts to unify efforts to measure and monitor inter- and intra-regional agricultural trade within Africa. As part of this project, A recent discussion paper, Existing data to measure African trade (pdf), by Cristina Mitaritonna of CEPII, the French research center for international economics, and Fousseini Traoré of IFPRI reviews efforts launched in the last 10 years to improve trade data in Africa. The study found that data collection efforts are fragmented and have generally lacked the necessary funding to be expanded or even established permanently. So even as the potential magnitude of under-reporting has come into focus, a unified approach to improving trade data has yet to emerge.
The overarching goals of the IFPRI project are to improve the measurement of intra-regional trade and to identify the factors that impede such trade. The first goal includes two key objectives: Improving the measurement of informal trade by expanding regional and product coverage; and formalizing best practices while developing methods to use the informal trade data to reconcile and augment formal data. To meet the second goal, the project aims to catalogue recent efforts to measure trade barriers, develop a series of technically robust indicators for trade performance and its impact on food security, and identify and track the determinants of African trade. Here are some specific steps needed to build this technical network:
AfDB’s Annual Meetings: a set of Working Papers prepared by India’s Exim Bank:
Profiled paper: Integrate Africa: a multidimensional perspective (WP 65). A resurgent Africa and a rising India could create a new paradigm for South-South Cooperation. While trade and investment have lately become the catchphrase in India’s multi-faceted relationship with Africa, an ambitious and all-encompassing action plan is necessary to further strengthen the cooperation between the two landmasses, of which engendering regional integration would form a key component. Special facilities can also be considered by the Government of India and the AfDB specifically for co-financing the regional infrastructure projects in Africa. Concessional loans can be provided by the GOI under this proposed facility. Some National Governments have set up such facilities in collaboration with multilateral financing institutions, for financing projects in Africa. [Table of contents: Introduction; Regional infrastructure development in Africa; Production and trade integration; Financial integration; Free movement of people; India’s role in integrating Africa]
Other working papers in the Exim Bank series are: (i) Manufacturing in Africa: a roadmap for sustainable growth; (ii) Power sector in Africa: prospect and potential; (iii) Feed Africa: achieving progress through partnership; (iv) Water, sanitation and healthcare in Africa: enhancing facility, enabling growth. [How to access the papers: click on the Working Papers tab, register to download.
Exploring trade and investment patterns of ASEAN in Africa: Are they limited by the bigger Asian powers? (ICS)
Finally, the increasing engagement of ASEAN nations provides more options for African agency, whose reliance on any one actor traditional or non-traditional can be decreased with more players entering the mix. Furthermore, it points to the fact that each country – historical and geopolitical reality (geographical or economic size) notwithstanding – brings to the relationship aspects that are truly unique. In other words, although they may be limited by the bigger Asian powers on several fronts, countries like Singapore and Malaysia are also quickly becoming a force that have a pivotal role to play in the continent’s growth story with the capacity also to contest dominance in any shape or form. What is even more promising, however, is that African markets are growing at a time when ASEAN countries are beginning to internationalize and expand. The timing could not be more conducive for building long-term, truly robust partnerships. [The analyst: Veda Vaidyanathan], [Vietnam seminar reviews Asia-Africa ties since Bandung Conference]
EAC Common Market Protocol Updates:
(i) Kenya: The update featured two policy briefs: (i) Towards the comprehensive review of the EAC Common External Tariff; (ii) Enhancing Kenya’s trade in services. Here are a few of the key recommendations for creating a better trading environment between Kenya and the EAC: (i) Timely resolution of non-tariff barriers that have a high impact on Kenya’s trade performance in the EAC; (ii) Support implementation of EAC export development and promotion strategies; (iii) Common External Tariff should take into account domestic production value chains that are aligned to Kenya’s industrial and agricultural policies.
(ii) Tanzania: The report highlights key areas of policy reform that Tanzania is exploring towards easier movement of goods, services and capital in the East African region. These reforms will spur inter-regional trade, which will in-turn lead to regional integration of the five EAC Partner States. This publication is a useful resource in tracking Tanzania’s progress in implementing the EAC Common Market Protocol.
Resolving the unresolved non-tariff barriers in the East African Community: outputs from an ODI project
(i) Would more trade facilitation lead to lower transport costs in the East African Community?. This briefing, based on interviews with East African private sector organisations and other relevant stakeholders, examines how and why increased trade facilitation has reduced transport costs, and argues that efforts to date have impacted the logistics chain unevenly, leaving room for more to be done to speed up regional trading and produce benefits for consumers. [The analysts: Andreas Eberhard-Ruiz, Linda Calabrese]
(ii) The costs of logistical and transport barriers to trade in East Africa. This fifth and final briefing of a project on NTBs in the EAC examines the cost of transport and logistical barriers to regional trade, calculating that they cost East African economies between 1.7% and 2.8% of gross domestic product every year. It then offers recommendations for policy-makers, suggesting that further trade liberalisation and improvements to infrastructure will reduce costs, in turn benefitting consumers by lowering prices. [The analysts: Michael Gasiorek, Maximiliano Mendez-Parra, Dirk Willenbockel
An assessment of Kenya’s international competitiveness (tralac)
This paper complements others in the sequence of a Kenyan tralac training week programme (24-28 April) by examining competitiveness ‘from the ground up’, as distinct from examining export competitiveness from the basis of the actual export performance. In order to do this, the authors draw heavily from the World Economic Forum Global Competitiveness Report of 2016-2017. They find that although Kenya does not rank highly on a global scale, it does rank highly on an African scale and its ranking in several factors is improving in a meaningful way. [The analysts: Kenneth Murimi, Samuel Matonda, Ron Sandrey]
Lagos, Gauteng Province have the capacity to drive economic growth in Africa ― Ambode (Nigerian Tribune)
Lagos State governor, Mr Akinwunmi Ambode, said on Wednesday that the state and the Province of Gauteng possess the capacity to drive the desired industrial and economic growth in the African continent. Governor Ambode said this while addressing Government House correspondents shortly after a meeting with the Premier of the Province of Gauteng, Mr David Makhura on a possible partnership on advancing trade and industrialization at the Lagos House in Ikeja, describing both city-states as the economic powerhouse of both Nigeria and South Africa. Governor Ambode, who disclosed plans to enter into a bi-lateral relationship with the Province of Gauteng, aimed at boosting the economic capacities of not just Nigeria and South Africa, but the continent of Africa, said it would be a win-win situation that would grow the GDP that would be beneficial to the citizen of both countries. [Ghana-South Africa Business-to-Business Forum: update]
Nigeria: With N49tn import bill, FG looks inwards for goods and services (ThisDay)
The federal government, yesterday, said Nigeria had spent a whopping N49 trillion on imports in 17 years, adding that it has resolved to chart a new course for the country by saving N3.6 trillion in five years through the take off of a new innovation plan targeted at Nigeria’s industrialisation. Briefing journalists at the end of the meeting, the Minister of Science and Technology, Dr. Ogbonaya Onu, said FEC approved a memorandum to alter the status quo and re-direct the country’s priority towards the production and consumption of locally made goods and services. “Before the study was done, there were extensive consultations with research institutes, countries and universities, businesses, industries, governments at all levels, to determine our level of dependence on outside products and to find a way we can stop this. We looked at what other countries such as Canada, China, India, Japan and South Korea did.” [Quartz: The key to diversifying Nigeria’s economy could lie in fixing its ports]
West African International Arbitration Conference: conference summary (AfDB)
This two-day event, the first of its kind, was organized by International Arbitration Africa, with the support of the AfDB Group and the African Legal Support Facility. Each coming year, I-ARB will organize the WAIAC in a different country in West Africa, facilitating a comprehensive, region-wide discussion on issues including investment arbitration and Bilateral Investment Treaties negotiations. [Related, forthcoming arbitration conferences: The future of arbitration in Africa (5 June, Nairobi), Advances in international arbitration in South Africa and Sub-Saharan Africa (8 June, Johannesburg)]
Does Africa have enough capacity to produce evidence maps and evidence syntheses? (Africa Evidence Network)
In total, 176 participants from 26 countries responded to the survey. Out of these, 90% were African-based participants across 18 countries. The majority of the respondents were from South Africa; evidence synthesis capacity, however, extends across Africa. About half (87/176) of the respondents reported having received training and mentoring in evidence maps and evidence syntheses that was supported by 100 different organisations; the bulk of these organisations being African institutions.
Today’s Quick Links: Tanzania: Govt finalising guidelines on investment land Tanzania: March revenue collection hits 95% of target Rwanda: Tea export revenue increases to Rwf19.4bn in first quarter Kenya’s leather sector: a skill gap assessment USAID/KEA: East Africa Regional Development Cooperation Strategy 2016 – 2021 World Bank to help Senegal negotiate complex oil and gas projects |
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Integrate Africa: a multidimensional perspective
Regional integration serves as an essential conduit for overcoming barriers and harnessing complementarities across countries. It enables sharing of resources and assets among countries, and also expands the markets and opportunities for these countries.
Regional cooperation is of particular relevance in Africa as the continent is not only home to some of the fastest growing economies in the world, but also has 34 of the 48 Least Developed Countries. The small size, landlocked nature and fragile state of several economies create a case for greater regional integration, aimed at facilitating shared prosperity in a region characterized by heterogeneity and substantial disparity. The role of Governments as well as the private sector will be essential in achieving this.
Regional integration is truly multi-dimensional, encompassing regional infrastructure, trade integration, productive integration, financial and macroeconomic integration, and free movement of people. These dimensions, while standalone objectives in themselves, also reinforce each other. Efficient regional infrastructure is required for creation of value chains, and therefore it supports trade and production integration. Regional infrastructure in turn benefits from larger resources and innovation arising from financial and macroeconomic integration. Free movement of people also hinges critically on regional infrastructure, and further contributes towards strengthening of trade and production linkages.
Production and trade integration
Integration of Africa in Global Value Chains (GVCs) has been limited. The share of foreign value added in exports of African countries stood at 15 percent in 2013, which is not significantly different from its level of 10.5 percent in 1990. Regional value chains (RVC) can serve as a transitional solution for integration of African countries into the GVCs. The demand for goods and services in the region can be leveraged for optimal utilization of resources in the country, and improvement in the production processes. The countries can benefit from the complementarities in natural endowments and industrial structures to establish and strengthen value chains. RVCs will also positively influence the growth of micro, small and medium enterprises (MSMEs) in the African region.
Strategies for Production and Trade Integration
Regional Value Chain Development Agenda
Foreign investments are indispensable for creation of regional and global value chains. As infrastructural deficiencies are a reality, intra-regional investments can first be incentivised at the REC level, and then be scaled up for the entire continent as transportation and transaction costs gradually decline at the back of policy and investment measures. RECs can identify opportunities for value chains and recognize current policy bottlenecks which inhibit intensive value chain engagements. Based on this, a comprehensive regional value chain development agenda can be formulated in close consultation with key stakeholders, including the private sector. The agenda should be developed based on a rigorous assessment of local markets, connectivity, industrial base, existing supply chains, business environment, and availability of land and labour. The agenda should also include a thorough assessment of broad policies and procedures which inhibit private investment in the countries.
Overcoming Barriers to Trade
The share of intra-regional trade in Africa’s total trade has not changed much over the past two decades. Intra-Africa exports stood at 12.4 percent of the total exports in 1995 – not substantially different from the current levels. A host of reasons including tariffs, border inefficiencies, weak infrastructure, and nontariff barriers (NTBs) have inhibited the realisation of full potential for trade in the continent. Trade policy reforms and trade facilitation can alleviate some of the constraints.
Reduction of tariff barriers can enhance intra-regional integration. There is high modularity in some value chains such as automotive, metals, textiles and garment, leather and footwear, as a result of which the production process is highly fragmented and requires multiple cross-border movements. The effect of tariffs is therefore amplified in these value chains. For countries to form efficient RVCs in these segments, tariff reforms will be critical. According to OECD estimates, DR Congo, Cameroon, Djibouti, Rwanda and Nigeria would benefit the most from trade policy reforms. Further, GVC participation of North African countries of Morocco and Tunisia can increase by 15 percent or more if trade policies are further liberalized in these countries.
A major step taken by African countries in reducing the barriers to trade is the signing of the agreement for establishing the Tripartite Free Trade Area (TFTA), and ongoing negotiations for establishment of the Continental Free Trade Area (CFTA). The TFTA agreement acknowledges that intensification of trade linkages in the African continent hinge not only on tariff liberalisation but also on addressing issues pertaining to rules of origin, NTBs and trade facilitation. The NTB mechanism under the TFTA is already operational and enables stakeholders to report and monitor the resolution of barriers encountered as they conduct their business in the countries covered under the TFTA. One-stop Border Posts have also been proposed under the TFTA. These will enhance trade facilitation by reducing the number of stops incurred in a cross border trade transaction by combining the activities of countries’ border organizations at a single location with simplified procedures and joint processing and inspections, where feasible.
The TFTA Agreement will clearly provide an impetus to the process of formation and strengthening of RVCs in the African continent. However, the agreement requires 14 ratifications to enter into force, and is still far from the mark. The TFTA will serve as a stepping stone for the CFTA which will have a far wider impact on trade integration in the continent.
The large informal cross border trade (ICBT) in Africa also has implications for production and trade networks. Presence of ICBT not only reduces revenue collection of National Governments, but also impacts the planning and decision making process. Therefore, their formalization should be a priority area for Governments. An essential first step for African countries should be to outline a common definition of what constitutes the informal sector and estimate the size of informal trade across borders. This shall aid formulation of national policy for formalizing the informal trade links. Tariff liberalization and trade facilitation can further assist this process.
Trade Finance
According to the African Development Bank (AfDB), the market for bank intermediated trade finance in African countries is close to US$ 330-350 billion, with the trade finance gap being close to US$ 110-120 billion. Other estimates peg the financing gap at US$ 225 billion a year. There are several reasons for this large unmet demand for trade finance, the lack of US dollar liquidity and limited financing capacity of banks being the chief ones. This unmet demand for trade finance through the formal banking system in Africa is hindering the development of production and export capacities in the continent.
New and innovative mechanisms will be required to bridge this trade financing gap. An innovative mode for addressing trade finance concerns is the warehouse receipt finance. It can be used for preshipment financing in the agriculture sector. Under this mechanism, producers/traders of agricultural products can avail of finance by using warehouse receipts, issued against commodities deposited in licensed warehouses, as collateral. Adoption of this model necessitates warehouse legislation and establishment of competent regulatory authorities, and therefore the commitment of National Governments will be crucial in this regard. Factoring can also be used as an instrument for trade finance in Africa. Jones (2010) defines factoring as a traditional product which allows suppliers to prefinance its receivables whereby the factor pays a percentage of the face value of the receivables based upon its assessment of the credit risk and the underlying payment terms. Several developing countries have used factoring facilities for improving access to finance for smaller suppliers. In Mexico, for example, the Cadenas Productivas program provides cash against receivables via a secure and online technology platform.
Payment Systems
Effective cross-border payment systems can promote economic efficiency and reduce settlement risk, thereby encouraging producers to intensify trade engagements. Several RECs have taken steps towards upgrading payment systems, either by linking various national payment systems in a network or by setting up specific clearing and settlement mechanism dedicated to crossborder transactions. However, there has been varying level of progress across RECs towards establishment of efficient cross border payment systems. In RECs such as the AMU, there have been no initiatives for such payment systems. Even the models adopted by various RECs are not uniform. Therefore, there is a need for more coordinated efforts amongst RECs for ensuring lesser incongruity in transactions across RECs. Further, there is a need to increase awareness about these payment systems amongst bankers and exporters, so that greater levels of trade can be routed through these channels. Capacity building programs can be organized by Central Banks of respective countries for this purpose.
Role of India in Africa’s integration
As a traditional development partner, India is ideally placed to understand and appreciate the needs of the resurgent continent in myriad developmental areas, of which regional integration is a key dimension. A resurgent Africa and a rising India could create a new paradigm for South-South Cooperation. While trade and investment have lately become the catchphrase in India’s multi-faceted relationship with Africa, an ambitious and all-encompassing action plan is necessary to further strengthen the cooperation between the two landmasses, of which engendering regional integration would form a key component.
According to the ICA, India had committed US$ 524 million to African infrastructure projects in 2015, up from US$ 424 million in 2014. The Export-Import Bank of India (Exim Bank) has been among the principal agents for supporting India’s development partnership with the African continent in the infrastructure sector. The Bank has financed regional projects under its Lines of Credit program, an example of which is the electricity interconnection project between Cote d’Ivoire and Mali. The transmission line has helped Government of Mali to import power from Cote d’Ivoire at a much lower cost.
Manufacturing in Africa: a roadmap for sustainable growth
Africa is one of the richest continents in terms of natural resources, endowed with about 30 per cent of world mineral reserves, 10 per cent of petroleum oil reserves and 8 per cent of natural gas resources. However, despite having abundant natural resources, Africa remains the most under-developed continent in terms of per capita income, literacy, water supply, health conditions, and most importantly infrastructure. As per the United Nations Committee for Development Policy, around 34 out of 54 countries in Africa are classified as Least Developed Countries as of May 2016. Africa’s real GDP grew at an average of 5 per cent during 2000-2014 mainly on the back of its dependence on its commodity exports. However, growth was subdued at 3.7 per cent with a fall in commodity prices since 2014. The contribution of manufacturing value added to the GDP of Sub-Saharan Africa stood at an average of 10.5 per cent during 2005 to 2015.
Africa’s population is expected to double to 2.4 billion by 2050. The rising population indicates a major need for employment generation for which a strong value-added manufacturing base would be required. At present, the situation is conducive for Africa to emerge as a manufacturing base with the supportive factors like abundant working age population, growing middle class coupled with rapid urbanisation, and significant contribution of services. Rapid urbanisation in turn gives rise to demand for consumer driven goods thus giving boost to industries like agribusiness, apparel and clothing, pharmaceuticals and automobiles.
Dependence on Natural Resources
Lack of economic diversification and excessive concentration on mineral resources makes the economy vulnerable towards global shocks. Crude and petroleum products are among the most important natural resources of Africa and crucial source of foreign exchange earnings for many African countries, and accounted for over 43 per cent of Africa’s exports in 2015. Crude petroleum oil and gas accounted for 37.3 per cent of Africa’s total exports whereas refined oil exports contributed to only 4 per cent of total exports. Oil producing economies of Africa like Nigeria and Angola, therefore, have been significantly impacted during the commodity price downturn. Other than crude and petroleum products, many African economies are dependent on mining activities. Copper accounted for around half of DR Congo’s exports (49 per cent of exports in 2015) followed by cobalt (23.2 per cent). Subdued global demand for these commodities post 2013 led to the fall of GDP rate of Democratic Republic of Congo from 9.5 per cent in 2014 to estimated 3.4 per cent in 2016 revealing its vulnerability. In a similar way, Zambia and Botswana were adversely affected by the fall in copper and diamond price, respectively. South Africa’s depleting gold reserves has led to loss of jobs thereby hurting the mining sector.
Potential Manufacturing Industries
Africa currently accounts for just 1.9 per cent of global manufacturing, and over 80 per cent of its workforce is in low productivity sector. Africa can move up the value chain, and thus have a sustainable growth, by focusing on the manufacturing sector, particularly agribusiness, textile and garments, automobile assembling and pharmaceuticals. These sectors have a potential to cater to the growing African market as well as can serve as an export base, making it attractive to international investors.
• Agribusiness
Agribusiness implies commercialisation of agriculture at different levels ranging from supply of inputs, processing, marketing and retail sale thus adding further value to it and driving growth of both forward and backward linked activities. According to the World Bank, the size of agriculture and agribusiness industry in Sub-Saharan Africa is projected to be at US$ 1 trillion by 2030. The growing urban population (350 million people are going to be added to the urban population of Africa by 2030) is expected to lead to further demand for processed food products. The potential sectors which are expected to grow in this process are rice, fruit and meat processing along with the traditional agricultural commodities of Africa like cocoa. Most of the African countries have comparative advantage in these commodities.
Beef production has been an attractive option in the Sub-Saharan African region due to its domestic demand. It is an important export product for Botswana and Namibia as they have preferential access to the European market. Sub-Saharan Africa accounts for 18 per cent of the global bovine herd and therefore large share of meat demand is met by domestic supply. Meat production still remains below global average leaving significant scope for further increase in productivity. The greatest challenge in the meat processing sector is investment, which limits production to generate export surplus, and therefore the Sub-Saharan region is still a net importer of meat. Processing facilities like slaughterhouses, cold storage warehouses and transportation ensuring proper condition would also be required. Import substitution might be aimed for only short term and once efficiency and scale of production is achieved export markets may be targeted.
• Textile and Apparel
The combined apparel and footwear market of Sub-Saharan Africa is around US$ 30 billion. The African textile industry has started to expand with African designs and fabrics showcased in international platforms like Paris, Milan, New York and London fashion shows. Africa has been the source of cotton production for international textile manufacturers with 10 per cent of global cotton being produced in Africa, but Africa accounts for only 16 per cent of global textile market.
Therefore, the need arises for Africa to produce value added products such as garments. The apparel sector faces challenges like lack of investment to develop production facilities, inadequate industry-specific skills, and lack of access to credit, lack of market information to cope with global market dynamics. Increased support and active participation by the governments of respective Sub-Saharan nations may help in improving the business environment and skill set of the workforce thus enhancing the competitiveness and integrating the industry with the global value chain. It will also result in equity distribution of employment opportunities as a substantial portion of the workforce in the textile industry comprises women.
• Automotive Industry
The African automobile industry is mainly characterised by assembling of vehicles. Africa’s automotive market is relatively small compared to its other counterparts like Latin America, Developing Asia, Oceania and Middle East. One of the biggest challenges of the automobile sector of Africa is the heavy import of second hand vehicles as a result of limited purchasing power. At least 8 out of 10 vehicles imported are second hand in countries like Nigeria, Kenya and Ethiopia. Access to credit for purchasing new vehicles is limited across the continent thus reducing the number of potential buyers of new vehicles. Developing a local manufacturing base is required for uninterrupted and price competitive supply of auto components. Considering the overall present scenario, the automotive industry in Africa is still at a nascent stage. The rate of motorisation is low compared to its peer countries. This leaves an immense scope for further development and tapping the untapped potential.
• Pharmaceutical industry
Africa currently accounts for around 2 per cent of global pharmaceutical industry. The African pharmaceutical industry has grown from US$ 4.7 billion in 2003 to US$ 20.8 billion in 2013 and is projected to reach US$ 60 billion by 2020.The African pharmaceutical industry faces the challenge of inadequate capacity for research and design required for producing drugs locally as a result of absence of investment. The African pharmaceutical industry also suffers from long delays in receiving international orders, poor logistics and storage facilities accompanied by high costs involved in transportation and distribution. In addition, with the absence of proper regulatory measures, people tend to settle for poor quality drugs thus adding little to curing the existing health issues. Scaling up of production is necessary to increase the access to essential medicines of standard quality and ensuring sustainable health systems. Focus on industry specific training and education would also be required to get a skilled workforce.
Potential for Enhancing India’s Engagements in the Manufacturing Sector of Africa
India’s imports from Africa are mainly dominated by primary commodities like mineral fuels, oils and products of their distillation, followed by pearls and precious stones, and ores slag and slash. On the other hand, India mainly exports products like processed petroleum products, pharmaceutical products, automobile components, machinery and mechanical appliances.
During the period 2010-11 to 2016-17, Africa has received investments worth of US$ 21.1 billion in the manufacturing sector, which accounted for 44.6 per cent of the total investment received by Africa (US$ 47.3 billion) from India. Other than Mauritius, countries receiving Indian investment include Tunisia, South Africa, Morocco, Libya and Ethiopia, Ghana, Zambia, Egypt and Nigeria.
India’s Role in Facilitating Manufacturing in Africa
The study on the manufacturing sector of Africa tries to identify the potential manufacturing industries for Indian investors, while at the same time focuses on mutually beneficial outcome from such collaboration. Following are the areas where India can assume a development partnership role to facilitate growth in manufacturing sector of Africa.
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Skill Development: With a significant increase in working population in the continent, one of the biggest opportunities for Africa would be development of skilled manpower to engage in manufacturing activities. India may engage with other African development institutes to enrich the human resource through various skill development programmes in manufacturing.
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Knowledge sharing: India’s manufacturing sector is essentially dominated by Small and Medium Enterprises. Indian manufacturing associations could tie up with their African counterparts to develop respective sectors of their specialisation through collaboration. This could include building common resource centres for disseminating market and business related information, common quality testing labs for their products, among others.
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Designing educational programmes: One of the important initiatives essential for development of African pharmaceutical industry is building a pool of professionals for clinical research. Similarly, in the case of textile industry, educational programme relating to technical know-how, efficiency in production, designing, packaging and marketing, among others, would be essential to develop countries in the continent as garment manufacturing hubs. India may collaborate with relevant educational institutes in African countries to deliver diploma programmes or vocational training for such sectors to train the workforce.
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Credit Access: Another major challenge for the African manufacturing sector is access to credit for investment, especially in case of textiles and agribusiness as these are mainly characterise of small holders. Indian financial institutions and banks could contribute to enhancing credit access by collaborating with financial institutions and banks in the African region.
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Organising B2B Meets: Enhancing of two-way trade and investment flows could not be sustained without vibrant people-to-people contacts. There could be various rounds of consultations among business fraternity, with special focus on dedicated sector/s in each round thus promoting exchange of ideas and business propositions among entrepreneurs and investors.
The above Working Papers were prepared by the Export-Import Bank of India for the AfDB’s Annual Meetings in Ahmedabad on 22-26 May 2017. Other working papers in the series include (registration required to download): (i) Power sector in Africa: prospect and potential (No. 67); (ii) Feed Africa: achieving progress through partnership (No. 63); (iii) Water, sanitation and healthcare in Africa: enhancing facility, enabling growth (No. 64).
Measuring and monitoring intra-African trade
IFPRI and partners to develop expert technical network
Trade integration is a powerful tool for economic growth, development, and poverty alleviation. In the Malabo Declaration of June 2014, African countries committed to tripling the level of intra-African agricultural trade and services by 2025, fast-tracking the establishment of a Continental Free Trade Area and adopting a continent-wide Common External Tariff scheme.
To accomplish this goal of spurring trade across the continent, countries will need high-quality economic data. But consistently and accurately measuring and monitoring the level of intra-regional trade within Africa remains a major challenge.
African trade data in international databases such as COMTRADE is generally inconsistently reported, and formal trade throughout the region is often under-reported or not registered at all. In addition, information on informal trade (which, in some countries and for some commodities, is estimated to be greater than formal trade) is typically missing as well, due to smuggling or weak data collection systems. These major challenges must be overcome if regional trade is to be sustainably and effectively increased.
The lack of reliable data on agricultural trade also complicates the measurement of the household food balance sheets prepared by the UN Food and Agriculture Organization (FAO). Those balance sheets are key indicators of household nutrition and well-being. To the extent that a country imports many of its foodstuffs or exports significant quantities of food, neglecting intra-regional trade data may lead to seriously under- or overestimating household food availability.
With the cooperation of the African Union and African Regional Economic Communities, and through funding by the US Agency for International Development (USAID), IFPRI has been helping to establish a technical network of experts to unify efforts to measure and monitor inter- and intra-regional agricultural trade within Africa. As part of this project, A recent discussion paper by Cristina Mitaritonna of CEPII, the French research center for international economics, and Fousseini Traoré of IFPRI reviews efforts launched in the last 10 years to improve trade data in Africa. The study found that data collection efforts are fragmented and have generally lacked the necessary funding to be expanded or even established permanently. So even as the potential magnitude of under-reporting has come into focus, a unified approach to improving trade data has yet to emerge.
The overarching goals of the IFPRI project are to improve the measurement of intra-regional trade and to identify the factors that impede such trade. The first goal includes two key objectives: Improving the measurement of informal trade by expanding regional and product coverage; and formalizing best practices while developing methods to use the informal trade data to reconcile and augment formal data. To meet the second goal, the project aims to catalogue recent efforts to measure trade barriers, develop a series of technically robust indicators for trade performance and its impact on food security, and identify and track the determinants of African trade.
Here are some specific steps needed to build this technical network:
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Identify past and current efforts to measure intra-regional trade. Projects would be identified by their scope in terms of area and commodities covered, projected duration, and funding sources. A list of experts will be assembled and invited to participate in this effort.
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Disseminate information via a central, open access data repository of research and data collection methods. Numerous reports on intra-regional African trade have been prepared on the behalf of governments, NGOs, and international organizations, but they are often not widely distributed or available. This means the lessons of some projects remain largely unknown, whether due to geographical distance or language barriers (reports written in English vs. French or Portuguese). In addition, informal trade data are often not widely accessible, even when there is regular reporting. Making all of these reports available online where they can be easily downloaded would help to better disseminate important findings.
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Convene experts regularly to discuss efforts to measure and monitor intra-regional trade. Experts would form a community of practice to discuss measurement issues, including best practices for gauging informal trade, gaps in regional and commodity coverage, potential partners who can help expand coverage, and how best to institutionalize the work over the long run.
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Engage the broader research community in discussions on how to improve data collection efforts. In addition to national and regional efforts, there is significant interest on the part of international organizations such FAO, IFPRI, OECD, World Bank, and the WTO, as well as research institutions and NGOs. Technical networks should include researchers from those institutions to ensure that there is broad information sharing and interaction among researchers.
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Work with national trade statistics agencies. Sharing informal trade data with governments can help improve their formal data collection. In some countries (for example, Uganda), such efforts are already underway. In other areas, the community of practice should include representatives from national trade statistics agencies. Other areas of potential collaboration could include FAO’s food balance sheet efforts.
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Expand and standardize data collection on barriers to trade. Much work has been initiated in the area of monitoring trade barriers (for example, the West Africa Trade and Investment Hub and CUTS International). As part of the technical network, experts can exchange findings and collaborate to develop a common framework to document trade barriers and to measure and assess their impacts.
This project began at a Dec. 2015 workshop in Nairobi that brought together trade experts from all over Africa and from international organizations including the World Bank and WTO. Two future workshops have been planned to launch regional expert technical networks. The first will be held in Dakar, Senegal in July, with a second workshop planned for southern Africa later in 2017. While these workshops will be regional in focus, technical experts from other regions will be invited share their expertise on these issues.
Joseph Glauber is a Senior Research Fellow and Kathryn Pace is a Program Manager with IFPRI’s Markets, Trade and Institutions Division.
» Download the IFPRI Discussion Paper: Existing Data to Measure African Trade (PDF, 1.23 MB)
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Resolving the unresolved non-tariff barriers in the East African Community: an ODI project
Since the establishment of the East African Community (EAC), comprising Burundi, Kenya, Rwanda, Tanzania and Uganda, the region has seen a steady strengthening of economic and political ties among the community's partner states. The EAC Customs Union came into force in 2005, facilitating the establishment of a common external tariff and paving the way for the removal of all intra-regional tariffs by 2010.
Despite this, available trade statistics paint a mixed picture about the impact of the EAC on intra-regional trade. Although the establishment of the EAC coincided with an important expansion in intra-regional trade in absolute terms, overall intra-EAC exports did not grow as a share of the region’s total exports. In addition, the persistence of non-tariff barriers (NTBs) still affects trade flows, and reduces the benefits to be gained from the regional integration process.
The following policy briefings* are outputs of a research project, Resolving the Unresolved NTBs in the East African Community, financed by the UK Department for International Development and undertaken by the Overseas Development Institute, the University of Sussex and CUTS Nairobi. The aim of this project was to measure the magnitude of NTBs affecting trade facilitation and transport among the EAC partner states and assess the impact of their removal on regional trade and production.
Would more trade facilitation lead to lower transport costs in the East African Community?
In recent years, the East African Community (EAC) has sought to eliminate non-tariff barriers (NTBs) through a common reporting and inter-state resolution mechanism among its members Burundi, Kenya, Rwanda, Tanzania and Uganda. Recent research shows that this mechanism has been particularly effective in identifying and removing those NTBs associated with customs and trade facilitation problems: more than 45% of NTBs which were identified and subsequently addressed since the monitoring mechanism’s inception in 2009 belonged to this category. During the same period, overall time required to move goods along the main transport corridors in the East African region were almost cut by half, while transport rates charged by trucking companies along the same routes fell by a third.
Although this decline in trucking prices appears to have been largely driven by lower fuel costs and a decrease in demand for transport services, the fact that these cost savings were passed on to users suggests a competitive market structure. Additional efforts to remove NTBs related to trade facilitation along the EAC’s transport corridors could thus have a large impact in the form of lower regional transport costs. This policy briefing provides an overview of the causes of the decline in transport costs across the EAC in the context of trade facilitation efforts.
Improvements in trade facilitation have taken centre stage in the EAC’s regional economic integration agenda. Yet, to date most efforts have not been felt equally along the logistics chain. While there are evident improvements in the speed of customs clearance and the handling of cargo at ports and terminal depots, the transportation of goods along the EAC’s main corridors is still very costly. Delays on account of the excessive number of weighbridges, lengthy queues at border posts, and numerous police road blocks cause the trip between Mombasa and Kampala to be twice as long as without these barriers. In addition, truckers face significant pecuniary costs of up to $250 on each trip, a fifth of which is directly associated with paying bribes and extra-official fines.
Completely eliminating all of these cost factors is unfeasible. A limited number of weighbridges, for instance, will have to remain to ensure that trucks comply with axle load regulations and that precious road infrastructure is preserved. Yet this research shows that an increased effort to address the remaining trade facilitation issues along the EAC’s main corridors could have a large impact on reducing overall transport costs. The fact that the trucking industry is operating in a relatively competitive environment makes the case for more trade facilitation and improvements in infrastructure on the corridors even stronger, as any cost reduction would be expected to be passed on in the form of lower prices for trucking services. Using recently collected data from EAC transporters, it is estimated that transport price per tonne could fall by as much as 23% from its current levels, if transit time and transit cost are reduced to a minimum.
» Download: Would more trade facilitation lead to lower transport costs in the East African Community? (PDF)
The costs of logistical and transport barriers to trade in East Africa
Trade increases general economic welfare by reducing prices, raising incomes and providing a better allocation of resources. In addition to tariffs, multiple non-tariff barriers (NTBs) introduce frictions in trade. Some of these barriers, in addition to issues related to the quality and quantity of infrastructure and the market structure of the relevant service providers, increase transport and logistics costs.1 Recent trade facilitation efforts in the East African Community (EAC) have led to faster customs clearance and speedier handling of cargo at ports and terminal depots. However, unnecessary en-route delays as a result of the existence of weighbridges, slow border-crossing times and police roadblocks mean that cargo transit times are almost twice as long as without these barriers. Tackling the remaining trade facilitation barriers along the corridors could result in additional cost savings of up to 23% per transported tonne.
This policy briefing summarises results of the elimination of transport and logistics NTBs and other related measures on the economies of the EAC countries. This includes an assessment using a computable general equilibrium (CGE) model of trade effects, gross domestic product (GDP), welfare, employment and prices. Moreover, using the Bottini et al. (2017) Trade Poverty Constraint Index (TPCI), we analyse how the reduction of relevant NTBs is transmitted to households in terms of their capacity to seize the opportunities generated and protect against negative shocks. This means the provision of a qualitative and quantitative assessment of the effect of the removal of these NTBs on poverty.
Trade and logistics costs limit the benefits of trade on the economies of the EAC. These barriers cost the EAC economies between 1.7% (Rwanda) and 2.8% (Kenya) of GDP and reduce the trade potential of the EAC when both the barriers affecting intra- and extra-regional trade are considered. In addition, they have direct effects on households. Although employment effects may be small, a significant reduction in the transport and logistics NTBs may reduce the prices paid by the poorest. For example, the elimination of these barriers may reduce the consumer prices in Tanzania by almost 2% in sensitive products for unskilled workers such as textiles.
Based on an assessment of constraints affecting the capacity of households to seize the opportunities arising from trade and to protect themselves from any negative effects, the poor in Kenya and Rwanda are better equipped to benefit from the removal of NTBs but are also among those who could be more negatively affected.
However, the elimination of NTBs is expected to substantially change existing constraints. Consequently, the poor of Burundi or Uganda may see some of these constraints lifted. This will help them benefit from further future trade liberalisation. Consequently, complementary policies should be designed and implemented to secure the protection of those negatively affected in both the countries that benefit directly from the reduction of NTBs and those where the reduction of NTBs will expose them to future shocks.
The improvement of road infrastructure in order to double travel speeds is expected to have the largest effects in terms of poverty reduction. However, it is very costly. Other policies can be adopted with larger effects relative to the investment made. In this sense, it appears that reducing border delays and the number of weighbridges are more accessible and rapid to implement.
» Download: The costs of logistical and transport barriers to trade in East Africa (PDF)
* The views presented in these papers are those of the author(s) and do not necessarily represent the views of ODI or its partners.
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tralac’s Daily News Selection
Underway, in Arusha: EAC Sectoral Council Meeting on Trade, Industry, Finance and Investment
Today, in Addis: Arbitration in Ethiopia, East Africa, and beyond: prospects, possibilities, and challenges
South Africa’s April 2017 Merchandise Trade Statistics: surplus narrows to R 5,083bn
Economic benefits of Open Data in Africa (AfDB)
Open data programs are at a nascent stage in Africa, with most attention being focused on the objective of boosting transparency and accountability. As a consequence, the potential economic benefit to Africa has been largely overlooked, and this paper seeks to address this issue. Based on plausible and cautious assumptions, and using a variety of estimated methods, the economic potential of open data to Africa could equate to roughly 1–2% of the region’s GDP. There are particular opportunities to be gained for the Africa region in the agriculture sector, in public procurement, and in geospatial data, and there is far greater upside potential than downside risk. This report makes a number of recommendations to help Africa realize the economic potential of open data. Specifically, it calls for: [VOA: Could Big Data help end hunger on the continent?]
Joint Africa-EU Strategy Reference Group on Infrastructure: documentation (Africa-EU Partnership)
In the run-up to the 5th Africa EU Summit in November 2017, the objective of the RGI was to shape the future JAES infrastructure agenda in the areas of energy, transport, water and digitalisation for the period 2018-2020. More than 120 African and European stakeholders attended the event. “Energising Africa, Interconnecting Africa, Digitalising Africa and achieving Equitable and Sustainable Use of Water in Africa” will therefore be the proposed pillars for the future Africa-EU infrastructure agenda towards prosperity and well-being for our citizens of Africa and Europe. Spurring of investments in Africa with the European External Investment Plan as major engine for innovative private investment leverage will be the core deliverable of the future Africa-EU cooperation. The working papers and presentations can be downloaded: [Note: EU-Africa Business Forum, 7 June; EC, AUC agree on measures to strengthen financial management of AUC]
Sindiso Ngwenya: Regional integration - linking regional and national programmes (pdf, COMESA)
A cursory examination of different regional programmes in the COMESA region reveals that a higher share of the programme activities and resource allocation is used for facilitation, coordination, capacity building and other ‘soft’ public sector projects. The main concern is that such programmes in most cases are prepared without the involvement of the private sector who are supposed to be the key drivers of regional integration. Whereas, it is not in dispute that smart investments in public goods facilitate private sector investments, this may not have been the case as these investments do not result in “crowding in” of the private sector. This may partly explain why the EDF support at both the national and regional levels may not have achieved the expected results and impacts among other reasons. From the foregoing, one may be excused from asking a rhetorical question as to why these investments have not been catalytic in “crowding in” the private sector? One possible explanation is that there have been no radical reforms in the way that the national and regional programs are conceptualized, designed and implemented. This notwithstanding the laudable efforts by both the African countries and the cooperating partners to draw lessons from previous funding cycles. [Extract from his speech at the EU-East Africa seminar, Djibouti, 25 May], [IGAD: Executive Secretary participates in EU-East Africa Seminar]
COMESA, EU sign agreements worth €68m to reduce costs of cross border trade
The EU has signed two financing agreements to finance implementation of two programmes in the COMESA region. They are: Trade Facilitation programme (€53m) and Small Scale Cross-Border Trade programme (€15m). The programme on small-scale cross-border trade aims at increasing the formalization of informal cross-border trade and enhancing trade flows leading to higher incomes for small-scale cross border traders. This is being done through simplifying the Certificates of Origin, Customs document and addressing harassment of small scale cross border traders at the borders. The programme has identified five key areas of support.
Russell Hillberry: Trade Facilitation Agreement’s benefits may extend well beyond cutting red tape (The Conversation)
Estimates of the economic benefits of this agreement vary widely: from $68bn to nearly $1 trillion per year. That translates to a gain of $9 to $133 a year for every person on the planet. The range of these estimates reflects several uncertainties. Countries may agree to implement reform, but do so imperfectly. Even if the reforms are implemented fully, their effects on the time and monetary costs of trading are uncertain. The quality of implementation and its effects on trade will also vary across countries, in ways that are difficult to predict. My own sense is that lower middle of the range represents a best guess, but the truth is that we cannot yet know. More important than the economic benefits discussed in these analyses, however, is the question of whether these trade reforms can boost the developing country governments’ capacities to administer complex systems. [The author is Associate Professor of Agricultural Economics, Purdue University]
Commonwealth African Regional Trade Consultation: eight downloads
Participants discussed the most pressing trade and development challenges for Commonwealth African member states, in the light of unfavourable global economic and trade patterns, rising protectionism and growing discontent about globalisation. The meeting also provided an opportunity to review the current issues for multilateral trade negotiations, especially since the WTO is hosting its 11th Ministerial Conference in Buenos Aires in December. The meeting also provided a platform for African member states to assess various trade policy options, including UK-Africa trade relations post Brexit, advancing African integration through the Continental Free Trade Agreement, and priority issues for the 6th Global Review of Aid for Trade in July.
India-Commonwealth SME Trade Summit: selected updates
(i) Commonwealth trade prop (Telegraph India). The Commonwealth countries are planning a business travel card that will allow business leaders from the 52-member club seamless travel without a visa within their territories. The Commonwealth is also considering a business-to-business portal especially for small- and medium-entities that will facilitate interactions in a bid to raise the trade within the member countries to $1trillion from $750m now. “I have proposed that the Commonwealth set up an e-commerce platform which lists firms by sectors to promote intra-commonwealth trade,” said Usha Dwarka-Canabady, foreign secretary of Mauritius, here to attend the first India-Commonwealth SME Trade Summit. The Commonwealth countries collectively exported and imported goods and services worth $4.3 trillion in 2015. However, intra-Commonwealth trade amounts to only 17% of the total trade.
(ii) Commonwealth can lead the growth in global trade. In her opening remarks, Rita Teatotia, Secretary, Commerce & Industry Ministry said SMEs accounts for huge percentage of economic activities. “The traditional image of SME sector has been that it is tradition based, it is small and low tech but in fact this is not the reality. The SMEs not just expand to the traditional sectors but it also goes to the high-tech areas,” she added. She stressed the need to create regular forum for interaction which would help in actualizing the potential of trade amongst commonwealth countries. Deodat Maharaj, Deputy Secretary General, Commonwealth Secretariat, said it is almost 19% more cost effective to trade within and amongst Commonwealth countries than to trade from Commonwealth to non-Commonwealth country. [India-Commonwealth summit ‘a win-win’ for all involved]
Russia-Africa: a structural approach to cooperation in the new economic reality (SPIEF-2017)
The last couple of years have seen a rise in Russia-Africa trade, with aggregate turnover reaching $14.5bn in 2016, up by $3.4bn year-on-year. The bulk of it ($10.1bn) was done by four countries, including Egypt ($4.16bn), Algeria ($3.98bn), Morocco ($1.29bn) and South Africa ($718m), with Algeria as the major growth driver adding $2bn. The rising trend was seen by 28 out of 55 African nations, with Ethiopia, Cameroon, Angola, Sudan and Zimbabwe doing better than neighbours, percentage-wise. According to the Eurasian Economic Commission, Africa was the only region to have expanded its trade turnover with Russia in 2016 (unlike the EU, MERCOSUR, APEC, and others). [SA’s Black Business Council to promote SMEs in BRICS regions]
EAC tax agencies unite in war on revenue leakages (Business Daily)
All the EAC states have missed their import duty collection targets in the nine months to March with Kenya, the biggest of the economies, recording Sh65.8bn against an expectation of Sh70bn. Official data shows that both the dry and wet cargo import volumes fell in the nine months, causing a cumulative effect even on consumption taxes. Following a meeting in Burundi last week, tax bosses from Kenya, Uganda, Rwanda, Tanzania, Burundi and South Sudan have agreed to implement a uniform system for valuing imports. This means that the customs authorities in the EAC would use the same formula in determining the value of goods coming into the bloc and by extension impose similar duties.
EALA report: Tanzanians wary of job, business losses under EA bloc integration (Daily News)
Stakeholders from Tanzania have expressed concern and wary of losing employment and business opportunities under a more integrated EAC Customs Union and Common Market protocols. That’s the most vivid reading here, at least as unveiled in a report presented to the East African Legislative Assembly, citing several factors such as lack of enough knowledge on the laws and regulations guiding operations of the EAC integration, but also harmonisation of taxation systems within, and among, partner states. Presenting the report to the House, Ms Patricia Hajabakiga said EALA Tanzania Chapter members who toured Dodoma, Morogoro and Zanzibar for sensitisation activities between April and May this year, received critical issues and concerns that need working upon – with immediate effect.
Tanzania: Private sector proposes reforms for inclusive industrialisation (IPPMedia)
Among changes presented during the annual general meeting of their umbrella body, the Tanzania Private Sector Foundation, include the latter’s participation in developing Special Economic Zones, creation of ministerial committees to coordinate investment at the regional level and establishment of an Industrial Development Bank as a strategic lender to local investors and entrepreneurs. Others include the establishment of economic processing zones in the Southern Agricultural Growth Corridor of Tanzania, which has rich economic potential, to ensure that crops produced in these areas are processed or semi-processed before export. This would in turn boost the performance of the newly-built Songwe International Airport in Songwe Region as well as the iconic Tanzania Zambia Railway Authority, the business community argued.
Nigeria: National Industrial Policy and Competitiveness Advisory Council inaugurated (NAN)
The Minister of Industry, Trade and Investment said the council represented what the government was working out in furtherance of the partnership between the public and private sector with respect to industrialisation. He said he was confident that the council would provide the formula that would work and produce results. The Council discussed the industrialisation priorities for the economy where Aliko Dangote said the council was a welcome development which if well utilised could ensure diversification of the economy. He urged that government should remove the constraints hindering industrialisation such as power, transportation, inconsistencies in policies, and challenges in land acquisition and communal violence. [Note: the article lists the full membership of the advisory council]
Competitiveness, comparative advantage, and role of NEXIM in export stimulation (Premium Times)
Capital remains a key constraint to the outlook and operations of NEXIM. To be functional as an ECA, NEXIM requires more capital than it has ever had since inception. According to the consolidated balance sheet released by the CBN in Q4 2016, NEXIM’s total asset stood at N66.5bn, or about $211m. It is no wonder that NEXIM could not provide any meaningful support as non-oil exports earnings continued on a free decline to N2.6bn by the end of 2016. How can NEXIM de-risk the sector with as little as $211m? How can it provide buyer credit and overseas investment loans to exporters and Nigerian companies abroad?
Sustainable banking as a driver for growth: a survey of Nigerian banks (pdf, Deloitte Nigeria Blog)
With the adoption of the Nigerian Sustainable Banking Principles (NSBP), most banks in Nigeria have been prompted to intensify their adoption of sustainable banking principles. Although the banks are at varying levels of engagement with these principles, and with sustainable banking in general, significant progress has been made since 2013. Deloitte surveyed 18 of the largest banks in Nigeria to understand how they have adopted sustainable banking principles, what their experience has been and what they need to overcome the challenges they have experienced so far. Some key highlights from the survey are outlined below:
International trade statistics: G20 trends, first quarter 2017 (OECD/WTO)
All G20 economies, with the exception of France (where exports contracted by 2.4%), saw export growth in the first quarter of 2017. Australia recorded the highest growth (7.2%) among OECD G20 economies. Growth was also robust in Korea (5.7%), the United Kingdom (3.3%), Canada (2.9%), the United States (2.7%) and Japan (2.5%) but was more subdued in the G20 euro area economies with Germany (1.3%) recording the highest growth. Export growth was especially strong in the BRIICS economies ranging from 3.5% in Indonesia to over 10% in Brazil and Russia. Imports grew in all G20 economies in the first quarter of 2017.
Today’s Quick Links Mercosur-SACU: inaugural Preferential Trade Agreement Joint Administrative Committee statement (pdf) Doing business in Africa not as difficult as perceived – report 2017 China Beijing International Fair for Trade in Services: update COMESA, ESAAMLG sign pact to fight money laundering Togolese soybean producers find new markets in Vietnam and Europe after ITC assistance IMF: Inclusive Growth Framework (illustrated with reference to Senegal, Djibouti) |
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South Africa Merchandise Trade Statistics for April 2017
South Africa trade surplus narrows in April
South Africa posted a trade surplus of R5.1 billion in April of 2017 compared to a downwardly revised R11.3 billion surplus in March and slightly below market expectations of R5.5 billion.
Exports fell 9.2 percent to R91.8 billion, due to lower sales of precious metals and stones, vehicles & transport equipment, machinery & electronics, and chemicals. Major destinations for exports were China (9.4 percent of total exports), Germany (7.7 percent), the US (6.9 percent), India (5 percent) and Japan (4.5 percent).
Imports went down 3.4 percent to R86.7 billion, driven by purchases of optical photographic products, original equipment components, vegetables, and chemicals. Imports came mainly from China (17.3 percent of total imports), Germany (10.5 percent), the US (6.3 percent), Saudi Arabia (5.9 percent) and India (5 percent).
Excluding trade with neighboring Botswana, Lesotho, Namibia and Swaziland (BLNS), the country posted a trade deficit of R1.19 billion in April.
The South African Revenue Service (SARS) today releases trade statistics for April 2017 recording a trade balance surplus of R5.08 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS). The year-to-date (01 January to 30 April 2017) trade balance surplus of R9.89 billion is an improvement on the deficit for the comparable period in 2016 of R26.39 billion.
Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The R5.08 billion trade balance surplus for April 2017 is attributable to exports of R91.78 billion and imports of R86.70 billion. Exports decreased from March 2017 to April 2017 by R9.29 billion (9.2%) and imports decreased from March 2017 to April 2017 by R3.09 billion (3.4%).
Exports for the year-to-date (1 January to 30 April 2017) grew by 6.4% from R338.75 billion in 2016 to R360.27 billion in 2017. Imports for the year-to-date of R350.38 billion are 4.0% less than the imports recorded in January to April 2016 of R365.14 billion.
On a year-on-year basis, the R5.08 billion trade balance surplus for April 2017 is an improvement from the deficit recorded in April 2016 of R2.12 billion. Exports of R91.78 billion are 2% more than the exports recorded in March 2016 of R90.02 billion. Imports of R86.70 billion are 5.9% less than the imports recorded in April 2016 of R92.14 billion.
March 2017’s trade balance surplus was revised downwards by R0.16 billion from the previous month’s preliminary surplus of R11.44 billion to a revised surplus of R11.28 billion as a result of ongoing Vouchers of Correction (VOC’s).
Trade highlights by category
The main month-on-month export movements (R’ million)
Section: |
Including BLNS: |
|
Vehicles & Transport Equipment |
- R2 287 |
- 18% |
Machinery & Electronics |
- R1 591 |
- 18% |
Precious Metals & Stones |
- R1 344 |
- 8% |
Chemical Products |
- R1 232 |
- 19% |
Vegetable Products |
- R1 203 |
- 23% |
Other Unclassified |
- R 936 |
- 64% |
Plastic & Rubber |
- R 589 |
- 29% |
Wood Pulp & Paper |
- R 477 |
- 23% |
Mineral Products |
+ R2 254 |
+ 10% |
The main month-on-month import movements (R’ million)
Section: |
Including BLNS: |
|
Original Equipment Components |
- R1 285 |
- 17% |
Optical Photographic Products |
- R 762 |
- 26% |
Vegetable Products |
- R 435 |
- 22% |
Chemical Products |
- R 363 |
- 4% |
Vehicles & Transport Equipment |
+ R 395 |
+ 4% |
Trade highlights by world zone
The world zone results from March 2017 (revised) to April 2017 are given below.
Africa:
Trade Balance surplus: R12 131 million – this is a 29.4% decrease in comparison to the R17 186 million surplus recorded in March 2017.
America:
Trade Balance deficit: R 980 million – this is a 62.5% decrease in comparison to the R2 615 million deficit recorded in March 2017.
Asia:
Trade Balance deficit: R8 823 million – this is a 67.2% increase in comparison to the R5 278 million deficit recorded in March 2017.
Europe:
Trade Balance deficit: R3 754 million – this is a 30.1% decrease in comparison to the R5 370 million deficit recorded in March 2017.
Oceania:
Trade Balance surplus: R 147 million – this is a 5.8% decrease in comparison to the R 156 million surplus recorded in March 2017.
Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The trade data excluding BLNS for April 2017 recorded a trade balance deficit of R1.19 billion. This was a result of exports of R82.66 billion and imports of R83.85 billion.
Exports decreased from March 2017 to April 2017 by R7.18 billion (8.0%) and imports decreased from March 2017 to April 2017 by R2.67 billion (3.1%).
The cumulative deficit for 2017 is R17.21 billion compared to R60.33 billion deficit in 2016.
Trade highlights by category
The main month-on-month export movements (R’ million)
Section: |
Excluding BLNS: |
|
Vehicles & Transport Equipment |
- R1 908 |
- 17% |
Machinery & Electronics |
- R1 329 |
- 19% |
Chemical Products |
- R1 129 |
- 20% |
Vegetable Products |
- R1 050 |
- 24% |
Other unclassified |
- R 931 |
- 64% |
Precious Metals & Stones |
- R758 |
- 5% |
Plastics & Rubber |
- R 506 |
- 33% |
Wood pulp & Paper |
- R 428 |
- 23% |
Mineral Products |
+ R2 236 |
+ 10% |
The main month-on-month import movements (R’ million)
Section: |
Excluding BLNS: |
|
Original Equipment Components |
- R1 285 |
- 17% |
Optical Photographic Products |
- R 765 |
- 26% |
Vegetable Products |
- R 435 |
- 22% |
Chemical Products |
- R 413 |
- 5% |
Precious Metals & Stones |
+ R 392 |
+ 95% |
Trade highlights by world zone
The world zone results for Africa excluding BLNS from March 2017 (Revised) to April 2017 are given below.
Africa:
Trade Balance surplus: R5 861 million – this is a 36.5% decrease in comparison to the R9 231 million surplus recorded in March 2017.
Botswana, Lesotho, Namibia and Swaziland (Only)
Trade statistics with the BLNS for April 2017 recorded a trade balance surplus of R6.27 billion. This was a result of exports of R9.12 billion and imports of R2.85 billion.
Exports decreased from March 2017 to April 2017 by R2.10 billion (18.8%) and imports also decreased from March 2017 to April 2017 by R0.42 billion (12.9%).
The cumulative surplus for 2017 is R27.10 billion compared to R33.94 billion in 2016.
Trade Highlights by Category
The main month-on-month export movements (R’ million)
Section: |
BLNS: |
|
Precious Metals & Stones |
- R 586 |
- 95% |
Vehicles & Transport Equipment |
- R 379 |
- 30% |
Machinery & Electronics |
- R 262 |
- 16% |
Vegetable Products |
- R 153 |
- 23% |
Base Metals |
- R 124 |
- 17% |
Textiles |
- R 108 |
-17% |
Chemical Products |
- R 103 |
- 11% |
The main month-on-month import movements (R’ million)
Section: |
BLNS: |
|
Precious Metals & Stones |
- R 172 |
- 29% |
Textiles |
- R 96 |
- 21% |
Prepared Foodstuff |
- R 92 |
- 18% |
Machinery & Electronics |
- R 46 |
- 16% |
Chemical Products |
+ R 50 |
+ 9% |
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Economic benefits of open data in Africa
Executive summary
Open Data is data that can be freely used, reused, and redistributed by anyone. At least 46 governments worldwide, including those of at least 14 of the 54 countries in Africa, are working on open data initiatives to release some of the data they collect and generate. The primary objectives of open government data are economic growth, increased transparency and accountability, improved public services, and efficiency in government.
Estimates of the global potential economic benefit of open data range as high as US$ 3-5 trillion, which represents about 4 percent of world GDP, although the international evidence to support such figures is not yet systematic. More modest estimates have driven policy-makers in Europe, the US, and elsewhere to initiate an open data approach. This makes good economic sense, not least because the costs of releasing data that the government already collects are far outweighed by even the most conservative estimates of potential benefits.
Open data programs are at a nascent stage in Africa, with most attention being focused on the objective of boosting transparency and accountability. As a consequence, the potential economic benefit to Africa has been largely overlooked, and this paper seeks to address this issue. Based on plausible and cautious assumptions, and using a variety of estimated methods, the economic potential of open data to Africa could equate to roughly 1-2 percent of the region’s GDP. There are particular opportunities to be gained for the Africa region in the agriculture sector, in public procurement, and in geospatial data, and there is far greater upside potential than downside risk.
Achieving such benefits not only requires the right datasets to be available, it also calls for innovators and entrepreneurs to convert these datasets into datadriven services, and for the installation of appropriate infrastructure to deliver those services. So far only a small amount of open data has been released in Africa; and in many countries economically important datasets, such as geospatial data, are non-existent or of poor quality. Nevertheless, in a number of African countries innovators are already demonstrating their ability to deliver data-driven services, including some that could increase small farmers’ incomes by 20 percent or more. Indeed, in the region there exists a groundswell of skills and innovative ideas capable of converting open data into economic growth.
This report makes a number of recommendations to help Africa realize the economic potential of open data. Specifically, it calls for: greater knowledge sharing; the need to focus on creating and releasing key datasets; taking strategic steps to invest in “African Information Infrastructure” alongside physical infrastructures; removing the barriers that governments encounter in implementing open data initiatives; and facilitating innovation and data-driven services geared to the needs of the continent.
The African Development Bank is already a leader in promoting and facilitating open data in Africa, especially through its Africa Information Highway (AIH) initiative. Indeed, the AIH was selected in 2015 by PARIS21 as one of the most innovative initiatives globally to enable and inform the Data Revolution. Similarly, in endorsing the enhancement of the General Data Dissemination System (e-GDDS), which forms part of the IMF’s Data Standards Initiative, the IMF Board decided that the AIH’s Open Data Platform (ODP) would be used as the core data management and dissemination platform for African countries – a model to be emulated in all IMF developing member countries across the globe. This report illustrates how the Bank can build on this success and spearhead the drive to maximize economic benefits for Africa from open data and the implementation of the recent “Africa Data Consensus.”
This study is a product of the Statistics Department of the African Development Bank Group. It is based on evidence as of mid-2015, although there have been some developments since then
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Commonwealth African Regional Trade Consultation held in Mauritius
Amid an unprecedented global trade slowdown, African policymakers, negotiators and trade analysts met 25-26 May 2017 in Mauritius to discuss priorities for reviving world trade and strengthening their trading capacity.
Participants discussed the most pressing trade and development challenges for Commonwealth African member states, in the light of unfavourable global economic and trade patterns, rising protectionism and growing discontent about globalisation. The meeting also provided an opportunity to review the current issues for multilateral trade negotiations, especially since the WTO is hosting its 11th Ministerial Conference in Buenos Aires in December.
The meeting furthermore provided a platform for African member states to assess various trade policy options, including UK-Africa trade relations post Brexit, advancing African integration through the Continental Free Trade Agreement, and priority issues for the 6th Global Review of Aid for Trade in July.
Past and present trade negotiators convened to finalise a proposal to establish an informal Commonwealth African Trade Negotiators Network.
Ahead of the meeting, Brendan Vickers, Economic Adviser (Regional Trade and Integration Issues) at the Commonwealth Secretariat, said: “African countries are engaged in a range of global, regional and bilateral negotiations on trade and trade-related issues. However, one of the major challenges confronting Africa is the capacity to undertake trade negotiations, although many experienced negotiators from Africa are willing to help.
“This network aims to bring these negotiators together and provide a ‘think tank’ for Africa for future trade negotiations. Drawing on the collective experience, knowledge and wisdom of present and past trade negotiators, the network will help set out strategic priorities for Africa’s current and future trade agenda, assess opportunities and challenges, brainstorm particular negotiating and policy issues, and explore ways to unlock any impasse in some of the negotiations.”
Presentations from the Regional Consultation are available to download, with thanks to Brendan Vickers from the Commonwealth Secretariat.
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International trade statistics: trends in first quarter 2017
G20 merchandise trade growth accelerates in Q1 2017
G20 international merchandise trade in the first quarter of 2017, seasonally adjusted and expressed in current US dollars, increased for the fourth straight quarter and at the fastest rate since the second quarter of 2011.
Export growth picked up to 3.0% in the first quarter of 2017, compared with 1.5% in the fourth quarter of 2016 while imports increased by 4.0%, significantly up on last quarter’s 1.2% growth. G20 merchandise trade has almost regained its pre-crisis levels, but remains around 10% lower than the highs reached in 2011-2014.
All G20 economies, with the exception of France (where exports contracted by 2.4%), saw export growth in the first quarter of 2017. Australia recorded the highest growth (7.2%) among OECD G20 economies. Growth was also robust in Korea (5.7%), the United Kingdom (3.3%), Canada (2.9%), the United States (2.7%) and Japan (2.5%) but was more subdued in the G20 euro area economies with Germany (1.3%) recording the highest growth.
Export growth was especially strong in the BRIICS economies ranging from 3.5% in Indonesia to over 10% in Brazil and Russia.
Imports grew in all G20 economies in the first quarter of 2017. China recorded the highest growth in the G20 (9.6%), which worked to reduce China’s trade surplus (94.2 billion US dollars) to its lowest level since the second quarter of 2014. Strong import growth was also observed in Argentina (5.0%), Brazil (9.1%) and India (6.5%). Among OECD G20 economies import growth was highest in Korea (8.2%) and lowest in Turkey (1.8%).
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Closing infrastructure gap in Africa a key catalyst for investment, says G20
The G20 says closing infrastructure gap on the continent represents a key step to achieving better youth employment and economic transformation.
Under the current German G20 Presidency, the key objective to advance the sustainable economic development of the African continent is of particular importance.
But this objective cannot be realized without good infrastructure, says Thomas Silberhorn, Germany Parliamentary State Secretary, whose country currently heads the G20.
The Group of 20, known as the G20, was formed in 1999 in response to the Asian financial crisis of the late 1990s. Its purpose was to gather Finance Ministers and Central Bank Governors from advanced and emerging economies to discuss how to support the stability of financial markets and to promote economic cooperation.
“It is important to close the infrastructure gap on the African continent, not just somehow, but in the spirit of the 2030 Agenda for sustainable development, by building sustainable infrastructure especially in the energy sector. That is why we are advocating for more support for the African Renewable Initiative of the African Union with the Secretariat hosted at the African Development Bank,” Silberhorn said Wednesday during a session on the “G20 New Partnership with Africa: Dialogue for Better Youth Employment and Economic Transformation” at the 2017 African Development Bank Annual Meetings in India.
The dialogue centered on the need to build on existing regional and international strategies of the G20-Africa Partnership, which comprises several initiatives that support private investment, sustainable infrastructure and employment in African countries.
And the focus is mainly on youth. According to AfDB, there are nearly 420 million young Africans between the ages of 15 and 35 today. Within 10 years, Africa is projected to be home to one-fifth of all young people worldwide. These millions of young people are sources of ingenuity and engines of productivity that, if well prepared, could ignite a new age of inclusive prosperity on the continent.
“But there are no guarantees,” said Jennifer Blanke, AfDB Vice-President for Agriculture, Human and Social Development. “While the youth population is Africa’s asset, it can also easily become a liability, and this is the whole question about demographic dividends. Let us be clear, it is only the existence of opportunity and the young person’s belief that they can access that opportunity that prevents pessimism and political unrest.”
AfDB is spearheading Jobs for Youth in Africa, an initiative to turn this population explosion into a wealth creation force. But the initiative requires African Governments to put in place strategic measures to tap into available opportunities.
And one country that has been making positive headlines in this area is Rwanda. Rwanda’s Minister for Finance and Economic Planning, Ambassador Claver Gatete, said Rwanda’s success is not accidental but the result of a well thought-out strategy.
“We set ourselves a target to create 2, 000 jobs for youth in agriculture every year, and that is a yard stick we use to measure ourselves,” he said, attributing success largely to the private sector.
Other African Ministers on the panel from Ghana and Morocco emphasized the need to train youth according to job market needs and de-risking private sector investments. Silberhorn described the AfDB as the right institution to mobilise and catalyse investments in order to address the most urgent infrastructure gap in Africa.
“The new cooperation with Africa is gaining momentum. It must not end at the G20 summit in Hamburg. On the contrary, it should be continued and strengthened further. It is the starting of a marathon, and I am glad that just like the Ethiopian, Kenyan and other African long-distance runners, the African Development Bank is going the distance with us,” Silberhorn emphasized.
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Increasing food production without damaging the environment
FAO Director-General addresses European Parliament’s Committee on Agriculture and Rural Development
To achieve sustainable development we must transform current agriculture and food systems, including by supporting smallholders and family farmers, reducing pesticide and chemical use, and improving land conservation practices, FAO Director-General José Graziano da Silva said on Tuesday while addressing European lawmakers.
“Massive agriculture intensification is contributing to increased deforestation, water scarcity, soil depletion and the level of greenhouse gas emission,” Graziano da Silva said. He stressed that while high-input and resource intensive farming systems have substantially increased food production, this has come at a high cost to the environment.
“Today, it is fundamental not only to increase production, but to do it in a way that does not damage the environment. Nourishing people must go hand in hand with nurturing the planet,” he said. This is in line with the 2030 Agenda for Sustainable Development and the Paris Agreement on Climate Change, he added.
“We have to move from input intense to knowledge intense production systems,” the FAO Director-General said.
The future of food and agriculture
Speaking to members of the European Parliament’s Committee on Agriculture and Rural Development, Graziano da Silva highlighted the findings of FAO’s report, The future of food and agriculture: trends and challenges.
Among the 15 trends described in the report, are the impacts of climate change, conflicts and migration. The FAO report also foresees 10 challenges for achieving food security, improving nutrition and promoting sustainable agriculture worldwide.
In his address, the FAO Director-General focused on four main issues: climate change; the spread of transboundary pests and diseases; food loss and waste; and the importance of eradicating not only hunger, but all forms of malnutrition in the world.
Addressing climate change
Graziano da Silva underscored that no sector is more sensitive to climate change than agriculture - especially for smallholders and family farmers from developing countries - while at the same time, agriculture and food systems account for around 30 percent of total greenhouse emissions.
“In agriculture, adaptation and mitigation go hand in hand. There is no trade-off between the two,” the FAO Director-General said. He pointed to the need to reduce greenhouse gas emissions while at the same time building the resilience and promote the adaptation of farmers to the impacts of climate change.
To this end, FAO supports countries through different initiatives and approaches, including climate-smart agriculture, agroecology and agro-forestry.
Curbing the spread of transboundary pests and diseases
Globalization, trade and climate change, as well as reduced resilience in production systems, have all played a part in dramatically increasingly the spread of transboundary pests and disease in recent years. These constitute a major threat to the livelihoods of farmers and the food security of millions of people.
For its part, FAO supports countries to implement prevention and surveillance system. “Even in situations of conflict and protracted crises, we promote programmes of (livestock) vaccination, as we are currently doing is South Sudan and Somalia,” the Director-General said.
Saving food
Today the world produces enough to feed the global population, but about one third of this food is either lost or wasted, while at the same time there is also a waste of natural resources such as land and water.
FAO currently supports about 50 countries in the area of food losses and waste, including through the SAVE FOOD initiative, a unique partnership – with more than 850 members from industry, associations, research institutes and non-governmental organizations – that addresses these issues “across the entire value chain from field to fork,” Graziano da Silva told the European parliamentarians.
The role of parliamentarians in combating malnutrition
Citing estimates that indicate that nearly half of the European Union’s adult population are overweight, the FAO Director-General noted how malnutrition affects both developed and developing countries.
“The way to combat this is to transform food systems, from production to consumption, and provide healthier diets to people,” Graziano da Silva said.
He called on the parliamentarians as lawmakers to ensure that adequate policies, programmes and operational frameworks are anchored in appropriate legislation.
“Parliamentarians not only have the means to place nutrition at the highest level of the political and legislative agenda, they also can guarantee that programmes will have the necessary budgets for implementation,” the FAO Director-General said.
He also praised Members of the European Parliament for establishing the “Alliance Fight Against Hunger” which according to Graziano da Silva will play an important role in combating malnutrition in Europe.
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tralac’s Daily News Selection
Underway, in Oslo: Conference of Parties to FAO’s illegal fishing treaty. The first Meeting of the Parties to FAO’s bold new international treaty aimed at cracking down on illicit fishing opened yesterday, as delegates began hammering out ways to make the agreement a success.
Tomorrow, in New York: ECOSOC Special Meeting Innovations in infrastructure development and promoting sustainable industrialization. Download: concept note (pdf).
ITF’s 2017 Summit on Governance of Transport (31 May - 1 June, Leipzig) will focus on infrastructure, global connectivity, the right regulation for innovation, and urban access and mobility. A preview, by Nancy Vandyke.
UN Ocean Conference on trade-related aspects of SDG 14 (5-9 June, New York). Profiled conference backgrounder: summary document from Informal Preparatory Working Group 4.
COMESA Time Release Study: workshop update
A report on a study conducted in 10 COMESA member states to establish the time taken for Customs Clearance during import and export of goods and the causes of delays has been presented to the country delegates for adoption. The Time Release Study was carried out in the main ports of entry and exits of Djibouti, DRC, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Sudan, Uganda and Zambia. The findings and recommendations of the study were presented to the country delegates during a two-day regional workshop, 24-25 May, Lusaka. The objective of the workshop was to enable member states understand the details of customs clearance time and adopt trade facilitation measures that will reduce the cost of trade and deepen regional integration. The AfDB’s Zambia Country representative, Mr Damoni Kitabire, said many challenges face cross border trade in the region: “Unless Africa addresses the challenges facing cross border trade, the potential from international trade will remain elusive.” The recommendations of the workshop will be incorporated in the 2018-2020 COMESA Customs Work Program for the Trade and Customs sub-Committee.
Malawi, Zambia sign agreement on Mwami/Mchinji border post (Maravi Post)
Malawi and Zambia on Friday signed a bilateral agreement for a One Stop Border Post at the Mwami- Mchinji Border, whose main objective is to enhance trade facilitation through efficient movement of goods and people within the COMESA and SADC regions. Zambia’s Minister of Commerce, Trade and Industry, Margaret Mwanakatwe, said the establishment of the OSBP will contribute to making the Nacala Corridor competitive in the near future.
Tanzania: Government firm on passports formality (Daily News)
The Tanzanian government has reiterated that foreigners, including nationals of other EAC member states, must use passports to gain entry into the country. This was stated by Deputy Minister for Foreign Affairs and East African Cooperation, Dr Susan Kolimba, in response to concerns on the issue, raised by some East African Legislative Assembly members on the matter. She told the House that the laws of the country had to be adhered to, among which were those related to immigration. Ms Susan Nakawuki (from Uganda) had wondered why Tanzania didn’t allow citizens of other members of the regional bloc to use Identification Cards at border-crossing points. She urged Tanzania to follow in the footsteps of Kenya, Uganda and Rwanda, which formalized the use of IDs, thereby easing movement of people from one partner state to the other. Dr Kolimba pointed out that Tanzania wasn’t part of the agreement that the three countries had struck, and would therefore stick to the passport-related formality. [Tanzania: Small-scale traders’ plea on passports]
Ministerial Committee on ECOWAS Institutional Reform: update
Liberia’s Minister of Foreign Affairs, and Chair of the ECOWAS Council of Ministers, Mrs Marjon Kamara, has expressed the wish to see a successful conclusion of the institutional reform process of the regional organisation. ‘Since 2006, ECOWAS initiated the institutional reform process that has lasted too long. We should strive to ensure a successful completion of the process.’ Members of the ad hoc Ministerial Committee will consider proposals relating to the institutional reform and then submit recommendations to the 78th Ordinary Session of the ECOWAS Council of Ministers, 1-2 June.
Mauritius to implement priority projects from $500m line of credit from India (GoM)
Other issues raised [during the State visit of the Prime Minister, Mr Pravind Kumar Jugnauth to India] pertained to the Mauritian-Indian partnership cemented in the agreement in the form of the Comprehensive Economic Cooperation and Partnership Agreement (CECPA) currently in negotiation. The CECPA will provide the opportunity for even greater flows of trade in goods and services as well as improve cross border investment between our two countries. The CECPA builds from the successful renegotiation of the Double Taxation Avoidance Treaty between the Mauritian and the Indian Governments in 2016, which has brought certainty to investments between our borders. Investments from Mauritius to India still represent a sizeable proportion of total investments, which provides much comfort in the terms of the new treaty. For Prime Minister Jugnauth, the revised treaty is in fact one pillar of our strategy: that of positioning Mauritius as a jurisdiction of substance to service the African continent and be the safety net for Indian investors willing to manage their investments in the region.
Thirteen African countries seal agriculture industrialization deal with India (AfDB)
The Indian Government is currently preparing an aide memoire – an informal diplomatic communication to all African countries – indicating proposed negotiating texts on identified fields of agriculture cooperation, he said at a session on “Africa-India Cooperation: Partnerships for Green Revolution”. India has made a proposal to provide vaccines to enable West African countries to deal with foot and mouth disease – an illness that affects livestock production. The Indian Government also spoke of its eagerness to advance cooperation through rapid expansion of agricultural trade between the two regions. To ensure a trade balance, the Indian Government is also ready to accept imports of key cereals and grains from African producers. One key import from Africa is expected to be pigeon peas, which the New Delhi-based Indian Government hopes to assist farmers in cultivating. The Indian Government believes both sides could exchange key commodities through trade – with India availing markets for millet produced from Africa, while India would look for opportunities to sell its wheat to the continent.
Zimbabwe: Govt loses out on mining tax (NewsDay)
According to an Afrodad report, “The impact of fluctuating commodity prices on government revenue in the SAC region – the case of platinum in Zimbabwe”, the country’s tax system was susceptible to transfer pricing. “Currently, Zimbabwe uses ad valorem based tax system, which is not optimal since it is based on export values, which are not only lower than production values, but also subject to transfer pricing by the mining companies and their sister companies in South Africa,” the report reads. “This indicates that a hybrid approach royalty system, incorporating both the unit-based method and value-based method would achieve better results in the platinum sector.” Afrodad said minerals, beneficiation in Zimbabwe was mainly being pushed through the mining sector policies rather than through the industrial policy, as the case in Japan and China.
South Africa: With GM’s exit, partnering with Africa for a regional car industry is essential (Business Day)
While developments at GM SA appear to be primarily driven by its parent company’s global strategy, with the outcome potentially having longer term benefits for SA, it does sound a warning. SA is falling behind its global competitors in terms of domestic market expansion and vehicle output growth. It is moving further to the periphery of the global automotive industry, making it more vulnerable to the global machinations of multinational corporations. If the ambitious targets of the industry’s master plan are to be achieved, all stakeholders will have to co-operate to a much greater degree than has been the case to date. It is critical that the country undertakes the structural reforms necessary to stimulate market growth and improve productivity levels. Collaboration with our African neighbours on the development of a regional automotive industry is also essential. In combination, these reforms should ensure that the highly unfortunate job losses at GM SA are not repeated elsewhere, and that SA’s leading manufacturing sector contributes more meaningfully to the industrialisation of the domestic economy. [The analysts: Justin Barnes, Anthony Black]
South Africa: Protection of the poultry industry is key to short-term survival, but is not the long-term answer (RNews)
Producers need to look at alternative solutions to ensure the industry’s long-term survival and to establish South Africa as a competitive global player. The first area of opportunity is exports. Only 1.4% of South Africa’s poultry is produced for export. The weakening rand presents a unique opportunity to develop sustainable exports. Producers need to work rigorously with the Department of Agriculture Forestry and Fisheries to secure access to export markets – especially in Africa. Access to the Middle Eastern markets is another avenue to be explored. The UAE and Saudi Arabia import almost all of their poultry. This is a significant market and should be considered by South African producers. [Comments by Chris Coombes, CEO of Sovereign Foods], [Growing resistance to South African products on the continent: here’s why]
Tanzania: Invest in economic diplomacy, MPs call on govt (IPPMedia)
Members of Parliament want the government to focus on economic diplomacy as well as attract foreign investments in agro-processing industries rather than relying on more attractive sectors such as tourism, minerals and gas. Records from the Tanzania Investment Centre show that in the recent past most foreign companies seeking investment in the country have been attracted by the mining and gas industries. Legislators from both sides of the House yesterday urged the government to explore opportunities in economic diplomacy to help increase foreign investments in the country to make Tanzania’s push for an industrial economy a reality. Debating the 2017/18 ministerial budget estimates for the Ministry of Foreign Affairs, East Africa and International Cooperation, the lawmakers noted that Tanzania needed to make major investments in attracting foreign investors in alternative sectors to create jobs quickly and improve the national economy. The Chairperson of the Parliamentary Committee on Foreign Affairs, Security and Defence, Adadi Rajab, said the government should complete the process of formulating the new Foreign Affairs policy to create a vision that goes hand in hand with modern global economic diplomacy. [How Magufuli implements economic diplomacy]
Regional experts meet over Lake Kivu resources (New Times)
During the opening of the international workshop on monitoring and development of Lake Kivu resources in Bugesera District, experts discussed sustainable use of the lake’s resources, with a focus on the extraction of methane gas. Methane gas in Lake Kivu has an estimated capacity to produce 700 megawatts of electricity, which could go a long way in boosting economic activity in both Rwanda and DR Congo. Preliminary research has also pointed to considerable probability of oil reserves in the Lake Kivu.