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Africa Regional Forum on Sustainable Development officially kicks off in Addis Ababa
The 2017 Africa Regional Forum on Sustainable Development (ARFSD) officially kicked-off in Addis Ababa on 17 May with Acting Executive Secretary of the Economic Commission for Africa, Abdalla Hamdok, calling on Africa to stop exporting raw materials and primary goods to feed industries of the developed world.
In his welcome remarks to delegates, Mr. Hamdok said exporting finished products would help Africa empower its people by eradicating some of the challenges it is currently facing, in particular unemployment and poverty.
“It is high time that the continent really changed this outdated model which we inherited from colonial rule, of continuing to export raw materials and primary commodities.
“Africa has to take a bold decision and say to itself ‘stop exporting raw materials’. We have to add value to our commodities and that is the surest way of creating decent jobs, addressing unemployment and related issues,” said Mr. Hamdok.
He said Africa should resist the continuing economic model that is benefiting outsiders more than local populations if the continent is to successfully implement Agenda 2063 and Agenda 2030 for Sustainable Development.
Mr. Hamdok, who enumerated the ECA’s work on trade and industrialization, statistics, climate change and other efforts with its partners to help the continent implement the two agendas, also said African countries should take advantage of the ongoing protectionism debate in the West and concentrate on increasing trade and investments amongst themselves for the betterment of its people.
“Many have seen this as an alarming signal but I see it as an opportunity which will allow us to develop our intra-Africa trade,” he said.
Mr. Hamdok said every ARFSD is a stark reminder that the clock is ticking very fast for the continent.
“We have a narrow window of opportunity to march boldly towards reducing poverty. The challenge is huge but the opportunities for transformational development are limitless,” he said.
For his part, Ethiopia’s Water, Irrigation and Electricity Minister, Seleshi Bekele Awulachew, said the theme of the meeting; “Ensuring inclusive and sustainable growth and prosperity for all” would be rendered meaningless unless the continent started addressing vulnerabilities on the continent.
“Inclusiveness, citizen participation, peace and security are key pillars to the achievement of the development agendas,” said Mr. Bekele, adding good governance and leadership were also crucial ingredients to a peaceful and prosperous Africa.
He applauded the ECA for partnering with Ethiopia, through its finance ministry in the area of statistics, which he said will allow the country to monitor and track progress in the implementation of its developmental priorities.
The African Union Commission’s Economic Affairs Commissioner, Anthony Mothae Maruping, for his part, said the AUC, working with its partners, was doing its best to ensure Member States domesticate Agendas 2030 and 2063.
He said partnerships with the outside world should be in the context of the two agendas.
Mr. Maruping said Africa can only grow if it empowered its youth and women and invested in the necessary infrastructure, adding Agenda 2063 seeks to achieve accelerated, stable, inclusive and real economic job-creating growth in Africa.
He said no form of poverty was acceptable on the continent, adding domestic resource mobilization, including stemming illicit financial flows, was crucial if the continent is to fund its development.
“Africa knows what it wants, what should be done to get it or to get there and with what to get there and when to get there,” said Mr. Maruping.
“There’s coherence, consistency and alignment in Africa. We just have to stand up and implement both agendas,” he said, adding the AU is also reforming itself to make sure that it is fit for purpose to deliver prosperity to the African people in an efficient and coherent manner.
Egypt’s Deputy Minister for Planning and International Cooperation, Ms. Nehal Magdy Ahmed Elmegharbel, shared her country’s experience in domesticating and embedding Agendas 2030 and 2063 into its national plans and vision.
She highlighted the need for data and information in helping Africa monitor the implementation of the two agendas.
Egypt was the chair of the Bureau of the 2016 ARFSD.
The 2017 ARFSD is in preparation for the 2017 High-level Political Forum on Sustainable Development (HLPF) that will be held in New York in July under the auspices of the Economic and Social Council (ECOSOC) under the theme; “Eradicating poverty and promoting prosperity in a changing world”.
The ARFSD tracks progress in the implementation of the 17 SDGs that are at the core of the 2030 Agenda for Sustainable Development.
Panelists share experiences on the implementation of Agenda 2063 and the SDGs
As part of activities marking the two-day Africa Regional Forum on Sustainable Development (ARFSD) in Addiss Ababa, high level representatives from some African countries on Thursday shared their successes and challenges in implementing the Sustainable Development Goals (SDGs) and Agenda 2063.
During the plenary session titled, “Challenges and opportunities arising in achieving inclusive growth and prosperity for all,” Zimbabwe’s minister of women’s affairs, gender and community development, Nysasha Chikwinya, said women constitute over 51% of Africa’s population and that her government has been smart enough to understand that involving women in politics and decision-making is crucial for achieving the SDGs.
“In Zimbabwe our constitution provides for 50-50 representation of women in politics and decision-making as a tool to realize gender equality. We are proud to have taken this bold step to empower women in Zimbabwe, and I trust there are many other countries that have done better. Those that have not should realize that without this important tool Agendas 2030 and 2063 cannot be fully realized.”
Ms. Chikwinya said more than half of African farmers are rural women who don’t understand most of the issues around climate change and mitigation measures, stating, “we need a sound and robust education program for women so that they can consciously participate in these programs.”
The point on empowering women was supported by Ugandan minister of state for gender, labour and social development, Mutuuzo Peace Regis, who said her government is heading the right direction as “42% of our parliamentarians are women.”
The Ugandan minister also said her government has focused enough resources towards empowering youth, given that “78% of our population is under age 35.” Ms. Regis credited her government for educational policy that has led to a “drop in illiteracy rate from 32% to 24% in just 10 years,” adding that one of the many other efforts by her government to ‘leave no one behind’ as per the SDGs is a “social assistance grant program for persons above 65 of age.”
Other panelists included high-level delegates from Egypt, Mauritania, Equatorial Guinea, Congo, Botswana, and the AU Commissioner for Economic Affairs – who all highlighted successes made in the context of the SDGs and Agenda 2063.
There was a general view, however, that a lot still needs to be done in areas such as youth unemployment, girls’ education and bridging gender gaps, reviving local economies, putting in place solid financial instruments, and investing in statistics.
The session was moderated by Fatima Denton, Director of ECA’s Special Initiative Division, and chaired by Seleshi Awulachew, Ethiopian Minister of Water, Irrigation and Electricity – who urged governments to align the Agendas to their national development plans.
“Agenda 2063 and Agenda 2030 originate from our respective countries and regions and therefore shouldn’t be regarded as an imposition but rather as a co-creation, which should not be difficult to align with national development plans and implemented,” said Mr. Awlachew.
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ACP-EU – 28th meeting of Economic and Social Interest Groups
Triennial meeting between EU and ACP delegates discusses lessons learned from EPAs and calls for greater involvement of economic and social actors in future development policies after Cotonou
The European Economic and Social Committee held the 28th Meeting of Economic and Social Interest Groups of the African, Caribbean and Pacific (ACP) group of states and EU countries in Brussels on 15-16 May. Trade relations, the new European consensus for development, prevention and reduction of food loss and waste, industrialisation as a development driver, and the future of EU relations with ACP countries were the five main themes of the conference, as outlined in a jointly accepted declaration.
The debate at the European Economic and Social Committee (EESC) was opened by Yves Somville, President of the ACP-EU Follow-up Committee of the EESC. “Striving to achieve a modern, equitable and genuine future partnership with ACP countries will be at the heart of our discussions during these two days.” EESC President Georges Dassis added: “We need to build a strong relationship between the EU and the ACP countries in which everyone wins. And of course, we will fight for a framework that ensures the participation of non-state actors and civil society organizations”.
Richard Ssewakiryanga, Chair of the African Union’s Economic, Social and Cultural Council, set out the achievements and challenges for civil society in Africa. Speaking on EU Economic Partnership Agreements with ACP states, he declared that in order to be effective, EPAs should be correctly implemented and monitored.
Delegates acknowledged that although Economic Partnership Agreements (EPAs) were originally seen as instrumental in improving the business environment and regional integration, they have by and large not succeeded in creating decent jobs, reducing poverty or bringing inclusive and sustainable development. Moreover, the lack of involvement of economic and social actors in these agreements from the negotiating stage was pointed at as one of the reasons behind implementation failures in some EPAs as the Cariforum. The declaration also called on African political authorities to remove obstacles likely to prevent the development of intra-regional trade in Africa with a view to forming a continental free trade area.
On the new European Consensus on Development, delegates agreed that development aid should not be used as leverage to impose cooperation on EU economic and foreign policy goals, state security or migration control. They also called for civil society organisations to be meaningfully involved in the formulation, implementation, monitoring and evaluation of development programmes so that these respond to the genuine needs of the widest range of people.
Other topics of discussion included the prevention and reduction of food waste, which should be given a key place on the political agenda in a world heavily affected by climate change, and the potential benefits that the industrialization of ACP countries can have on the diversification of the economy, job creation and the building of equitable societies.
Background
The meetings with ACP and EU economic and social interest groups are organised by the European Economic and Social Committee (EESC) in Brussels once every three years, under the auspices of the ACP-EU Joint Parliamentary Assembly. The meetings host delegates from the economic and social interest groups of 78 ACP countries, members of the EESC, together with representatives of the EU institutions, national economic and social councils, the secretariat of the ACP Group of States, EU and ACP states’ diplomatic missions, NGOs and other interested parties. These general meetings are in addition to the regional seminars, which take place in the ACP regions once a year.
This role of the EESC has been confirmed by the Cotonou Agreement, which mandates the Committee to organise consultation sessions and meetings of ACP and EU economic and social interest groups (Protocol 1).
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tralac’s Daily News Selection
Featured infographic, @WandileSihlobo: Zambia’s 2017 maize crop is set to reach 3.6 million tonnes – a record harvest. The government has now lifted the maize export ban.
Launched, yesterday at the UN: World Economic Situation and Prospects as of mid-2017
Saturday’s EAC Summit: Trade deal with EU, Secretariat funding mechanism top agenda (New Times)
The annual report of the Council of Ministers, a progress report on the implementation framework for the EAC institutional review, and a report on the implementation of previous decisions of the summit, are also lined up for discussion. The Council’s report, a copy of which The New Times has seen, notes that while Bujumbura’s only concern is that “EU unilaterally suspended direct partnership with the Government of Burundi,” Tanzania maintains reservations and needs the EAC Secretariat to conduct a detailed analysis on the effects in order to bring about regional perspective to the Community. Tanzania’s 15 specific concerns include effects of EPA on EAC industrial development, effects of EU subsidies and domestic support on EAC farmers accessing EU market, bridging the gap of revenue losses resulting from substantial trade liberalisation, and effect of Brexit as UK is one of the major trading partner of EAC countries. Tanzania also questions the rationale of Burundi signing EPA while the EU has imposed an embargo on her exports.
Compact with Africa: fostering private long-term investment in Africa (GDI/DIE)
Extract (4.3: Urban agglomerations become main hubs of investment, pdf): Clusters are of importance to a city. Africa has four major city clusters, which are referred to as “FDI corridors”: (i) a North African corridor including Casablanca, Tunis and Tripoli; (ii) a Nile corridor including Cairo; (iii) a West African corridor including Lagos, Abuja, Abidjan and Accra; and (iv) a Gauteng-Maputo corridor, which includes Johannesburg, Midrand, Pretoria and Maputo (Wall, 2016). These corridors attract FDI because they are comprised of several primary cities in close proximity to each other and connected through good road and rail networks and port infrastructure.
FDI in Africa’s high-tech sector is much more concentrated in fewer highly urban areas – such as clusters around Nairobi, Johannesburg, Port Elizabeth, the West Africa corridor, the North Africa corridor and the Cairo corridor – than it is in other sectors. The quality of infrastructure (road, rail, airports and ports) is the most significant factor with regards to the production of high-tech goods and the distribution thereof. Among all the jobs directly created by FDI in Africa between 2003 and 2014, 83 per cent were located in cities. Over the same period, FDI in manufacturing is estimated to have directly created more than 646,000 jobs; FDI in services, 281,000 jobs; FDI in high-tech, 159,000 jobs; and FDI in resources (or non-urban FDI), 220,000 jobs (Wall, 2016). [The analysts: Robert Kappel, Birte Pfeiffer, Helmut Reisen]
A suite of new ICTSD, BRIDGES Africa postings:
Nicolette Cattaneo: Trade in services negotiations - a Southern African perspective. This paper explores the regional and international services negotiating landscape that impacts on the countries of the COMESA-EAC-SADC region and delves into the ways in which services negotiations can be harnessed to drive sustainable development outcomes for the region’s least developed and low income countries. After highlighting current trends, the structure of negotiations, and challenges and opportunities for Africa’s least developed countries, the author recommends a set of strategic policy responses that could be applied at the multilateral, regional, and bilateral levels in order to enhance the utilisation of the services sector for developmental purposes. [Related: Memory Dube, Patrick Kanyimbo: Leveraging trade facilitation to drive Africa’s regional integration agenda; Paul Batibonak: Africa and the Implementation of the Trade Facilitation Agreement; Ben Shepherd: How can Africa better participate in global value chains?]
SWIFT’s messaging traffic grows by 15.2% in Africa (SWIFT)
Data from SWIFT shows that Africa’s traffic growth has outperformed the total growth of SWIFT globally. In the year to date, total message traffic volumes grew by 15.2% versus 6.4% growth for SWIFT worldwide, illustrating that Africa plays an increasingly important role in SWIFT’s global business. Growth in Africa is underpinned by a significant increase in payments traffic. This indicates that, despite challenging global conditions including the downturn in the commodities cycle that has significantly impacted several markets, many countries in Africa continue to see relatively stable economic growth. African payment traffic volumes grew by 16.9% versus 11.6% for the same period last year. Growth was even more pronounced in SADC, which saw growth of 21.6%. The African securities segment has also witnessed a strong rise in volumes. Securities traffic grew by 14.6%. Compound annual growth for Africa since 2012 has been 13% year on year.
David Hodnett: Regional banks in Africa need to balance risk with financial inclusion (Business Day)
With this background, it is clear that regional banks will need to become a bigger feature on the financial services landscape in Africa. With the decline in correspondent banking, regional banks are vital to ensure the continued connectedness of Africa to the global economy as banks across the world find it easier to maintain relationships with fewer groups that have a presence in multiple African countries. In this way, they can continue to ensure a connection into Africa for their clients, but also manage their risk by having to maintain a relationship with fewer banks that they can be comfortable with, that will implement the same policies and controls in all the countries in which they operate. Regional banks are also necessary to effectively and efficiently facilitate regional trade, particularly if Africa is to grow intra-continental trade.
Carl Manlan: A Universal African Basic Income (World Policy Blog)
The idea of a universal basic income is on the minds of policymakers around the world. The Indian government is considering such a program as an alternative to its current welfare system. Evidence suggests that giving $113 a year to every Indian citizen would cut absolute poverty from 22% to less than half of 1%. The combined population of all African countries is similar to the size of India, with comparable levels of poverty. If this works in India, it certainly has potential in Africa. But one thing India has that Africa lacks is solid data on its citizenry. More than 1 billion Indians are now enrolled in the country’s biometric database, making it easier for the government to figure out how an income grant program would work. In Africa, by contrast, four out of five known births occur in countries without complete birth registration systems, calling into question the reliability of civil registration or vital statistics systems. Governments therefore have no hard numbers on how many people would qualify for grants or how much such a program would cost.
Tanzania: Govt gets 63bn/- taxes from mobile money transactions (Daily News)
Mobile money transactions have brought in 63bn/- as taxes to the government coffers for the past four years, thanks to Telecommunications Traffic Monitoring System. The Deputy Minister for Works, Transport and Communication, Engineer Edwin Ngonyani, said that out of it 56 billion/- went to the treasury and the remaining 6bn/- was channeled to COSTECH for financing various researches.
Tao Zhang: Achieving Tanzania’s goal of middle-income status (IMF)
Tanzania, like many other countries, has learned the limits on the statist impulse to lead development. Governments have a key role to play providing stable policy and regulatory frameworks for development. But it is ultimately the private sector that is the engine of growth - creating employment and opportunities. A strong private sector can foster economic diversification, expand trade and deepen Tanzania’s integration into global value chains. So, government policy is most effective when its objective is to cultivate the private sector. Many African countries are addressing the same issue. And our advice includes the following steps that we believe to be useful for Tanzania: [The author is IMF Deputy Managing Director]
Rwanda: Trade deficit drops by over 10.5% in March (New Times)
According to the NISR report released on Monday, the country’s formal trade in goods deficit narrowed by 10.51% in March compared to the same period last year. However, it was recorded at $102.22m (about Rwf856.86 billion) in value over the reporting period, an increase of 34.6% compared to the month of February. The country’s export value rose by 39.56% in March, but was up by a lower margin of 23.40% on a yearly basis, NISR indicates. The import bill increased at lower percentage of 29.68% compared to February 2017, and dropped 1.08% compared to March 2016, according to the report.
Kenya: Export council chief wants team set up to address low earnings (Business Daily)
Newly appointed Export Promotion Council chief Peter Biwott has called for the formation of a joint public-private team to address issues pulling down export earnings and volumes. Mr Biwott said this would help build loyalty for Kenyan brands in the international market, thereby creating demand for processed products and raising production and incomes. He said EPC was engaging State regulatory agencies to promote local certification of exports to ensure they conform to international standards thereby helping Kenyan goods compete in foreign markets.
Zimbabwe: Govt commissions Electronic Cargo Tracking System (The Herald)
Government has commissioned a $1,2m Electronic Cargo Tracking System which was availed under a capacity building for public and economic management project being financed by the African Development Bank. The ECTS is expected to go a long way in reducing the cases of transit fraud and the dumping of illegal imports on the domestic market which is estimated at $1bn annually. Speaking at the commissioning ceremony on Monday, Finance and Economic Planning Minister Patrick Chinamasa said there is need for concerted efforts in tackling corruption but expressed confidence the introduction of the system would result in an increase in contributions to the fiscus.
Kenya: Launch of SGR cargo train service put off to December (Business Daily)
Transport Principal Secretary Paul Maringa said direct cargo haulage of the SGR’s portion of the port’s one million-a-year containers to Nairobi inland container depots will start by end year. Truckers and CFSs, which have thrived on congestion at the port, have previously raised concern over survival of their businesses in the era of fast trains. According to Kenya Railways, the country has received 25 freight locomotives out of the 43 on order. It has also received 763 wagons out of the 1,620 units ordered for.
Safaricom’s deal with Vodacom South Africa will help drive M-PESA to other markets in Africa (Quartz)
The news came after UK’s Vodafone Group transferred its 35% stake in Safaricom to its South African subsidiary, Vodacom. Subject to shareholder and regulatory approvals, the proposed transaction will cost Vodacom 34.6 billion rand ($2.6bn) in exchange for the stake. Safaricom, Kenya’s largest telecommunication company, said it gave “appropriate assurances” to the government of Kenya - which owns a 35% share in the company- about the deal. Vodafone will also retain a 5% stake in Safaricom, while 25% of the shares are on a free float being traded in the stock market. Aly-Khan Satchu, a financial analyst based in Nairobi, says that the deal would be lucrative for both companies and help “consolidate” their reach across Africa in new markets such as Ethiopia, Africa’s second largest country by population.
Cairo says ‘technical issues’ on Nile dam studies remain unresolved after tripartite committee meeting (Ahram)
Egypt, Sudan and Ethiopia have not yet resolved points of contention over studies evaluating the potential impact of the Grand Ethiopian Renaissance Dam after a tripartite committee meeting to discuss the dam concluded on Tuesday, Egypt’s irrigation ministry said. The ministry said that the committee of experts tasked by the three countries to oversee the studies, which concluded its 14th meeting in Addis Ababa on Tuesday, will discuss “outstanding technical points” about the impact studies in a future meeting.
4th SAWAP conference: update (GoG)
The 4th Conference of the Sahel and West Africa Program (SAWAP) in support of the Great Green Wall has ended in Accra. The conference brought together about 100 participants from 12 SAWAP countries and other partners to work together to ensure the coherent implementation of the activities that support sustainable land and water management projects, and to share and capitalize on the results achieved in the implementation of the SAWAP Program to address land degradation. The participating countries were Benin, Burkina Faso, Ethiopia, Ghana, Mali, Mauritania, Niger, Nigeria, Senegal, Sudan, Chad and Togo.
Q&A: Donald Kaberuka on financing the AU peace fund (Devex)
It’s a very small levy - 0.2% - and will have no impact on trade. But it could raise enough money for the AU to function. Remember that the European Union used to do exactly that a long time ago, so it has proven its worth. The Economic Community of West African States does that quite well; that’s how they fund the organization. The West African Economic and Monetary Union does the same; they raise enough money to run the organization and fund some of the programs. [ECDPM interactive map: Estimated assessed contribution of each member state of the AU]
Interactive guide: Exploring EuropeAid’s funding priorities (Devex)
Of the 5.1 billion euros ($5.6bn) covered by the dataset, sub-Saharan Africa will receive over 2 billion euros ($2.2bn), the most of any region. Over one billion euros ($1.09) of that will go to the sub-region of West Africa - much of it funneled through the EU’s Emergency Trust Fund for Africa to catalyze social and economic development in migration-prone countries. Asia will also receive over one billion euros ($1.09bn), although it will be distributed more equitably across its sub-regions [A Devex guide to EuropeAid]
Belt and Road Forum for International Cooperation: communiqué
We reaffirm our shared commitment to build an open economy, ensure free and inclusive trade, and oppose all forms of protectionism including in the framework of the Belt and Road Initiative. We endeavour to promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system with the WTO at its core. [Related: List of deliverables of Belt and Road forum, Think Tanks of the Belt and Road Initiative launch a new platform]
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Trade deal with EU, Secretariat funding mechanism top agenda of EAC Summit
The Economic Partnership Agreement (EPA) between East African Community (EAC) partner states and the European Union, search for a sustainable financing mechanism and assent to bills passed by the regional Assembly are among the agenda items of the upcoming summit, an official has said.
The leaders of the six EAC partner states are due to meet in Dar-es-Salaam, Tanzania, on Saturday for their annual summit that has been postponed three times in the recent past.
While in Kigali, earlier this year, the East African Legislative Assembly (EALA) passed a resolution urging the Council to find a common stance on partner states’ funding deficit by having it on the agenda of next EAC Summit.
Richard Owora, the EAC head of corporate communications and public affairs, told The New Times yesterday that the provisional agenda of the summit also includes matters concerning the EAC Political Federation, the fourth goal of regional integration, after the Customs Union, Common Market and Monetary Union.
According to Owora, the 18th Ordinary Summit of EAC Heads of State will also consider various reports including the “report on the roadmap for the accelerated integration” of South Sudan.
South Sudan deposited the instruments of ratification of the accession Treaty on September 5, 2016, and the summit is set to appoint a judge from South Sudan to the East African Court of Justice.
South Sudan has already elected its nine members for the fourth East African Legislative Assembly in June.
The summit will also consider a progress report on admission of Somalia to EAC.
The annual report of the Council of Ministers, a progress report on the implementation framework for the EAC institutional review, and a report on the implementation of previous decisions of the summit, are also lined up for discussion.
The 34th Extraordinary Meeting of the EAC Council of Ministers is taking place in Dar to prepare all the above mentioned agenda items for the Summit, Owora said.
Concerns about EPAs
The recent 35th Ordinary Meeting of the Council of Ministers in Arusha looked at partner states’ concerns about the EAC-EU EPA deal. In September last year, trade ministers for Rwanda and Kenya signed the deal in Brussels, Belgium.
Although Rwanda and Kenya have no concerns, the last Council meeting was informed that Uganda’s interest was for the partner states to move to sign the agreement as a bloc; and explore available options in the event that some partner states sign the EPA and others do not.
The Council’s report, a copy of which The New Times has seen, notes that while Bujumbura’s only concern is that “EU unilaterally suspended direct partnership with the Government of Burundi,” Tanzania maintains reservations and needs the EAC Secretariat to conduct a detailed analysis on the effects in order to bring about regional perspective to the Community.
Tanzania’s 15 specific concerns include effects of EPA on EAC industrial development, effects of EU subsidies and domestic support on EAC farmers accessing EU market, bridging the gap of revenue losses resulting from substantial trade liberalisation, and effect of Brexit as UK is one of the major trading partner of EAC countries.
Tanzania also questions the rationale of Burundi signing EPA while the EU has imposed an embargo on her exports.
Conclusively, Tanzania is of the view that signing a bad EPA deal will set a bad precedence, which will compromise the region’s interests in all other subsequent negotiations on free trade agreements (FTAs).
South Sudan informed the Council that being a new partner state, it will need time to study the issues related to the EAC-EU EPA negotiations.
Considering the different views, the Council recalled the summit decision stating that the matter regarding EPA will be considered on the summit agenda.
“It was noted that the divergent views are positions of partner states, and as such the views were to be consolidated and subsequently forwarded to the summit.”
Draft legislations
The Bills set to be assented to by the Heads of State during the summit are the EAC Customs Management (Amendment) Bill, 2016; the EAC Appropriation Bill, 2016; and the EAC Supplementary Appropriation Bill, 2016.
Consultations on Political Federation
It is not clear whether the Summit will conclude on the matter of the Political Federation as consultations could still be underway.
A confederation model is being mulled instead of a political federation as the last stage of EAC integration. A confederation, according to Judy Njeru, senior assistant director for political affairs in Kenya’s state department of EAC integration, is a union of political units for common action in relation to other units.
Njeru has previously explained that confederations tend to be established for dealing with critical issues such as defence and security, foreign affairs, a common currency, and immigration and labour movement, and that the idea of a confederation as a transitional phase toward the political federation is desirable, particularly since partner states will retain their sovereignty and only transfer some capacity in identified areas.
Meanwhile, the recent Arusha meeting recalled that a previous session of the Council observed that upon further consultations, all partner states had generated convergence on confederation as the model for the EA Federation.
“The meeting agreed that the Constitutional experts will provide a proposal on the areas to be covered under pooled sovereignty. The Republic of Kenya requested that she be given more time to consult on the proposal for the Confederation,” reads the Council’s recent report.
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Global growth strengthens in line with economic forecasts, but prospects for some of world’s poorest regions deteriorate: UN report
Shifting international policy landscape heightens uncertainty around prospects for world trade, development aid and climate targets
Growth in the global economy has picked up in the last six months in line with expectations, but in many regions, growth remains below the levels needed for rapid progress towards achieving the Sustainable Development Goals, according to the United Nations World Economic Situation and Prospects as of mid-2017 report, launched on 16 May at UN Headquarters.
The report identifies a tentative recovery in world industrial production, along with reviving global trade, driven primarily by rising import demand from East Asia. World gross product is expected to expand by 2.7 per cent in 2017 and 2.9 per cent in 2018, unchanged from UN forecasts released in January this year. This marks a notable acceleration compared to just 2.3 per cent in 2016.
In a statement on the report, Mr. Lenni Montiel, Assistant Secretary-General for Economic Development in the UN Department of Economic and Social Affairs, underscored the “need to reinvigorate global commitments to international policy coordination to achieve a balanced and sustained revival of global growth, ensuring that no regions are left behind.”
According to the report, underpinning global economic recovery is firmer growth in many developed economies and economies in transition, with East and South Asia remaining the world’s most dynamic regions. However, economic recovery in South America is emerging more slowly than anticipated, and gross domestic product (GDP) per capita is declining or stagnant in several parts of Africa.
Forecasts for GDP growth in some of the least developed countries (LDCs) have been revised downward since January, with growth in the group as a whole projected to remain well below the Sustainable Development Goals target of at least 7 per cent. The report notes that under the current growth trajectory and assuming no decline in income inequality, nearly 35 per cent of the population in LDCs may remain in extreme poverty by 2030. Additional policy efforts are needed to foster an environment that will accelerate medium-term growth and tackle poverty through policies that address inequalities in income and opportunity.
The report points to a combination of short-term policies to support consumption among the most deprived and longer-term policies, such as improving access to healthcare and education and investment in rural infrastructure.
The report states that inflation dynamics in developed economies have reached a turning point, and risks of prolonged deflation have largely dissipated. By contrast, inflationary pressures have eased in many large emerging markets, allowing interest rates to come down.
The report further stresses heightened uncertainty over international policy, which will hinder a strong rebound in private investment globally. Corporate sectors in many emerging economies are vulnerable to sudden changes in financial conditions and destabilizing capital outflows, which could be triggered by faster-than-expected interest rate hikes in the United States.
The report highlights some positive developments related to environmental sustainability. The level of global carbon emissions has stalled for three consecutive years. This reflects growing renewable power generation, improvements in energy efficiency, transition from coal to natural gas, and also slower economic growth in some major emitters. But, the report also warns against waning commitments going forward.
Looking ahead, the report advocates for renewed global commitments to deeper international policy coordination in key areas, including aligning the multilateral trading system with the 2030 Agenda for Sustainable Development; expanding official development aid; supporting climate finance and clean technology transfer; and addressing the challenges posed by large movements of refugees and migrants.
Economic outlook by region: Africa
Growth in Africa remains subdued due to more severe headwinds than previously expected. Modest growth rates of 2.9 per cent and 3.6 per cent are expected in 2017 and 2018, respectively, down from forecasts of 3.2 per cent and 3.8 per cent in January.
Forecasts for 2017 were lowered in all sub-regions except Southern Africa, which is expected to benefit from the small recovery in commodity prices and a better harvest. However, tighter external financing conditions, currency depreciation and political instability could undermine prospects. In East Africa, growth will be driven by investment supported by government incentives, while current weather patterns will act as a significant drag on growth. Despite remaining the fastest growing African region, the situation of the poorest remains critical. In North Africa, the downward revision is primarily driven by rapid inflation in Egypt. Stronger growth is anticipated in 2018, as the stabilizing security situation and stronger demand from Europe should prompt a recovery in tourism and trade. The prospects for Central Africa remain subdued as a result of low oil revenues and political stability risks. Similarly, pressures on the oil sector and foreign exchange constraints keep growth prospects down in Nigeria and, consequently, West Africa.
Despite tight monetary stances, inflation will remain elevated due to gradually rising commodity prices, lagged effects of currency depreciations, and dry weather in East Africa. High food inflation is particularly worrying, as it has a severe impact on the poor. Fiscal deficits remain stable but high, as a result of increases in infrastructure and social spending.
The outlook is subject to a number of risks. A more pronounced slowdown in China would negatively impact many economies that receive rising levels of FDI and investment finance from China. A sharper rise in global yields and a stronger US dollar would deteriorate external financing conditions, slightly offset by increased remittances. Security issues and political instability also pose critical threats. More than 20 million people face starvation and famine in northeast Nigeria, Somalia and South Sudan due to drought and protracted conflicts. Finally, should weather-related shocks continue, severe economic and social consequences are expected.
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Leveraging trade facilitation to drive Africa’s regional integration agenda
As regional economic integration gathers pace in Africa, how can trade facilitation be leveraged to spur the economic growth and development necessary for its implementation? Is the TFA the answer?
Have you ever considered how competitive a country would be if donkeys and camels were the primary mode of transport for its cross-border trade? Over long distances, a donkey can trot at a leisurely 9 km/hour but it can notch up a top speed of 43 km/hour. That is approximately how efficient trade would have been for our forefathers in Africa’s ancient trading kingdoms around Timbuktu and similar cities. It took a trade caravan 40 days to cross the Sahara Desert in those medieval times. Fast forward to the twenty-first century and you would think that things must be totally different and that Africa would have considerably accelerated. Not quite, when you consider that the estimated effective speed of road transport within the Southern African Development Community, for example, is between 6 km/hour and 12 km/hour.[1] The road infrastructure has substantially improved since the medieval era and trucks can move as fast as anywhere else in the world. But when drivers have to be stopped at numerous checkpoints and are forced to spend days at borders, the average speed of an entire journey reduces to donkey pace.
It is therefore unsurprising that Africa faces the largest trade costs of any region in the world. And many of the challenges are man-made. Granted, geographic constraints, such as having more landlocked countries (16) than any other region in the world, put Africa at a disadvantage. But such geographic barriers have not prevented Switzerland or Austria from participating effectively in international trade. In fact, the landlock barrier needs to be qualified. In The Bottom Billion, Paul Collier pins it down to being “landlocked with bad neighbours.”[2] Since exports and imports have to pass through one or more borders to reach their intended destinations, bad neighbours make trade especially problematic for landlocked countries.
One of the solutions proffered by development practitioners is for African countries to adopt trade facilitation measures in order to reduce trade costs and enhance economic competitiveness. Essentially, the Trade Facilitation Agreement (TFA) concluded under the WTO at Bali, Indonesia, in December 2013 is all about reducing trade costs. The TFA was a major milestone for the multilateral trade talks, as the Doha Development Agenda had lost momentum since its launch in 2001. The agreement contains provisions for expediting the movement, release, and clearance of goods, including goods in transit. Many of these measures were already being implemented to varying extents by some African countries as part of the Revised Kyoto Convention (RKC) under the World Customs Organization.
However, unlike the RKC, which provides good practices on trade facilitation for countries to adopt on a voluntary basis, the TFA entails binding commitments.[3] By 22 February 2017, 87 countries, including 18 African countries, had ratified the TFA, triggering its entry into force. The beginning of the implementation phase again spotlights the importance of trade facilitation to the continent. This article seeks to address the role of trade facilitation in regional economic integration in Africa. It draws lessons from recent experiences and their implications to make the TFA a success.
The WTO’s TFA and intra-African trade
A number of studies have attempted to quantify the benefits of the TFA. For instance, a 2015 WTO study argued that least developed countries (LDCs), the majority of which are in Africa, would experience a 35 percent increase in exports courtesy of the TFA if the agreement is fully implemented. It added that the TFA could boost economic growth in developing countries by increasing exports by 3.5 percent annually, increasing annual economic output by 0.9 percent, while also expanding and diversifying the export basket by as much as 20 percent.[4] Given that Africa is wholly made up of developing countries and LDCs, such estimates suggest that Africa would reap substantial benefits by implementing the TFA. Moreover, since intra-African trade comprises a larger share of products which are more sensitive to transport costs and border delays, it is reasonable to expect that the TFA would help to boost intra-African trade in particular. Simulations by the United Nations Economic Commission for Africa demonstrated that implementation of the Continental Free Trade Area, accompanied by trade facilitation measures, would double the share of intra-African trade in the continent’s total trade in a decade, from circa 12 percent in 2012 to 22 percent by 2022, compared to an increase up to 15.5 percent in a scenario without trade facilitation measures.[5]
Therefore, the coming into force of the TFA bodes well for Africa’s reinvigorated agenda on regional integration, complemented and underpinned by an industrialisation as well as an infrastructure development drive. This agenda includes the official launch, in June 2015, of the Tripartite Free Trade Area (TFTA) involving 26 countries that form the Common Market for Eastern and Southern Africa, the East African Community, and the Southern African Development Community. These 26 countries account for over half of the continent’s gross domestic product and population. Beyond the TFTA, African countries are pursuing negotiations towards the establishment of the Continental Free Trade Area.
The TFA also brings with it the certainty that binding legal commitments will be implemented by all the countries involved, including developing countries. This will positively impact on the overall business environment. African countries can also benefit from the goodwill generated by the TFA, which will help unlock developmental assistance to support developing countries in their implementation efforts and respond to their specific needs. International goodwill is evident in the establishment of the TFA Facility, launched by the WTO in July 2014, which offers a range of activities designed to enable developing countries and least developed countries to implement the agreement and reap its full rewards. The African Development Bank also aims to expand its Africa Trade Fund, which African countries can call on.
African countries can therefore ride this tide of trade facilitation enthusiasm and goodwill from development partners and launch measures aimed at fulfilling the provisions of the WTO’s TFA.
Challenges
Although trade facilitation, per TFA definition, is necessary for enhancing intra-African trade, it is by no means sufficient to realise Africa’s integration goals. Inadequate infrastructure (energy, information and communication technologies (ICTs), roads, water) and supply-side constraints associated with low levels of economic diversification, low productivity, low investment, and an underdeveloped and unregulated services sector pose fundamental challenges for regional integration.
Moreover, many studies seem to ignore the cost of implementing trade facilitation reforms. Implementing a single window system, for example, requires substantial upfront investment in hardware and software, process re-engineering, and legislative changes, plus recurring maintenance and upgrading costs and training of personnel. These costs must be passed on to economic operators and ultimately to consumers. Ultimately, answers to these questions will provide a more comprehensive picture of what the adoption of trade facilitation measures, and the TFA in particular, really means for Africa. Yet studies analysing such issues in Africa are scanty.
Further, the adoption of trade facilitation measures may be hampered by political economy issues as certain categories of stakeholders may feel that their interests are threatened. There is also a degree of apprehension among some African countries over a binding trade facilitation agreement, which may be seen to impose restrictions on their exercise of their development space.
In addition, the limited scope of the TFA minimises its impact. For Africa, in particular, achieving its integration aspirations requires a more comprehensive understanding of the concept of trade facilitation which goes beyond the narrow TFA definition, which is about freeing trade by unlocking border and transit measures. A broader definition includes dealing with hard infrastructure development, behind-the-border policies that impact on trade, policies regulating markets in backbone services (including issues affecting the market structure and pricing of marine and road freight), services trade, and trade finance, among many others. The trade facilitation agenda goes way beyond the TFA agreement. Viewed from a wider perspective, there are therefore many ways in which trade facilitation can help address some of the challenges that constrain regional integration on the continent.
Towards a more holistic approach to supporting Africa’s integration
Beyond the TFA, development institutions such as the African Development Bank need to provide holistic support to deliver on this broader mandate. A few considerations will be vital to success in economic integration in terms of movement of goods, services, and people. These include the following.
Pursuing a regional approach
Trade facilitation measures are best implemented through a regional approach, since they need to be harmonised across countries. In the absence of such an approach, efficiency gains at one point along a corridor may be easily offset by chokepoints at a converging crossing point. Addressing facilitation along the entire length of a corridor and across many countries and regional blocs is imperative if Africa is to achieve integration on the scale of Cape to Cairo and east to west connectivity, as envisaged by its leaders. In other words, corridors and borders should be looked at in terms of “spaces of flows,” rather than “spaces of places.” This entails unbundling an approach to border control concentrating on territory towards one focusing on facilitation
However, a regional approach requires levelling up capacities in terms of human resources, ICTs, and other infrastructure, and addressing coordination weaknesses.
Leveraging the hard-soft infrastructure nexus
Implementing trade facilitation reforms tends to have less visible outcomes and may not be the best vote-catcher for political leaders compared to investment in hard infrastructure (roads, airports, railways, internet broadband, irrigation systems, potable water, schools, hospitals, etc.). Pushing for trade facilitation reforms may therefore be challenging if it is not accompanied by bigger and tangible investments in hard infrastructure. The solution is to leverage the hard–soft infrastructure nexus by combining physical infrastructure with soft infrastructure interventions in projects. At the African Development Bank, for instance, 10 percent of the budget for regional projects funded from the regional operations envelope must be carved out for soft interventions. This approach also enhances inclusiveness. A 2012 study by the World Bank on the economic geography of the East Africa Community, found that “border improvements save more time for the most number of people than infrastructure improvements alone.”[6] Given the relative costs involved, a dollar invested in trade facilitation measures is a quick win over new infrastructure.
Scaling up funding and effective policy dialogue to bridge the implementation gap
Africa tends to lag behind in the implementation of regional integration commitments – rhetoric has not always been matched with action. This seems to be no different in the case of the TFA. The lethargy demonstrated by African countries in accepting the TFA may be indicative of slow donor support in helping countries to fully assess the benefits, define their commitments under the three commitment categories, expand their implementation capacity, and make the requisite investments among many competing priorities. Although the TFA contains promises of technical assistance for implementation, these provisions are not binding and support so far has been minimal, with demand by far outweighing the resources committed. Therefore, development institutions and donors need to scale up support in order to make a dent in the trade facilitation needs of developing countries, including those in Africa.
Conclusion
To sum up, for Africa to achieve its goal of boosting trade within its own region and globally, it needs to make a leap from the current inefficient trade logistics. The TFA offers a platform to realise that goal, but it has its own limitations. Therefore, efforts should go beyond the narrow definition of trade facilitation under the TFA to embrace a broader approach that encompasses dealing with hard infrastructure development, behind-the-border policies that impact on trade, regulating backbone services, enhancing competition in logistics value chains on both land and sea, leveraging the hard–soft infrastructure nexus, and embracing a regional approach.
Memory Dube is Senior Trade Officer in the Industrialisation and Trade Department, African Development Bank. Patrick Kanyimbo is Principal Regional Integration Coordinator: East Africa Regional Development and Business Delivery Hub, African Development Bank.
This article is published under Bridges Africa, Volume 6 - Number 3, by the ICTSD.
[1] UKAID (2014) quoted in Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and South African Institute of International Affairs (SAIIA). Regional Business Barriers: Unlocking Economic Potential in Southern Africa. 2014.
[2] Collier, Paul. The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done about It. Oxford: Oxford University Press, 2007.
[3] For more on this, see Kanyimbo, Patrick. “Trade Facilitation in the Bali Package: What’s In It for Africa?” Briefing Note No. 61, European Centre for Development Policy Management, December 2013.
[4] WTO. World Trade Report 2015. Geneva: WTO, 2015.
[5] Mevel, Simon, and Stephen Karingi. “Deepening Regional Integration in Africa: A Computable General Equilibrium Assessment of the Establishment of a Continental Free Trade Area followed by a Continental Customs Union.” Paper presented at the 7th African Economic Conference, 2012.
[6] World Bank. Reshaping Economic Geography of East Africa: From Regional to Global Integration, Vol. 1 of 2. Washington, DC: World Bank, 2012.
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Compact with Africa: fostering private long-term investment in Africa
Executive summary
With its “Compact with Africa”, the German G20 Presidency intends to encourage private institutional and corporate investment, together with the African partners. The objective is to boost growth and jobs, promote inclusion and give people economic perspectives at home so that they do not have to leave their home country to seek subsistence elsewhere. Stimulating private sustainable investment in Africa has been a longstanding G20 policy target.
Both institutional investments, for example through pension funds and life insurers, as well as corporate investments in the form of foreign direct investment (FDI) can benefit Africa. Institutional investors enjoy long-term liabilities in their balance sheets, which is essential to fund Africa’s infrastructure, a central growth prerequisite for the continent. FDI, in turn, requires modern infrastructure, especially energy and connectivity, to fully deploy its external benefits. FDI can entail benefits for the modernisation of production capacity; knowledge transfer; integration into global value chains and regional value chains; as well as employment for the jobless. Corporate FDI reflects a long-term commitment and is hard to reverse, thus providing stability.
Total assets managed by long-term institutional investors are projected to reach $100 trillion by 2020, up from $62 trillion just eight years earlier. To fill Africa’s annual infrastructure funding gap of $50 billion, one percent of new institutional investment by pension funds, life insurance companies and sovereign wealth funds would need to be invested in Africa’s infrastructure every year. Yet, despite the longstanding policy focus of G7/G20 leaders, private long-term investment in Africa’s infrastructure has remained deficient. Private finance still plays a minority role in funding Africa’s infrastructure. Since 2010, Africa’s infrastructure deployment has become uneven and, on average, has not progressed further. Why has the decade-long G7/G20 push for private investment in Africa’s infrastructure failed to produce better results so far? Regulatory supply-side barriers for investors and low-income Africa host barriers have been identified as root causes. To help improve the situation, appropriate dialogue partners not envisaged so far are identified, especially prudential regulators.
FDI inflows produce important effects which go beyond spillovers to domestic firms. They contribute to structural change, but the effects of different FDI inflows vary (FDI in resource-driven countries vs. consumer-oriented industries). The shift of FDI to consumer sectors has created jobs, mainly low-skilled ones. Some middle-income African countries have managed to enter global value chains. Generally, a stronger integration of African countries into global value chains may foster the absorption of technology, build skills and promote inclusive growth. The paper shows that the transfers of technology and spillover effects are still limited; a systematic trend can hardly be identified.
In order to drive structural transformation in Africa, some policy prerequisites are seen as key: apart from political and macroeconomic stability, improved transport systems and energy access to generate agglomeration benefits and industrial clusters. Job creation in small and medium-sized enterprises (SMEs) requires that barriers be removed. Regional economic integration is essential for Africa to realise its full growth potential, to participate in the global economy and to share the benefits of an increasingly connected global marketplace. Many African economies are still resource-intensive and FDI inflows mainly resource-driven. Dominance of resources, low levels of manufacturing and widespread informal economic activities do not appear to be the appropriate foundations for long-term, sustainable and jobs-driven growth.
The main 10 policy recommendations:
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Initiation of a structured dialogue between prudential regulators of savings institutions and development partners to remove prudential barriers to institutional investment in Africa.
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Identification of viable components of infrastructure projects and revenue streams in cooperation between institutional investors and development finance institutions.
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Handling of contingent liabilities for weak African public budgets that may arise from public-private partnerships from the start of jointly financed projects.
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Provision of local currency finance to unhedged and vulnerable borrowers by multilateral development banks to avoid currency mismatches.
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Provision of various forms of credit enhancement, structured finance and hedging solutions by multilateral development banks to increase the attractiveness of local-currency bond offerings.
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Promotion of a favourable investment climate (such as access to finance and imported inputs, enforcement of contracts, reliable regulatory standards, improved infrastructure) for local firms and foreign investors.
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Promotion of a change in industrial policy to develop national industries to raise the potential of upgrading in global value chains through tax incentives and local content requirements.
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Facilitation of the formation of industrial clusters through business development services, better transport systems, qualified labour, cooperation with research institutions and access to electricity.
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Promotion of regional economic integration, stronger intraregional cooperation, connectivity, regional market expansion and intraregional investment in infrastructure (roads, electricity, internet networks, ports and railways).
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Transforming the SME sector to become a more sustainable employer with backward and forward linkages to large domestic firms and foreign companies.
The “Compact with Africa” has suggested a great number of “policy commitments” for African partner countries that are deemed necessary to facilitate private infrastructure and corporate foreign direct investment. These commitments have not been subject to the reality test of the difficult political and institutional environments in many poor countries. Such a “laundry list” approach to reform has proven ineffective, as it assumed that all developing countries suffer from the same problems, and that all of the problems were equally important. However, an unweighted check-off of selected governance elements has led to an undifferentiated reform programme that fails to target an economy’s most severe bottlenecks under the constraint of scarce political and administrative (human) capital.
» Download the DIE discussion paper: Compact with Africa: fostering private long-term investment in Africa (PDF, 1.3 MB)
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tralac’s Daily News Selection
tralac’s Tarik Oguz examines the latest malicious software code attack
Race for supremacy: India, Japan plan alternative to counter China’s OBOR (Business Standard)
Away from the glare of the multi-nation “One Belt, One Road” initiative at Beijing, India and Japan plan to soft launch their own Asia-Africa connectivity project this month. Like OBOR, the Indo-Japanese plan is also predicated on a race for supremacy in the Indian Ocean. The venue for its launch will be the upcoming annual meeting of the African Development Bank to be held at Ahmedabad from May 22. For both Japan and India, the meeting is a highly significant event to draw attention to their strength as partner nations in a project that demonstrates the same type of ambition as OBOR does. The partnership will initially “focus on countries on the eastern coast of Africa... In the initial phase, seven countries on the east coast — Ethiopia, Somalia, Kenya, Uganda, Tanzania, Mozambique and South Africa may be taken up”. [Uhuru seeks more billions for SGR extension to Kisumu]
SA ‘working on scrapping visa for all African citizens’ (News24)
According to the White Paper, South Africa “fully supports the vision of an Africa where its citizens can move more freely across national borders, where intra-Africa trade is encouraged and there is greater integration and development of the African continent”. It said the current status was untenable. “For instance, on average Africans need visas to travel to 55% of other African countries. They can get visas on arrival in only 25% of other countries. Finally, they do not need a visa to travel to just 20% of other countries on the continent.” But the White Paper, which moves South Africa’s approach to immigration from a purely administrative one to a security-based approach, warns that the scrapping of visas needs to happen with caution. South Africa’s risk-based approach “advocates for an incremental removal of migration formalities for frequent and trusted travellers including diplomats, officials, academics, business persons, students, etc.” The policy is envisaged as follows:
We have no intention of banning mitumba trade, CS Mohamed reassures (CapitalFM)
Industry, Trade and Cooperatives Cabinet Secretary Adan Mohamed has clarified that it is not the government’s intention to ban second hand clothes. Speaking on the sidelines of the Belt and Road Forum for International Cooperation in China, Mohamed said the government was simply working to revive and make competitive, Kenya’s textile industry. And if the mitumba trade falls casualty to the market forces, Mohamed said, then so be it. [Row brews as US-based NGO petitions EAC mitumba ban]
Kenya feels Brexit impact with fall in UK tea exports (Business Daily)
An industry performance report by the Tea Directorate indicates the volume purchased by Britain dropped from 5.4 million kilogrammes in March last year to 3.1 million kilogrammes in the same month this year. The directorate indicates that Britain is no longer buying same amount of tea from Kenya due to a reduced re-exportation market to other European countries who have been securing the commodity from the UK. “We can comfortably attribute this decline to Brexit, Britain has been a major buyer of our tea in Europe and it was buying for both local consumption and re-export to other European countries,” said Samuel Ogola, head of the directorate.
Infrastructure financing in Sub-Saharan Africa: best practices from 10 years in the field (AFC)
This report is a joint effort of BCG and the Africa Finance Corporation, focusing on the climate for infrastructure investment in Sub-Saharan Africa. The key chapters of the report cover the logistical, financial, and socio-political challenges of infrastructure investment in the region; key considerations and strategies for governments to take into account in pursuing such investments; and corresponding considerations and strategies for private investors to weigh in doing the same. The remaining material in the report consists of ten case studies of major infrastructure projects in the region, and appendixes containing lists of resources and projects for reference. Extract (pdf): The importance of understanding Africa’s diversity. While some generalizations are possible, it is essential to remember how diverse Sub-Saharan Africa is. This can create real differences for infrastructure investors. Countries have many differences in legal traditions, regulatory environment, levels of political stability, human capacity, financial sector maturity, historical background, cultures, languages, natural resources, climate, geography, and so on. The resulting complex mix of variables can significantly affect a country’s attractiveness to private investors. (See the following exhibit.) We used a mix of enabling environment and economic opportunity metrics to assess each Sub-Saharan country for infrastructure investment attractiveness. (See Appendix 3.) We reached a number of conclusions on the basis of that data: [Note: The report was prepared for the AFC conference, now underway in Abuja. Twitter: #AFCLive]
COMESA in strategic partnership with Islamic Solidarity Fund for Development
The Islamic Solidarity Fund for Development (ISFD) will provide funding for micro financing for enterprises in COMESA member States that are members of the Islamic Development Bank. This will be done once the ISFD receives a request from COMESA. This is one of the agreements reached during a meeting between the Secretary General of COMESA Sindiso Ngwenya and the Director General of the ISFD Dr Waleed Al-Wohaib. The meeting took place in Jeddah, Saudi Arabia. The two agreed on areas of strategic cooperation which COMESA will take the lead in bringing together national development banks, sovereign wealth funds and multilateral development banks in the Gulf Cooperation Council Countries to fund the COMESA regional programs and projects to realize economic transformation.
A new role for development banks? (World Bank)
Earlier this month, development banks from around the world took stock of where they stand and where they see their efforts having the greatest impact at a meeting organized by the World Bank and Brazil’s development bank, BNDES. Two themes characterized the discussion at the meeting: how to leverage private capital and create new markets. [Related: To close the infrastructure gap, Brazil needs to spend better – not necessarily more]
Rwanda: IMF completes 2017 Article IV Consultation, Review Mission. “Rwanda’s external trade deficit was lower than expected in 2016, following a strong pick up in goods and services exports, combined with reduced demand for imports. The IMF team observed that these developments reflected in part decisive government policies: to address pressures on the balance of payments and falling reserves, the government allowed the exchange rate to adjust, resulting in depreciation of just under 10% in 2016, supported by public spending restraint and prudent monetary policy. The government also implemented a “Made in Rwanda” policy to encourage domestic production of certain goods currently imported and promote export diversification, intended to foster external stability and growth in the medium term. These efforts should allow for a slight increase of foreign exchange reserves in 2017. The IMF team commended these policies, but underlined the importance of balancing tax incentives in Rwanda and domestic revenue mobilization objectives. To that end, the IMF team urged accelerated completion of revisions to income and fixed asset tax laws, and further analysis of the effectiveness of various tax incentives in promoting the competitiveness of Rwanda’s private sector.
Zimbabwe: IMF completes 2017 Article IV visit. “Restoration of confidence is essential for attracting the necessary dollar inflows to the economy. Refraining from central bank financing of the deficit and containing the issuance of debt and quasi-currency instruments is vital. Furthermore, the financial sector should restore its role of intermediating resources in the economy by channeling deposits to productive credit rather than financing fiscal operations. The team recommends taking action to unleash the potential of the private sector and ensure that growth benefits the most vulnerable segments of the population. Building on the progress already achieved, the government is encouraged to demonstrate that Zimbabwe is open for business.” [Gold reserves to anchor local currency]
World Trade Outlook Indicator (WTO)
The WTO’s latest World Trade Outlook Indicator suggests that global trade will continue to expand moderately in the second quarter of 2017. The latest reading of 102.2 is the highest since May 2011, but strength in the overall index is tempered by weakness in certain component indices.
Expert Group on trade finance: informal report by WTO Secretariat (WTO)
The objective of the March 2017 meeting was twofold: (i) to take stock of the current market situation (ii) to examine possible areas of cooperation between participants based on proposals by the WTO Director-General in his 2016 publication: “Trade Finance and SMEs”. Such proposals are: boosting trade finance facilitation programs, reducing the knowledge gap, improving synergies on capacity-building and gap detection. Extract: Representatives of multilateral development banks said that trade finance facilitation programs had been designed to support small trade transactions in the poorest countries. These countries cumulated poor country risk and a high perception of AML-KYC risk. MDBs could only do so much. The CEO of ITFC shared his concern regarding the poorest countries of the Organization of Islamic Co-operation. He emphasized the growth in ITFC’s portfolio, in particular towards SMEs. The ITFC had already stepped in, increasing its support to trade in the OIC by 15%. The African Development Bank was also making progress. The 4-year sunset clause regarding the African Development Bank’s trade finance facilitation program had been lifted, which meant that trade finance had become part of the normal operations of the bank. The AfDB welcomed risk-sharing agreements with partner institutions. [Note: The meeting was held on 29 March]
Pew Research Center: In US, support for free trade agreements rebounds modestly
As has been the case in the past, free trade agreements are viewed far more positively by younger people than older adults. Majorities of those under 30 (67%) and those ages 30 to 49 (58%) say free trade agreements have been good for the country. Among those 50 and older, just 41% say free trade agreements have been a good thing. By roughly two-to-one, both blacks (62% to 29%) and Hispanics (63% to 33%) are more likely to say free trade agreements have been good for the country than to say they have been bad for the country. By contrast, whites are divided in their views of the impact of free trade agreements (47% say they have been a good thing, 44% say they have been a bad thing). Those with postgraduate degrees view free trade agreements positively by about two-to-one (61% good thing, 29% bad thing).
China still wants to import commodities, not manufactures (CFR)
If you net out imported components for reexport, China really doesn’t import many manufactures: manufactured exports are about 12 percent of its GDP, and imports—net of processing imports—are just over 4 percent of GDP, leaving China with a large surplus in manufacturing trade. Exports as a share of GDP have come down after the crisis, but so too have China’s imports of manufactures for its own use. [The analyst: Brad Setser]
2017 Fragile States Index (Fund for Peace)
The Index assesses 178 countries across 12 social, economic and political indicators to identify potential risk of social and political turmoil and conflict. The United States ranks as the thirteenth-most worsened state of the year, while Ethiopia, Mexico and Turkey are the most worsened since the 2016 assessment. The 2017 Index also shows pressure continuing to mount in Brazil and South Africa, while Belgium, Italy, Japan and South Korea experienced upticks in fragility. Ethiopia: Along with Mexico, Ethiopia was the most worsened country of the past year, continuing a decade-long trend of increasing pressures. The most significant issues within Ethiopia are severe drought compounded by land competition and resulting tension between ethnic groups, both of which have been exacerbated by climate conditions. The FFP research team is tracking this trend more broadly and is currently assessing similar patterns elsewhere on the globe. South Africa: The economic engine of Africa, South Africa is the sixth-most worsened country of the past decade. Data this year indicates that conditions continue to decline, with a worsening economy and a crisis of confidence in the country’s leadership. Not only is this a serious concern for South Africa, but it could have a bearing on the region more broadly.
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Ransomware attacks vulnerable computers around the world and disrupts many institutions and organizations
What happened?
Last Friday, May 12th, 2017, a type of malicious software code (malware in short) named Wanna Cryptor found its way to affect computers around the world that are running older versions of Microsoft Windows Operating System or newer versions which have not applied the latest security updates issued by Microsoft. More than 40,000 computers were compromised and their data files were locked. The users were asked to pay a ransom of $300 to de-encrypt the information saved in their computers.
It also started spreading over The Internet to other vulnerable connected computers. As at Monday morning; about 200,000 computers are affected in more than 150 countries.
No doubt an in-depth analysis will place a figure on the financial cost (lost productivity, lost revenues, and the least of it – paid ransom) in the coming weeks.
Image credit: Cisco Talos Intelligence blog
This attack shows the ubiquity of the internet and technology in general; such attacks may have significant adverse effects in our daily lives in the hands of criminals.
In this instance the attack was opportunistic and did not necessarily target a specific country or a specific organization. However, as connectivity extends and the number of online applications increases, the targeted cyber-attacks will also be inevitable and a new type of warfare may enter our lives. Smart phones may initiate random network activity; intelligent cars may drive against the drivers’ wills. The effects could be disastrous from a total network congestion to loss of lives.
Why it happened?
The irony of this attack goes back to February 2017 when it was revealed that the United States National Security Agency (NSA) had identified a security vulnerability in Microsoft Windows operating system software. It is not clear when this vulnerability was identified originally and why the NSA kept it secret. One explanation is perhaps the intention of the NSA to use this vulnerability to access computers for national security purposes.
Once the news about this vulnerability was made public, in March 2017, Microsoft issued a fix for all Windows software versions that are within their regular support phases (Windows 7 and later versions)[1]. A fix was not released for earlier versions where the support had expired (Windows XP is an old version and widely used around the world despite no longer being supported by Microsoft).
On April 8, 2017 another interesting development took place and a group of hackers, known as Shadow Brokers, announced that they have access to an encrypted cache of “software hacking tools” and released a password for the cache on The Internet[2].
It was only a question of when, not if, a malicious attack would occur once these tools were publicly available.
Who was affected?
The diversity of the organizations affected by this attack is phenomenal. Services stopped, manufacturing halted, routine activities were disrupted. In more than 150 countries about 200,000 computers were reported to be hit by the attack.
Below are just a few examples collated from some of the global news sources.
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Hospitals and National Health Service (NHS) trusts in the United Kingdom
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Telecommunications Company (Telefonica) in Spain
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Government Departments and Hospitals in China
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Transport and Logistics company FedEx in the USA
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Hospitals in Indonesia
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More than 1,000 computers in the Interior Ministry in Russia
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2,000 computers in 600 organizations in Japan
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Police Department in Andhra Pradesh and several companies in major cities of India
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Car manufacturing plants in France
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Gas companies in Spain
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Electronic boards at railway stations in Germany
Image credit: http://www.bbc.com/news/world-39919249
What can be done now?
Microsoft took the unprecedented step to issue a software patch for the old versions of their Windows Operating Systems (Windows 8, Windows XP); and server software[3].
Individuals and organizations can protect their computers and networks to the best of their ability, by
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Contacting their IT services and support specialists for advice
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Ensuring the software used in their networks is current and up to date with all the security patch software from the vendors are applied
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Being extremely careful of the current Wanna Cry, or Wanna Crypt, or Wanna Decryptor variations of the ransomware (never clicking on any enclosure files in any email messages)
What can be done in the future?
The most important precaution to protect “connected computers” from malicious software attacks
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Design and implement necessary software firewalls where these network based attacks can be blocked before reaching the individual computers
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Always apply security patch software updates from computer and networking software vendors
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Do not use any software programs once their support periods are expired
[1] https://technet.microsoft.com/en-us/library/security/ms17-010.aspx
[2] http://www.bbc.com/news/technology-39553241
[3] https://www.catalog.update.microsoft.com/Search.aspx?q=MS17
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Latest trade indicator signals sustained momentum in second quarter
The WTO’s latest World Trade Outlook Indicator (WTOI) suggests that global trade will continue to expand moderately in the second quarter of 2017. The latest reading of 102.2 is the highest since May 2011, but strength in the overall index is tempered by weakness in certain component indices.
The WTOI is a leading indicator of world trade, designed to provide “real time” information on the trajectory of merchandise trade ahead of trade volume statistics. Combining a variety of trade-related measures, the WTOI provides an early signal of the current direction of world trade and where it is likely to go in the near future. A reading of 100 indicates trade growth in line with medium-term trends, while readings greater or less than 100 suggest above or below trend growth.
The main components of the WTOI, including export orders, container shipping and air freight, recorded strong gains in recent months, signalling above-trend growth in merchandise trade volumes for the second quarter. However, the upward trend is balanced by weak demand for automotive products, electronics and agriculture raw materials.
The latest reading is up slightly from the previous value of 102.0, which suggests that trade volume growth will be above trend in the first and second quarters of 2017 once data for these periods are available. These results are broadly in line with the WTO trade forecast issued on 12 April, which foresaw a return to moderate trade growth this year after sluggish expansion last year.
The WTOI is not intended as a short-term forecast, although it does provide a signal of trade growth in the near future. Its main contribution is to identify turning points and gauge momentum in global trade growth. It complements existing tools such as the WTO’s longer-term trade forecasts, and other statistical releases.
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Expert Group Meeting on Trade Finance: Informal report by the WTO Secretariat
The objective of the March 2017 meeting was twofold: (i) to take stock of the current market situation (ii) to examine possible areas of cooperation between participants based on proposals by the WTO Director-General in his 2016 publication: “Trade Finance and SMEs”. Such proposals are: boosting trade finance facilitation programs, reducing the knowledge gap, improving synergies on capacity-building and gap detection.
In his opening remarks delivered on behalf of the Director-General, the Deputy Director-General stated that, based on the evidence provided by the Asian and African Development Banks’ surveys, trade finance gaps had remained high but stable at USD $1.6 trillion (some 10% to 15% of trade finance markets), and was falling disproportionally on small and medium-sized enterprises’ (SMEs) trade. Fifty-eight per cent of SMEs saw their trade finance requests rejected. This situation could not continue since SMEs were the heart of wealth, job creation and innovation. Trade finance gaps with the greatest trade opportunities were highest, notably in developing countries. The lack of trade finance was therefore an obstacle to building a more inclusive trading system.
Since the publication of the Director-General’s proposals, progress had been made. WTO and G-20 Members had supported the Director-General’s efforts and recommendations. The Director-General had met heads of organizations, such as the International Trade Finance Corporation (ITFC, part of the Islamic Development Bank’s Group) and of the World Bank’s International Finance Corporation (IFC), with a view to moving the trade finance agenda forward. He had agreed with the CEO of IFC to co-host a high-level dialogue with the main stakeholders, scheduled at the fall meetings of the IMF and World Bank in October 2017. The idea was to bring together multilateral development banks, private sector representatives, prudential and other regulators, at head of institution level. A preparatory meeting for multilateral development banks was scheduled to be co-hosted on the first day of the Aid-for-Trade Global Review.
The high-level round table would address some of the proposals of the Director-General and his partners, including the scaling up of trade finance facilitation programs and increasing their synergies. New and innovative ways of seeking synergies were welcome. Training efforts also needed to be increased. A dialogue with regulators, notably in the area of know-your-customer (KYC) and anti-money laundering (AML) could usefully be conducted to address the trade and development dimension of trade finance. Finally, efforts to track the trade finance gap needed to be enhanced.
The meeting started with a review of the current market situation. The contrast characterizing the situation in recent years had narrowed. The market could thus be described as being dual, with excess liquidity for large lenders and “premium” clients, the large traders. At the lower end of the market, small and medium-sized enterprises (SMEs) suffered, both in developed and developing markets, from the impact of reduced correspondent banking networks, the greater selectivity of banks, and the focus of the largest institutions on the best rated “customers”. Participants confirmed a firming up of trade demand in recent months, in all regions of the world; which, in turn, contributed to reduce excess liquidity gaps at the higher end of the market. In Latin America, Brazil had bottomed out, whereas in Asia the mood was more confident. The rise in trade demand in countries such as Indonesia, Viet Nam, and Bangladesh, in market segments previously dominated by China, was noted. Most participants confirmed a stronger outlook for commodity markets, benefiting Sub-Saharan Africa and the Middle-East and North Africa (MENA) region.
The (modest) improvement in the trade outlook did not necessarily mean an immediate improvement in trade finance market conditions at the lower end of the market, particularly for SMEs. In China, the combination of Basel III implementation and stricter caps on lending actually meant a greater selectivity of clients. At the same time, China was implementing stricter KYC-AML requirements; with the result that large Chinese banks have had to close many correspondent banking relationships. This “flight to quality” was also affecting the commodity sector, as confirmed by a leading commodity trading firm. Excess liquidity was focused on the largest companies, but could not be fully absorbed, leaving SMEs to be dependent on financial facilities extended by these companies. While a pan-African bank representative indicated that the reduction of correspondent banking relationships in the continent had slowed down, the knock-on effect of previous reductions and prudence in accepting new ones was seriously affecting trade finance in Africa. A large United States bank clearing US dollar transactions noted that the “precautionary” mindset on KYC-AML implementation had forced out small African banks, despite their impeccable due diligence records. In the MENA region, the introduction of new bankruptcy laws has been affecting SMEs. In Europe, the perception of KYC-AML risk was very high in view of the potential fines to be applied. This was confirmed by the representative of the European Bank for Reconstruction and Development (EBRD), who stated that AML-KYC requirements had become so tight that some countries, notably in Eastern Europe, had become virtually “un-bankable”.
Representatives of multilateral development banks (MDBs) said that trade finance facilitation programs had been designed to support small trade transactions in the poorest countries. These countries cumulated poor country risk and a high perception of AML-KYC risk. MDBs could only do so much. The CEO of ITFC shared his concern regarding the poorest countries of the Organization of Islamic Co-operation (OIC). He emphasized the growth in ITFC’s portfolio, in particular towards SMEs. The ITFC had already stepped in, increasing its support to trade in the OIC by 15%. The African Development Bank (AfDB) was also making progress. The 4-year sunset clause regarding the African Development Bank’s trade finance facilitation program had been lifted, which meant that trade finance had become part of the normal operations of the bank. The AfDB welcomed risk-sharing agreements with partner institutions. The EBRD had a record year in supporting trade in 2016. It stepped in to alleviate liquidity shortages in Egypt, Greece and Cyprus. The EBRD-supported trade transactions helped supply essential commodities and goods for the local population. Many countries were struggling to keep correspondent banking relationships, as a result of KYC-AML procedures. The EBRD had to put in place a platform on information exchange for due diligence, as local companies and banks could simply not comply with the 40 or more minimum guidelines imposed on them. The Asian Development Bank (ADB) was increasing the scope of its programs, now operating in 20 countries. The ADB has been increasing the risk that it assumed under risk-participating agreements, and new funded risk distribution programs. On AML-KYC, it was coordinating a pool of data on compliance infraction among banks, an early warning system, and the promotion of a global legal identifier. All in all, current support for trade by MDBs was stable, at around USD $30 billion a year, compared to a USD $1.6 trillion trade finance gap in developing countries.
Professional organizations made several points. The International Chamber of Commerce’s (ICC) Banking Commission wished to step up its advocacy role and to set up meetings with the Basel Committee on Banking Supervision. Creating standards for digital finance was also a priority. The Berne Union and International Factoring Association reported a slower increase in insured trade credit and factoring flows in 2016, contrasting with the record increases of the past decade.
It was clear that efforts were being made to scale up trade finance facilitation programs, in one direction or the other, either by extending countries’ coverage, or by supporting new categories of banks and traders. Demand for supply chain finance programs was increasing. MDBs, such as the ADB, were looking at how to respond to such demand. Innovative products were also being proposed to operators (factoring arrangements). The ITFC presented ideas for the creation of a multilateral development bank (MDB) SME Trade Fund, structured in two sub-funds: (i) a trade finance fund for SMEs, and (ii) a technical assistance facility to offer a comprehensive solution to increase the competitiveness of SMEs involved in trade. Some early reactions were offered during the meeting. In general, institutions wished to move towards a higher-level of risk coverage (up to 100%).
Regarding capacity-building, there was an overall desire by private and public institutions to team up on delivering more technical assistance, hence reducing the “knowledge gap”. This implied that professional organizations from the private sector cooperate with multilateral development banks, with a view to increasing potential global outreach and minimize costs. This was gradually happening. For example, the ICC e-learning institute was cooperating with Factoring International and other professional institutions, while obtaining the support of the Asian Development Bank. This was a good start.
Participants committed to improve gap detection and mapping. Considerable progress has been made by the Asian and African Development Banks, through their respective trade finance gap studies, which were being updated. Almost all participants in the room, including MDBs, the ICC banking commission, the FCI and the Berne Union, contributed to the Asian Development Bank survey. There was strong support for the continuation of such surveys in the future.
As in previous years, there had been a fair amount of discussion on non-prudential regulatory issues described as “know-your-customers” (KYC) requirements and anti-money laundering regulations (AML). For the WTO, the question was to define the possible “trade” content of any future dialogue with the OECD’s Financial Action Task Force (FATF), and more generally with the Financial Stability Board (FSB). Any future dialogue needed be fact-based. To this extent, the analytical basis for linking AML-KYC requirements, on the one hand, and de-risking, on the other, had been relatively weak. The expert group took note of the recent reports by the World Bank, International Monetary Fund (IMF) and Bank of International Settlements (BIS), highlighting the relationship between the fall of correspondent relationships and its impact on financial exclusion. The BIS had issued broad recommendations on how to address some of these problems. Supervisors should follow a risk-based approach, provide greater clarity and stability on the extent of obligations, and promote a greater use of KYC “utilities”, etc.
The expert group also supported the greater use of utilities such as the KYC repository, which had been created by SWIFT. Already, 2500 financial institutions used it. However, the SWIFT repository needed to be further promoted, including by regulatory authorities. Other information-pooling initiatives had been mentioned. To save certain countries from trade finance exclusion, the EBRD had to establish an information-pooling platform for KYC purposes, for trade companies and bankers in Eastern Europe. However, it was noted that the exchange or pooling of information was severely constrained by countries’ privacy laws. The ADB strongly argued in favour of the generalization of the Global Legal Entity Identifier, as a way to promote KYC-AML implementation while reducing its cost. In general, the expert group requested a dialogue with FATF to be able to design a “rule-book” for trade finance, as AML-KYC requirements had become too much of an “open-book”. Such a rule book could simply be extracted from the very complex overall rule book of the FAFT. It was felt that trade finance, which was a very organized and documented business, was only too often mixed with less documented financial transactions (such as remittances), and had to suffer excessive controls.
The 2016 BIS report on correspondent banking had called for a greater dialogue between financial institutions and the FAFT. The report promoted the use of utilities mentioned above, and that of the Global Legal Entity Identifier. As stated on several occasions, the WTO Secretariat indicated that it would be happy to engage, to the extent that the WTO could bring value and data to that dialogue. It also considered that the industry had to collect the necessary data and formulate its own terms of dialogue with regulators. The establishment by the industry of a clear agenda for such dialogue should therefore be a priority. Collecting the appropriate data should follow.
The Deputy Director-General noticed, during this meeting, a positive engagement in supporting and implementing the WTO initiative in favour of reducing trade finance gaps in developing countries, with a focus on SMEs. The process of building support within the WTO will continue. Some members of the expert group may be called upon to contribute in the coming months, notably in the context of the round tables mentioned above.
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SA ‘working on scrapping visa for all African citizens’
South Africa is working towards allowing all African citizens to enter the country without visas – but at first “trusted travellers” like diplomats, officials, academics, business people and students will be the only ones to benefit.
The Department of Home Affairs outlines the steps that will be taken towards scrapping visa requirements in its latest White Paper on International Migration, which was adopted by cabinet six weeks ago but not made public yet.
The African Union’s Agenda 2063, championed by former AU Commission chairperson Nkosazana Dlamini-Zuma, calls for the scrapping of visa requirements for all African citizens travelling on the continent by 2018 based on the views of the African Rennaissance.
The African passport was launched with great ceremony by Dlamini-Zuma and Rwandan President Paul Kagame at last year’s AU summit in Kigali.
According to the White Paper, South Africa “fully supports the vision of an Africa where its citizens can move more freely across national borders, where intra-Africa trade is encouraged and there is greater integration and development of the African continent”.
It said the current status was untenable. “For instance, on average Africans need visas to travel to 55% of other African countries. They can get visas on arrival in only 25% of other countries. Finally, they do not need a visa to travel to just 20% of other countries on the continent.”
Security-based approach
But the White Paper, which moves South Africa’s approach to immigration from a purely administrative one to a security-based approach, warns that the scrapping of visas needs to happen with caution.
South Africa’s risk-based approach “advocates for an incremental removal of migration formalities for frequent and trusted travellers including diplomats, officials, academics, business persons, students, etc.”
The policy is envisaged as follows: African citizens can enter South Africa visa-free where there are reciprocal agreements.
Visas will only be needed when there are risks of foreign nationals overstaying, security risks like organised crime, terrorism and political instability, civil registration risks, i.e. fraud by foreign governments in issuing documents or an unable or unwillingness to identfy their nationals when requested, and for countries “with a high number of nationals who abuse the asylum system”.
One of the countries identified elsewhere in the document as doing such is Zimbabwe.
Key elements of the visa-free regime would be visa-free entry for visits up to 90 days, recognition of visas for third parties, for example regional visas, agreed standards on immigration and border management, agreed standards on civil registration and “sophisticated, real-time risk management, information and intelligence sharing”.
Where visas are required “South Africa should make it as easy as possible for bona fide travellers to enter South Africa”, by standardising and expanding the use of long-term, multiple-entry visas for frequent travellers, business people and academics, according to the White Paper.
A list will be developed of countries whose visa adjucation systems are trusted and recognised by South Africa, and technology will be used to establish trusted traveller schemes.
Free movement of African citizens
At regional level, South Africa “should continue to advocate for a free movement of African citizens,” the paper states.
It also says, however, that there has been a large influx of semi-skilled an unskilled economic migrants who couldn’t get visas and permits through the “mainstream immigration regime”.
These had some negative consequences, such as the asylum seeker management system being “abused and overwhelmed by economic migrants”, and then these migrants, and by extension also South African workers, being abused by “some unscrupulous South African employers”.
There has also been “increased trade in false documentation and petty corruption by police and immigration enforcement officials”, and social cohesion has suffered, “as all citizens assume that all migrants from the rest of Africa are irregular and undesirable”.
There has also been a “revolving door” of migrants returning, and deportations to neighbouring countries increasing significantly.
The White Paper, which has a strong focus on attracting more skilled migrants to counter the brain drain, also announces a special dispensation for migrants from the Southern African Development Community, with the focus on giving visas to skilled migrants, traders and small and medium sized business owners.
Visas for lower skilled migrants will be “quota-based”, but details on this still have to be decided.
Home Affairs minister Hlengiwe Mkhize is expected to announce details on the new immigration dispensation in her budget speech in Parliament on Wednesday.
It is expected that the new policy will find its way into legislation by next year.
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Infrastructure financing in sub-Saharan Africa: Best practices from ten years in the field
This report is a joint effort of The Boston Consulting Group (BCG) and the Africa Finance Corporation, focusing on the climate for infrastructure investment in Sub-Saharan Africa.
The key chapters of the report cover the logistical, financial, and sociopolitical challenges of infrastructure investment in the region; key considerations and strategies for governments to take into account in pursuing such investments; and corresponding considerations and strategies for private investors to weigh in doing the same. The remaining material in the report consists of ten case studies of major infrastructure projects in the region, and appendixes containing lists of resources and projects for reference.
Executive summary
The World Bank estimates a global investment gap of $1 trillion annually in infrastructure development, and Africa faces especially sharp challenges in this area. For example, statistics reveal that two-thirds of Africans have no access to power, and the road access rate in Africa is only 34%, compared with 50% in other parts of the developing world. Overall, the nations of Sub-Saharan Africa lose as much as 2.1% of GDP annually to inadequate infrastructure – a circumstance that is at once daunting and correctable through appropriate investment and collaborative action.
Estimates of Sub-Saharan Africa’s annual infrastructure gap put it at around $100 billion. Every dollar of that gap represents a drag on Africa’s development and a diminution of its potential. Unless and until it acquires the modern transport systems, power generation capacity, and other basic infrastructure that it needs, it will lag behind not only the developed world but other emerging regions as well. Yet Africa presents a huge market opportunity. It has 52 cities with population of one million or more and has an extremely low current level of intraregional trade. Its urban population is expected to increase by 50% by 2030. The purchasing power of Africa’s middle class is growing. In a decade, the continent will have the largest workforce in the world, along with 60% of the world’s uncultivated arable land and abundant energy resources ranging from hydrocarbons to renewable. The continent is home to four of the world’s ten fastest-growing economies.
Africa’s governments recognize the infrastructure problem, but they have neither the financial resources nor the technical ability needed to close the gap by themselves. Private capital and expertise must be mobilized, too – and that is the focus of this report. Collaboratively developed by the Africa Finance Corporation (AFC) and The Boston Consulting Group (BCG), the report draws on the experience and best-practice advice of experts from both the private sector and the public sector.
International private capital – especially foreign direct investment – has much to gain by broadening its investment in African infrastructure. Successful projects are likely to generate a higher return on investment than similar projects in other regions, but to succeed in Africa, investors must adapt to an environment that presents a number of challenges related to government and financial markets:
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Government: Complications include limited public-sector capabilities to develop strategic foresight and planning, insufficient political will, policy uncertainty, weak regulatory environments and law enforcement, and a shortage of people who have the needed technical skills.
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Financial markets: Narrow financial markets, higher actual and provisional risks, longer project durations, significant cost overruns, and currency mismatches make financing issues more complex.
In addition, Africa often fails to attract first-tier international private investors in infrastructure projects, and a number of the second- and third-tier investors that tend to be more active in the continent lack some capabilities themselves.
Financial systems, too, need upgrading. Only the banking sectors of South Africa and (to a lesser extent) Nigeria currently offer financial markets sound enough to be tapped for infrastructure projects – although, in a similar vein, Kenya has developed a framework for infrastructure bonds.
That money is not flowing freely into Africa in pursuit of higher expected returns reflects these challenges, which must be addressed if the infrastructure gap is to close. Indeed, these challenges have resulted in relatively few projects’ reaching a bankable stage.
African governments are attempting to address these deficiencies. Of the 49 Sub-Saharan countries, 42 now have enacted legislation to provide a regulatory framework for private investment in infrastructure. South Africa, Rwanda, Botswana, and Mauritius offer good examples of advanced and robust regulatory contexts.
But this is merely a start. Most African countries’ regulatory frameworks remain limited, piecemeal, and untested. Going forward, governments on the continent should take several steps to improve the situation.
Private investors, too, have much to learn. They must understand the challenges that are distinct to infrastructural investment in Africa, and they must develop the patience, resilience, and risk appetite that the environment demands. They should also recognize that the most successful investors possess an entrepreneur and engineer mentality and engage fully with projects on the ground – from concept to bankable project and throughout execution. Engaging with and earning the confidence of host communities is another requirement.
Many projects that include private investors run into severe challenges because of an initial lack of fairness and balance between the parties to the contract An infrastructure project that involves both public and private sectors should be crafted in a way that it is not skewed toward either party, and it should include built-in revision clauses in case the context changes in an unforeseen way.
In this respect, certain institutions such as AFC, with its shareholder profile of 58% private investors and 42% public investors, can be of great help in mediating fair contractual balances. Moreover, the dynamism and flexibility of this type of organization structure is more in line with private sector trends than with traditional (and typically more bureaucratic) development financial institutions.
There is also a pan-African aspect to this endeavor. An all-African association could assist in the exchange of experience and strategies in infrastructure investment, favoring know-how building, best practices, and templates. Meanwhile, regional and cross-border projects could be of particular value to nations handicapped by small size or geographical disadvantages, such as Africa’s 15 landlocked countries’ lack of coastal territory.
The challenge is huge, but so are the opportunities – a winning proposition for those who get it right. For private investors, there is money to be made; for governments, the possibility of transformative social and economic development. And the biggest winners will be the almost one billion citizens of Sub-Saharan Africa, whose life prospects stand to change for the better.
» Download: Infrastructure financing in sub-Saharan Africa: Best practices from ten years in the field (PDF)
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tralac’s Daily News Selection
Zimbabwe’s former Economic Planning and Investment Promotion minister, Tapiwa Mashakada (MDC-T), has been elected the new chairperson of PAP’s Committee on Trade, Customs and Immigration Matters
Underway, in Abuja: 2nd ICC Africa Regional Arbitration Conference
Starting tomorrow, in Ouagadougou: West Africa ICE meetings. (i) Ad-hoc Experts Meeting (16-17 May): Impact of the ECOWAS-CET and EPAs by the EU on structural transformation of economies and regional integration in West African economies. Based on the review of the preliminary report proposed by ECA, participants shall focus specifically on the following: (ii) 20th Session of the ICE: The role of development planning (18-19 May).
2017 Africa Regional Forum on sustainable development (17-19, Addis Ababa). Profiled background paper: Building resilient infrastructure and promoting inclusive and sustainable industrialization and innovation (pdf): Domestic resource mobilization is critical to the development of regional infrastructure. Steps are being taken to reduce fiscal pressures by facilitating remittances and by seeking to rely less on traditional investors and more on non-traditional African financial entities, including pension funds. Indeed, as only 2.9% of pension fund investments are earmarked for infrastructure development projects, there is considerable scope to redirect an increased proportion of investments to that sector; increased investment in the sector should, moreover, take place in tandem with the development of robust policies to minimize risks and support project preparation. [Background papers]
G20 Africa Partnership: Investing in a common future (12-13 June, Berlin)
Clarification: WTO responds to “Africa ponders challenges as WTO steps in way of AU self-financing model” (New Times)
This is incorrect. The WTO never wrote a letter to member countries “complaining” about the AU self-financing mechanism or questioning its compatibility with WTO rules. No such letter exists. The issue was raised by several WTO members at a meeting of the WTO’s Goods Council on 6 April, but the members were speaking in their own capacity. The WTO itself did not express any views on the matter. We would therefore be grateful if you could run a correction and inform your readers that the WTO is not taking a position on the AU self-financing mechanism.
Customs organisation pushes for more intra-African trade (Daily Monitor)
The secretary general of World Customs Organisation, Kunio Mirukiya, has called for combined efforts towards boosting intra-African trade, proposing a number of reforms to ensure customs facilitate trade within the region. “First is infrastructure at borders because what is lacking is systems that can facilitate movement of goods and people. Customs should coordinate border management, have one stop border post or a single window and more security by collaboration is what Africa should be looking at,” Mr Mirukiya said at the 22nd World Customs Organisation East and South Africa council governing meeting in Kampala last Thursday. The meeting that attracted 22 countries from East and South Africa was aimed at looking at how best customs can facilitate trade and creating a platform for countries to collaborate and fight mutual challenges within the region.
South Africa: New car sales in Africa ‘may be on the up’ (Business Day)
A report by the Automotive Industry Export Council released on Friday showed trade in South African vehicles and components with the rest of the world hit new peaks in 2016. Though the local industry continued to record an overall trade deficit of R32.9bn - R204.1bn in imports against R171.1bn in imports - the gap was down sharply from R45.2bn a year earlier and R62.2bn in 2015. The big disappointment was Africa. Though SA’s trade surplus - R28.7bn - was the biggest of any region’s, 2016 exports to the rest of the continent fell 49% compared to a year earlier, from 42,234 to 21,564. That is a drop of almost 75% in four years, from 80,293 in 2012. [South Africa’s Top 5 car exports into Africa: by country]
Iran - South Africa trade planned to hit $2b by 2021 (Tehran Times)
Iran and South Africa have planned to boost the volume of their bilateral trade up to $2bn by 2021, an official in Iran Chamber of Commerce, Industries, Mines and Agriculture, Shahram Khasipoor, announced on Sunday. Making the remarks addressing Iran-South Africa Business Forum, Khasipoor noted that regarding the existing political and cultural ties between the two countries, the volume of common trade is not at a satisfactory level and should be increased. Iran-South Africa trade volume decreased to $45.7m in 2016 from the previous $2.055bn in 2011, due to the Western-led sanctions imposed on Iran.
Kenya: Agency meant to help rid Kenya of cheap imports taking shape (Daily Nation)
The Kenya Trade Remedies Agency proposed in a Bill, which sailed through the second reading last week, will monitor dumping of subsidised goods in the country. At the moment, the role is shared between the Kenya Bureau of Standards and the Kenya Revenue Authority. “There is established an agency to investigate and evaluate allegation of dumping and subsidisation of imports,” reads the Kenya Trade Remedies Bill, 2017 sponsored by Ugenya MP David Ochieng.
Tanzania: Fake clothes to be flushed out (Daily News)
Industrial, Trade and Investment Minister Charles Mwijage said yesterday in Dar es Salaam that the exercise would be instituted starting July, this year. “The aim of the exercise is to ensure we (government) set stringent measures to curb the influx of substandard clothing and textile products that are dominating the local market, “ he said. Mr Mwijage was speaking when opening the AGM of members of Tanzania Chamber of Commerce, Industry and Agriculture, Dar es Salaam Region. According to the minister, the inspection exercise will also help expose and curb products that fail to meet verification standards and be denied entry into the country. “The inspection will help drive the development of our manufacturing industries and promote fair competition in the market, “ he said.
Tanzania: SAGCOT gets kudos for uplifting agriculture (Daily News)
The Parliamentary Committee on Agriculture, Lands and Water, has showered praise on the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) for blazing the way towards future commercial farming and uplifting livelihoods. “It is a stunning development in our nation’s bid to turn around Tanzania’s agriculture,” the Committee Chairperson, Dr Mary Nagu, said, after a presentation by the Sagcot team on the initiative’s activities. By 2030, SAGCOT partners want to bring 350,000 hectares of land into profitable production, push 100,000 peasants into commercial farming, create 420,000 new jobs and generate 1.2 US billion dollars in annual farming revenue. [Dar secures Chinese cassava market]
EAC: update on regional Authorized Economic Operators (WCO)
At the occasion of the Committee on Customs of the EAC (25-27 April, Dar es Salaam), the WCO-EAC CREATe project team reported the number of regional Authorized Economic Operators had increased from 13 to 46. These 46 companies accounted for a record-breaking $930 000 000 in trade volume in March 2017, which represented over 5% of the regional trade in the EAC region according to the statistics provided by EAC Partner States (Burundi, Kenya, Rwanda, Tanzania, Uganda). The EAC Committee on Customs encouraged the project team to continue building on the momentum gained in the first quarter of 2017 and advised that the EAC region had decided that all negotiations and signatures of Mutual Recognition Agreements with external trading partners/blocks (outside the EAC) will be undertaken as a region rather than as individual EAC Partner States. [CEMAC Common External Tariff: WCO update]
World Bank signs trilateral agreement with Mozambique, Brazil
Mark Lundell, World Bank’s Mozambique country director, added that Mozambique could learn from countless experiences of Brazil in rural development and environmental management. “We think that the experiences of Brazil are interesting for Mozambique in terms of micro-climates, the structure of production and forests. These are all areas they have in common”. At the ceremony, the Brazilian Foreign Minister, Aloysio Ferreira, said that his government has been following with great interest the economic situation in Mozambique, and wants Brazilian business people to invest in Mozambique.
Egypt’s trade deficit declines 56% in February, year-on-year (Ahram)
Egypt’s trade deficit in February declined by 56% to register $2.1bn, down from $4.7bn recorded in the same month last year, state statistics body CAPMAS said in a statement Saturday. Exports increased by 22.1% in February compared to the same month last year, to reach $2bn up from $1.6bn. Fertiliser exports increased by 173.8% while crude petroleum exports increased by 104.6%. Imports in February 2017 decreased by 35.8% to reach $4.1bn, down from $6.4bn registered in February 2016.
Nile Basin Discourse: citizen voices shape Nile Basin resilience investments (World Bank)
Amidst increasing climate change events, the link between national and regional governments and local communities is crucial to creating response measures to benefit vulnerable populations. But the Nile Basin’s vast geography and diversity in cultures, languages, and interests require that outreach and support to civil society be thoughtfully designed, tailored to local contexts and timely. For this reason, CIWA is supporting the Nile Basin Discourse , a network of civil society organizations from across the Nile Basin, to influence the investments under the Nile Basin Initiative and other programs. Meaningful engagement on projects that affect communities across borders can often be challenging.
SADC Parliamentary Forum: update (New Era)
Speaker of the National Assembly, Professor Peter Katjavivi, is concerned about the slow pace of regional integration in the SADC region. He feels regional bodies such as the SADC-PF have a greater role to play to advance this ideal. “Our region is lacking in terms of regional integration. I was very impressed with the report we received from what ECOWAS (West Africa) is doing. As SADC-PF we should take stock and make sure that we are equally visible. When are we going to tackle particular challenges that hinder the process of regional integration?” he asked rhetorically.
Belt and Road Initiative: Speeches by President Xi Jinping, Christine Lagarde, António Guterres
Xi ends China world trade summit with plan to return in 2019 (Bloomberg)
The initiative has “entered a new era as it is in full swing,” Xi said in his closing remarks, noting 68 nations and international organizations had signed cooperation agreements with the host. He said the forum would reconvene in 2019, skipping a year. [Download (pdf): Building the Belt and Road: concept, practice and China’s contribution]
Related: East Asia Forum, editorial commentary: How to respond to China’s Belt and Road Initiative, Kenya president urges rebalance of China-Africa trade (Financial Times), Financial Times editorial: One Belt, One Road — and many questions, Reuters: Behind China’s Silk Road vision: cheap funds, heavy debt, growing risk, The Economist: What is China’s belt and road initiative?, Quartz Africa: There’s one major pitfall for African countries along China’s new Silk Road
Trade groups appeal to Beijing to postpone cybersecurity law (Bloomberg)
A coalition of 54 global business groups appealed to Chinese authorities Monday to postpone enforcing a cyber security law they warned violates Beijing’s free-trade pledges and might harm information security. The appeal by groups from the United States, Japan, Britain and other countries adds to complaints Beijing is improperly limiting access to its markets for technology products, possibly to support its own fledgling suppliers.
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Xi ends China world trade summit with plan to return in 2019
President Xi Jinping wrapped up the inaugural summit dedicated to his cornerstone diplomatic initiative for Chinese-style globalization with an invitation to world leaders attending the gathering to re-convene in 2019.
Xi, who has heralded his Belt and Road Initiative as a “project of the century,” said in a televised closing address in Beijing that his plan to link China with the world via ancient trade routes would address economic challenges and promote globalization.
The initiative has “entered a new era as it is in full swing,” Xi said in his closing remarks, noting 68 nations and international organizations had signed cooperation agreements with the host. He said the forum would reconvene in 2019, skipping a year.
Xi opened the two-day meeting on Sunday by pledging 540 billion yuan ($78 billion) in financing, including 100 billion yuan for China’s Silk Road Fund, 380 billion yuan in new lending for participating nations, and 60 billion yuan in coming years to developing countries and international organizations that join the program.
In that speech, Xi repeated his call for multilateral trade, describing his initiative as a force for peace in “a world fraught with challenges.” He told the almost two dozen world leaders gathered at the forum that countries should “uphold and grow an open world economy.”
The speech built on an image of Xi as a champion of global free trade that he’s sought to hone since President Donald Trump’s election, most notably in a January speech in Davos. It set the tone for a major two-day forum starting Sunday to discuss the Belt and Road plan, which aims to connect China with Europe, Asia and Africa through infrastructure and investment.
“They see an opportunity to fill the vacuum and take advantage of perceptions globally,” said Andrew Gilholm, director of analysis for North Asia at Control Risks Group, referring to changing perceptions of U.S. leadership in the Trump era. The presence of major leaders in Beijing to hear China’s plans “fits with the kind of image China has been trying to project.”
Assembled delegates included representatives from more than 100 countries and heads of state including Russian President Vladimir Putin, Turkish President Recep Tayyip Erdogan and Pakistani Prime Minister Nawaz Sharif. Representation from India, however, was conspicuously absent as were all Group of Seven heads of state except Italy’s.
During the opening ceremony, the first speakers to follow Xi were Putin and Erdogan, who pledged support for China’s initiative while showcasing their own regional projects. Putin called the initiative “timely and promising” while highlighting the Russia-led Eurasian Economic Union. Erdogan told delegates that the world’s economic center of gravity was shifting to the East and said he would like Turkey’s planned infrastructure expansion to be linked with the Belt and Road.
Other world leaders lined up to praise the project. U.K. finance minister Philip Hammond called the initiative “truly groundbreaking,” stressing the country’s desire for new global trade ties as it prepares to leave the European Union. Pakistan’s Sharif called the forum a “historic event” that would “tear down barriers to trade and commerce.”
Addressing concerns that the initiative will become a bonanza for Chinese companies or a strategic play for regional domination, Xi declared that the plan would be open to all countries and would complement each nation’s development goals.
‘Fair Process’
Other leaders hinted at potential problems in their remarks. Matt Pottinger, senior director for East Asia on the National Security Council and special assistant to Trump who is representing the U.S. at the forum, urged transparency and “fair process” in his comments. International Monetary Fund Managing Director Christine Lagarde called for high-quality infrastructure that respects the environment while also welcoming the Chinese initiative.
Xi’s speech also drew implicit contrast between Chinese-style development objectives and those of the West, saying the initiative won’t resort to “outdated geopolitical maneuvering.” He stressed that China doesn’t seek to export its development model to other nations while also calling for mutual respect of one another’s sovereignty, territory and “core interests.”
Eighteen countries including the U.K. agreed Sunday on the guiding principles for financing development of the initiative. The Asian Development Bank, Asian Infrastructure Investment Bank, European Investment Bank, New Development Bank, World Bank, and China’s Finance Ministry signed an agreement on promoting Belt and Road, Finance Vice Minister Shi Yaobin said.
China will also encourage financial institutions to conduct an estimated 300 billion yuan ($43 billion) in overseas business using yuan, the official Xinhua News Agency said.
Xi proposed the initiative, then known as the Silk Road, in 2013. China’s investment in Belt and Road countries has surpassed $50 billion, according to Xinhua. Credit Suisse Group AG estimates the plan could funnel investments worth as much as $502 billion into 62 countries over five years.
The speech set the ambitious plan against the sweep of Chinese history. The first nine minutes of Xi’s remarks traced the Silk Road’s genesis 2,000 years ago with ancestors trekking across Eurasian steppes to the opening of the $100-billion AIIB in Beijing last year. He evoked treasure-laden ships, the ancient cultures of the Nile and Ganges, and Buddhism’s spread from India to China and beyond.
Missile Launch
But present-day concerns also intruded on the event. Hours before Xi spoke, North Korea fired a ballistic missile, its seventh such test this year, just days after South Korea elected a president who vowed to engage with Kim Jong Un’s regime. The launch defies United Nations sanctions and Trump’s warnings that military action is an option to prevent Kim’s regime from developing an ICBM with the capacity to carry a nuclear warhead to North America.
While Xi didn’t address China’s irksome ally, his remarks referred to geopolitical difficulties along the Belt and Road route. “The ancient silk routes thrived in times of peace, but lost vigor in times of war,” he said. “The pursuit of the Belt and Road Initiative requires a peaceful and stable environment.”
China’s foreign ministry later issued a statement opposing missile launches by North Korea that violate United Nations resolutions. China urged restraint from all parties on the currently “complex and sensitive” situation on the Korean peninsula, the statement said.
The real challenge, though, for the initiative will be implementation. “To get a procession of leaders coming and saying nice things in Beijing, to have the vassal states gathering in the ancient center of the world is very nice,” said Gilholm, “but to actually implement a gigantically expensive and ambitious project and vision to remake how a large part of the globe interacts is a lot more difficult.”
Joint Communiqué of the Leaders Roundtable of the Belt and Road Forum for International Cooperation
16 May 2017
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We, President Xi Jinping of the People’s Republic of China, President Mauricio Macri of the Republic of Argentina, President Alexander Lukashenko of the Republic of Belarus, President Michelle Bachelet Jeria of the Republic of Chile, President Milos Zeman of the Czech Republic, President Joko Widodo of the Republic of Indonesia, President Nursultan Nazarbayev of the Republic of Kazakhstan, President Uhuru Kenyatta of the Republic of Kenya, President Almazbek Atambayev of the Kyrgyz Republic, President Bounnhang Vorachith of the Lao People’s Democratic Republic, President Rodrigo Roa Duterte of the Republic of the Philippines, President Vladimir Putin of the Russian Federation, President Doris Leuthard of the Swiss Confederation, President Recep Tayyip Erdoğan of the Republic of Turkey, President Shavkat Mirziyoyev of the Republic of Uzbekistan, President Tran Dai Quang of the Socialist Republic of Viet Nam, Prime Minister Hun Sen of the Kingdom of Cambodia, Prime Minister Hailemariam Dessalegn of the Federal Democratic Republic of Ethiopia, Prime Minister Josaia Voreqe Bainimarama of the Republic of Fiji, Prime Minister Alexis Tsipras of the Hellenic Republic, Prime Minister Orbán Viktor of Hungary, Prime Minister Paolo Gentiloni of the Italian Republic, Prime Minister Najib Razak of Malaysia, Prime Minister Jargaltulgyn Erdenebat of Mongolia, State Counsellor Aung San Suu Kyi of the Republic of the Union of Myanmar, Prime Minister Muhammad Nawaz Sharif of the Islamic Republic of Pakistan, Prime Minister Beata Szydło of the Republic of Poland, Prime Minister and President-elect Aleksandar Vučić of the Republic of Serbia, President of the Government Mariano Rajoy Brey of the Kingdom of Spain, and Prime Minister Ranil Wickremesinghe of the Democratic Socialist Republic of Sri Lanka, attended the Leaders Roundtable of the Belt and Road Forum for International Cooperation on 15 May 2017 in Beijing. We also welcome the participation of Secretary General Antonio Guterres of the United Nations, President Jim Yong Kim of the World Bank Group, Managing Director Christine Lagarde of the International Monetary Fund. The Leaders Roundtable was chaired by President Xi Jinping of the People’s Republic of China.
General Context
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We are mindful that the world economy is undergoing profound changes, presenting both opportunities and challenges. This is an era of opportunity, where countries continue to aspire for peace, development and cooperation. The UN 2030 Agenda for Sustainable Development with the set of Sustainable Development Goals at its core provides a new blueprint of international cooperation.
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In this context, we welcome bilateral, triangular, regional and multilateral cooperation where countries place emphasis on eradicating poverty, creating jobs, addressing the consequences of international financial crises, promoting sustainable development, and advancing market-based industrial transformation and economic diversification. We note with appreciation that various development strategies and connectivity cooperation initiatives have been put forward, providing broad space for strengthening international cooperation.
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We further recognize the challenges that the world economy faces. While it is currently experiencing modest recovery, downside risks remain. The growth of global trade and investment remains tempered, and the rules-based multilateral trading regime is yet to be strengthened. All countries, especially developing ones, still face common challenges of eradicating poverty, promoting inclusive and sustained economic growth, and achieving sustainable development.
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Noting that the Silk Road Economic Belt and the 21st Century Maritime Silk Road (The Belt and Road Initiative) can create opportunities amidst challenges and changes, we welcome and support the Belt and Road Initiative to enhance connectivity between Asia and Europe, which is also open to other regions such as Africa and South America. By providing important opportunities for countries to deepen cooperation, it has achieved positive outcomes and has future potential to deliver more benefits as an important international initiative.
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We also emphasize the opportunities which can be created by communication and coordination among other global, regional and national frameworks and initiatives for promoting cooperation in connectivity and sustainable development, such as 2030 Agenda for Sustainable Development, Addis Ababa Action Agenda, Agenda 2063 of the African Union, Ancient Civilizations Forum, APEC Connectivity Blueprint, ASEAN Community Vision 2025, Asia-Europe Meeting and its group on path-finder of connectivity, Caravanserai Customs Initiative, China and Central and Eastern European Countries Cooperation, China-Europe Land-Sea Express Route, East-West Middle Corridor Initiative, EU-China Connectivity Platform, EU Eastern Partnership, Eurasian partnership based on the principles of equality, openness and transparency, Initiative for the Integration of Regional Infrastructure in South America, Master Plan on ASEAN Connectivity 2025, Main Directions for Economic Development of the Eurasian Economic Union until 2030, Paris Agreement on Climate Change, Trans-European Transport Networks, Western Balkans 6 Connectivity Agenda, WTO Trade Facilitation Agreement.
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We reaffirm our shared commitment to build open economy, ensure free and inclusive trade, oppose all forms of protectionism including in the framework of the Belt and Road Initiative. We endeavor to promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system with WTO at its core.
Cooperation Objectives
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We stand for enhancing international cooperation including the Belt and Road Initiative and various development strategies, by building closer collaboration partnerships, which include advancing North-South, South-South, and triangular cooperation.
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We reiterate the importance of expanding economic growth, trade and investment based on level-playing field, on market rules and on universally recognized international norms. We welcome the promotion of industrial cooperation, scientific and technological innovation, and regional economic cooperation and integration so as to increase, inter alia, the integration and participation of micro, small and medium enterprises in global value chains. Attention should be paid to tax and fiscal policies, prioritizing growth and productive investment.
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We stand for strengthening physical, institutional and people-to-people connectivity among all countries. The least developed countries, landlocked developing countries, small island developing states and middle-income countries deserve special attention to remove bottlenecks of development and achieve effective connectivity.
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We endeavor to expand people-to-people exchanges, promote peace, justice, social cohesion, inclusiveness, democracy, good governance, the rule of law, human rights, gender equality and women empowerment; work together to fight against corruption and bribery in all their forms; to be more responsive to all the needs of those in vulnerable situations such as, children, persons with disabilities and older persons; and help improve global economic governance, and ensure equal access by all to development opportunities and benefits.
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We are determined to protect the planet from degradation, including through taking urgent action on climate change and encouraging all parties which have ratified it to fully implement the Paris Agreement, managing the natural resources in an equitable and sustainable manner, conserving and sustainably using oceans and seas, freshwater resources, as well as forests, mountains and drylands, protecting biodiversity, ecosystems and wildlife, combating desertification and land degradation so as to achieving sustainable development in its three dimensions in a balanced and integrated manner.
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We encourage the involvement of governments, international and regional organizations, the private sector, civil society and citizens in fostering and promoting friendship, mutual understanding and trust.
Cooperation Principles
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We uphold the spirit of peace, cooperation, openness, transparency, inclusiveness, equality, mutual learning, mutual benefit and mutual respect by strengthening cooperation on the basis of extensive consultation and the rule of law, joint efforts, shared benefits and equal opportunities for all. In this context we highlight the following principles guiding our cooperation, in accordance with our respective national laws and policies:
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Consultation on an equal footing: Honoring the purposes and principles of the UN Charter and international law including respecting the sovereignty and territorial integrity of countries; formulating cooperation plans and advancing cooperation projects through consultation.
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Mutual benefit: Seeking convergence of interests and the broadest common ground for cooperation, taking into account the perspectives of different stakeholders.
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Harmony and inclusiveness: Acknowledging the natural and cultural diversity of the world and recognizing that all cultures and civilizations can contribute to sustainable development.
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Market-based operation: Recognizing the role of the market and that of business as key players, while ensuring that the government performs its proper role and highlighting the importance of open, transparent, and non-discriminatory procurement procedures.
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Balance and sustainability: Emphasizing the importance of economic, social, fiscal, financial and environmental sustainability of projects, and of promoting high environmental standards, while striking a good balance among economic growth, social progress and environmental protection.
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Cooperation Measures
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We affirm the need to prioritize policy consultation, trade promotion, infrastructure connectivity, financial cooperation and people-to-people exchanges, and we highlight concrete actions, in accordance with our national laws and regulations and international obligations where applicable, such as:
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Pursuing dialogue and consultation in order to build synergies in development strategies among participating countries, noting the efforts to strengthen cooperation in coordinating development of the Belt and Road Initiative with other plans and initiatives as mentioned in Paragraph 6 and to promote partnerships among Europe, Asia, South America, Africa and other regions.
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Conducting in-depth consultation on macroeconomic issues by optimizing the existing multilateral and bilateral cooperation and dialogue mechanisms, so as to provide robust policy support for practical cooperation and the implementation of major projects.
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Strengthening cooperation on innovation, by supporting innovation action plans for e-commerce, digital economy, smart cities and science and technology parks, and by encouraging greater exchanges on innovation and business startup models in the Internet age in respect of intellectual property rights.
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Promoting practical cooperation on roads, railways, ports, maritime and inland water transport, aviation, energy pipelines, electricity, fiber optic including trans-oceanic cable, telecommunications and information and communication technology, and welcoming the development of interconnected multimodal corridors, such us a new Eurasian Land Bridge, Northern Sea Route, the East-West Middle Corridor etc., and major trunk lines to put in place an international infrastructure network over time.
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Maximizing synergies in infrastructure planning and development by taking into account international standards where applicable, and by aiming at harmonizing rules and technological standards when necessary; fostering a favorable environment and predictability for infrastructure investment by private capital; promoting public-private partnership in areas that create more jobs and generate greater efficiency; welcoming international financial institutions to increase support and investment for infrastructure development.
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Deepening economic and trade cooperation; upholding the authority and effectiveness of the multilateral trading system, and working together to achieve positive outcomes at the 11th WTO ministerial conference; promoting trade and investment liberalization and facilitation; enabling the general public to benefit from trade.
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Expanding trade by nurturing new areas of trade growth, promoting trade balance and promoting e-commerce and digital economy, welcoming the development of free trade areas and signing of free trade agreements by interested countries.
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Advancing global value chains development and supply chain connectivity, while ensuring safer work places and strengthening social protection systems; increasing two-way investment, and enhancing cooperation in emerging industries, trade and industrial parks and cross-border economic zones.
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Enhancing cooperation in ensuring the protection of the environment, of bio-diversity and of natural resources, in addressing the adverse impacts of climate change, in promoting resilience and disaster-risk reduction and management, and in advancing renewable energy and energy efficiency.
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Regarding the process of customs clearance, strengthening cooperation on information exchange and on developing mutual recognition of control, mutual assistance of enforcement, and mutual sharing of information; enhancing customs cooperation with a view to facilitating trade including by harmonizing procedures and reducing costs, and in this regard, strengthening cooperation in protecting intellectual property rights.
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Jointly working on a long-term, stable and sustainable financing system; enhancing financial infrastructure connectivity, by exploring new models and platforms of investment and financing and improving financial services; assessing the opportunity to better serve local financial market; and encouraging development-oriented financial institutions to play an active role and strengthen cooperation with multilateral development institutions.
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Contributing to a stable and equitable international financial system; promoting openness and connectivity among financial markets, including through mutual cooperation on payment systems and the promotion of financial inclusion; encouraging financial institutions to establish commercial presence in relevant countries and regions; promoting bilateral local currency settlement and cooperation agreements, and facilitating the development of local currency bonds and stock markets; encouraging dialogues to enhance financial cooperation and fend off financial risks.
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Promoting people-to-people exchanges and bonds by deepening practical cooperation on education, science, technology, sport, health, think-tank, media, capacity building including through internships.
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Encouraging dialogues among civilizations, cultural exchanges, promoting tourism and protecting the world’s cultural and natural heritage.
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Our Vision for the Future
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Our joint endeavor on the Belt and Road Initiative and seeking complementarities with other connectivity initiatives provide new opportunities and impetus for international cooperation. It helps to work for a globalization that is open, inclusive and beneficial to all.
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We reiterate that promoting peace, mutually-beneficial cooperation, and honoring the purposes and principles of the UN Charter and international law are our shared responsibilities; achieving inclusive and sustainable growth and development, and improving people’s quality of life are our common goals; creating a prosperous and peaceful community with shared future for mankind is our common aspiration.
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We congratulate China on successfully hosting the Belt and Road Forum for International Cooperation.
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Infrastructure tops agenda as AfDB, India work towards a ‘more robust Africa’
The African Development Bank (AfDB) is looking to strengthening its relationship with India as part of its larger agenda for a ‘a more robust Africa’.
Motivated by the success of previous cooperation with the country, the AfDB is seeking greater ‘productive and winning relationships’ with India through investments in infrastructure, regional integration, regulation of enterprises, skills development and employment, agriculture, health and innovation.
“In each of these areas, I see the prospect for greater cooperation and collaboration with India, an inveterate and committed investor in Africa. May this investment continue to be lucrative, and may our mutual interests endure for years to come,” President of the African Development Bank, Akinwumi Adesina, said ahead of AfDB’s 2017 Annual Meetings to be hosted by India this May.
An estimated 3,000 attendees are expected at the Meetings, which are focusing on the theme: “Transforming Agriculture for Wealth Creation in Africa.”
Agriculture has a central place in the United Nations Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063, both of which focus on poverty reduction, overcoming hunger and food insecurity.
The Bank has aptly prioritized agriculture transformation by designating it as one of its High 5s: Feed Africa, along with a strategy for Africa’s Agricultural Transformation Agriculture is an important economic sector in Africa given its centrality to poverty alleviation, food security and economic transformation.
India joined the African Development Fund (ADF) in 1982 and the African Development Bank in 1983, initiating a long history of cooperation spanning over 30 years. India is the fifth largest country in the continent, with investments over the past 20 years amounting to US $54 billion, 19.2% of all its total foreign direct investment.
The infrastructure development needs of Africa are in the range of US $100 billion per annum.
“Nowhere is this partnership more needed than in infrastructure. India has already shown its commitment, with a large proportion of Indian foreign direct investment already flowing into the infrastructure sector in Africa,” Adesina emphasized.
Conscious of the instability in the global economic environment, India considers the need to establishing deeper relation with Africa more expedient.
The shared goals between India and Africa of eliminating poverty and hunger, and the improving the quality of life of Africans and Indians are of significant value to the government of India.
“The Annual Meetings of the AfDB this year provide not just an opportunity for the Governors and other delegates to dwell upon the issues and challenges that we together face, it would provide a perfect occasion for India and Africa to deepen our economic cooperation and partnership,” said Indian Minister of Finance, Arun Jaitley.
Jaitley stressed how much importance the country places on rural development and agricultural transformation.
He added: “With the harmony between the Bank’s developmental priorities and India’s engagement with Africa, there is a tremendous potential for collaboration in a number of areas.”
The 2017 Annual Meetings of the African Development Bank Group will be held on May 22-26, 2017 in Ahmedabad, Gujarat, India.
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More inclusive growth and youth employment within reach for Morocco
New report outlines path to faster, sustainable economic growth and more inclusive human and social development
Morocco has an opportunity in the years ahead to boost economic growth and job creation, especially for young people, and to catch up even faster with developed economies by investing in its human capital, modernizing the economy and improving the performance of public institutions.
This is the conclusion of the most recent Morocco Economic Memorandum (CEM) released today, entitled “Morocco 2040 – Emerging by Investing in Intangible Capital”. The new report provides an analysis of past economic performance as well as development opportunities and constraints, and then offers a roadmap for reforms to achieve superior economic and social outcomes over the next generation.
“Today’s launch concludes two years of research and analysis conducted in close collaboration with the government and key Moroccan constituencies. This report is timely as the country engages in a new development phase and we are pleased to contribute to its efforts towards the sustainable development goals,” said Marie Francoise Marie-Nelly, World Bank Maghreb and Malta Country Director. “We are also pleased to present the report’s main recommendations to a set of stakeholders, from government, civil society, academia, to private sector and youth. We hope that this document will trigger a rich debate among all segments of society and mobilize greater support and understanding for the reforms needed to build a future based on shared prosperity”.
The CEM underlines the country’s significant social and economic achievements over the past fifteen years. Morocco engaged in a set of economic and social reforms to boost productivity, improve living standards, create jobs and enhance institutions. This process was further enriched by the 2011 Constitution which called for greater rights and opportunities for Moroccan citizens and enhanced the Kingdom’s governance framework. Bringing Morocco’s improved development outcomes to the next level and achieving economic convergence with Southern European countries will require to further deepen and integrate sector and governance reforms, according to the CEM.
The report proposes a set of critical pathways to reach that goal. It recognizes that while youth employment continues to be a major challenge, the country has the potential to unleash job creation and bring about the needed reforms to improve productivity and people’s living conditions. Specifically, the report invites the authorities to rethink the country’s business model in order to spur competitiveness, boost productivity and promote fair market conditions for investors, be they small or large. This will in turn create a more level-playing field for the private sector to grow and will generate more jobs for youth and women in particular.
In order to achieve this strategic goal, greater investments in the country’s precious human capital will be needed. This long term agenda touches upon two key sectors: education and health. In order to achieve an “education miracle” and give Moroccan students the needed skills to integrate into a more competitive job market, the CEM calls for a comprehensive education reform geared toward enhanced education sector performance, governance and outcomes. The health sector will also require sustained and significant efforts to bridge the access gap between rich and poor and to ensure efficient and accountable public health care. Yet, based on international experience, no successful social inclusion can be attained without achieving gender equality. According to the CEM, Morocco’s ability to empower and mobilize greater economic opportunities for women will be instrumental to significantly enhance economic growth.
Finally, the CEM views the strengthening of institutions and the country’s governance model as a key precondition to reinforce the rule of law and place the Moroccan citizen at the heart of its development model. This ranges from more accountable and efficient public services to giving voice to citizens and enhancing respect, interpersonal trust and civic duty.
“This roadmap humbly presents the economic policy and political economy conditions capable of boosting Morocco’s growth potential. But the most important role is that of each and every citizen to feel entitled and responsible to act on the country’s development, to strive for inclusive institutions and equal economic opportunities, to promote gender equality and interpersonal trust, and to contribute with confidence to building Morocco’s future,” said Jean-Pierre Chauffour, World Bank Lead Economist and CEM author. “It takes a consultative and inclusive process for the country’s constituencies to discuss and agree on how they would like to see their country by 2040. We hope that we have at least contributed to triggering this debate through the analysis and projections contained in the present report”.
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European Union woos Tanzania to sign trade deal
The European Union has invited the government of Tanzania for dialogue over the Economic Partnership Agreement impasse that has threatened to derail the trade pact between the bloc and the East African Community member countries.
The head of the EU delegation to Tanzania and the East African Community, Roeland van de Geer, said they were awaiting Dar es Salaam’s position on the matter.
“What is important is that we have dialogue,” said Mr Geer during the Europe Day celebrations in the Tanzanian political capital Dodoma last week.
“Tanzania has its own convictions, the EU have theirs. Tanzania is a sovereign country and should take its own decisions,” he said, underscoring the importance of the dialogue.
Tanzania has not signed the EPA, arguing that the trade agreement in its current form will have negative implications for its industrialisation strategy.
Talks on the EPA are expected to feature for the East African Heads of State Summit on May 20. Only Kenya and Rwanda have signed and ratified the EPA deal, but being a Single Customs Territory, the other EAC members must sign the pact to make it enforceable.
Burundi has also not signed, citing the resumption of EU aid to Bujumbura as a precondition for its signature. Uganda, on the other hand, said it will only sign the EPA if there was consensus among the EAC members.
Parliament’s role
The EU-EAC EPA promises duty and quota-free access to EU markets for East African goods in exchange for a gradual opening up of the region’s markets to European products.
President John Magufuli, addressing a joint press conference with his Ugandan counterpart Yoweri Museveni at State House in Dar es Salaam recently, said that Tanzania was examining EPA, arguing that there was no rush to sign it.
President Museveni concurred with his host, insisting that East African countries should first focus on issues of interest to their countries prior to signing.
At the gathering, which drew many lawmakers from the European Parliament, National Assembly Deputy Speaker Dr Tulia Ackson said Parliament’s role on the EPA was to advise the government on how best to deal with the treaty.
“We have constitutional duty to advise the government on issues of national importance,” she said in her speech, adding that the parliament had advised the government on what was in the country’s interest.
“Practically, parliament hasn’t said no to EPA, but there are issues that have been raised and the parliament will want them ironed out before the government makes its decision,” noted the Deputy Speaker.
A United Nations think-tank has, however, held reservations over the East African Community entering into an Economic Partnership Agreement with the European Union arguing that it will neither spur economic growth nor bring wealth to the region’s citizens.
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tralac’s Daily News Selection
Posted: tralac’s Weekly Newsletter
Akinwumi Adesina: Africa and India – sharing the development journey (IPPMedia)
And nowhere is this partnership more needed than on the issue of infrastructure. At the top of the list is power and electricity. Universal access requires large financial investments. By some estimates, Africa needs $43-$55bn per year until the 2030s, compared to current energy investments of about $8-$9.2bn. We must close this gap. And to do so, the mobilization of domestic resources will play a major role. Pension funds in Africa will reach $1.3 trillion by 2025. Already tax revenues have exceeded $500bn per year. Sovereign wealth funds in Africa stand at $164bn. India is already one of the top bidders for Bank projects. This is a reflection of its immense expertise in a diverse range of areas from engineering to education; from ICT to railway development; skills development to regional integration; and from manufacturing to industrialisation. It is our pleasure to partner with such an inveterate and committed investor in Africa. And may this investment be lucrative and justified, and may our mutual interest and cooperation continue for many years to come. [The author is President of the African Development Bank. The 2017 AfDB Annual Meetings will be held in Ahmedabad (22-26 May) on the theme Transforming agriculture for wealth creation in Africa.] [Brochure: Africa and India – a shared development agenda (pdf)]
African Trade Insurance Agency’s Annual General Meetings
At a Roundtable event in Nairobi, Ministers from across Africa sat together with investors and the private sector to determine how best to tackle the investment and credit risk hurdles in order to make African risks bankable. For African governments part of what is at stake are much needed foreign direct investments and access to affordable financing necessary to spur development and, specifically, to close the estimated $900bn infrastructure gap. Equally, the private sector stands to lose billions of dollars in lost opportunities if the requirements for a favourable investment environment are not adequately addressed. In 2016, ATI insured close to $2bn worth of trade and investments and the company is increasingly supporting some of the continent’s most important transactions such as Ethiopian Airline’s fleet expansion and a $660m investment in Lake Turkana, Africa’s largest wind farm and, to date, the single largest investment in Kenya. [Related: African governments to focus on growing intra-African trade]
SACU: Namibia chases equal share of revenue (Namibia Economist)
Finance Minister Calle Schlettwein said Namibia will continue to push for smaller economies in SACU to get a fair share of revenue from collective pool of trade tax. “We are entitled to our SACU share and what we want is a situation where the sharing does not favour others. We want the gains and loses to be equally shared among member countries,” Schlettwein told journalists in Windhoek on Wednesday ahead of the SACU chair’s visit to Namibia yesterday. “There are different issues that have been tabled for discussion including the industrialisation policy, the revenue sharing formula among others” he said. “We are entitled to our share from the SACU pool and we want to find a way were we deal with the skewed sharing in a manner that benefit all member states,” Schlettwein said.
Overview of the rebate facilities in the Southern African Customs Union (tralac)
The main objective of the paper is to provide a baseline outline and preliminary assessment of the rebate facilities in SACU. The paper looks at the types of rebates available, the rationale and legal basis, the policy implications of rebates in the SACU member states and, more particularly, their effect on industrial development. [The analysts: Khutsafalo Sekolokwane, Maria Immanuel, Moureen L. Matomola, Ron Sandrey]
ECOWAS Parliament: Nigeria’s Saraki warns against misuse of ECOWAS Free Trade Policy (ThisDay)
The Senate President, Bukola Saraki, wednesday warned on the dangers to misuse the ECOWAS Trade Liberalisation Scheme by member states, which according to him is capable of killing local industries and thereby negate the integration drive of the region. The Senate President, who was speaking at the first Ordinary Session of the Fourth Legislature of the ECOWAS Parliament in Abuja, urged the West African parliamentarians in their deliberations to come up with strategies and legal framework that would block leakages in their intra sub-regional trade engagement. “A situation where due to the ECOWAS trade liberalisation Policy, is manipulated by other countries to channel goods into the sub-region in a predatory manner to kill the local industry is not the intendment of the policy. This is today going on in the area of agricultural development and we must resist this and ensure that where there is a leakage in the trade engagement that enable this practice is nipped in the buds,” he added.
Dar set for stronger business ties with SA after Zuma visit (IPPMedia)
President John Magufuli has reached out to South Africa to invest in the ongoing construction of cross-country Standard Gauge Railway and other projects as a way of cementing bilateral relations with Tanzania. Speaking in Dar es Salaam yesterday after hosting talks between him and South African president Jacob Zuma, Magufuli also asked his counterpart to help Tanzania secure soft loans from the New Development Bank, which South Africa co-owns with other BRICS countries. The two presidents witnessed the signing of three bilateral contracts in tourism, infrastructure and foreign affairs sectors. Magufuli said they have agreed to strengthen cooperation in various other areas such as industry, trade and investment, education, health care, and defence and security. “We will have a monitoring mechanism to ensure that all the agreed issues are implemented in a proper and timely manner,” he added.
Ethiopia sets sights on $30bn apparel exports (Just-Style/The Herald)
Ethiopia is raising the bar on its garment and textile ambitions, targeting exports worth $30bn by 2025: a huge goal for a country whose annual shipments currently sit at just $115m. Speaking for the first time about the plans, Dr Arkebe Oqubay, a minister and special advisor to Prime Minister Hailemariam Desalegn, shares the “bold vision” he believes will transform this East African nation into a compelling new sourcing hub for brands, retailers and their suppliers. “It is a challenge, but one we are confident we can achieve. We believe if Vietnam can do it, if Bangladesh can do it, Ethiopia can do it even better.”
Mauritian lender names dream team for its operations in Kenya (The Star)
Mauritian lender SMB Holdings, through subsidiary SBM Africa, has named high-profile personalities to its board and appointed an acting CEO to lead strategy for its operations in Kenya. The lender, which has a presence in Mauritius, Madagascar and India, completed the acquisition of Fidelity Bank on Wednesday for Sh100 and will inject in $20.6m fresh capital. The acquisition process was first made public on November 22 last year. SBM Group is also among the lenders looking to acquire a majority stake in Chase Bank, which was put under receivership on 7 April.
Zimbabwe: ‘Local content policy formulation under way’ (The Herald)
Zimbabwe has started formulating the Local Content Policy, which will stipulate percentage thresholds for goods that will qualify as locally produced to support domestic production, Industry and Commerce Minister Dr Mike Bimha said yesterday. The local content regulations would form a key part of Government broad industrialisation initiatives and would be considered as “smart” protectionism measures, said Dr Bimha while delivering a key-note address during the opening of the Zimbabwe Association of Pension Funds’ 42nd AGM yesterday.
Nigeria: SON seeks adoption of ADR for trade, business, others (The Nation)
To save costs and mitigate the suspension of economic activities that may arise from enforcing its statutory regulatory functions against importers of sub-standard goods to the country, the Standards Organisation of Nigeria, may soon deploy Alternative Dispute Resolution mechanisms in resolving several disputes. Although the general provisions in the new SON Act has empowered the agency to prosecute perpetrators of substandard products manufacture, importation and distribution while also providing stiffer penalties for convictions including jail terms, the agency is exploring measures at resolving conflicts without wasting resources or stalling economic activities.
Morocco’s exports from Western Sahara hang in the balance (ISS)
The court case on the matter, to be heard on 18 May, could set a legal precedent that would have an important impact on the status of Western Sahara. The NM Cherry Blossom was seized in Port Elizabeth in the Eastern Cape following a maritime court order obtained by the Sahrawi Arab Democratic Republic and the Polisario Front on 1 May. Legal experts say the case is the first of its kind in South Africa.
Ghana: How inflated expectations of oil revenues led to a deterioration in macroeconomic management (UNU-WIDER)
Prior to the discovery of oil, Ghana was one of the stars of the ‘Africa rising’ story, with an established track record of macroeconomic stability and fiscal discipline. When oil was discovered, there were great hopes that Ghana would avoid the ‘resource curse’. Initial signs were promising - the Petroleum Revenue Management Act was established in 2011 to lay down the key parameters for accounting and collecting of petroleum. However, by 2014 the economic situation had deteriorated so badly that Ghana requested another IMF bailout. What went wrong?
Value chain analysis: the AfDB has posted EOI requests for three key sectors - oil, gold, timber
Industrial policy, information, and government capacity (World Bank)
Governments are resource and bandwidth constrained, and hence need to prioritize productivity-enhancing policies. To do so requires information on the nature and magnitude of market failures on the one hand, and government’s capacity to redress them successfully on the other. The paper reviews perspectives on vertical (sectoral) and horizontal (factor markets, cluster) policies with an eye to both criteria. [The analysts: William F Maloney, Gaurav Nayyar]
Ministers of Interior and Justice of the Member States of ECOWAS this week adopted an ambitious regional Plan of Action to end statelessness in West Africa. Gathered at a joint ECOWAS/UNHCR Conference hosted by the Government of the Republic of the Gambia, the Ministers agreed on concrete measures and a specific timeframe that aim at resolving the obstacles to the acquisition of nationality so as to end statelessness by 2024. “One million people are statelessness in West Africa,” says Volker Türk, Assistant High Commissioner for Refugees.
China-Africa trade enjoys 16.8% boost in Q1 (China Daily)
China’s imports from the continent in the first three months amounted to $18.4bn, up 46% from a year earlier. Among them, agricultural products grew by 18%, according to the ministry. The nation’s exports to African countries continued to decline, by 1 percent year-on-year in the period, but the rate of decline has slowed.
Today’s Quick Links: London Somalia Conference 2017: communiqué (pdf) Transform Africa summit updates: Political will key to digital integration, How can nations build smart cities?, ‘Smart Rwanda’ initiative gets a boost from JICA West African International Arbitration Conference: update Africa Finance Corporation infrastructure summit: 15-16 May, Abuja IGAD workshop: strengthening Member States capacity on fisheries monitoring control, surveillance In Addis: 2017 World Hydropower Congress closes with wide-ranging commitments Nigeria commences vegetable exports to UK Finally, Nigeria’s National Assembly releases its budget details, passes FG’s pending Bill Nigeria parliament approves 21% budget hike to boost economy India: Govt imposes new duties on 47 steel products, risking trade complaints What our government clients think in fragile countries: a perspective from the World Bank’s country surveys |
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Nigeria: FEC approves trade negotiations office (PM News)
The Federal Executive Council, presided over by Acting President Yemi Osinbajo, on Wednesday approved the establishment of a national office for trade negotiations. The Minister of Industry, Trade and Investments, Dr Okechukwu Enelamah: “What we found was that this was happening in various ministries, departments and agencies with insufficient coordination and therefore, frequently, it had unintended consequences and costs for us. The cabinet decided that it is wise to establish a coordinating central office for trade negotiations, the Nigerian office for Trade Negotiations. It will be headed by a Chief Trade Negotiator of Ambassador rank that would then work with both the Economic Management Team and the cabinet.” He added that it would also be a proactive strategy for engaging discussions at the continental level of free trade area agreements and negotiations as well as guide in other trade agreements with strategic partners across the globe.
India blocks discussion on global investment facilitation at WTO (Mint)
India on Wednesday blocked the WTO General Council from approving an agenda to discuss investment facilitation on grounds of mandate, triggering an uproar and the suspension of proceedings, people familiar with the development said. India has consistently maintained that there is no merit for any proposal on investment facilitation at the WTO, as investment falls outside the trade body’s mandate. India, which was supported by several countries such as Uganda, Ecuador and Bolivia, asked General Council chair Ambassador Xavier Carim to take investment facilitation off the agenda. Countries who sought a discussion on investment facilitation strongly criticized India, saying blocking the agenda is unprecedented.
Can trade facilitation drive manufacturing FDI? (Global Alliance for Trade Facilitation)
Figure 3 shows the relationship between the Border Administration sub-index of the World Economic Forum’s Enabling Trade Index and the capital expenditure of FDI projects in manufacturing (normalized per million inhabitants) between 2013 and 2015 for a number of developing and emerging economies. Put simply, improving the trade facilitation environment by 1% as measured by the ETI sub-index is associated with a 3.2% increase in FDI into manufacturing. While this does not imply causation, as investment is driven by many different factors, it still points to the importance of the trade facilitation environment in helping to attract and retain investment. Looking at the number of new (greenfield) projects, we see an even stronger relationship, with a 1% increase in the ETI sub-index being associated with a 3.8% increase in the number of projects (see Figure 4, pdf).
South Africa: Annual State of Cross-Border Operations Report, 2017 (pdf, CBRTA)
The purpose of this report is to: (i) Present the state of cross-border operations to key stakeholders in the cross-border road transport value chain, paying particular attention to challenges that undermine the efficient functioning of three prioritised regional road transport corridors, namely the North-South Corridor, Maputo Development Corridor and Trans-Kalahari Corridor; (ii) Identify, discuss and inform relevant stakeholders of initiatives and developments that are being designed and developed or taking place in the region that will have an impact on the cross-border sector; (iii) Identify, discuss and inform relevant stakeholders of interventions implemented in other regions around the world that can also be considered by MS in the region; and (iv) Propose recommendations (interventions) and actions plans that may be considered in pursuit of addressing cross-border challenges and constraints that exist in regional road transport corridors.
How opening up airspace could boost whole EA economy (EABC)
One of the factors contributing to the slow take-up of Yamoussoukro Decision (YD) principles is a lack of clear and specific information regarding the impacts of enacting Air Transport liberalization hence, the East African Business Council and the EAC Secretariat commissioned a study on the Costs and Benefits of Open Skies in the East African Community (pdf) understand the impact of implementing the YD in East Africa. The study estimates that liberalization between the five EAC countries could result in an additional 46,320 jobs and $202.1m per annum in GDP. Study analysis reveal compelling evidence that full liberalization of restricted routes leads to 9% lower average fares and a 41% increase in frequencies, which in turn stimulate passenger demand.
Bid to upgrade EAC education sector (Tanzania Daily News)
Participants in the 7th Annual Forum of the EA Higher Education Quality Assurance Network are drawn from the regional bloc’s member states ‑ Uganda, Kenya, Rwanda, Burundi and host Tanzania. In attendance, too, are representatives from donor partners and visiting guests from West Africa. Tanzania’s Minister of Education, Science and Technology, Prof Joyce Ndalichako, urged the delegates to deliberate incisively on challenges facing higher learning institutions across the region, which have impacted negatively on the quality of graduates, compared to the market demand. [African airlines under pressure in 2017 due to strong dollar]
Botswana: Mining Investment and Governance Review (World Bank)
The review’s key findings indicate (pdf): (i) Botswana’s mining policy and legal framework are sound (ii) Mining sector institutions are for the most part staffed with trained, qualified people; (iii) Environmental protection legislation is current and in line with international good practice, with the exception of access to Environmental Impact Assessments; (iv) Land use issues, including resettlement and compensation require a more inclusive process and stronger legislative framework; and (v) Local content policy should be developed with mining sector participation.
Tanzania: EU open to talks over EPA, affirms envoy (Citizen)
Speaking at a cocktail party to mark the Europe day at the National Assembly grounds on Wednesday evening Ambassador van de Geer said Tanzania as a sovereign country has all the rights to have its opinion on the agreement and EU are waiting for the official government response on the matter.”What is important is that we have dialogue. You (Tanzania) have your convictions; we (EU) have our convictions, we are all human beings. Tanzania is a sovereign country and should take its own decisions,” he said, adding “Let’s talk and let us continue our dialogue, and I’m really looking forward to it. I have all confidence in a robust reply from the Tanzanian side.”
Mauritius: Business Facilitation Bill presented to ease doing business procedures (GoM)
During his statement at the second reading, the Prime Minister emphasised the importance of the Bill which he said constitutes another major stride in Government’s endeavour to boost up private investment, attract more FDI, create employment for youth at a faster pace and build up on the renewed momentum in the economy. The Business Facilitation Bill focuses on seven main areas:
Namibia: AfDB approves $226.5m loan to boost economic governance, competitiveness (AfDB)
The Board of Directors of the AfDB has approved a loan of $226.5m (R3bn) to finance the Namibia Economic Governance and Competitiveness Support Programme. The operation is the Bank’s maiden policy based operation in Namibia and the first of two programmatic series for the 2017/18 and 2018/19 fiscal years. The programme will support the strengthening of public financial management and improve the quality and efficiency of public sector spending, while laying a solid foundation for industrialization through support to critical business environment reforms.
Tanzania-Rwanda rail development to boost East African train links (IPPMedia)
Although a massive 40 companies asked for the tender application documents for the $1.1bn, 330km section project of the railway line between Dar es Salaam and Morogoro, only one bid was received.
Transform Africa Summit 2017: selected highlights
Address by President Paul Kagame: Let me remind us about a few key priorities. First, Africa has to be connected—and why not at the highest possible speeds? At first glance the figures appear low: only 20% of Africans have internet access and there are only three years left to meet the Broadband Commission’s target of 50%. However, this must be regarded as an opportunity for stronger public-private collaboration. In Rwanda, for example, our partnership with Korea Telecom has already served to speed up our progress toward the broadband target. Second, we must deliver on technology’s promise to bridge divides rather than deepen them. [South Africa: Cabinet approves membership of the Smart Africa Alliance]
Smart Africa Alliance, Inmarsat developing blueprint for digital services across Africa (RNA): The world’s leading provider of global mobile satellite communications, today announced that, in conjunction with the government of Rwanda, it is launching a series of digital service initiatives across the capital, Kigali, a city of more than one million people. The digital service pilots, which will be enabled through Inmarsat’s world-leading satellite communications network, are scheduled to last up to 12-months in Kigali. The results of the lessons learnt during the pilots will be used to develop blueprints for a range of digital services initiatives that can be applied more broadly across Rwanda and in other African nations, in conjunction with the Smart Africa Alliance.
Also in Kigali: the Africa Regional Internet and Development Dialogue - Enhancing entrepreneurship, innovation and education in Africa through the internet. Presentations: Day 1, Day 2
Blue Economy: selected postings
Next month’s ocean conference eyes cutting $35bn in fisheries subsidies: Harmful fishing subsidies that contribute to overfishing are estimated to be as high as $35bn, fisheries experts from the United Nations trade and development agency said, highlighting one of the key issues that will be debated at next month’s Ocean Conference. ”If you consider that the total export of fish and seafood products is $146bn, we are talking about that of each $5 in fish products, $1 is subsidized,” David Vivas of the UNCTAD told reporters in Geneva. UNCTAD is working towards a multilateral fisheries agreement that will be discussed at The Ocean Conference in New York in early June, and finalized at the WTO’s Ministerial Conference in Buenos Aires this December. The idea of such an agreement has support from a number of countries and regional blocs, including the ACP Group, the EU, and Pakistan.
Indian Ocean should be given a ‘modern purpose’: India at IORA (Outlook India). The Indian Ocean should be given a “modern purpose” to make it a central space in the geo-economics of the 21st century for integrated prosperity and security and sustained peace in the region, India said today. Minister of State for External Affairs M J Akbar said that India seeks an integrated future for the Indian Ocean region through the development of a “Blue Economy” and called for inter-governmental cooperation for financing it. He was addressing a ministerial-level conference at the Second Indian Ocean Rim Association meeting on Blue Economy in Jakarta. [2nd IORA Blue Economy Ministerial Conference: concept paper (pdf); Sustainable Ocean Economy, Innovation and Growth: a G20 initiative]
World Hydropower Congress: selected highlights
Africa seeks energy security (AU): Hydropower provides significant opportunities for Africa, particularly with the abundance of the resource on the continent and further, the maturity of the technology which indicates hydropower’s crucial role in expanding electricity access to the African citizenry, says African Union Commission Deputy Chairperson Ambassador Kwesi Quartey. Speaking at the opening of the sixth World Hydropower Congress (WHC) in Addis Ababa, Ethiopia, Ambassador Kwesi observed that Africa accounts for about 12% of the World’s technically feasible hydropower potential, likely to generate over 1,800 Terra Watts-hours of electricity. “Currently, less than 10% of the hydropower potential in Africa is exploited making hydropower an ample opportunity for Africa to develop both large and small-scale energy infrastructure at the regional, national and local levels,” stated the Deputy Chairperson.
Kenya drops on list of top hydropower producers (Business Daily): Kenya’s failure to develop more hydropower stations has continued its downward slide on Africa’s list of top hydroelectricity producers as Ethiopia shoots to position one for the first time. Kenya’s installed hydropower capacity remained unchanged at 818 megawatts last year, ranking at position 12 in Africa from 11 in 2015 and from top 10 the previous years, according to a new report by International Hydropower Association. Neighbouring Ethiopia is the top hydro-power producer in Africa with an installed capacity of 4,054 MW, having overtaken Egypt for the first time last year. Second is South Africa (3,583 MW), followed by Egypt (2,800 MW), DRC Congo (2,509 MW) while Zambia is fifth.
As the world cuts back on coal, a growing appetite in Africa (National Geographic)
According to data compiled by CoalSwarm, an industry watchdog, more than 100 coal-generating units with a combined capacity of 42.5 gigawatts are in various stages of planning or development in 11 African countries outside of South Africa—more than eight times the region’s existing coal capacity. Nearly all are fueled by foreign investment, and roughly half are being financed by the world’s largest coal emitter: China. This comes at a time when China and India, which accounted for 86% of global coal development over the last decade, are putting coal projects on hold at record rates due to existing overcapacity, the lowering cost of renewables, and crippling pollution that is thought to kill more than a million people a year in the case of China alone. Many of the world’s more developed countries are also in the process of phasing out the fuel as a power source.
Today’s Quick Links: Keynote speeches at today’s London Somalia Conference 2017, EU support for Somalia Nigeria launches 10-year food security, nutrition policy Botswana to fine-tune tourism levy before June Mozambique establishes Tourism Forum Tanzania Revenue Authority chief’s pledge to business community India: Cargo traffic at 12 major ports up 6% in April UN Commission on Science and Technology for Development: opening address by Dr Mukhisa Kituyi |