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tralac’s Daily News Selection
New tralac publications: The EAC Mode 4: trade data (by Viola Sawere), Africa’s trading relationship with Japan (by Ron Sandrey), WTO: Agricultural Issues for Africa (by Ron Sandrey, Moses Lubinga, et al.)
South Africa’s March trade statistics: trade surplus jumps (SARS)
The South African Revenue Service has released trade statistics for March 2017 recording a trade balance surplus of R11.44bn. The year-to-date trade balance surplus (1 January to 31 March 2017) of R4.98bn is an improvement on the deficit for the comparable period in 2016 of R24.27bn. The trade balance surplus is attributable to exports of R101.23bn and imports of R89.79 billion. Exports increased from February 2017 to March 2017 by R13.96bn (16.0%) and imports increased from February 2017 to March 2017 by R7.32bn (8.9%). Africa zone: Exports of R27 007 million – an increase of R3 360 million from February 2017. Imports of R9 785 million – a decrease of R 547 million from February 2017. Trade balance surplus: R17 222 million – this is a 29.3% increase in comparison to the R13 315m surplus recorded in February 2017.
SA plans emergency steel tariff from July – WTO (Reuters)
South Africa is proposing to put emergency “safeguard” tariffs on imports of certain flat hot-rolled steel products from July, it said in a filing published by the World Trade Organization on Thursday. The tariff would be in place for three years, and fall from 12% in the first year to 10% in the second year and 8% in the third, it said. South Africa said the proposal was based on a final determination by its International Trade Administration Commission that domestic production had suffered serious damage from an unforeseen surge in imports.
India export subsidies may have to be phased out soon (Mint)
India may soon have to phase out its export subsidy regime in the current form as WTO rules bar it from offering export incentives to any sector, including textiles, when it reaches certain thresholds that it is nearing. The deadline for ending direct subsidies to textile companies is December 2018. Under the special and differential provisions in the WTO’s Agreement on Subsidies and Countervailing Measures, least developed countries and developing countries whose GNI per capita is below $1,000 per annum at the 1990 exchange rate, are allowed to provide export incentives to any sector that has a share of below 3.25% in global exports.
Brazil minister backs tariff to curb US ethanol imports (Reuters)
Agriculture Minister Blairo Maggi has asked Brazil’s foreign trade council to impose tariffs on ethanol imports following a surge in shipments from the United States, an official said on Thursday, a move that could stir trade tensions with the Trump administration. Ethanol imports from the United States increased fivefold to a record 720 million litres in the first quarter - worth some $363m, according to official trade data. Most of that went to ports in north eastern Brazil, where ethanol producers are leading calls for the imposition of a 20% tariff.
Structural change, fundamentals, and growth: a framework and case studies (World Bank)
This essay examines how seven key countries fared from 1990-2010 in their development quest. The sample includes Brazil, India, Vietnam and four African countries (Botswana, Ghana, Nigeria, Zambia) all of which experienced rapid growth in recent years, but for different reasons. The patterns of growth are analyzed in each of these countries using a unifying framework that draws a distinction between the “structural transformation” and “fundamentals” challenges in growth. Out of the seven countries, the traditional path to rapid growth of export oriented industrialization only played a significant role in Vietnam. [The analysts: Margaret McMillan, Dani Rodrik, Claudia Paz Sepulveda] [Morten Jerven: Africa Growing? Past, present and future]
EAC to fully rollout Single Customs Territory (Daily News)
The EAC Committee on Customs has agreed on full implementation of Single Customs Territory system effective 31 July, this year, to enable faster clearance of goods and reduce the cost of doing business in the region. Through this, the respective governments look forward to cutting time and resources used in collecting custom taxes at various borders. The agreement was reached in Dar es Salaam, yesterday, by respective Commissioner Generals of Revenue Authorities from Tanzania, Kenya, Uganda, Rwanda, Burundi and South Sudan. Chairperson of the Committee, Dicksons Kateshumbwa, said the EAC was also exploring the possibility of entering into mutual recognition agreement with the rest of the world, to allow traders enjoy benefits when trading with other regions of the world. However, he said that will depend on refining operationalisation of the Authorised Economic Operator (AEO) programme with the EAC.
Region in joint effort against tax fraud (New Times)
Commissioners of tax investigation and enforcement from Rwanda, Tanzania, Kenya and Uganda say information sharing as well as deeper collaboration will be decisive in tackling tax fraud. They emphasised this, yesterday, at the opening of a two-day session of the sixth East African Regional Meeting for Commissioners of Tax Investigation and Enforcement in Kigali. The tax collectors’ last meeting, in November last year in Nairobi, Kenya, established two technical committees; one mandated to deal with the establishment of a harmonised tax investigators capacity building framework and the other to work out a technical guide on legal and administrative operational framework. The Kigali session is, among others, reviewing and validating these frameworks.
Social protection in East Africa: harnessing the future (OECD)
This strategic foresight report assesses the interaction between demographics, economic development, climate change and social protection in six countries in East Africa between now and 2065: Ethiopia, Kenya, Mozambique, Tanzania, Uganda and Zambia. The report combines population projections with trends in health, urbanisation, migration and climate change and identifies the implications for economic development and poverty. It concludes by identifying policies to address seven grand challenges for social protection planners in national governments and donor agencies which emerge from the projections.
Mozambique: New World Bank Group strategy seeks growth diversification (World Bank)
The World Bank Group Board has endorsed a new Country Partnership Framework with Mozambique for the fiscal years 2017-2021. The CPF focuses on a set of objectives reflecting the Government of Mozambique’s five-year program (Plano Quinquenal do Governo); development priorities identified in the WBG’s own diagnostic; and the institution’s comparative advantages. In line with these principles, the CPF objectives are organized into three focus areas: promoting diversified growth; investing in human capital; and enhancing sustainability. This strategy’s indicative financing envelope is $1.7bn from IDA.
Angola: AfDB 2017-2021 strategy focuses on agricultural transformation and infrastructure development (AfDB)
The Board of Directors of the African Development Bank Group has approved the Bank’s Angola Country Strategy Paper to guide its interventions in the country in the next five years. The strategy’s first pillar involves interventions in agro poles and agro industries aligned to the Bank’s High 5s priorities to Feed Africa and Industrialize Africa that would help transform the economy. Pillar II will focus on power transmission lines, renewable energy projects, transport infrastructure all of which will contribute to the achievement of the light-up and power Africa, Industrialize Africa and Integrate Africa priorities. The strategy also places greater emphasis on gender mainstreaming through women’s empowerment in agricultural cooperatives; climate change and green growth agenda through investments in renewable energy projects; and co-financing mechanisms with key development partners to leverage resources.
Sango Ntsaluba: Rating agencies did not conspire against the government or ANC (Business Day)
These challenges have manifested themselves in an increasing fiscal burden and a widening current account deficit as the government grapples with competing needs. At one point, the government projected a deficit of R149bn, translating to 3.1% of GDP. Against a backdrop of underperforming tax revenue receipts, the government has had to rely on the debt market to raise financing. With a growth rate that has averaged 0.7% over the past three years, the downgrades have increased the possibility of recession and a larger fiscal deficit. It may well be argued that at least in the short to medium term SA cannot finance its budget commitments out of its revenue collections. [The author is a co-founder of SizweNtsalubaGobodo, is now chairman of NMT Capital and WZ Capital]
Tafadzwa Chibanguza: SA has missed the rates boat but opportunities can still be seized (Business Day)
This assessment and its implication could not be any truer than for the metals and engineering sector. The sector exports about R216bn, of which 40% (R86bn) is exported into Africa. Of the exports into Africa, 85%, or R73bn, is exported into SADC. The economic prospects of the SADC are on the rise as a function of the recent surge in commodity prices and an improving global economic environment. On a weighted average, the SADC is expected to grow 2.3% in 2017 and 2.7% in 2018. If we exclude SA, the region is expected to expand by 3.6% in 2017 and 3.8% in 2018. Although they are smaller economies, the countries have the potential to increase the scale of South African firms. For context, the 14 SADC economies (excluding SA) combined are the same size as SA’s. [The author is senior economist at the Steel and Engineering Industries Federation of Southern Africa]
Barclays takes £884m hit on African operation (Business Day)
UK banking group Barclays booked an £884m goodwill write-down of its investment in JSE-listed Barclays Africa Group in its first-quarter results released on Friday morning. Barclays said this was primarily due to the 17% drop in Barclays Africa Group’s share price over the quarter. Following the £884m impairment, Barclays valued its remaining stake in Absa’s JSE-listed owner at £8.1bn as at March 31.
Turkey inks agriculture deals with six African countries (Anadolu)
Friday was the last day of Turkey-Africa First Agriculture Ministers Meeting and Agribusiness Forum. Organized by the Turkish Ministry of Food, Agriculture and Livestock, the event hosted more than 300 participants, including ministers, from 54 African countries. The deals were signed with Congo, Ivory Coast, Djibouti, Guinea, Rwanda and Gambia. [Rwanda: Agri-exporters to benefit from Export Growth Fund]
Zimbabwe: MDC backs rand adoption (Daily News)
Morgan Tsvangirai’s MDC has said it backs the adoption of the South African rand as the primary currency. In an interview with the Daily News yesterday, MDC shadow finance minister Tapiwa Mashakada said since 50% to 60% of Zimbabwe’s total trade is with South Africa, the most advantageous foreign currency to adopt is the rand.
Tanzania: Flagship projects rule the roost (Daily News)
The Ministry of Works, Transport and Communication has unveiled a massive 4.5trl/- budget, which among other things, will cover flagship infrastructure development in the 2017/2018 fiscal year. This means, the government will be spending almost 45% of its budget as development expenditure in infrastructure. However, the figure represents a drop of almost 400bn/- compared to the 2016/2017 budget, in which 4.9trl/- was set aside for the same purpose. Presenting the budget estimates yesterday, the Minister, Prof Makame Mbarawa, said that out of the amount, the transport sector will take a huge chunk, totalling 2.5trl/-, while 1.9trl/- is for works sector and the remaining 18bn/- is reserved for communication sector.
Akinwumi A. Adesina: speech to the Committee for Economic Cooperation and Development, German Parliament (pdf, AfDB)
We are focusing on co-financing more than ever before. We have corralled Japan to commit to the High 5s with $10bn over the next ten years; Korea committed to $10bn over the next five 4 years, all aligned to the High 5s; China’s Africa Growing Together Fund has committed $2bn, while we’ve signed a co-financing of Euro 1.5bn with France (AFD). We’ve rolled out Africa 50, an investment vehicle for developing and financing infrastructure, which has raised $830m and plans to attract $3bn in the medium term. And later this year we will launch the Africa Investment Forum – a totally transactional Forum – to leverage global and African pension and sovereign wealth funds to invest in Africa. That’s the way it should be: taxpayers’ money should leverage private resources.
Africa urged to tap local funds to finance mega infrastructure (Business Daily)
Two European development agencies have urged African governments to find ways to help pension schemes and local private equity firms to finance mega infrastructure. European Investment Bank and German Technical Assistance said African governments can promote use of locally available funds through Special Purpose Vehicles (SPV) at the bourse. GIZ advisor Timo Bollerhey said this could be fast-tracked via formulation of a legal framework that promote alternative infrastructural investments by pension funds, away from the restrictive regime currently governing their operations.
China opens African investment office in Johannesburg (IOL)
The China Overseas Infrastructure Development and Investment Corporation (COIDIC) this week opened its first African headquarters in Johannesburg, marking an important milestone in China-Africa relations. COIDIC director Zhou Chao said the corporation recognised the challenges of building infrastructure in Africa. “We will develop in a very short time and provide mature projects in Africa, thereby attracting more funds to invest in African infrastructure.” He said COIDIC would focus on incubation of overseas infrastructure projects in order to implement the Chinese government’s “The Belt and Road” strategy to improve Chinese enterprises’ capacity of infrastructure development in Africa and around the world, and to boost development of the projects.
African nations endorse simple trade documentation procedures at seaports (TVC News)
Heads of African Maritime Administration from 34 nations in Africa have identified the need for member countries to adopt simple trade documentation procedures at the seaports. The action, they believe, would fast track cargo clearance and enhance delivery to warehouses. This resolution was against the backdrop of worries expressed by delegates at the third Association of African Maritime Administrations annual conference that held in Abuja. [Related: 32 African countries move against dumping of nuclear, toxic wastes, Ship owners back Dakuku to lead African maritime revival]
South Asia’s ports: expensive and slow (World Bank)
The report Competitiveness of South Asia’s Container Ports (pdf) provides the first comprehensive look at the 14 largest container ports in South Asia, which handle 98% of the region’s container traffic. It focuses on port performance, drivers, and costs. Although South Asia reduced the performance gap with East Asia, persistent inefficiencies meant that it still cost about twice as much to import a container as in competitor countries in East Asia. Average ship turnaround time for the region, at more than two days, was more than four times that of Singapore, one of the best performing ports in the world.
Promoting investment in the digital economy (UNCTAD)
Many countries and economies have adopted digital development strategies. An UNCTAD survey of the investment dimension in more than 100 digital development strategies shows that almost all such strategies acknowledge the need for investment. However, hardly any strategy contains a specific ‘investment chapter’ and less than half of digital development strategies explicitly consider foreign investment as a source of finance. Investment promotion agencies mostly do not feature in the plans. [Download: Promoting investment in the digital economy, pdf; At UNCTAD’s E-commerce week: Dr Kituyi, Jack Ma highlight e-commerce opportunities for the developing world]
Please note: The next selection will be circulated on Tuesday, 2 May.
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tralac’s Daily News Selection
World Economic Forum on Africa: Achieving inclusive growth (3-5 May, Durban). Profiled points for discussion (pdf): Connecting markets, Revitalizing manufacturing, Integrating innovation
According to the International Air Transport Association, if 12 African economies liberalize access to their skies for each other, an additional 155,000 jobs could be created and $1.3bn added to GDP. How can the continent fast-track the establishment of a single African air transport market together with continental visa openness?
Almost 90% of Africa’s international trade is conducted by sea, yet port delays account for about 10% of import costs. How can investment in regional shipping hubs boost trade efficiency?
Investors cite the lack of harmonized regional rules and regulations as a barrier for deepening and expanding financial services. How can Africa advance regional financial integration?
Infrastructure investments and growth in African retail markets are transforming the logistics industry in Africa. How can new technologies, like drones, drive high growth in the continent’s logistics industry?
Building on the success of mobile money and the emergence of new technologies like blockchain, fintech is fast banking the unbanked in Africa. How can regionalization accelerate the establishment of universal digital financial services?
Globally, efforts to strengthen intellectual property rights are gaining momentum. While patents can be filed in the Africa, global IP systems are difficult to enforce. How can regional IP regimes be strengthened to fast-track African innovators?
Mozambique’s Trade Policy Review takes place next week (3,5 May in Geneva)
Inaugural meeting of the Tanzania National Business Council (6 May, Dar es Salaam): Tanzania’s first National Business Council is set for inauguration next week amid growing concerns over an increasingly unfavourable environment for the country’s private sector to thrive. The 6 May inauguration, to be graced by President John Magufuli as chief guest, will also see the launch of a report compiled by a special committee under the Ministry of Trade, Industries and Investments on challenges facing local business in general. Tanzania Private Sector Foundation executive secretary Godfrey Simbeye described the TNBC as the highest public-private sector dialogue organ. “The council is made up of 40 members; 20 from the private sector ranging from business owners or leaders, and 20 from the government, including cabinet ministers, the central bank governor and the attorney general,” Simbeye explained.
Friends of eCommerce for Development: seminar on e-payments and financial inclusion (13 March, WTO). Extract from Roberto Azevêdo’s address: In conversations here at the WTO, Members have been raising many of these issues, but it is clear that there are still divergent views on how to advance the e-commerce discussion. And there are concerns that the digital divide and the knowledge gap would limit some Members’ participation in the talks. These concerns need to be addressed to ensure that a meaningful and inclusive debate can take place. I think there is broad agreement that the development dimension of e-commerce needs to be part and parcel of our continuing conversations. This will be fundamental to allow all WTO Members to engage constructively and to ensure that e‑commerce works for inclusive growth and development. However, it is also important to recognize that the challenges posed by e-commerce are many and complex – and not all of them are trade-related. [The Friends of eCommerce for Development (Argentina, Chile, Colombia, Costa Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka, Uruguay): (i) download the presentations, (ii) Mapping e-trade for all development objectives into a WTO Framework for E-Commerce (pdf)]
Reaffirming Development – MC11: submission by the G-33 to the WTO Committee on Agriculture
The following submission, dated 25 April, is circulated at the request of the delegation of Indonesia, on behalf of the G-33: The time is short. Hence G-33 requests Members to constructively and meaningfully engage on the two most important issues of SSM and PSH with a view to deliver them in MC11 so that developing Members are equipped with these tools to counterbalance some of the inequities built into the WTO rules in favour of the developed Members.
How much labour do South African exports contain? (World Bank)
Like many emerging economies, South Africa has identified exports as an engine for more inclusive, job-intensive growth. However, employment growth did not follow the substantial export growth that South Africa experienced in the 2000s. This paper uses a newly developed World Bank database -- the Labor Content of Exports -- to show that the composition of South Africa’s export growth helps to understand the weak relationship between export and employment growth. Minerals exports, which propelled export as well as wage growth, are not job intensive and as a result supported far less job growth. Minerals have also increasingly become an enclave sector with few backward linkages to the domestic economy. In contrast, manufacturing exports support jobs and wages primarily in input-providing sectors, where indirect manufacturing employment is nearly 4.5 times greater than direct manufacturing employment. The paper also documents a shift in the labor content of global value chain–intensive manufacturing sectors away from direct manufacturing to indirect services. Such a shift has been biased toward skilled labor. As a results of these trends, labor in services sectors has been the main beneficiary of South Africa’s export growth, absorbing more than half of the growth in wage income from exports over the 2000s, primarily by supplying inputs to other sectors’ exports. [The analysts: Massimiliano AuthorCali, Claire Honore Hollweg]
Evaluation of the AfDB’s South Africa Country Strategy and Programme 2004-2015 (IDEv)
What do we get for $5bn investment? The IDEV of the AfDB has just published a report evaluating more than a decade of engagement in South Africa, principally in the finance and energy sectors. According to AfDB Evaluator General Rakesh Nangia, “The report offers a thorough analysis of Bank performance and also of the limitations of the AfDB’s positioning in the South African context. Across its work in finance and infrastructure, stakeholders in South Africa saw the AfDB as a financier, rather than adding value as a knowledge provider or supporter of their capacity. The AfDB must think carefully about its comparative advantage and innovatively about funding instruments for the future.”
Extract from executive summary (pdf): The evaluation found a Bank that is learning to adapt to the developed, competitive South African market. It highlighted the fact that while the scope and scale of Bank operations cannot make a significant national impact, they are nevertheless important for the Bank. The findings showed that the Bank was moving in a relevant direction given its objectives, but that gaps exist in key areas and that ambitions were ill matched to available resources, instruments and demand. The evaluation raised concerns about efficiency (timeliness and processes) and effectiveness (in relation to Bank targets). The findings and conclusions indicate that current policies and practices are inadequate if the Bank wants to remain relevant and grow its portfolio in South Africa. A more tailored approach, appropriate resourcing of the team and a broader menu of innovative funding facilities, are required.
Michel Arrion: Some important clarifications about the EPA and EU trade policy (The Guardian)
These are, in short, the advantages the EPA provides. I will now address some provocative questions I often hear about the EPA. A first question is why Nigeria should sign the EPA if it is currently unable to export any product other than oil. My answer is simple. Everybody knows that Nigeria needs to diversify its exports. However, diversifying exports does not take place over night. It requires the adoption and implementation of several coordinated policies, aiming at increasing Nigeria’s capacity to satisfy both local and foreign demand. The conclusion of international trade agreements must be necessarily part of this strategy. No country in the world has been able to dramatically increase and diversify exports without entering into trade agreements. A second question I often hear is “why should Nigeria sign now a trade agreement with the EU, rather than waiting for the opportunity to sign possibly better agreements with other countries”? The reasons are manifold.
But the most important question I often hear is “What benefits will the EU obtain from the EPA”? Let me be also very clear on this. The EU will not obtain many economic or commercial benefits in the short or medium term. As explained, the market opening of West Africa will be gradual and very slow, and will only concern capital goods, i.e. inputs and machinery. According to the EPA, West Africa will still maintain high import duties on most finished and consumer goods imported from Europe. Under these circumstances, only few EU suppliers would, over a medium and long term, be able to increase sales to West Africa as a result of the EPA. [The author is the EU Ambassador to Nigeria and ECOWAS]
China’s Belt and Road Initiative a golden opportunity for Africa: Ethiopian special envoy (Xinhua)
The Belt and Road Initiative is a golden opportunity to bring about regional integration and sustainable economic growth for Africa, said Berhane Gebre-Christos, special envoy of the Ethiopian Prime Minister, on Tuesday. The special envoy made the remarks at the opening of a seminar organized on the B&R Initiative in Ethiopia’s capital Addis Ababa. La Yifan, Chinese ambassador to Ethiopia, said the seminar was organized as part of preparation for an upcoming B&R Initiative forum scheduled for mid-May in Beijing, China.
IGAD to develop a regional medicines assessment, registration guidelines
This five-day meeting, underway in Entebbe, brings together experts and officials from IGAD Member States in charge of their respective National Medicine Regulatory Authority whose mandate is to guarantee populations’ access to essential quality, safe, and efficacious medicines. The long term goal of the Working Group is to develop a draft policy towards harmonization of registration and evaluation of medicines, while the overall objective of this First Meeting of Experts is to develop an IGAD reference list of registered products, conduct pilot joint review of essential priority medicines, and determine avenues for collaboration between IGAD-NMRAs.
ECOWAS high-level ministerial mission to Guinea Bissau: statement
Rwanda, DRC agree to enhance bilateral trade ties (New Times)
This was one of the outcomes from a weekend meeting between François Kanimba, the Minister for Trade, Industry and East African Community Affairs, and Aimé Boji Sangara Bamanyirwe, DR Congo’s Minister for Commerce. The two ministers committed to instruct relevant institutions to refrain from creating tariffs and non-tariff barriers for trade between the two countries, according to a communiqué issued at the end of the meeting. The statement indicates that the Congolese minister “clearly stated” that no other institutions should introduce trade barriers on the Congolese side without due consultations. Such decisions, he noted, should only be taken by central government in Kinshasa. An action plan to implement the decisions and trade facilitation between the two countries was adopted and approved by the two ministers.
Today’s Quick Links: Africa tourism trends: presentation to UNWTO Commission for Africa (pdf) Emirates extends agreement with Mauritius and Seychelles African Diaspora urged to help drive intra-African trade World Bank: Performance of water utilities in Africa OECD’s Working Party on Agricultural Policies and Markets: Managing food insecurity in ASEAN (pdf) WFP/ECLAC: Latin America’s double burden of under-nutrition and obesity |
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Reaffirming Development – MC11: Submission by the G-33 to the WTO Committee on Agriculture
The following submission, dated 25 April 2017, is being circulated at the request of the delegation of Indonesia on behalf of the G-33.
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We recall the G-33 submission entitled “Reaffirming Development – MC10 Nairobi and Post MC10 Nairobi” dated 5 October 2015 as reflected in the document TN/AG/GEN/37.
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We, the G-33 Members, strongly renew the long-standing calls for global trade reforms that address inequities and imbalances in the Uruguay Round Agreement on Agriculture (AOA) so that all WTO Members would be governed by a multilateral trading system (MTS) under the WTO which is not only open, transparent, and market-oriented but also, more importantly, development oriented, fair and provides a level playing field.
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Developed Members have expansive flexibilities in the AOA, which make their farmers and exporters artificially competitive. These flexibilities include, amongst others, high AMS entitlements with no product specific caps on AMS; very high levels of total per capita domestic support; non-transparent and complex TRQ and non-ad valorem tariff systems including tariff peaks and escalation; and highest entitlements to the special safeguard provisions (SSG), among others.
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Developing Members’ tariffs have not been able to match these wide-ranging flexibilities causing periodic import surges and almost permanent market distortions in agriculture trade to the disadvantage of developing Members where agriculture is characterized by small subsistence farming and market failure.
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In order to continue the fundamental reform in agriculture and to address the inequities and imbalances, our Ministers in the Uruguay Round inscribed the “built-in” agenda under Article 20 of the AOA. The agenda has been carried through and further reinforced by the Doha Development Agenda (DDA) in 2001 (WT/MIN(01)/DEC/1) which puts “development” and special and differential treatment (S&DT) for developing Members at its core.
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The objectives enshrined in the DDA can only be achieved once all the elements of the agriculture negotiations have a comprehensive and development-oriented outcome. Until the same is achieved we firmly believe that the negotiations must continue towards and after the 11th Ministerial Conference (MC11) Buenos Aires, building on the various Ministerial decisions/declarations and the development framework we have agreed to date since 2001.
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The Group is willing to engage constructively and contribute to a credible and balanced outcome, which withstands the test of development at MC11 Buenos Aires and beyond.
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As part of the balancing and S&DT instruments, the G-33 has long been calling for meaningful Special Products (SP), an accessible and effective Special Safeguard Mechanism (SSM) and a permanent solution on Public Stock Holding (PSH) for food security purposes. These tools are needed for sustaining investments in agriculture for food security, livelihood security and rural development, as well as addressing the destabilizing and crippling effects of import surges and downward price swings in the increasingly volatile global agricultural markets largely due to huge subsidies in productions and exports by the developed Members.
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Also the Group firmly believes that there should be a permanent solution on public stockholding for food security purposes and a Special Safeguard Mechanism for developing Members as mandated. There is a clear mandate to arrive and adopt a permanent solution on Public Stock Holding (PSH) for food security purposes by 2017. The Nairobi Ministerial Decision on SSM for developing Members has reinforced and strengthened the mandate in the Hong Kong Ministerial Declaration to establish both price and volume-based SSM.
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The time is short. Hence G-33 requests Members to constructively and meaningfully engage on the two most important issues of SSM and PSH with a view to deliver them in MC11 so that developing Members are equipped with these tools to counterbalance some of the inequities built into the WTO rules in favour of the developed Members.
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World Economic Forum on Africa 2017: Achieving Inclusive Growth
Achieving Inclusive Growth
Durban, South Africa, 3-5 May 2017
Africa is facing a mixed outlook for growth. The economic growth forecast for the continent over the coming year is expected to be lower than the 5% average of the past decade. This is largely due to the dip in commodity prices and the economic slowdown in China. That said, a number of countries are growing above 6% per annum and foreign direct investment inflows continue to rise. Overall, the divergence of Africa’s economies makes it imperative to address the challenges posed by a growing unemployed youth population and climate change, among others.
The impact of the headwinds for commodity-dependent countries has refocused attention on the urgency of economic diversification, revitalization of manufacturing and harnessing of human innovation in order to weather the economic storm. The Fourth Industrial Revolution offers new opportunities to achieve inclusive and sustainable growth by fast-tracking market integration in Africa through industrial corridors.
Events in Africa and across the world have demonstrated a need for leaders to be responsive to the demands of the people who have entrusted them to lead, and to also provide a vision and a way forward. In partnership with the Government of the Republic of South Africa, the World Economic Forum on Africa will be held in Durban, South Africa, on 3-5 May 2017. The meeting will convene regional and global leaders from business, government and civil society to agree priorities that will help Africa achieve inclusive growth.
The host country – the only African G20 economy – is championing reforms to eradicate extreme poverty and promote shared growth nationally, regionally and globally. The host city, Durban, which has the busiest industrial port in sub-Saharan Africa, offers insight into how trade in regionally manufactured goods can strengthen economic resilience and create jobs.
Programme overview
Under the theme Achieving Inclusive Growth, the meeting will convene regional and global leaders from business, government and civil society to explore solutions to create economic opportunities for all.
Participants will explore challenges and opportunities, deepen insights and foster coalitions around instruments that could be used to achieve inclusive and sustainable growth. For example, the Fourth Industrial Revolution offers new opportunities to fast-track market integration in Africa through industrial corridors by connecting markets, revitalizing manufacturing and integrating innovation. In this context, the 27th World Economic Forum on Africa will address the following topics that underpin the programme:
Connecting Markets
The increased prioritization of investment in infrastructure over the past decade has boosted trade in Africa. Transport corridors are an increasingly common approach to accelerating cross-border investments. Nonetheless, the infrastructure financing gap is daunting, particularly for transnational projects. Further, in order to boost the development impact, it is necessary to take a holistic approach that ensures that regional arteries connect rural communities and local industries to markets.
African nations have adopted sub-regional economic blocs as a stepping stone towards a unified continent, but levels of market integration vary significantly. Drawing lessons from other regional groups like the EU, the Pacific Alliance and ASEAN, how can alternative approaches fast-track economic unification in Africa?
According to the UNECA, transport costs for 12 landlocked countries in sub-Saharan Africa account for more than 70% of the value of goods exports. Transnational transport corridors have proven to be successful at lowering such costs, but funding remains a challenge. How can blended finance accelerate investments in transport corridors?
Africa’s expansive geography makes it challenging to reach scattered rural communities cost-effectively and affordably. How can broadband access by satellite close the continental digital divide?
According to the International Air Transport Association, if 12 African economies liberalize access to their skies for each other, an additional 155,000 jobs could be created and $1.3 billion added to GDP. How can the continent fast-track the establishment of a single African air transport market together with continental visa openness?
Almost 90% of Africa’s international trade is conducted by sea, yet port delays account for about 10% of import costs. How can investment in regional shipping hubs boost trade efficiency?
Investors cite the lack of harmonized regional rules and regulations as a barrier for deepening and expanding financial services. How can Africa advance regional financial integration?
Regional electricity markets have been cited as a means of attracting higher investment in generation by creating larger pools of demand. How can the continent fast-track the implementation of cross-border power pools?
The African e-commerce market is creating new opportunities for small and medium-sized businesses. Yet, according to the World Bank, varying trade requirements make intra-Africa trade costs almost 50% higher than in East Asia. How can African countries reduce payment, shipping and customs costs?
Image source: Rexparry sydney, CC BY-SA 3.0
Revitalizing Manufacturing
According to the African Development Bank, the continent’s manufacturing exports doubled between 2005 and 2014 to more than $100 billion, with the share of intra-African trade rising from 20% to 34% over the same period. However, Africa’s share of global manufacturing exports remains less than 1%, compared with over 16% for East Asia. Fortunately, regional demand is growing and has resulted in manufacturing production growth at 3.5% annually in real terms – faster than the global growth rate – over the past decade.
With the region lagging as the least-competitive globally, concerted steps need to be taken to boost productivity. Fortunately, there are regional clusters of global manufacturing excellence. How can regional value chains foster more African value addition in global supply chains?
Despite the growing potential of renewable energy to electrify Africa, currency mismatch is emerging as a barrier to investment in countries with underdeveloped financial markets. How can countries create regional investment risk-mitigation vehicles?
Infrastructure investments and growth in African retail markets are transforming the logistics industry in Africa. How can new technologies, like drones, drive high growth in the continent’s logistics industry?
Building on the success of mobile money and the emergence of new technologies like blockchain, fintech is fast banking the unbanked in Africa. How can regionalization accelerate the establishment of universal digital financial services?
In January 2016, the African Space Policy and Strategy was adopted in Addis Ababa as a stepping stone to the attainment of the African Outer Space Programme. How can Africa’s leaders fast-track the development of a globally competitive nano-satellite industry?
Pharmaceutical manufacturing is expanding rapidly across the continent, building on the continental Pharmaceutical Manufacturing Plan for Africa. How can regional safety and marketing regulations advance the industry?
It is estimated that Africa’s current net food-import bill is $35 billion per annum. With Africa’s fast-growing youth population, how can regional food manufacturing transform to meet rising consumer needs regionally and globally?
According to the African Development Bank, textile and clothing is the second-largest sector in the developing world after agriculture, and estimated to be worth $1.3 trillion in Africa. How can buyer-driven commodity chains upgrade the fashion and textile industries?
Integrating Innovation
Technological innovation is rapidly evolving under the Fourth Industrial Revolution. As such, significant investment is required to strengthen the continent’s skills base, particularly in applied sciences and engineering. Currently in Africa, the overall shortage of engineers is estimated at above 1 million. In addition, more efforts are required to reverse the widening gender digital divide.
Human-centred design is crucial in inspiring innovative solutions that are relevant to African consumers, the majority of whom are poor and engaged in the informal sector. How can Africa’s leaders scale the impact of social innovations on poverty?
Globally, efforts to strengthen intellectual property rights are gaining momentum. While patents can be filed in the Africa, global IP systems are difficult to enforce. How can regional IP regimes be strengthened to fast-track African innovators?
The continent currently contributes less than 1% of the world’s scientific papers. Dedicated long-term funding is needed to support the training of world-class scientists and researchers, and research environments. How can regional and global collaboration finance Africa’s science agenda?
Women are increasingly underrepresented in technology-based industries. This widening gap is due to a variety of reasons, ranging from cultural stigmas against girls learning mathematics and sciences to hostile work environments for women in science, technology, engineering and mathematics (STEM). How can Africa’s leaders reduce gender barriers while promoting the pursuit of careers in STEM for all?
To fully integrate into the global digital economy, Africa needs to significantly expand its e-skills agenda by closing the deficit of ICT skills. How can the continent’s educational institutions reinvent their systems to transform regional learning?
Establishing world-class training centres of excellence requires heavy investment and takes time. Artificial intelligence and gamification are rapidly transforming education delivery. How can Africa leverage education technology to deliver marketable skills regionally?
The World Bank estimates that there are 117 technology hubs across the continent, although the turnover rate is relatively high. These technology hubs face substantial challenges in transitioning from start-up to sustainable businesses. How can government and business leaders foster viable pan-African innovation ecosystems?
Several African start-ups are on the verge of attaining the global distinction of being “unicorns” with a $1 billion valuation mark. Accordingly, venture capital investments are taking off across the continent, particularly in Kenya, Nigeria and South Africa. How can Africa excel at commercializing innovation?
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DG Azevêdo: E-commerce can help to improve livelihoods and boost development
Speaking at the first Ministerial Meeting of the “Friends of E-Commerce for Development” on 25 April, Director-General Roberto Azevêdo said that many members want to set a path forward for discussions on e-commerce, with a view to ensuring that e-commerce supports growth and development in the years to come. “Engagement is high,” he said, but if members want to make progress, they will have to turn that engagement into “real proposals”.
Friends of E-commerce for Development ministerial meeting
Remarks by DG Azevêdo
Good morning. I am pleased to join you at this first Ministerial Meeting of the ‘Friends of E-Commerce for Development’[1].
I had the chance to address a meeting of the group at Ambassador-level in December last year. I’m glad to see this excellent initiative evolving today.
Your presence here in Geneva highlights your commitment to this conversation. It shows your desire to ensure that e-commerce contributes to further growth and development in your countries – and across the world.
And I think that this is a very timely debate.
E-commerce is changing the economic landscape – and the way we trade and live.
Research from PWC on purchasing habits in 25 countries, both developed and developing, showed that 54% of respondents already buy products online weekly or monthly.[2] In fact the numbers were even higher in some developing countries.
And the market is growing rapidly.
Between 2013 and 2015, the value of global online trade jumped from 16 trillion to 22 trillion dollars.[3]
This is significant because of the opportunities that it represents, especially for the smaller players.
For small and medium-sized enterprises, e-commerce can significantly lower the costs of doing business across borders.
It also provides a platform that allows producers to access the global marketplace, reach a broader network of buyers and, potentially, to participate in global value chains.
For consumers, it means access to a broader selection of products, from a wider range of suppliers, and at more competitive prices.
In this way, e-commerce can help to improve livelihoods, promote further inclusivity in the trading system, and boost development.
It is very positive that you are looking at how to make the most out of these opportunities.
However, there is still a long way to ensure that everyone can partake in these digital flows. In many places e-commerce is not yet a reality.
Four billion people in the developing world remain offline today.
This is an immediate challenge to us all.
And we should seek to put a particular focus where the need is the greatest. For example, only one in four people in Africa use the internet – and only one in seven people in LDCs.
E-commerce should not be something that widens the development gap. It should be a means of closing it.
And while being connected is a necessary condition, it is not enough.
E-commerce is not only about the clicks. It is also about the bricks. And that means infrastructure.
We need to ensure that the right infrastructure is in place, as well as appropriate policy, regulatory and payment systems to provide the trust which is essential in any transaction.
Any international initiative to unlock the potential of e-commerce for development will have to tackle these issues. It will have to help with providing support to improve capacity and infrastructure in those countries that need it the most.
We have a strong record of helping the most vulnerable to join trade flows.
Programs like the WTO Aid for Trade Initiative already do very important work to help build trade capacity in developing and least developed countries. UNCTAD’s ‘eTrade for All’ initiative is another positive example here – and we’ll be hearing much more about this over the next few days.
Reforms to the trading system can also make a big difference.
The WTO’s Trade Facilitation Agreement, the first global trade deal of the 21st century, will be particularly important. Under this agreement, trade costs could be reduced by 14.3% on average, and by significantly more in many developing countries. And the agreement provides for the necessary practical support to help members with their implementation. We are working with a range of donor members and partners to mobilise that support.
Working together, we can find creative solutions to bridge gaps and help more people access the opportunities and benefits of e-commerce.
That’s why today’s meeting is so welcome.
This has to be a collective effort.
Many members – and not only the Friends of e-Commerce for Development – want to set a path forward for discussions on e-commerce, with a view to ensuring that e-commerce supports growth and development in the years to come.
Engagement is high. Many ideas have been put forward – by WTO members, by the private sector and by other stakeholders.
If we are going to advance, we have to turn that engagement into real proposals. We need to focus on specifics.
This week is an excellent opportunity to have discussions with the full range of stakeholders. But of course progress requires routine engagement.
We need to continue this work throughout the year. The WTO acts as a platform to have these discussions among all members that want to do so.
I will be there to help and facilitate this as much as I can – but, as always, it is for members to set the direction and the pace. It is up to you to drive this work forward, put proposals on the table, and build convergence behind them.
So there is a lot of work to do! I wish you a very successful event today.
Thank you.
[1] ‘Friends of E-Commerce for Development’ consists of Argentina, Chile, Colombia, Costa Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka and Uruguay
[2] https://www.pwc.com/gx/en/industries/retail-consumer/global-total-retail.html
[3] http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1438
“Financial inclusion” key to delivering full development potential of e-commerce
Speaking at a 13 March seminar on digital payments and financial inclusion, Director-General Roberto Azevêdo said underdeveloped financial and payment systems are hindering the use of electronic commerce as a tool for growth and development. With more than 200 million small firms in emerging economies worldwide lacking access to basic financial services, “e-commerce will not deliver its full potential if many are still financially excluded.” Extracts from his speech are available below:
This is another important initiative in your efforts to deepen members’ understanding of e-commerce issues.
And it is obvious that these issues are of interest to many Members, regardless of their level of development. There may be different challenges, opportunities or perspectives but it is clear to me that many of you want to better understand this phenomenon.
Of course this is not surprising. E-commerce presents significant opportunities for growth, development and job creation. It has already helped to lower trade barriers for businesses and consumers alike.
By reducing the costs associated with distance, e-commerce provides businesses with access to new market opportunities and global value chains. This is particularly important for small businesses, those located in rural areas, as well as land-locked and other geographically challenged countries.
And for consumers, it means access to a wider range of products and services suppliers – and at more competitive prices.
However, with 4 billion people still offline, the opportunities offered by e-commerce are still out of reach for many and its benefits remain unevenly distributed. While some countries have made significant headway in recent years, others are struggling to keep up.
If we want e-commerce to be an engine for inclusive growth and development, we must understand its challenges and address them in a way that ensures better access and better opportunities, particularly for those who are behind.
Underdeveloped financial and payment systems are one of these challenges. It is clear that traditional banking and payment methods are often ill-suited to the digital environment.
E-commerce will not deliver its full potential if many are still financially excluded. And while there has been progress toward financial inclusion, significant challenges remain. As you will know, an estimated 2 billion adults worldwide don’t have a basic bank account.
Financial exclusion affects not only individuals but businesses, and therefore trade, as well.
The World Bank has estimated that more than 200 million formal and informal micro, small and medium-sized enterprises in emerging economies lack access to basic financial services to thrive and grow. No wonder therefore that financial inclusion is becoming a priority for policymakers, regulators and development agencies globally. In fact it is identified as an enabler for 7 of the 17 Sustainable Development Goals.
Digital payments are actually an entry point for financial inclusion. Integrating digital payments into the economies of developing nations is crucial for broad economic growth and individual financial empowerment.
Technological advances, especially in mobile technology, have provided alternative solutions – and they have been advancing at a tremendous speed.
We have all heard of M-PESA, which became a world leader in mobile-money. It showed the potential of these solutions – and the potential of developing countries to leapfrog forward in their use of technology.
A couple of years ago it was easier to pay for a taxi with your phone in Nairobi than in New York – or Geneva. Now the developed world has caught up. Mobile money is everywhere.
New ideas and new solutions will continue to spread at a frenetic pace – and there’s no reason why developing countries can’t be at the forefront.
But we should be conscious as well that payment facilities are not credit facilities – and this is particularly important where cross-border transactions are concerned.
Traditionally in a trade transaction, the exporter is paid upon shipping and the importer only pays when the merchandise is delivered and its integrity is verified. It is the job of trade finance to bridge the gap between the two.
In contrast, with e-commerce, the importer pays cash in advance and then simply has to wait and trust that the goods will arrive in a timely fashion and function as expected.
Clearly, for many SMEs, this poses significant problems. With low cash flow and tight margins, such a financial arrangement is costly when inputs come from foreign suppliers. Moreover, consumers tend to opt for better known traditional suppliers, to the detriment of SMEs, even when their price is competitive. So, SMEs face significant challenges both as buyers and as suppliers.
Some e-platforms are providing solutions to deal with this – but that can come with strings attached, such as exclusivity to sell on that platform. The emerging “FinTech” sector is also stepping into this arena. But so far they only work for the top end of SMEs – those which have certified accounts, are registered, and so on. These are positive steps, but more could be done.
Awareness among smaller companies is also an issue. A recent survey by the Asian Development Bank found that 70% of SMEs were not aware of digital finance.
So, again, the challenge is to ensure that these evolving technologies work both to tackle financial inclusion and to close the digital divide – not widen it even further.
And this brings us to the broader and even more fundamental issue of connectivity.
Many economies face challenges from a lack of reliable infrastructure, poor internet access and affordability, and a wide range of other economic and regulatory barriers. These include weak legal and regulatory frameworks, inadequate privacy and consumer protection, low consumer trust, poor IT skills – and the list goes on. [...]
I think there is broad agreement that the development dimension of e-commerce needs to be part and parcel of our continuing conversations. This will be fundamental to allow all WTO Members to engage constructively and to ensure that e‑commerce works for inclusive growth and development.
However, it is also important to recognize that the challenges posed by e-commerce are many and complex – and not all of them are trade-related. Addressing them will require dialogue and cooperation amongst different actors as the issues involved cut across different areas of expertise.
Presentations from the FED Seminar on ePayments and Financial Inclusion are available here.
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Institutional reform of the African Union: remarks by President Kagame
There are two priorities to focus on in the time ahead, leading up to the next Summit. First, we need to accelerate the decision to finance the African Union with a levy on eligible imports. Everything else flows from this and we cannot afford to get bogged down. The second priority is to move quickly with those reforms, which can be implemented right away. One example is speaking with one voice, when Africa as a whole engages with external partners. Nobody benefits from the confusion inherent in the current method of doing business. The Chairperson of the Commission and the Chairperson of the African Union should take the lead. Another example is to agree on a binding mechanism to ensure that Member States are held accountable for respecting key African Union decisions, such as the ones on financing and institutional reform. These would be strong signals that we are serious about doing things differently.
The Southern African poultry value chain: regional development versus national imperatives (UNU-WIDER)
Extract from the conclusion (pdf): These developments notwithstanding, there is no coordinated regional poultry value chain in Southern Africa, but rather firm strategies which are regional in nature. As a result, while large firms have spread out throughout the region, they have invested in their destination countries mainly for domestic operations. Where they do export out of their destination countries, this is either for their own operations as in the case of CBH’s Ross Breeders exports from Zambia into its Botswana operations, or it is arm’s length transactions such as the large exports of maize and soya from Zambia into Zimbabwe. Other strategies that have negated the formation of an RVC are trade barriers, particularly NTBs. The NTBs, ranging from import limits to complete bans on finished goods, have contributed a great deal to the current structure of the value chain. Protection of the industries in most countries means that firms have to set up in those countries in order to take advantage of the opportunities found there. This indicates that only the large firms, with significant scale economies, could competitively make these investments, and also participate in a possible RVC. [The analysts: Phumzile Ncube, Simon Roberts, Tatenda Zengeni], [Olle Östensson: Local content, supply chains, and shared infrastructure (UNU-WIDER)]
Zambia announces indefinite ban on “In Transit” timber (TRAFFIC)
The decision addresses ongoing international concerns that the country is being exploited by smuggling networks to transport timber to lucrative markets overseas, with primary destinations including China and Viet Nam. Additional motivations for the ban include issues raised by the Namibian Ministry of Agriculture, Water and Forestry. Namibia’s Chief Agricultural Scientific Officer said in a written letter to plant health officials that the country had been “experiencing serious problems with timber transported from the DRC and neighbouring countries via Zambia.”
Botswana-Mozambique state visit: trade, infrastructure issues
President Khama: It is also critical for our two countries to continue to redouble our efforts in accelerating implementation of strategic projects such as the development of a deep-sea port and a railway line linking Botswana with Mozambique. The development of this vital transport corridor, will go a long way in unlocking the economic potential of our two countries, and also contribute towards greater regional integration. I note with satisfaction that the Joint Permanent Commission on Cooperation between Botswana and Mozambique continues to meet regularly in order to advance the implementation of our agreed commitments. Whilst we continue to expand the scope of our bilateral cooperation by signing additional bilateral agreements, it is however, critical that we ensure their effective implementation. This will ensure that our people benefit from tangible programmes and projects, which will help improve their living standards.
President Filipe Jacinto Nyusi: We believe that your participation in these and other projects could leverage socio economic development of our two countries and fast-track regional integration. In this context, the Government of Mozambique is expanding the capacity of the Port of Maputo in order to enable it to accommodate larger vessels and diversity of cargo. We believe this is yet another opportunity open for Botswana to utilise this potential for more exports and imports. This project could be complemented by the construction of the Tchobanine deep waters port which is still under consideration and negotiation. Tchobanine Port is posed as a strategic asset within the framework of effective growth and diversification of the economies of Mozambique, Botswana and Zimbabwe. The Port can go a long way in realising the SADC Industrialization Strategy and Roadmap.
Namibia-Zimbabwe: Geingob to visit Zimbabwe this week (The Namibian)
Ease of Doing Business: Nigeria’s FG reduces number of days for business registration (ThisDay)
This decision was part of the resolutions of the Presidential Enabling Business Environment Council (PEBEC) meeting at the end of the 60-day action plan on Ease of Doing Business in Nigeria reforms held in the Presidential Villa on Monday. The council which took off on 21 February 2017 was set up by President Muhammadu Buhari, and chaired by Vice President Yemi Osinbajo. The council also set up a 24-hour timeline for company registration from the day application form is completed and all required documents made available while prospective business owners can now search on the CAC portal to avoid duplication of names. On trading across borders, some of the completed reforms, according to the report, include palletisation of imports, advanced cargo manifests, reduction in documentation requirements and scheduling of joint physical examination by the Nigeria Customs Service.
DRC: Miners told to move HQs as provinces vie for revenue (Bloomberg)
The Democratic Republic of Congo told local units of Glencore Plc, China Molybdenum Co., Ivanhoe Mines Ltd. and four other mining companies to relocate their head offices as newly demarcated provinces fight over tax revenue and control of mineral projects. The companies, all headquartered in Lubumbashi, the capital of Haut-Katanga province, must move to Kolwezi town in neighboring Lualaba, where their mines are based, Mines Minister Martin Kabwelulu said in a 14 April letter, a copy of which was seen by Bloomberg and confirmed by the ministry. [In the DRC, artisanal mining is a remnant of the once-booming gem industry (Slate)]
DRC: SADC Organ Troika Ministerial Assessment
Tanzania: The shilling and top value losers in Africa (IPPMedia)
According to new data by audit firm Deloitte, the depreciation was the second highest in the EAC bloc after the Ugandan unit that shed its value by 30% and the ninth in Africa. The currency value loss chart leader was Egypt with a 61% average depreciation of the pound. The other currencies that lost value the most included the Mozambique’s metical (60%), Nigeria’s Naira (49%), Ghana’s cedi (45%) and Zambia’s kwacha (44%). Also in the list are Angola’s kwanza (41 per cent), Algeria’s dinar (29%), South Africa’s rand (24%), the West African franc (23%) and Ethiopia’s birr (15%). “Currencies on the continent have depreciated significantly against the US dollar since 2014 or, in the case of managed currencies, have been devalued. In some cases their value suffered further as a result of errant monetary policies that undermined investor confidence and heightened uncertainty,” Deloitte notes in a recent note titled: The repricing of Africa’s economies.
Ghana records 3.2m metric tonnes of imports from Africa (StarrFM)
This represented an increase of 1.1 million metric tonnes, or 57% increase, over the 2015 figure. The Ghana Shippers Authority’s outlook cites major items imported from the Africa regions as liquid bulk cargoes, mainly crude oil, LPG and petroleum products. Liquid bulk cargo therefore saw an increase of 94% over the 2015 figure. The chief Executive Officer of the Ghana Shippers’ Authority, Dr. Kofi Mbiah underscored that trade between Ghana and the West African sub-region is nothing to write home about. “Imports from other African countries accounted for 27% share of Ghana’s import trade and the large part of it is as a result of the importation of crude oil and that impact is significantly because indeed trade between our country and the West African sub-region is very small, nothing to write home about,” Mbiah noted.
South Africa-China science park cooperation: launch (GCIS)
We hope to build on the successful industrial development partnership that has emerged through the development of the Special Economic Zone in our Limpopo Province. Similar to China, we are implementing Special Economic Zones to accelerate manufacturing and mining production. Increasingly, innovation will play a bigger role in the production activities in these Zones. We are confident that we will be able to build an industrial development partnership in high-technology areas with global growth potential. This includes ICTs, advanced manufacturing, the bio-economy, and renewable energy. In advancing the current partnership, our analysis points to the development of multiple research and innovation spaces informed by but not bundled with a Special Economic Zone. In parallel to advancing a long-term high-technology industrial development partnership, we have identified short-term opportunities which will offer significant opportunities for China to expand its R&D and innovation activities into South Africa. [Speech by Minister Naledi Pandor]
The United States and China in Africa: what does the data say? (pdf, SAIS China-Africa Research Initiative)
With Chinese engagement increasing in Africa, observers have asked how US engagement is similar or different. How do oil exports influence Chinese and US trade relations with Africa? Why do Chinese and US firms favor investment in different African industries? What are the main sectors to which China and the United States provide loans in Africa? This policy brief analyzes CARI’s data on Chinese and US trade, FDI, and loans to Africa over the past 15 years to answer such questions.
Tanzania: China to punish traders in substandard goods (Daily News)
Chinese Foreign Affairs office in Guangdong Province is putting in place legislation that will severely punish its citizens or anyone found exporting substandard goods to Tanzania and other parts of the world. Speaking at a meeting with journalists, Deputy Director General of Foreign Affairs in Guangdong, Luo Jun, said Guangzhou is the economic city of many African traders, and thus any trader who will be found selling to them any substandard goods, will not only be charged with a criminal offence, but also face severe punishment. He said having the law in place, no one will be pardoned in the sale of low quality goods to dismiss allegations that China lacks mechanisms to deal with such crime.
Cocoa growers will work together on strategy to fight rout (Bloomberg)
“We are in a crisis, in a price crisis,” Louis Valverde, chairman of the International Cocoa Organization, said. “The last six months have been terrible, and the forecast is even worse.” Cocoa futures in New York have plunged more than 40% in the past year amid a worldwide glut caused by bumper harvests in West Africa. While many commodities have been saddled by oversupply in recent years, in markets such as crude oil, producers have been able to stem price losses by agreeing on output cuts. Now, growers of the chocolate ingredient plan on working together on strategy. “We can no longer make sole decisions,” Valverde said. “We now make decisions as a group.”
EAC: EALA hits the road on last phase of sensitisation
The twelve-day activity which started on 20 April, is premised on the theme EAC integration agenda: accessing the gains. The sensitisation phase hopes to bring EAC citizens up to speed on the overall integration process, promote liaison with EAC National Assemblies and key stakeholders and create awareness among the populace on the gains and challenges of integration. It also seeks to enhance mutual relationships between EALA and the citizens of the region.
Global survey reveals the impact of declining trust in the internet on e-commerce (UNCTAD)
Released at the UNCTAD E-Commerce Week in Geneva, the 2017 CIGI-Ipsos Global Survey on Internet Security & Trust shows that among those worried about their privacy, the top sources of concern were cybercriminals (82%), Internet companies (74%) and governments (65%). Lack of trust is most likely to keep people off e-commerce platforms in the Middle East, Africa and Latin America, suggesting that the potential gains of e-commerce are not spread evenly around the globe. The survey also revealed great differences in e-commerce behavior when it came to how users are purchasing goods online. For example, in China, India and Indonesia, more than 86% of respondents expect to make mobile payments on their smartphone in the next year, compared with less than 30% in France, Germany and Japan.
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President Kagame speaks on African Union reforms
Remarks by President Paul Kagame at the Meeting on Institutional Reform of the African Union in Conakry, 24 April 2017
Good morning. It is a pleasure to be back in Conakry.
I would like to begin by thanking our brother, President Conde, the Chairperson of our Union, for inviting us for this important consultation on the institutional reform of the African Union.
I also thank his predecessor, President Deby, for being with us today, and for having initiated this new chapter of reform.
As you know, under their dynamic leadership, the Assembly of Heads of State adopted a wide-ranging decision this past January, that is going to make the African Union more relevant and fit-for-purpose. Under the leadership of President Deby, and now President Conde, we are seeing this take root.
Implementing these measures is critically important for Africa. We take it very seriously and this is why President Conde has brought us here today.
We intend to review the implementation timeline and ensure that the new Commission has the resources needed to move forward at full speed.
I am pleased to say that Chairperson Moussa is off to a good start. He has made reform a priority. As the Heads of State mandated to supervise the process, we stand ready to provide him and his team whatever support they need, as we continue the reforms as necessary.
Allow me to take this opportunity to remind you of the main components of the reforms, and most importantly the reasons why they were adopted.
First, the African Union will focus on key priorities with continental scope, while empowering Regional Economic Communities to take the lead where they are best placed to do so.
Second, re-align African Union institutions to deliver on those key priorities.
Third, connect the African Union more closely to citizens, so our people feel they have a stake in its work.
Fourth, manage the business of the African Union more efficiently and effectively, notably in how Summits are conducted and how personnel are selected.
Finally, finance the African Union sustainably from our own resources.
Beyond the details, it’s really about embedding a mindset in this institution of always striving to do the best for our people.
The basis for the urgency of these measures is clear. The global context is changing rapidly. Standing united, with a common vision of our continent’s interests and aspirations, we can bend the trail of history in Africa’s favour.
There are two priorities to focus on in the time ahead, leading up to the next Summit.
First, we need to accelerate the decision to finance the African Union with a levy on eligible imports. Everything else flows from this and we cannot afford to get bogged down.
The second priority is to move quickly with those reforms, which can be implemented right away.
One example is speaking with one voice, when Africa as a whole engages with external partners. Nobody benefits from the confusion inherent in the current method of doing business. The Chairperson of the Commission and the Chairperson of the African Union should take the lead.
Another example is to agree on a binding mechanism to ensure that Member States are held accountable for respecting key African Union decisions, such as the ones on financing and institutional reform.
These would be strong signals that we are serious about doing things differently.
The mood for change is already there and we have a clear roadmap. Let’s capitalise on it, prioritise the next steps, and keep up the good momentum.
In that spirit, I look forward to welcoming Chairperson Moussa, as well as African Union Foreign Ministers and Permanent Representatives, in Kigali in early May for an extensive briefing on reform implementation.
Let’s work together to shape the future we want for Africa.
I thank you.
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The AU Trade and Industry 6th Strategic Stakeholders Retreat kicked off today at Premier Hotel in Midrand, South Africa.
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Migration and Development Brief: Remittances to developing countries decline for second consecutive year (World Bank)
India, while retaining its top spot as the world’s largest remittance recipient, led the decline with remittance inflows amounting to $62.7bn last year, a decrease of 8.9% over $68.9bn in 2015. Remittances to other major receiving countries are also estimated to have fallen last year, including Bangladesh (-11.1%), Nigeria (-10%), and Egypt (-9.5%). The exceptions among major remittance recipients were Mexico and the Philippines, which saw inflows increase by an estimated 8.8% and 4.9%, respectively, last year. Remittances to Sub-Saharan Africa (pdf): With the firming of oil prices and improvement in global economic activities projected for 2017, remittances to SSA are projected to increase by 3.3%. Remittances to Nigeria, the largest regional remittance recipient, are expected to increase by 1.9%. Ghana, the second largest recipient in the region, is expected to receive 3.1% more remittances. Remittance inflows to Senegal, the third largest recipient, are expected to grow by 2.6%.
Trade and investment for decent work (pdf, AU)
USDOL will continue to engage with AGOA stakeholders, including African governments, the African Union, industry, and civil society to promote labor and trade coordination under AGOA. The 2017 AGOA Forum, to be held in Lomé, Togo, will continue the discussion of labor and trade coordination, targeting ministers and technical experts from ministers of trade across sub-Saharan Africa. Messaging from African ministers of labour to African ministers of trade about the importance of and political will to coordinate would be welcome at the AGOA Forum, as would the presence of a commission of labour ministers at the meeting. Issues for discussion: [Tabled at 2nd Session of the STC on Social Development, Labour and Employment, 24-28 April, Algiers]
UN body warns region against signing trade deal with EU (The EastAfrican)
The UNECA says in a report that if the EPA is signed, local industries will struggle to withstand competitive pressures from EU firms, while the region will be stuck in its position as a low value-added commodity exporter. “If the EAC-EU EPA is fully implemented, the region risks losing trading opportunities with other partners, industrial output, welfare and GDP,” the 45-page report seen by The EastAfrican says. The report titled Analysis of the impact of the EAC-EU Economic Partnership Agreement on the EAC economies is yet to be made public and is expected to be discussed by the Council of Ministers in the “days to come,” according to sources at the EAC Secretariat. The report, commissioned by the EAC Secretariat, is likely to further polarise the position of the Community’s members on the EPA, which Kenya and Rwanda have already signed. According to David Luke, co-ordinator of the African Trade Policy Centre at UNECA, the deal with Europe will be calamitous unless EAC countries are able to clearly define what their infant industries are, as well as identify sub-sectors they intend to protect.
Kenya: New OSBPs triple KRA custom revenue (Business Daily)
The Kenya Revenue Authority says it has tripled custom revenue collections in its seven border points after it began operating one-stop border posts in June 2016. The move, which put together bureaucrats involved in cross-border clearance processes under one roof, has also cut cargo clearance time from the previous three days to just under 1 hour, the agency said. KRA Western Regional Coordinator Kevin Safari said the simplified procedures have attracted traders into the cross order business as well as reduced smuggling hence the increased revenues.
Mauritius: External Merchandise Trade Statistics - February 2017 (GoM)
Balance of Visible Trade showed a deficit of Rs 5,647 million in February 2017 lower by 34.4% compared to the previous month and higher by 15.6% when compared to the corresponding month of 2016. France (16.4%), USA (11.3%), United Kingdom (10.7%), and South Africa (8.0%) were our major export destinations in February 2017 while our imports were mainly from India (17.0%), China (13.4%), South Africa (8.6%) and France (8.4%).
Updates on Egypt’s intra-African, agricultural trade policy processes:
Agriculture Export Council prepares to enter Africa: The Agriculture Export Council is working on the preparation of marketing and consumer studies for the African markets and is expected to finish them in May. The AEC also intends to raise exports of the sector to $2.26bn in 2017, up from $2.146bn in 2016, with an expected growth of 5%. Head of the AEC, Abdel Hamid Demerdash said the studies are based on exploiting the joint trade agreements between Egypt and the rest of the African countries, which will contribute to entering these markets with the help of intact economic trade plans. He explained that Egyptian agricultural exports to the markets of Africa are low in terms of size and value. He noted that Kenya is one of the most important countries to Egyptian exports; despite so, Kenya only receives 7,000 tonnes of agricultural exports per year from Egypt. He added that the total size of Egyptian agricultural exports to all markets in Africa is below $25m per year.
Horticultural Export Improvement Association prepares field studies for expansion in Africa: Chairperson of the Horticultural Export Improvement Association, Mohsen El Beltagy, said the plan to expand in the African markets will begin in September. The goal of the association is to account for the largest possible share in African markets, he stated, especially as many other countries have their eyes set on moving to Africa. He said that Egypt did not benefit from Africa at all, due to the lack of studies and weak exporting. Ghana, Guinea, Kenya, Uganda, and Zambia are the markets being targeted for entry, he stated. [ICTSD: Agricultural policies, trade and sustainable development in Egypt (pdf)]
Tanzania: Zambia yet to release timber trucks (Daily News)
Owners of trucks seized in Zambia carrying logs from DR Congo are counting a loss of 15bn/-. Their 600 trucks have been held for two months now. They are calling for immediate solution to the matter. Elaborating on the incurred losses, Deputy Chairman of the TATOA, Mr Elias Lukumay, said for the period of two months, the trucks could have generated a total of 15bn/- should they have been operating for the fact that each of them could bring in $10,000 for a return trip within that period. The association went on raising concern over the predicament of the drivers and conductors (about 1,200 of them), who are stranded in Zambia, saying that their safety and health were at risk due to insecurity at the DRC-Zambia border. The Zambian government impounded the consignment after alleging that the logs were harvested in that country. However, Tatoa maintains that the logs were in transit to the Dar es Salaam Port from the DRC and the drivers had all documents to prove that the logs were from the DRC.
Malawi: Aflatoxins cost Malawi k8bn yearly (The Nation)
Malawi is losing an estimated $11m (about K8 billion) annually due to availability of aflatoxins found in some grains and legumes including groundnuts and maize, Business News has learnt. Partnership for Aflatoxin Control in Africa (Paca) country officer Mphatso Dakamau said Malawi was once one of the leading exporters of groundnuts in the region but lost its market share in the early 1990s due to the availability of aflatoxins in groundnuts. Paca is an AU initiative operating in six countries: Senegal, Nigeria, Gambia, Uganda, Tanzania and Malawi. Deputy Director of Trade, Charity Musonzo, said there is light at the end of the tunnel for Malawi because the country will from next year start producing a bio control product, known as aflasafe, which is currently on trials in some districts.
COMESA: Livestock Forum for the Establishment of Regional Livestock Policy Hub
During the two-day meeting in Mauritius, the delegates critically reflected on potential responsibilities and contributions of the RLPH in the development of the livestock sector in COMESA; developed an action plan that included the steps to formalize the RLPH as a tool for livestock development within the COMESA Region. The Livestock Forum agreed on the following recommendations and way forward:
Angola: Chinese businesses quit after ‘disastrous’ currency blow (Bloomberg)
Tens of thousands of Chinese have left Angola because of the oil slump that’s hurt business and halted construction projects, according to the head of a commerce group. The number of Chinese workers and business owners has fallen to about 50,000, a quarter of what it was four years ago, Xu Ning, the chairman of the Angola-China Industrial and Commerce Association, said in an interview in the capital, Luanda. Those who stayed are recovering from a “disastrous” 2016, with most Chinese-led construction projects still halted, he said. “Last year was very bad, we lost a lot of money,” Xu said. “Many closed down their businesses and went back to China, crying.”
India: Visa crunch causes Dongri’s Nigerian garment trade to fray (Times of India)
But visas for Nigerian nationals have tightened since 2012, hitting both local traders and the city’s small Nigerian community. Approximately 3,000 business visas were issued last year, down from 9,000 in 2011, according to Sharad Srivastava, the first secretary (consular) of the High Commission of India in Abuja. He cites three reasons for the drop: closer scrutiny of documents; a dip in the Nigerian economy due to falling oil prices; and a weakening Naira, the national currency, with the consequent rationing of dollars by Nigeria’s Central Bank, which has affected Nigerian travel. As a result, wholesale sales on Mohammed Ali Road [in Mumbai] have fallen by 50-75%. Traders here have customers from other African countries - Sudan, Djibouti, Ghana, Tanzanian and Kenya - but most export depends on Nigerians.
Nigeria: Government fast tracks bill against sea pirates, illegal trade (Guardian)
Determined to ensure optimum safety, the Federal Government is concluding plans to put in place a new law to curtail the activities of illegal shippers and sea pirates on Nigerian nation’s waters. The bill on ‘Suppression of Piracy and other unlawful Acts at Sea,’ is currently with the executive arm of government waiting to be transmitted to the legislative chambers for proper processing into law.
Closing out the World Bank – IMF Spring Meetings: selected postings
African Consultative Group Meeting: Minister Kenneth O. Matambo (Chairman of the African Caucus) and Ms Christine Lagarde (MD of the IMF) co-chaired the African Consultative Group meeting at the IMF Headquarters. They issued the following statement after the conclusion of the Group’s meeting in Washington:
Press briefing by Abebe Aemro Selassie (IMF’s African Department): Lastly, on the bond notes in Zimbabwe. This is something we are beginning to look at. It’s, of course, a recent phenomenon. Zimbabwe is in a very, very difficult situation, as you know. There’s a limited amount of foreign exchange inflows coming in and no monetary policy tool. So, they are in a difficult circumstance right now. We think that, going down this one note route, in and of itself, will not address the challenges that the country has. So, it’s very important to have a more comprehensive policy package which also addresses a lot of the fiscal challenges that the country faces, a lot of the structural reforms that have to be done. So, it’s, again, more of a holistic package of reforms that are required to get Zimbabwe out of the place it’s in right now. [Middle East and Central Asia briefing]
Multilateral banks to deepen collaboration with private sector to boost inclusive, sustainable infrastructure: 2017 Global Infrastructure Forum Outcome Statement (pdf): The MDBs also agreed in April 2017 Principles to Crowd in Private Sector Finance and have agreed on their strategy to achieve this objective. The implementation of these principles and strategy will be of particular importance for scaling up investment in sustainable infrastructure. The MDBs are also working on a Joint MDB Statement of Ambitions, to be published in July, for Crowding in Private Sector to Support Infrastructure, which include specific commitment focusing on the operationalization of the Principles. [Annex to Outcome Statement: Action Progress (pdf; Mobilization of private finance by multilateral development banks: 2016 Joint Report (pdf)]
Communiqués: IMFC, Development Committee
G20 Compact with Africa: Germany, IMF strengthen capacity development cooperation
UN, World Bank sign new partnership to build resilience for the most vulnerable
World Bank Group, China-led AIIB agree to deepen cooperation (Reuters): They said in a joint statement that they are discussing more projects to be co-financed in 2017 and 2018. “Signing this memorandum of understanding fits into our vision of a new kind of internationalism,” AIIB President Jin Liqun said. “It deepens our relationship with the World Bank Group and sets up the mechanisms through which we can more easily collaborate and share information.”
Today’s Quick Links: Nigeria: Federal Government approves 48hr for import, export trade deals timeline Political differences between Burundi and Rwanda stifle Zambian trade Hercules Haralambides: Globalization, public sector reform, and the role of ports in international supply chains Competitive Enterprise Institute: Africa economic success depends on three big reforms Malawi: Dalitso Kabambe appointed as new RBM Governor Piyushi Kotecha: How African universities can lead climate-friendly development OECD Working Paper: Climate-resilient infrastructure - getting the policies right (pdf) Central bankers and inclusive growth: building a framework for financial inclusion (IMF) |
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UN body warns region against signing trade deal with EU
A United Nations think-tank has warned the East African Community against 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.
The United Nations Economic Commission for Africa (UNECA) says in a report that if the EPA is signed, local industries will struggle to withstand competitive pressures from EU firms, while the region will be stuck in its position as a low value-added commodity exporter.
“If the EAC-EU EPA is fully implemented, the region risks losing trading opportunities with other partners, industrial output, welfare and GDP,” the 45-page report seen by The EastAfrican says.
The report titled Analysis of the Impact of the EAC-EU Economic Partnership Agreement on the EAC Economies is yet to be made public and is expected to be discussed by the Council of Ministers in the “days to come,” according to sources at the EAC Secretariat.
The report, commissioned by the EAC Secretariat, is likely to further polarise the position of the Community’s members on the EPA, which Kenya and Rwanda have already signed.
The two countries were opposed to the commissioning of the study that was requested by Tanzania towards the end of last year.
Uganda said it would only sign the EPA if there was consensus among the EAC members while Burundi refused to sign the agreement until the EU lifts sanctions imposed on Bujumbura in 2015.
Sources say Rwanda and Kenya have already said they will not discuss the report at the next Council of Ministers meeting.
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.
However, UNECA says the removal of taxes on capital goods from Europe will cause the EAC accumulated revenue losses of $1.15 billion per year. The market would be opened up over a 25-year period and capped at 80 per cent market access.
The UNECA findings are in direct conflict with a 2014 report by the European Commission, which shows that the region will experience an economic boom due to improvements in market access to the EU.
But according to David Luke, co-ordinator of the African Trade Policy Centre at UNECA, the deal with Europe will be calamitous unless EAC countries are able to clearly define what their infant industries are, as well as identify sub-sectors they intend to protect.
“While the EPA purportedly intends to respect regional integration programmes, they are adding to the complexity of the task. Additional burdens are created through provisions that complicate or contradict the agreements African states have with each other or are about to make,” Mr Luke said.
Rwanda’s Minister of Trade, Industry and EAC Affairs, Francois Kanimba, said the report is a “political tool” and a step back in long-term negotiations to secure a positive deal with the EU.
According to Mr Kanimba, even Uganda – which has been undecided over the EPA – had argued that mentioning the report in the upcoming council of minister’s meeting is “not correct because there was no consensus gained before conducting it.”
“I think this is now a political issue. These negotiations took more than seven years and have been conducted at several levels in order to minimise the potential risk that this arrangement can have for our infant industries and our economy at large,” he said.
“You cannot expect an agreement where you offer nothing and want to get everything. It does not make sense. The most important aspect was to secure a quota-free and duty-free access to EU market, which is a huge benefit for all the countries in the region,” he added.
EAC has been negotiating the EPA since 2007 and the current differences reflect the divergent economic strategies of the member states. Rwanda which has a small industrial sector is pursuing a growth strategy based on building a knowledge-based economy while Kenya has a fairly developed industrial sector and perceives less risk from the EA.
Key findings of the Analysis of the Impact of the EAC-EU Economic Partnership Agreement (EPA) on the EAC Economies report:
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The bilateral deficit will increase given that the EPA does not represent improved market access for EAC countries to Europe over the short-to-midterm, as tariff eliminations are implemented.
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Local industries will not withstand the competitive pressures from EU firms, and the region could get locked even more firmly in its role as a low value-added commodity exporter.
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Welfare in the EAC will likely reduce as a consequence of EPA. Most losses will be accrued by Kenya – $45 million – while the EU will register a huge welfare gain of $212 million.
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Intra-EAC imports could decline by $42 million – mainly in manufacturing – while tariff revenues from EU imports would decline by $169 million.
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The EPA adds to the potential complexity in rolling out an effective industrial policy due to clauses that impinge on the way domestic support measures are provided.
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It prevents EAC from later applying a higher tariff rate on capital and manufactured goods like pharmaceuticals, yet EAC countries might be in a position to produce them in the future.
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It mainly benefits the EU which needs unrestricted access to strategic materials produced in EAC – as expressed in the 2008 EU Raw Materials Initiative.
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The EPA does not mention commitment to additional funding from the EU for development, unlike similar agreements in place with other regions such as ECOWAS.
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Africa security forum opens in Ethiopia, natural resources tops agenda
The sixth Tana High-level Forum on Security in Africa opened on 22 April 2017 in the Bahir Dar city of Ethiopia, where the management of the continent’s natural resources tops the agenda.
“The Forum has become a platform to nurture open dialogue on the continent’s peace. Unless we manage our natural resources properly, they will become a source of contention,” said Ethiopia’s Prime Minister Hailemariam Desalegn.
He added: “If natural resources have to contribute to human development, they ought to be used productively. Natural resources need to be transformed to manufactured capital and human capital. Specific policies are needed for that to happen.”
A 2016 African Development Bank report notes that over the past 60 years, 40 to 60 per cent of internal armed conflicts on the continent are related to natural resources.
The chairperson of the forum, former Nigerian President Olusegun Obasanjo said that in 2016, Ethiopia, South Africa and Tunisia were among African countries that witnessed protests related to natural resources management.
The deputy chairperson of the African Union Commission, Thomas Kwesi Quartey said that Africa needs to focus on educating its youth in order to solve its major development challenges including natural resources governance.
Reports show that Africa is rich in natural resources, including 12 per cent of global oil reserves, 40 per cent of gold deposit and hundreds of precious minerals.
The continent also possesses 60 per cent of the world’s arable but uncultivated land.
The forum will reflect on what is hampering the continent from better managing its natural resources and come up with recommendations on the way forward.
The two-day forum will also address issues related to the management of agricultural land, inland water, sea water, forests and biodiversity of Africa.
Also on the agenda is the growing demand by some African countries for the renegotiation of concessions with multinational companies, responsible revenue management and resource sovereignty
Among the attendees of the forum are President Yoweri Meseveni of Uganda and former South Africa President Thabo Mbeki.
Named after Ethiopia's biggest lake and the origin of Blue Nile (Lake Tana), the forum was started in 2012 by the Addis Ababa University’s Institute for Peace and Security Studies following the August 2009 African Union Tripoli Declaration on the need for centred solutions for the continent's challenges.
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Remittances to developing countries decline for second consecutive year
Remittances to developing countries fell for a second consecutive year in 2016, a trend not seen in three decades, says the latest edition of the Migration and Development Brief, released on 21 April 2017 during the World Bank’s Spring Meetings.
The Bank estimates that officially recorded remittances to developing countries amounted to $429 billion in 2016, a decline of 2.4 percent over $440 billion in 2015. Global remittances, which include flows to high-income countries, contracted by 1.2 percent to $575 billion in 2016, from $582 billion in 2015.
Low oil prices and weak economic growth in the Gulf Cooperation Council (GCC) countries and the Russian Federation are taking a toll on remittance flows to South Asia and Central Asia, while weak growth in Europe has reduced flows to North Africa and Sub-Saharan Africa.
The decline in remittances, when valued in U.S. dollars, was made worse by a weaker euro, British pound and Russian ruble against the U.S. dollar.
As a result, many large remittance-receiving countries saw sharp declines in remittance flows. India, while retaining its top spot as the world’s largest remittance recipient, led the decline with remittance inflows amounting to $62.7 billion last year, a decrease of 8.9 percent over $68.9 billion in 2015.
Remittances to other major receiving countries are also estimated to have fallen last year, including Bangladesh (-11.1 percent), Nigeria (-10 percent), and Egypt (-9.5 percent). The exceptions among major remittance recipients were Mexico and the Philippines, which saw inflows increase by an estimated 8.8 percent and 4.9 percent, respectively, last year.
“Remittances are an important source of income for millions of families in developing countries. As such, a weakening of remittance flows can have a serious impact on the ability of families to get health care, education or proper nutrition,” said Rita Ramalho, Acting Director of the World Bank’s Global Indicators Group.
In keeping with an improved global economic outlook, remittances to developing countries are expected to recover this year, growing by an estimated 3.3 percent to $444 billion in 2017.
The global average cost of sending $200 remained flat at 7.45 percent in the first quarter of 2017, although this was significantly higher than the Sustainable Development Goal (SDG) target of 3 percent. Sub-Saharan Africa, with an average cost of 9.8 percent, remains the highest-cost region. A major barrier to reducing remittance costs is de-risking by international banks, when they close the bank accounts of money transfer operators, in order to cope with the high regulatory burden aimed at reducing money laundering and financial crime. This has posed a major challenge to the provision and cost of remittance services to certain regions.
The Brief notes that several high-income countries that are host to many migrants are considering taxation of outward remittances, in part to raise revenue, and in part to discourage undocumented migrants. However, taxes on remittances are difficult to administer and likely to drive the flows underground.
On the global migration crisis, the Brief notes that between 2015 and 2016, the number of refugees in the 28 European Union countries increased by 273,000 to 1.6 million. During the same period, the number of refugees worldwide increased by 1.4 million, to 16.5 million.
In a special feature, the Brief notes the absence of a formal definition of the Global Compact on Migration, and advances a working definition of “an internationally negotiated framework for governments and international organizations to harness the benefits of migration while navigating its challenges.” It calls for regional and bilateral agreements that address migration, to develop a normative framework or guidelines for governments and international organizations.
“Migration will almost certainly increase in the future due to large income gaps, widespread youth unemployment, ageing populations in many developed countries, climate change, fragility and conflict,” said Dilip Ratha, lead author of the Brief and head of the Global Knowledge Partnership on Migration and Development (KNOMAD). “Currently, the global migration architecture is fragmented and undefined. The global community needs to systematically map the current institutional framework, clarify the missions of key organizations, and develop normative guidelines by building on existing conventions that address migration.”
Regional Remittance Trends
Latin America and the Caribbean was the only region to see growth in remittances in 2016, estimated at $73 billion, an increase of 6.9 percent over 2015, as remittance senders took advantage of the strong U.S. labor market and beneficial exchange rates. Robust remittance growth was estimated for Mexico, El Salvador and Guatemala. In 2017, remittances to the region are projected to grow by 3.3 percent to $75 billion.
Remittances to the South Asia region declined by an estimated 6.4 percent to $110 billion in 2016 due to lower oil prices and fiscal tightening in the GCC countries. In addition to the decline in remittances to India and Bangladesh, Nepal also saw a contraction of 6.7 percent, while Pakistan saw modest growth of 2.8 percent. Remittances to the region are expected to grow by a muted 2 percent to $112 billion in 2017.
The economic slowdown in the GCC countries also impacted remittances to the Middle East and North Africa, which saw an estimated decline of 4.4 percent to $49 billion in 2016. The decline for the region was driven by Egypt, the region’s largest remittance recipient. Remittances to the region are expected to expand by 6.1 percent to $52 billion this year.
Remittance flows to Sub-Saharan Africa declined by an estimated 6.1 percent to $33 billion in 2016, due to slow economic growth in remittance-sending countries; decline in commodity prices, especially oil, which impacted remittance receiving countries; and diversion of remittances to informal channels due to controlled exchange rate regimes in countries such as Nigeria. Remittances to the region are projected to increase by 3.3 percent to $34 billion in 2017.
Remittance flows to Europe and Central Asia continued to be severely affected for a third year in a row, contracting by an estimated 4.6 percent to $38 billion in 2016. Low oil prices and sanctions continued to impact Russia, which is both a recipient and a remittance-source country. Uzbekistan saw remittances shrink by nearly one-third since 2013, while Azerbaijan, Turkmenistan, and Tajikistan were also hard hit. For 2017, remittances to the region are expected to increase by 6.6 percent to $41 billion, mainly due to stronger growth in Russia and several European countries.
Remittances to the East Asia and Pacific region declined by an estimated 1.2 percent in 2016 to $126 billion. Flows to major recipients presented a mixed picture, with remittances to the Philippines growing by almost 5 percent, while those to Indonesia fell by 4.4 percent. For 2017, remittances to the region are forecast to grow 2.5 percent to $129 billion.
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Multilateral banks to deepen collaboration with private sector to boost inclusive, sustainable infrastructure
Leaders of the top multilateral development banks (MDBs) have agreed to deepen their collaboration to encourage private sector investment in vital infrastructure needed to support sustainable and inclusive economic growth throughout the world.
Under the theme of “Delivering Inclusive, Sustainable Infrastructure,” the Global Infrastructure Forum 2017 provided a venue to discuss how MDBs can best work with countries and the private sector to create markets for infrastructure projects. The forum brought together potential investors, representatives of the United Nations and the G20 with the heads of the African Development Bank, Asian Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, Inter-American Investment Corporation, International Finance Corporation, Islamic Development Bank, New Development Bank and the World Bank.
Basic infrastructure services – like roads, water and sewage lines, and electrical power – are scarce in many developing countries. Over one billion people live without electricity, more than 660 million people don’t have access to clean drinking water, and one in three people lack access to flushing toilets and sewerage infrastructure. In addition, countries face the urgent need to invest in climate-resilient infrastructure and renewable, efficient energy sources.
With trillions of dollars in capital sitting on the sidelines earning low or even negative returns, deeper engagement with the private sector can create win-win scenarios where investors earn better returns on long-term investments and developing countries get much needed investment and expertise.
In order to fulfill commitments that countries throughout the world made to meet the ambitious Sustainable Development Goals, the MDBs pledged not only to leverage their resources by joining forces to co-finance projects, but also to help generate interest among private sector investors in Public-Private Partnerships and the development of infrastructure as an asset class for institutional investors.
These pledges are included in the MDBs’ Outcome Statement, issued on 22 April 2017 at the Forum.
Among the speakers at the day-long event were Amina Mohammed, Deputy Secretary General of the United Nations, and Wolfgang Schäuble, Finance Minister of Germany, which currently chairs the G20.
Eight parallel sessions explored a variety of subjects:
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How to ensure that infrastructure meets environmental and climate change standards;
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How to help cities meet their infrastructure needs and climate objectives;
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The role of national development banks in implementing renewable energy and energy efficiency programs;
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Mobilization of private and concessional resources;
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Special challenges faced by least developed countries, small island developing states and landlocked developing countries;
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Risk mitigation for emerging market infrastructure;
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Infrastructure as an asset class for institutional investors;
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How to prepare projects with an eye on costs and quality control; and constraints and opportunities for energy and economic development in Africa.
The full agenda of the Global Infrastructure Forum 2017 is available on the Forum’s website, along with a reference guide on Public-Private Partnerships (PPPs), country data, information on specific infrastructure sectors, key databases and other tools.
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Development Committee Communiqué: An essential role, a new approach
Even as the global economy begins to strengthen, major risks remain for developing countries and the world’s poor. The World Bank Group retains an essential role in helping ensure that growth is sustainable, with benefits that reach everyone and help reduce poverty and inequality.
This was a key message from the Development Committee, a ministerial-level forum of the World Bank Group and the International Monetary Fund, in a communiqué issued at the close of the institutions’ Spring Meetings in Washington.
The committee, which represents 189 member countries, reiterated its support for the Bank Group’s role in tackling a wide range of challenges in the global public goods arena and its work to develop a comprehensive approach to crises. On the urgent issues of famine and forced displacement, the committee cited both “efforts to mobilize and rapidly disburse support for countries, communities, and refugees” and the importance of “investing to address the root causes and drivers of fragility and helping countries build institutional and social resilience.”
World Bank Group Jim Yong Kim addressed this new approach in his opening remarks to the press at the beginning of the meetings. The Bank Group is working closely with the UN and other global partners on a coordinated and effective response to famine in parts of East Africa and Yemen. At the same time, Kim emphasized that “we will use every tool we have, financial and advisory, to prevent famine in the future.”
On the refugee crisis, in a speech at the London School of Economics in the lead-up to the meetings, Kim noted major efforts that address urgent needs while supporting long-term development objectives. IDA, the Bank Group’s fund for the poorest countries, has allocated $2 billion over the next three years to support low-income countries that are hosting refugees.
A complementary initiative addresses the cross-border nature of forced displacement. As Kim explained, “For the first time, we’re also providing concessional, essentially below-market interest financing to any middle-income country hosting refugees through our new Global Concessional Financing Facility, starting with support to Jordan and Lebanon, who are hosting millions of Syrian refugees.”
The committee’s communiqué and the statements by Kim stress the need to address doubts that many people feel, in developed and developing countries alike, whether they are benefiting from a more interconnected and economically integrated world. Some of this is rooted in inequality; the committee notes that “gains have not always been shared evenly within countries.” Kim’s speech in London also highlights a “convergence of aspirations,” as technology makes it easier for people to compare their income prospects and quality of life with others around the world. He noted the risks: when people have “no opportunity to achieve those aspirations, frustration may very well lead to fragility, conflict, violence, extremism, and eventually migration.”
To meet the ambitions embodied by the world’s Sustainable Development Goals – as well as growing aspirations – he and the committee have emphasized a major shift in thinking about development finance: the need to mobilize funding on a much larger scale, with a stepped-up role for investments from the private sector.
For many projects crucial to development, even in the poorest countries, the Bank Group sees untapped potential for private investment, on commercial terms. As the committee puts it, development partners can “prioritize private sector solutions when deploying scarce public resources, including for infrastructure.” The Bank Group can help by reducing risk, both real and perceived, for investors, while also helping ensure that projects really work for poor countries and poor people.
As Kim states in his speech, there “has never been a better time to find those win-win solutions. The trillions of dollars sitting on the sidelines, earning little interest, and the investors looking for better opportunities should be mobilized to help us meet the exploding aspirations of people all over the world.”
Development Committee Communiqué
World Bank/IMF Spring Meetings 2017
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The Development Committee met today, April 22, in Washington, D.C.
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The global economy is gaining momentum, but risks remain tilted to the downside. Further improvements in the global outlook will require policies that foster inclusive and sustainable growth, address financial vulnerabilities, and create jobs and economic opportunities for all. Actions to tackle the adverse impact of the decline in correspondent banking relations are an important priority for many countries. World Bank Group (WBG) and International Monetary Fund (IMF) advice and support are important to advance such policies, deliver the 2030 agenda, and protect the most vulnerable.
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Reducing inequality is necessary to ensure long-term and sustainable growth. Technological change, trade, financial flows, and economic integration have helped boost incomes and have narrowed the economic gaps between countries. But these gains have not always been shared evenly within countries. We urge the WBG and IMF to redouble efforts to eradicate poverty and ensure that the benefits of international economic integration are shared widely.
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We welcome the implementation update on the WBG Forward Look. In October, we endorsed a vision for a better, stronger, and more agile WBG and identified areas for improvement. We recognize the progress so far in becoming a better WBG. We encourage continuing efforts, in coordination with development partners, to implement and report on the Forward Look commitments and associated policies to (i) prioritize private sector solutions when deploying scarce public resources, including for infrastructure; (ii) strengthen domestic resource mobilization; (iii) support global public goods; (iv) assist all WBG client segments; (v) be more agile, responsive, and results-focused in working across the public and private sectors; and (vi) pay special attention to stabilizing the economy and supporting growth in situations of fragility, conflict, and violence, as well as to the development needs of small states.
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We support the WBG’s scaled-up activities in the area of crisis preparedness, prevention, and response, through investments to address the root causes and drivers of fragility by helping countries build institutional and social resilience. We encourage further efforts to mobilize and rapidly disburse support for countries, communities, and refugees that are affected by famine or forced displacement, in close coordination with the UN and other partners. We acknowledge the various initiatives by the WBG to strengthen the Humanitarian-Development-Peace nexus.
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We are encouraged by the WBG’s efforts to become more efficient through reforms of its operational and administrative policies and its People Strategy. We welcome the budget discipline introduced by the Expenditure Review, acknowledge WBG efforts to ensure transparency and accountability in tracking and reporting how it uses its scarce resources, and urge continued commitment on these fronts.
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We also welcome progress and discussions to strengthen the WBG’s financial capacity. We are greatly encouraged by the successful IDA replenishment negotiations. IDA18 delivered a record $75 billion thanks to the generosity of partners and the plans to leverage IDA’s equity. Innovative measures introduced, such as the Private Sector Window, will help catalyze additional resources for IDA countries. We look forward to successful implementation that maximizes development impact.
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We take note of the ongoing discussions to enhance the WBG’s financial capacity and enable it to deliver on the ambition of the Forward Look. We ask the Board and Management to develop a set of options by the Annual Meetings in October 2017.
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We welcome the progress made in the Shareholding Review and recall our commitment to the principles we endorsed in Lima toward a WBG that reflects the evolution of the global economy and contributions to the WBG’s mission. We are encouraged by progress on diversity and inclusion in WBG staff and management, and we support similar progress on gender diversity in the Executive Board.
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The next meeting of the Development Committee is scheduled for October 14, 2017.
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African Consultative Group Meeting: Statement by the Chairman of the African Caucus and the Managing Director of the IMF
Minister Kenneth O. Matambo, Chairman of the African Caucus, and Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), co-chaired the African Consultative Group meeting on 23 April 2017 at the IMF Headquarters. They issued the following statement after the conclusion of the Group’s meeting in Washington.[*]
“We had very productive discussions on Africa’s economic prospects, focused on policy challenges and opportunities. Reflecting the difficult external economic environment, particularly related to continuing low commodity prices and security-related challenges, economic growth in Africa slowed in 2016 to its lowest level in two decades. However, there continues to be significant variation in economic performance across countries, with non-resource intensive countries, particularly in sub-Saharan Africa, continuing to grow robustly.
“We agreed that the medium-term outlook remains clouded. The external environment has improved somewhat, but significant downside risks and policy uncertainties remain. A possible faster-than-expected normalization of monetary policy in the US could imply a sharp U.S dollar appreciation and further tightening of external financing conditions, as well as a higher external debt burden. Famine in Somalia, South Sudan, and possibly northeastern Nigeria, drought in eastern Africa, and pest and armyworm infestations in some southern African countries could also create food insecurity in about half of the countries in the region.
“Against this backdrop, we agreed that the policy adjustments needed to address the large macroeconomic imbalances faced by some of the countries hardest-hit by the commodity price fall, and to contain emerging vulnerabilities in other countries, should not be delayed. Most oil exporters, particularly in Sub-Saharan Africa, continue to face the need for a large fiscal adjustment to reflect the permanently lower oil prices, and in countries with scope for exchange rate flexibility, the exchange rate should be allowed to absorb pressures, while eliminating exchange restrictions. Even for those countries that have continued to grow robustly, a gradual, growth-friendly fiscal consolidation may be required to address emerging vulnerabilities. More broadly, efforts to enhance domestic revenue mobilization, public financial management, and financial sector deepening while addressing long-standing weaknesses in the business climate will all support a resumption in stronger and more inclusive growth. Finally, we concurred that there is a need to develop a more integrated and well-targeted social safety net.”
Minister Matambo noted that “addressing the heightened vulnerabilities facing African economies will require an invigoration of policy measures to address macroeconomic imbalances, rebuild fiscal and reserve buffers, and advancing structural reforms to tackle bottlenecks to broad-based growth and enhance economic resilience. Our countries’ efforts to tap into non-concessional financing to augment the fiscal space for development expenditures, shall be accompanied by reforms aimed at improving public investment efficiency and strengthening capacity for debt management, with the view to preserve debt sustainability. The Fund has a critical role to play in supporting African countries’ efforts in addressing the macroeconomic and structural challenges, through enhanced policy advice and technical assistance, but also adequate financial support where required.”
Ms. Lagarde stated that “the IMF will remain closely engaged with its African members. The Fund will continue to support the authorities’ efforts to not only address the current economic challenges but also to emerge from them stronger and on a path to achieve sustained inclusive growth. The Fund’s support in these efforts can take several forms, depending on countries’ needs: policy advice, technical assistance and training, and – where appropriate and needed – financial assistance. For those members facing situations of food insecurity or famine, we remain prepared to assist promptly, consistent with our mandate, including with additional financial assistance as warranted. The IMF will continue to strengthen the analytical underpinning of its policy advice, and seek to adapt to meet the evolving needs of the membership.”
[*] The African Consultative Group comprises the Fund Governors of a subset of 12 African countries belonging to the African Caucus (African finance ministers and central bank governors) and Fund management. It was formed in 2007 to enhance the IMF’s policy dialogue with the African Caucus. The Group meets at the time of the Spring Meetings, while Fund Management meets with the full membership of the African Caucus at the time of the Annual Meetings.
Transcript of African Department Press Briefing
Washington D.C., 23 April 2017
Mr Abebe Aemro Selassie, Director, African Department, IMF: A very good morning to you all. Thank you for joining us today for this press briefing. Before I take your questions, I want to make some remarks about the macroeconomic situation in Sub-Saharan Africa, the near-term outlook, and the policies and reforms that we think are necessary to basically foster the stronger and durable economic growth that we all seek and create the many jobs that Sub-Saharan Africa needs.
As many of you know 2016 was a difficult year for many countries. Economic growth in 2016 we estimate only reached about one and a half percent, which is the weakest outcome in more than 20 years and well below the rate of population growth. While a number of countries continued to grow robustly the slowdown in growth has been fairly broad based, affecting about two-thirds of the countries in the region. That accounts for about four-fifths of regional GDP. This of course contrasts with the very robust growth rates the region was experiencing in recent years. We have also noticed that inflation has begun to accelerate in some countries, reflecting the widening of macroeconomic imbalances, some currency depreciation, and in a few cases, drought related food price increases. Looking ahead we see a rebound in growth, but only a modest one, so around two and a half percent in 2017. This will fall short of the recent trends and will be barely sufficient enough to deliver any per capita income gains. The uptick in growth is largely driven by one-off factors in the three largest economies – a recovery in oil production in Nigeria, higher public spending ahead of elections in Angola, and the fading of drought effects in South Africa. Sub-Saharan Africa is a very diverse region and this aggregate number hides the fact that there are quite a few countries that continue to grow fairly robustly at five percent, even up to seven percent, particularly in West Africa and also some countries in East Africa. That said, going forward the outlook is subject to considerable downside risks from the external side.
The global environment – while improving – remains a challenging one, particularly the financing constraints facing the region. Also, the scope for domestic shocks is fairly significant, either from insecurity or from some countries dealing with drought type situations. In this context, I want to stress how concerned we are about the famine in South Sudan and the severe border security in Northeast Nigeria, which has created significant humanitarian concerns along with the region's conflicts are behind some the problems. These need to be addressed as soon as possible, paving the way for stronger humanitarian systems to be put in place, but more importantly, economic conditions to revert back to normal. Let me also say a little bit more about economic policies. You know, these overall weak economic outcomes have to do with insufficient policy adjustments that we've seen to date. Particularly in the resource intensive countries adjustment has been delayed. In the countries hardest hit by the commodity price decline, especially oil exporters like Angola, Nigeria, and CEMAC, the budgetary revenue losses and balance of payment pressures are continuing. The delay in the much-needed reforms is creating uncertainty, holding back investment, and risks generating even deeper difficulties in the future.
We are also seeing vulnerabilities in many non-resource intensive countries, that are oil importers. While these countries have generally maintained high growth fiscal deficits in a number of cases they are beginning to widen as governments seek to address their development needs. And as a consequence, we've seen debt levels beginning to creep up and also borrowing costs on the rise.
So, in view of these challenges, what needs to be done to restart growth and address the vulnerabilities that we are seeing? We see three priorities to engender stronger and durable growth. First is a renewed focus on macroeconomic stability. This we think is the prerequisite to realize the tremendous potential that the region has. For the hardest hit multi exporters fiscal consolidation will be very important with a strong emphasis on revenue mobilization. This is needed to halt the decline in international reserves and to offset the permanent revenue losses, especially in the CEMAC region. Elsewhere exchange rate flexibility is another issue. Wherever there is scope for exchange rate flexibility, I think that flexibility has to be used, including by eliminating the exchange restriction to help absorb the shocks that these countries are subject to.
For other countries in the region, and in particular those countries where growth is still strong, it will be very important to address emerging vulnerabilities from the position of strength that many of these countries are now in. While the expansionary policy, fiscal policy has been appropriate, now is the time to shift towards gradual fiscal consolidation. Higher revenue mobilization is needed to safeguard debt sustainability and the efficiency of investment spending would need to be enhanced. We see a second priority being structural reforms to help support macroeconomic rebalancing. In particular structural measures are needed to help improve the fiscal accounts to a more sustainable position. This includes reforms like revenue mobilization with a focus on shifting away from the focus on relying on commodity related revenues and debt financing to more robust sorts of tax revenue. There's also the need to strengthen public finance management systems and frameworks, to do better project selection. Important here also at this juncture where we are seeing bank balance sheets being impacted, is the strengthening of financial supervisory capacity. Finally, policies to foster economic diversification will be very important in the coming years, again with a view to moving countries away from commodity dependence where that is the case. Third, another important area of focus, particularly at this juncture, is going to be strengthening social protection mechanisms to help alleviate the impact of the current slowdown on the most vulnerable groups. At this juncture, you know, reflecting the low growth and widening macroeconomic imbalances, of course we see significant risk of social dislocation in the coming months. We were seeing a bit of decline in poverty in the region over the last many years. Existing social protection programs in the region are often fragmented, not particularly well targeted, and generally cover a very small share of the population. We see tremendous scope to better target these programs and use the savings from aggressive spending on other parts of the budget – such as fuel subsidies – to better target these resources to help vulnerable groups.
Before ending, I just want to say that we see Sub-Saharan Africa as being a region of tremendous potential and have no doubt that in the coming years we'll begin to tap into this potential. However, reaping this potential requires strong and sound domestic policy measures, as I just laid out. The earlier that these can be put in place the earlier the prospects of a stronger recovery. Let me stop here and just mention that our twice yearly regional economic outlook for Sub-Saharan Africa will be launched on May 9. The launch events will take place in Abuja and Dakar. Thank you very much.
QUESTIONER: Mr. Selassie, can you please comment about bond notes in Zimbabwe? What do you think of the concept, and how do you think that system should evolve? How will that experiment be concluded?
MR. SELASSIE: Lastly, on the bond notes in Zimbabwe. This is something we are beginning to look at. It’s, of course, a recent phenomenon. Zimbabwe is in a very, very difficult situation, as you know. There’s a limited amount of foreign exchange inflows coming in and no monetary policy tool. So, they are in a difficult circumstance right now. We think that, going down this one note route, in and of itself, will not address the challenges that the country has. So, it’s very important to have a more comprehensive policy package which also addresses a lot of the fiscal challenges that the country faces, a lot of the structural reforms that have to be done. So, it’s, again, more of a holistic package of reforms that are required to get Zimbabwe out of the place it’s in right now.
Read the full transcript on the IMF website.
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Regional Livestock Facility Hub launched
COMESA has established a regional livestock facility hub which will operate as a network of stakeholders interested in and committed to improving the institutional environment at regional level in order to have effective and efficient animal health, welfare, livestock trade and production services.
The regional hub was launched on 13th April 2017 in Mauritius after a livestock forum.
During the two-day meeting, the delegates critically reflected on potential responsibilities and contributions of the Hub in the development of the livestock sector in COMESA. They developed an action plan that included the steps to formalize the Hub as a tool for livestock development within the 19 member COMESA Region.
The forum was officially opened by the Minister of Agro-Industry of Mauritius Mr. Mahen Kumar Seeruttun who emphasized the need for the region to have harmonized systems which will help develop the livestock sector.
“We do recognize the important role of livestock production in poverty alleviation and providing meaningful livelihoods to a large number of our citizens. We assure you of our support to the Livestock Policy Hub to enable it fulfil its role in the drafting of livestock policies that are meaningful for our farmers,” Minister Seeruttun added.
African Union Interafrican Bureau of Animal Resources (AU-IBAR) Director Professor Ahmed El-Sawalhy, reiterated that his organization was committed to ensure sustainable use of animal resources to ensure maximum contribution to socio-economic development of the continent. He was represented by AU-IBAR Senior Policy Officer Dr Mphumuzi Sukati.
Secretary General Sindiso described the livestock hub as crucial as it will help improve investment, intra and inter regional trade in livestock and livestock products.
“The regional hub will strengthen our regional integration for better control of trans-boundary diseases and improve production and productivity of livestock agriculture for the benefit of COMESA citizens,” Mr Ngwenya said through his representative Director of Industry and Agriculture Mr. Thierry Mutombo Kalonji.
The Regional Livestock Facility Hub is being supported by AU-IBAR through the Veterinary Governance (VET-GOV) Programme working with the World Organization for Animal Health (OIE) and the Food and Agriculture Organization (FAO) in partnership with the European Union and USAID.
To be functional and effective, the regional hub will be made operational around the Regional Livestock Technical Focal Points and the Alliance for Commodity Trade in eastern and Southern Africa (ACTESA), a specialized agency under COMESA in charge of facilitating Commodity trade in the region.
The Forum was attended by experts in livestock, animal health, Member States, regional Economic Communities, cooperating partners, academia and regional farmer organisations.
Final Communiqué
Livestock Forum for the Establishment of Regional Livestock Policy Hub in COMESA
The VET-GOV programme has supported the establishment and strengthening of National Livestock Policy Hubs (NPLH) in most of the COMESA Member States (MSs). To complement the NLPH and for overall guidance and oversight of implementation of livestock programmes, COMESA is looking forward to the establishment of Regional Livestock Policy Hub (RLPH). The RLPH will be linked to the Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA), a specialized agency under COMESA in charge of facilitating Commodity trade in Eastern and Southern African Countries.
The Livestock Forum for the establishment of the RLPH within the COMESA was held in Port Louis, Mauritius on the 11-12th April, 2017. The overall objective of the meeting was to discuss on improvement of the institutional environment at national and regional levels to provide effective and efficient animal health and extension services in COMESA. The Forum was attended by participants from COMESA Secretariat, AU-IBAR, OIE, FAO, USAID/USDA, Tufts University and RECs (COMESA, EAC and IGAD). The list also included invited representatives from Comoros, Kenya, DRC, Egypt, Ethiopia, Libya, Madagascar, Mauritius, Malawi, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe in addition to participants from the Regional Farmers Organizations (EAFF, SACAU).
The forum was officially opened by H.E. Mr. Mahen Kumar Seeruttun, the Minister of AgroIndustry, Mauritius following remarks from Dr Mphumuzi Sukati, Senior Policy Officer, Economics, trade and Marketing on behalf of Professor Ahmed El-Sawalhy, the Director AUIBAR and Mr. Thierry Mutombo Kalonji, Director of Industry and Agriculture, on behalf of COMESA Secretariat.
The Livestock Forum Hub deliberated on the following:
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Livestock Forum meeting Objectives;
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Overall VET-GOV programme progress;
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VET-GOV programme progress in COMESA, EAC and IGAD;
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Livestock trade and trade policy in Africa: Opportunities and challenges;
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The effect of TADs on livestock production and trade;
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Importance of RLPH and its functional linkages with National SPS committee;
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The effect of drought on Livestock production and trade in the Horn of Africa and the way forward;
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The OIE Standard Setting Process;
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Major Trans-boundary animal diseases and Zoonosis in Eastern African Countries, their implication on animal production, trade and the way forward;
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The effect of drought on the livelihood of livestock producers and resilience in the Horn of Africa and the way forward;
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The importance of RLPH and TOR for its establishment;
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TOR of the RLPH and proposed structure and its vertical and horizontal linkages;
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Criteria for selecting Members and profile of individual Membership (Organizations and individuals within the organizations);
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Recommendations and the way forward
During the two-days meeting, the delegates critically reflected on potential responsibilities and contributions of the RLPH in the development of the livestock sector in COMESA; developed an action plan that included the steps to formalize the RLPH as a tool for livestock development within the COMESA Region.
The Forum members appreciated the efforts made by the VET-GOV COMESA and partners in fostering the regional policy making processes and ensuring inclusiveness, gender responsiveness; participation/representation of multidisciplinary stakeholders and the use of evidence and knowledge-based decision making in the membership and activities of the relevant institutions.
Following fruitful deliberations and considering;
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The role played by COMESA in the development of the RLPH that will support the coordination, harmonization and integration of countries to stimulate a more conducive environment for public and private investments in the livestock sector;
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The improved capacity of COMESA in terms of regional coordination and harmonization for the benefit of the livestock sector;
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The role played by AU-IBAR for the reinforcing of the veterinary governance in Africa for developing policies, strategies and legislations to improve the livestock sector Governance.
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The role played by FAO at international level in reinforcing veterinary services capacities and technical support provided for policies development and implementation for the development of the livestock sector ;
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The role played by OIE through PVS missions in enhancing capacities of countries to comply with OIE standards regarding veterinary services delivery;
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The need for establishment of a RLPH within the COMESA region that will operate as a network of stakeholders interested in and committed to improving the institutional environment at regional level to provide effective and efficient animal health and production services.
The Livestock Forum agreed on the following recommendations and way forward:
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Establishment of the RLPH within the COMESA to provide effective and efficient animal health, welfare, production and trade services taking into consideration that:
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The policy hub is to be coordinated at the Directorate of Industry and Agriculture at COMESA, and will be linked to ACTESA, the COMESA specialized agency in charge of facilitating commodity trade in Eastern and Southern African Countries;
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Additional livestock initiatives (by AU-IBAR/FAO/OIE, COMESA) should utilize the policy hub in order to strengthen and sustain its operations; and
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AU-IBAR to finalize the draft road map and action plan on operationalization of the livestock policy hub in COMESA to be shared with partners and RECs and agree on implementation.
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Framework and mandate of the RLPH within COMESA
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The attached proposal on
- Structure;
- Terms of reference;
- core values and
- mode of operation
- List of members organisations and other stakeholders
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Will constitute the framework and mandate of the RLPH within COMESA
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Sustaining Regional Policy Processes and Initiatives
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Building on the successes of the VET-GOV programme, AU-IBAR/FAO/OIE/COMESA and RECs within AU to establish linkages with any ongoing regional policy processes and livestock initiatives that may be relevant at regional level;
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The COMESA RLPH will be housed under Industry and Agriculture division with functional linkages with ACTESA and CAADP regional team in charge of developing and monitoring the regional CAADP COMPACTs and the Regional Investment Plans;
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COMESA and Partners to support intra and inter-regional linkages within the framework of the COMESA/ACTESA Agricultural/Livestock Program; and
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Partners (AU-IBAR, FAO, OIE, RECs) to continue support to the LPH in each member state and focus on the anchorage of the LPH in appropriate ministry and relevant directorates for national ownership.
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The specific recommendation
For AU-IBAR
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Support the region in its efforts of coordination and harmonization within the governance of animal resources under the AUC Agenda 2063, CAADP results framework and the LiDeSA.
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The VET-GOV and subsequent programs is to promote and assist the complete establishment of N/RLPH;
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Assist Members States and the region to put in place functional links between the N/RLPH with CAADP teams at national and regional level as well as others relevant networks.
For FAO
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Continue the technical assistance necessary to Members States for the formulation, the implementation of livestock policy as well as capacity building necessary to stakeholders in the sector.
For OIE
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To continue supporting Member States through the OIE PVS Pathway for sustainable improvement of country's Livestock Services' compliance with OIE standards on the quality of Livestock Services.
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Continue supporting the regional harmonization of legislation and standard to promote trade and investment.
For COMESA Secretariat
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Ensure a regional coordination and harmonization of policies and strategies of the livestock sector within COMESA in line with continental policies like Agenda 2063, CAADP results framework and the LiDeSA;
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Ensure the follow up of the official recognition of the governance tool and its adoption within reasonable time frame in the region.
For Member States
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Facilitate the LPH to contribute in the review of the National Agriculture Investment Plans (NAIP) for a better mainstreaming of the livestock component in the CAADP process;
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Ensure the availability of adequate resources to support the operationalization of NLPH;
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Advocate for proper integration of the NLPH into livestock development programmes and viable linkages with the proposed RLPH;
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Develop synergies at national level allowing the NLPH to better function, particularly with national SPS committees.
The Establishment of the RLPH
COMESA Secretariat will take appropriate steps for the adoption of the RLPH.
Acknowledgement
The members of Livestock Forum for the establishment of the RLPH within the COMESA thank the Government and people of the Republic of Mauritius for hosting the forum meeting and COMESA Secretariat for assistance provided in the organization of the meeting, AU-IBAR and partners for the support extended during the preparation and conducting the meeting, and the European Union for funding the programme.
Done in Port Louis, Mauritius on 12th of April 2017
tralac’s Daily News Selection
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Nigeria: FG inaugurates Continental Free Trade Area negotiations committee (ThisDay)
The membership of the committee is drawn from the organised private sectors, ministries departments and agencies, the Nigerian Economic Summit Group, Nigeria Customs Service, CBN and the civil society. It was launched at the Nigerian Export Promotion Council office Thursday by Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah. It is to advise government as the national multi-stakeholder technical platform on the CFTA negotiations on goods, services, investment, competition and intellectual property. It will also monitor the negotiations and undertake analysis to ensure that the negotiations and emerging results approximate the goals for the negotiations established by government. The committee is to also identify the opportunities and challenges facing the country in trade with other African countries, both intra and Inter-Regional Economic Communities and participate in the negotiations, as appropriate. [Nigeria needs to modernise economy through African trade integration – Enelamah]
China-Mauritius to explore new strategic partnership (GoM)
The Ministry of Foreign Affairs, Regional Integration and International Trade had a working session yesterday with a high-level delegation from the Chinese government in a view to engage China in the Mauritius Africa Strategy, so as to explore new avenues of cooperation. The Chinese government delegation was headed by Mr Xu Jinghu, Special Representative of the Chinese Government on African Affairs. China can play a crucial role in the Mauritian strategy of setting up Special Economic Zones in targeted countries such as Ghana, Senegal and Madagascar. Chinese investors will find in the package of instruments that Mauritius proposes such as government-to-government agreements, as a very attractive possibility to mobilise investments in these new economic poles. Chinese investors are encouraged to use the Mauritius financial centre for their African operations.
First renminbi-denominated bond well received in Africa (China Daily)
Bank of China’s Johannesburg branch completes issuance of the first renminbi-denominated bond in Africa, marking another milestone in yuan’s internationalization. The three-year bond received subscription of 2.13 times, which helped tighten the yield to 4.88%. The 1.5 billion yuan raised will be used to bankroll the Belt and Road Initiative projects, according to a Monday report carried by Economic Daily.
How multinationals can grow in the Middle East and Africa (Harvard Business Review)
In doing research on multinational operations in the Middle East and Africa, we’ve learned that companies are well aware of how President Trump’s foreign and trade policies could affect their businesses there. However, the region has long been volatile and unpredictable (from coups and sharp changes in government policies, to currency shortages, to terrorism and large-scale population displacements), so operating under uncertainty is not new. Many companies are assessing their exposure to specific policy decisions (e.g., if the U.S. unilaterally pulls out of the Iran nuclear deal), building contingency plans, and diversifying their portfolio of markets. For instance, the relative scarcity of executive policy statements about Sub-Saharan Africa (compared with, say, Mexico or China) suggests that Sub-Saharan African markets may be able to pick up the slack should new policies cause a drop in demand in the Middle East and other areas. The region remains attractive. Our research forecasts that it will offer the second-fastest economic growth after the emerging Asia-Pacific in 2017. [The author, Martina Bozadzhieva, is MD for Europe, Middle East & Africa Research at Frontier Strategy Group]
Nigeria, US trade hits $1.36b in two months (The Guardian)
Nigeria’s trade with the United States rose by 70.44% from $799.93m in January and to $1.36bn in February, according to the latest US Census Bureau data. Data obtained from the Fact Sheet on Nigeria–US Relations, showed that petroleum products dominated the US import from Nigeria during the period in review. For instance, US crude oil import from Nigeria stood at $936.65m while gasoline import was $83.43m. According to the data, through February, 22 Customs districts posted trade surpluses with Nigeria while 13 had deficits. [US Census Bureau: US trade in goods, by country]
Kenya: AGOA doubts cut US exports 12% (Business Daily)
The 2017 Economic Survey shows apparel volumes exported declined to 74.4 million pieces in 2016 even as earnings increased to Sh35.2bn on the back of weak shilling. Under AGOA, the US has become Kenya’s largest apparel export destination. Textiles and apparel account for about 80% of Kenya’s total exports to the US under the pact. The Economic Survey shows direct employment generated by Agoa increased by 2.5% to 42,645 people in 2016. [Kenya Economic Survey 2017: launch speeches are now available]
East Africa: Double taxation pact put on ice as businesses cry foul (The EastAfrican)
East African Community member states are wavering on a plan to implement an agreement on double taxation avoidance, over fears that the deal could provide a loophole for tax evasion by companies. The states are now focusing on harmonisation of legislation on domestic taxes such as income tax, excise duty and value added tax to make the bloc a single, friendly investment destination.
Buhari seeks Africa’s support in Nigeria’s quest for Category C Seat in IMO Council (ThisDay)
President Muhamadu Buhari has vowed to ensure that Nigeria achieves its goal of attaining the Category C seat in the Council of the International Maritime Organisation. To this end, he stated that Nigeria would promote and support effective African participation in the council of the IMO, stressing however that this can only yield the desired results when African states speak with one voice at the global level for the enduring interest of Africa. He declared this yesterday while delivering his speech at the ongoing African Maritime Administrations (AAMA) annual conference holding in Abuja. [Related: Buhari: Africa’s blue economy crucial to food security, forex earning, Dogara: West Africa loses $1.3bn annually to illegal maritime operations, Dakuku Peterside: Nigeria engages maritime Africa]
Dar port turns up roses with increased output, TPA chief now reveals (Daily News)
The Director General of Tanzania Ports Authority, Eng. Deusdedit Kakoko, maintained yesterday that the volume of cargo has continued to record an upward trend during the last quarter of last year and first quarter of this year. “We recorded an impressive surge in traffic of cargo between October and December, last year and this was maintained during January to March, this year,” he explained.
South Africa: Cyril Ramaphosa’s address at the Black Business Council Dinner (GCIS)
Radical economic transformation requires that we create a new generation of black industrialists. Government, through its development finance institutions and other agencies, is putting significant resources into this effort. To date, the Department of Trade and Industry has approved over R1bn in grant finance to 36 projects undertaken by black-owned and managed businesses. Together, these projects have a combined project value of over R3bn. The private sector needs to support this programme, whether through provision of additional funding, the transfer of skills and technology, or providing access to supply chains. This programme, once it reaches scale, will both contribute to the reindustrialisation of our economy and help redefine our approach to black economic empowerment.
Zimbabwe: Seven Bills to promote ease of doing business (The Herald)
Government has made strides towards creating a conducive business environment to transform the economy and attract Foreign Direct Investment after tabling seven Bills to do with the ease of doing business during the first quarter of this year. This is in keeping with Government’s pronouncement last year that 13 laws will be promulgated in the first quarter of the year to create a conducive investment climate by addressing concerns previously raised by foreign investors. Some of the Bills include:
The 2017 Foreign Direct Investment Confidence Index (A.T Kearney)
Emerging markets account for 28% of the positions this year, rebounding from a historical low of 20% of the Index last year. This could signal a nascent trend of global investors increasing their risk tolerance and eyeing emerging markets for growth opportunities. The top two emerging market performers on the Index are China and India—both in the top 10 this year—and these are also the two emerging markets about which investors are most optimistic on economic prospects compared with a year ago. Investors are more mixed on the economic outlooks of other emerging markets, which could mean that weaker economies are seen as either opportunities in terms of the price of making investments now or long-term rather than short-term growth opportunities, or both. South Africa: Coming in at 25th, South Africa makes a comeback to the Index for the first time since 2014. This would seem to suggest that recent FDI trends may continue: FDI inflows rose 38%to an estimated $2.4bn last year after falling to its lowest level in 10 years the previous year. According to UNCTAD, the 2015 slump was a result of weak economic growth, low commodity prices, and high electricity costs coupled with divestments from non-core assets in the first quarter of 2016.
Ejeviome Eloho Otobo: Africa’s opportunity and reasons for a reset (The Guardian)
Africa now has an opportunity and several reasons to reset its priorities. The opportunity for a reset is offered by the election or appointment of new heads of the three major regional institutions. The President of AfDB assumed office in November 2015; The Chairperson of AU in March 2017; and the Executive Secretary of the Economic Commission for Africa was appointed in April, 2017. There are several compelling reasons for a reset and re-alignment of priorities. The AUC bears a special responsibility for achieving these strategic objectives but also has to make the most adjustments because it has taken on too many responsibilities than it can possibly manage or finance. African countries cannot depend on the generosity and goodwill of partners forever to deliver on their aspirations. [The author is a non-resident senior expert in peacebuilding and global economic policy at the Global Governance Institute in Brussels]
G-24: Statement on international monetary affairs and development (World Bank)
We reiterate our support for a stronger WBG to provide continued assistance to developing countries of all income levels, as laid out in its Forward Look. In the meantime, we are concerned with the IBRD’s and IFC’s strained financial capacity and the consequent expected decrease in annual lending over the coming years. This will adversely affect the WBG’s ability to engage its member countries and to catalyze private financing, which are essential to meet the ambition of its Forward Look. To strengthen the financial capacity of the IBRD and IFC and build on their ability to leverage their shareholders’ capital, we call for exploring all options, including capital increases, further balance sheet optimization, and review of financial transfers from IBRD and IFC to IDA. Furthermore, we recognize the importance of having a balanced portfolio, which contributes to the financial sustainability of IBRD. We welcome the shift in the WBG’s development financing approach towards greater strategic use of official resources to further catalyze public and private investments and mobilize private capital. [IMFC Statement by Minister Malusi Gigaba (pdf), issued on behalf of Angola, Botswana...)
India: Trading away our digital rights (The Hindu)
The WTO ministerial in Argentina in December 2017 will be a key battleground for whether WTO should start negotiating digital trade issues. These issues also figure in the Regional Comprehensive Economic Partnership talks among ASEAN-plus countries (including India). India must resist any digital trade negotiations at this time. It has little to gain from them, and much to lose. It must first build its digital sovereignty — and digital rights — before it can begin negotiating a part of it in global trade talks. [The author, Parminder Jeet Singh, works with the Bengaluru-based NGO, IT for Change]
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Kenya: 2017 Economic Survey launched
Remarks by Hon. Mwangi Kiunjuri, Egh, Mgh Cabinet Secretary in the Ministry of Devolution and Planning, during the launch of the 2017 Economic Survey, 19 April 2017
Let me take this opportunity to welcome you all to this official launch of the 2017 Economic Survey Report which focuses on the performance of our economy in 2016.
The Report has been prepared by the Kenya National Bureau of Statistics and provides detailed information on socio-economic indicators in agriculture, environment and natural resources, manufacturing, public finance, Transport, building and construction among others.
It is our belief that the statistics contained in the Report are of practical use to various stakeholders including policy makers, Research Institutions, investors and business community.
As has been pointed out, the economy grew by 5.8 per cent in 2016 compared to a revised growth of 5.7 per cent in 2015. it remained resilient in the face of one of the worst droughts witnessed in the last quarter of 2016. This growth was achieved through the Government’s commitment in creating an enabling environment for doing business in key areas including:
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Ongoing public infrastructure development, e.g. roads construction
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Tourism which had a remarkable improvement as it benefitted from improved security with the number of international visitor arrival expanding by 13.5 per cent in 2016 to 1.34 million.
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Increased total installed electricity capacity enabling the Government to connect an unprecedented number of customers which rose by 38.2 per cent under the Rural Electrification Programme. Our rural population is now experiencing the same benefits out of this connectivity as has been enjoyed by urban populations.
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Another important sector that recorded significant growth is the ICT which grew by 9.7 per cent in 2016. 39.9 million Kenyans are now using mobile phone enabling easy access to digital services offered by the government. Owing to this connectivity, the value of money transacted through mobile services increased by 21.4 per cent, from from 2.8 trillion in 2015 to 3.4 trillion in 2016 making Kenyan a leader in mobile money transaction in the world.
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It is worth highlighting too that the economy generated a total of 832.9 thousand new jobs against the target of 1 million jobs, representing 83.3 per cent of the target.
However, the country is still phasing some challenges in overrelying on rain fed agriculture though the Government is investing heavily in irrigation programmes to transform the sector. Also, the manufacturing sector is still phasing some challenges in regards to cheap imports and the counterfeit goods, this again is being addressed by the policies that have been put in place.
My Ministry will continue to regularly monitor evaluat and report on our economy with a view to drawing lessons for improved performance as we move towards implementing the MTP III of the Kenya Vision 2030 and the Sustainable Development Goals (SDGs) which require comprehensive data to monitor their progress.
I am happy to note that over the years, the Economic Survey Report has provided a candid appraisal of the achievements and challenges we face as a nation in our endeavour to develop our country and improve the welfare of our people. And we shall continue to do so.
2017 Economic Survey
Kenya’s Gross Domestic Product (GDP) is estimated to have expanded by 5.8 per cent in 2016 compared to a revised growth of 5.7 per cent in 2015. Accommodation and food services recorded improved growth of 13.3 per cent in the year under review compared to a contraction of 1.3 per cent in 2015. The other sectors that registered significant improved performance in economic activities were in the information and communication; real estate; and transport and storage. Persistent drought hampered growth in the fourth quarter of 2016 impacting negatively on agriculture and electricity supply. On the other hand, growth in construction; mining and quarrying; and financial and insurance activities decelerated in 2016. From the demand side, growth was buoyed by consumption in both the public and private sector.
Annual average inflation eased to 6.3 per cent in 2016 compared to an average of 6.6 per cent in 2015. This was mainly due to decline in prices of transportation; housing and utilities; and communication. The Shilling strengthened against the Pound Sterling, South African Rand, Ugandan Shilling, Tanzanian Shilling and the Rwandan Franc but weakened against the US Dollar, Euro, and the Yen in 2016. The capping of interest rates to a maximum of 4.0 per cent above the Central Bank Rate (CBR) resulted in a significant decline in interest rates during the month of September to 13.84 per cent compared to 16.75 in a similar month in 2015.
Domestic credit slowed from a growth of 20.8 per cent in 2015 to 6.4 per cent in 2016 mainly on account of a decline in credit to the private sector. The current account deficit narrowed to KSh 370.8 billion in 2016 from a deficit of KSh 421.1 billion in 2015. The fiscal deficit in 2016/17 as a percentage of GDP is expected to rise to 9.9 per cent compared to 8.6 per cent in 2015/16.
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Kenya: Agoa doubts cut US exports 12pc
The volume of apparel shipped to the US under the African Growth and Opportunity Act (Agoa) declined by 12.1 per cent last year even as uncertainty clouds the 17-year-old preferential pact under President Donald Trump.
The 2017 Economic Survey shows apparel volumes exported declined to 74.4 million pieces in 2016 even as earnings increased to Sh35.2 billion on the back of weak shilling.
Under Agoa – a trade pact allowing US buyers to import goods from a number of sub-Saharan African countries without paying duty or facing quota restriction – the US has become Kenya’s largest apparel export destination.
Former US President Barack Obama extended Agoa to September 2025 allowing local entrepreneurs more time to benefit from the preferential trade pact.
There have, however, been fears that President Trump could either use executive orders to cut short that period or refuse to renew it upon expiry.
Textiles and apparel account for about 80 per cent of Kenya’s total exports to the US under the pact.
The Economic Survey shows direct employment generated by Agoa increased by 2.5 per cent to 42,645 people in 2016 while the number of enterprises operating at the export processing zones (EPZs) increased to 91 from the 89 recorded in 2015.
Total sales by the enterprises in the 65 gazetted EPZs increased by 5.8 per cent to Sh68.7 billion in 2016 from the Sh64.8 billion recorded in the year before.
The report says exports from the EPZs increased by 3.7 per cent to Sh63.1 billion, accounting for 91.9 per cent of the total sales.
Mid last year, the government exempted garments and footwear bought from EPZs from paying 16 per cent value added tax (VAT), in a move to make the products more affordable to Kenyans.
Trade barriers and duty free imports from Common Market for Eastern and Southern Africa states have been cited as the biggest impediments to growth of EPZs in Kenya.
With the country becoming more visible on the global map, local traders are increasingly opening more supply channels to the US, helped by increased interactions with American investors.
Conferences like the Global Entrepreneurship Summit that attracted Mr Obama have opened the much-needed avenues of interaction.
Last September, Kenyan authorities said they were looking to expand the list of products that the country exports.
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Double taxation pact put on ice as businesses cry foul
East African Community member states are wavering on a plan to implement an agreement on double taxation avoidance (DTA), over fears that the deal could provide a loophole for tax evasion by companies.
The states are now focusing on harmonisation of legislation on domestic taxes such as income tax, excise duty and value added tax to make the bloc a single, friendly investment destination.
This means that companies involved in cross-border operations may continue losing millions of dollars by paying taxes on the same income in the home countries and where they are operating.
The EastAfrican has learnt that despite calls by manufacturers, businesses and tax experts for the ratification of the DTA agreement, fears over potential loss of tax revenues by some member states have slowed down the process.
Developed cold feet
The EAC member states hold diverse views on the implications of the DTA agreement. Though Kenya has signed the agreement, it is said to have developed cold feet on its implementation, arguing that it would lead to tax evasion and loss of revenues.
“The purpose of DTA is to attract foreign direct investment. It should not be signed just with any country, because companies will evade taxes,” said Geoffrey Mwau, director-general in charge of Budget, Fiscal and Economic Affairs. “You have to sign it with countries that have the potential to bring FDI, because if you don’t, the agreement becomes a conduit for tax evasion.”
Currently, EAC governments tax income earned by investors both in the country where it is generated and in the country where the taxpayer originates.
Dr Mwau said DTA is not a priority for the region.
“We have to harmonise our tax and regulatory environment,” he said.
So far, Kenya, Rwanda and Uganda have ratified the agreement. It requires all the EAC member states to sign as a bloc for it to take effect.
The DTA was signed on November 30, 2010, but there has been little progress in terms of fast-tracking internal processes by member countries, including securing Cabinet or parliamentary approvals. The agreement should be implemented within a year after ratification.
None of the EAC countries have double taxation agreements with each other.
Dr Mwau said the region is working on a harmonised DTA framework that will inform discussions on all DTAs signed between the EAC and non-EAC countries.
“We are trying to harmonise a framework of DTA for the EAC so that the DTA a country signs with another outside the Community must be within the EAC guidelines,” he said.
This comes as private businesses in the region push for the removal of the double taxation regime to promote trade and investment across borders.
The East African Business Council (EABC), the umbrella body of private businesses in the region, cited double taxation as the largest stumbling block to trade and the full implementation of the Common Market Protocol.
Gains of integration
Tax experts say the delay in implementation of the DTA will discourage cross-border investments and negatively affect economic growth and undermine the gains of regional integration.
“We are hopeful that double and multiplicity of taxes will be rescinded,” said Jane Ngige, chief executive of the Kenya Flower Council. The EAC has engaged the International Monetary Fund to advise on how to harmonise its taxation policies as part of the ongoing regional integration programme.
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Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development: Communiqué – 2017 Spring Meetings
Ministers of the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development held their ninety-seventh meeting in Washington D.C. on April 20, 2017 with Abraham Tekeste, Minister of Finance and Economic Cooperation of Ethiopia in the Chair; Ravi Karunanayake, Minister of Finance of Sri Lanka, serving as First Vice-Chair; and Julio Velarde, Governor of the Central Reserve Bank of Peru as Second Vice-Chair.
The meeting of the Ministers was preceded on April 19, 2017 by the one hundred and ninth meeting of the Deputies of the Group of Twenty-Four, with Fisseha Aberra, Director of the International Cooperation Directorate at the Ministry of Finance of Ethiopia, as Chair.
G-24 Communiqué
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We held our ninety-seventh meeting in Washington D.C. on April 20, 2017 with Abraham Tekeste, Minister of Finance and Economic Cooperation of Ethiopia in the Chair, Ravi Karunanayake, Minister of Finance of Sri Lanka as First Vice-Chair; and Julio Velarde, Governor of the Central Bank of Peru as Second Vice-Chair.
Managing Growth under Global Uncertainty
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We welcome the increased momentum in global economic growth. Economic activity in emerging market and developing countries (EMDCs), while uneven across countries, is expected to strengthen. EMDCs will continue to contribute the bulk of global growth. However, downside risks from economic and non-economic sources remain high, including sharper than expected tightening of global financial conditions, a potential turn to inward-looking policies, and a reversal of financial regulatory reforms in systemically important advanced economies (AEs).
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Boosting inclusive growth remains our priority as this is key to raising living standards and lifting many out of poverty. Investment growth, which has declined significantly in recent years, needs to be reinvigorated. This requires maintaining macroeconomic stability and continuing to strengthen fiscal, structural, and governance reforms tailored to country circumstances. We will use all policy levers to ensure that the benefits of growth are shared widely and to reduce high levels of income inequality. We call on the International Monetary Fund (IMF) and the World Bank Group (WBG) to support countries’ efforts in achieving inclusive growth.
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A well-functioning international monetary system will support our efforts to manage vulnerabilities and pursue our growth agenda. We continue to call for a strengthened Global Financial Safety Net, with an adequately-resourced, quota-based IMF at its center. We look forward to an enhanced IMF toolkit that responds effectively to liquidity and precautionary needs of all countries and provides the right incentives for policymakers. More work needs to be done on how to minimize fears of perceived stigma attached to IMF facilities as well as to provide timely and adequate support for primary commodity exporters. We call for evenhandedness in lending decisions, including access and conditionality, and for tailoring policy advice to country circumstances. We look forward to greater cooperation between the IMF and Regional Financial Arrangements.
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We continue to call for improved international policy coordination to minimize adverse spillovers from major economies’ policies. We welcome the IMF’s review of country experiences with its Institutional View on the management of capital flows and urge further work on the interaction of macro-prudential and capital flow management measures, to enhance the Fund’s policy advice in dealing with capital flow volatility. We look forward to further work to broaden the role and use of Special Drawing Rights as a reserve currency.
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EMDCs have contributed to and benefited from increased global integration by lowering barriers to trade, while also bearing the cost of adjusting to competitive pressures and technological change. A likely rise in inward-looking policies in some AEs poses a substantial source of risk to the growth prospects of EMDCs. We call for stronger multilateral cooperation to preserve an open and rules-based global trading system, and ensure that its benefits are widely shared. South-South cooperation and regional, subregional and interregional integration have continued to deepen. We encourage IFIs to broaden their work to support and catalyze more South-South cooperation and connectivity.
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We welcome the support from IFIs and the international community to EMDCs that are disproportionately affected by the refugee crisis, including the internally displaced populations, and encourage the continued pursuit of developmental approaches to address this serious challenge.
Financing for Development
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Strong fiscal frameworks are essential to mobilize domestic resources to effectively support development efforts. We are encouraged by the progress made in improving tax revenue-to-GDP ratios and enhancing spending efficiency in EMDCs. Progressive and growth-enhancing tax policies and expenditure measures also play an important role in improving income equality and broadening opportunity. We underscore the important role of IFIs and donors in supporting capacity building for revenue mobilization and encourage more peer learning and capacity building among EMDCs through collaborative platforms. We welcome the work of the Platform for Collaboration on Tax and look forward to its engagement with tax officials in EMDCs.
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We welcome ongoing initiatives on international tax cooperation such as the Automatic Exchange of Information (AEoI) initiative and the Base Erosion and Profit Shifting (BEPS), and call for a framework that ensures effective participation of EMDCs. We support the development of a digital global platform with least compliance cost for implementation of AEoI. We appreciate the work of the UN Tax Committee and encourage multilateral support to upgrade the Committee to an intergovernmental body to enhance the voice of EMDCs on international tax policy matters. We also call for more attention to developing fair tax rules to guide the taxation of multinational corporations and for international cooperation to prevent harmful international tax competition, negative spillovers from shifts in tax policies in major countries, and illicit financial flows.
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We emphasize the vital importance of scaling up investments in quality infrastructure to deliver on the growth and sustainable development agenda. We call on IFIs to step up support to strengthen policy and institutional frameworks, prepare bankable projects, and crowd in private sector financing. Further, we call on multilateral development banks (MDBs) to implement their Joint Declaration of Aspirations on Actions to Support Infrastructure Investments and enhance synergies with various infrastructure initiatives. The MDBs’ ability to finance infrastructure investments to scale will depend on adequate capitalization and optimizing the use of their balance sheets, while maintaining their financial strength that needs to be assessed with appropriate credit rating agencies’ methodologies.
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Concessional financing remains a key element of development financing. We welcome the successful 18th replenishment of the International Development Association (IDA). As IDA integrates non-concessional lending among its instruments, we stress the need to preserve concessionality as a core element of IDA, and to ensure adequate concessional resources for the poorest and the most vulnerable countries. We welcome the creation of the Private Sector Window, the enhancement of the Crisis Response Window, and the doubling of allocation to countries affected by fragility. We call for taking steps to smoothen graduation of IDA countries by providing them adequate transitional support and waiving the acceleration repayments clause. We also welcome the IMF’s decision to extend the zero interest rate on its concessional lending through the end of 2018. We call on donors to ensure timely disbursements of their financial commitments to low-income countries (LICs) and encourage the IMF to highlight the negative implications of untimely disbursement.
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International commitment is essential to implement the Paris Agreement on Climate Change, including by ensuring the availability of the necessary concessional financing. We look forward to developed countries delivering on their commitment to provide US$100 billion per year additional financing by 2020 to support EMDCs’ climate actions. We urge developed countries to take the necessary actions to authorize the use of reflows from the Clean Technology Funds to allow the implementation of new financing modalities. We support the increase in access limits in the IMF’s rapid facilities to countries hit by very large natural disasters and welcome the extension of the WBG’s Catastrophe Deferred Drawdown Option facility to IDA countries.
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We note the ongoing review of the Joint WB-IMF Debt Sustainability Framework for LICs. We look forward to a new, forward-looking and more flexible framework that considers country specific circumstances and the impact of effective public investments on growth. We continue to encourage the use of enhanced contractual clauses in sovereign debt issues to facilitate timely and orderly sovereign debt restructuring and support exploring solutions to address potential holdout problems.
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We support the continued reform of global financial regulations and the strengthening of the AML/CFT framework but highlight the need to address their unintended consequences. In this regard, we take note of the initiative by the Financial Stability Board (FSB) to develop a structured framework to evaluate the effects of the implementation of financial regulatory reforms. We call for continued efforts by the IMF, the WBG, the FSB and other global financial standard-setters toward finding concrete solutions to address the withdrawal of correspondent banking relationships, its multifaceted drivers, and its disruptive impact on cross-border flows and access to financial services. We are committed to enhancing financial inclusion, drawing on country experiences through peer learning, and look forward to stronger support from IFIs, including on enabling digital financial innovations and managing their risks, and reducing the cost of remittances. We call for further support to promote deeper and more resilient financial sectors, including through the development of local currency bond markets.
Reforming the Bretton Woods Institutions
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We support a quota-based, adequately-resourced IMF that is less dependent on borrowed resources. We call for the full implementation of the 2010 Governance Reforms on Board Representation. We call for the completion of the 15th General Review of Quotas, including a new quota formula, by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019. We call for a revised quota formula that further shifts quota shares from AEs to dynamic EMDCs, reflecting their growing weight in the global economy, while protecting the quota share of the poorest countries, and puts greater weight to GDP PPP within the GDP blend. The realignment of quota shares must not come at the expense of other EMDCs. We reiterate our longstanding call for a third Chair for Sub-Saharan Africa, provided that it does not come at the expense of other EMDCs’ Chairs.
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We look forward to a World Bank’s Shareholding Review that upholds the Istanbul Principles to achieve equitable voting power between developed and developing and transition countries (DTCs), and produces an outcome that is broadly acceptable to the membership, while protecting the smallest poor countries. We call for the timely implementation of the Lima Roadmap. As the review moves toward the conclusion of the new shareholding package, we call for exploring options to ensure a meaningful realignment with a balanced shareholding outcome, including allocations in line with the agreed formula, special allocations, forbearance, and limits on dilution of individual DTCs.
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We reiterate our support for a stronger WBG to provide continued assistance to developing countries of all income levels, as laid out in its Forward Look. In the meantime, we are concerned with the IBRD’s and IFC’s strained financial capacity and the consequent expected decrease in annual lending over the coming years. This will adversely affect the WBG’s ability to engage its member countries and to catalyze private financing, which are essential to meet the ambition of its Forward Look. To strengthen the financial capacity of the IBRD and IFC and build on their ability to leverage their shareholders’ capital, we call for exploring all options, including capital increases, further balance sheet optimization, and review of financial transfers from IBRD and IFC to IDA. Furthermore, we recognize the importance of having a balanced portfolio, which contributes to the financial sustainability of IBRD. We welcome the shift in the WBG’s development financing approach towards greater strategic use of official resources to further catalyze public and private investments and mobilize private capital.
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We call for strengthening the efforts of the IMF and the WBG towards greater representation of under-represented regions and countries in recruitment and career progression, including at managerial levels. We reiterate the importance of staff diversity and gender balance at all levels, including diversity of educational institutions.
Other Matters
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We welcome Morocco and Haiti as new members of the Group.
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The next meeting of the G-24 Ministers is expected to take place on October 12, 2017 in Washington, D.C.