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Non-tariff barriers and ‘complaints’ in the East African Community’s reporting process
Since the establishment of the East African Community (EAC), comprising Burundi, Kenya, Rwanda, Tanzania and Uganda, the region has seen a steady strengthening of economic and political ties among the community’s Partner States.
The EAC Customs Union came into force in 2005, facilitating the establishment of a common external tariff and paving the way for the removal of all intra-regional tariffs by 2010. Despite this, available trade statistics paint a mixed picture about the impact of the EAC on intra-regional trade. Although the establishment of the EAC coincided with an important expansion in intra-regional trade in absolute terms, overall intra-EAC exports did not grow as a share of the region’s total exports. In addition, the persistence of non-tariff barriers (NTBs) still affects trade flows, and reduces the benefits to be gained from the regional integration process.
The third briefing from a project examining the magnitude of NTBs affecting trade in the EAC and assessing the impact of their removal, this paper explores the difference between NTBs and ‘complaints’ identified and reported to the EAC, and suggests a way to streamline the process so that NTBs can be more quickly and easily resolved and intra-regional trade enhanced.
Introduction
In 2000, the East African Community (EAC) partner states came together to form a regional trading bloc in order to ‘widen and deepen economic, political, social and cultural integration … to improve the quality of life of the people of East Africa through increased competitiveness, value added production, trade and investment’ (EAC, 2016). To this end, the EAC has since recorded a number of milestones, including the creation of a customs union and a common market. The common market came into force in 2010 on the signing of the East African Common Market Protocol, in which the partner states agreed to maintain a liberal position on free movement of factors of production, goods and services.
Despite these high-level commitments, trade barriers continue to affect the free flow of goods and services amongst EAC states. Although tariffs have been eliminated in trade among members, non-tariff barriers (NTBs) are common and constitute a major hurdle to the establishment of the common market. The UN Conference on Trade and Development (UNCTAD) (2013) defines NTBs as restrictions, unrelated to tariffs, that result from quotas, import licensing systems, prohibitions, regulations, conditions or specific market requirements that make the importation or exportation of products difficult and/ or costly. Additionally, the EAC defines NTBs as laws, regulations and administrative and technical requirements (other than tariffs) imposed by a partner state, whose effect is to impede trade. In response to the persistence of NTBs in the region, the EAC Secretariat in partnership with the East African Business Council (EABC) established a monitoring mechanism to deal with NTBs as they arise.
The EAC’s NTBs reporting mechanism
In 2009, the EAC launched the Time-Bound Programme for the Elimination of Identified/Reported NTBs to improve trade in the region. Under this programme, monitoring and reporting of NTBs is facilitated at national and regional levels and is conducted at various stages by relevant trade officials. The monitoring and reporting of NTBs begins with companies that identify and report their experiences of trading in the EAC to their business associations, or even directly through online or SMS-based tools. The business associations, which act as watchdogs for the process of elimination of NTBs, then forward the reports to National Monitoring Committees (NMCs). These NMCs meet regularly to discuss reported cases and actions taken, and report the information gathered to their line ministries or the agency responsible for taking further action.
NMCs also participate in regional fora where they are able to share experiences of NTBs and of the elimination process. NMCs escalate reported NTBs to the EAC Secretariat through the EAC Directorate of Trade. The EAC Secretariat then forwards these reports to the EAC Coordination Committees and the EAC Trade, Industry and Investment Committee for discussion and decisionmaking. The EABC is then responsible for disseminating the information on NTBs’ elimination progress to members. The EABC also has the duty of producing the annual business climate index, which gives information on the progress of the NTBs’ elimination.
NTBs and ‘complaints’ reported to the EAC Secretariat
Since 2012, the EAC Secretariat has published quarterly reports on the status of NTB elimination in the region. These reports detail information on the nature of reported NTBs, their sources and the affected countries. Based on an analysis of reported and unreported NTBs, some of them seem to reflect complaints on the application of agreed rules or regulations rather than actual NTBs. This is reflected in the short time required for the NTBs to be resolved. Almost one third of the NTBs reported were resolved in less than three months, which constitutes a very short period of time. Complaints, in this sense, can be defined as instances where there is an incorrect implementation of the agreed commitments in terms of NTBs.
Although the time taken for resolution of NTBs varies depending on the degree of political will in the imposing countries, in the main, NTBs take some considerable time to resolve. The various stages involved in the resolution of specific barriers require bilateral and internal negotiations in the affected and imposing countries.
Many reported NTBs require only simple administrative acts to be resolved. For example, in the June 2016 meeting of the EAC Committee, the Tanzanian Government confirmed that its Rail Development levy would no longer be applied. However, in the months that followed, customs officers were not properly informed about the change. This suggests that the reported NTB, in reality, was simply a complaint about the existing procedure or the result of a lack of information. Examination of other NTBs that were resolved relatively quickly also reveals the presence of multiple cases of complaints that affected a single firm in a particular country.
At the June 2016 EAC Committee meeting, of the 26 NTBs reported, six were found to be complaints. In one example, Kenya complained that Rwanda, Tanzania and Uganda did not provide adequate information on changes to their export procedures. This led to an increase in the cost of doing business in Kenya. The accused countries agreed to investigate the evidence provided by Kenya and report back at the next meeting. In another example, Tanzania complained that Rwanda and Uganda did not give preferential treatment to rice originating from Tanzania as per the EAC rules of origin, thereby denying them market entry.
The presence of complaints within the NTB reporting mechanism diverts resources and time away from the resolution of real NTBs that have remained unresolved for years – for example, that affecting beef exporters to Uganda. These complaints should be handled through a different mechanism that allows for a faster and more direct approach. In fact, there are existing bilateral and informal mechanisms in place that could be used for this purpose.
When complaints are excluded, the number of reported NTBs is quite small. To date, there have been very few reported NTBs associated with services provision, despite the high level of regulations of services in EAC countries. This suggests the existing NTB reporting mechanism is not adequately reflecting and addressing the multiple barriers affecting trade in the EAC.
To tackle this, the NTB forum should seek to gather experts in trade and regulation from EAC countries, in addition to other relevant stakeholders and government officials. These actors will be in a position to identify additional issues that can contribute to improving trade and the integration of partner states’ markets. They could also bring attention to related overlooked issues that would help to build the common market.
» Download: Non-tariff barriers and ‘complaints’ in the East African Community’s reporting process (PDF, 97 KB)
This publication is an output of the Resolving the unresolved non-tariff barriers in the East African Community project, written by Rosebela Oiro, Boniface Owino and Max Mendez-Parra.
The aim of the project is to measure the magnitude of NTBs affecting trade facilitation and transport among the EAC partner states and assess the impact of their removal on regional trade and production. A key objective is to identify the effects of specific NTBs on income, employment and prices; this will help to assess the likely effect of the removal of NTBs on efforts to alleviate the high levels of poverty that currently affect countries in the region.
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tralac’s Daily News Selection
Today, in Lusaka: Tanzania-Zambia Trade Forum
Kenya’s 2017 Budget Policy statement (pdf), documentation
Launched: Online Africa knowledge repository platform (with 4000 World Bank publications specific to Africa)
2017 African business outlook survey: The long view – commercial performance and prospects (pdf, Economist Corporate Network)
The dynamic nature of the markets in Africa points to the importance of building a presence in multiple countries in the region, in order to avoid an over reliance on any one country; a strategy of developing a portfolio of markets, is the approach adopted by most of the firms interviewed by ECN. A clear, market-by-market understanding of potential is leading respondents’ firms to remain undeterred and to stay plugged in. The commercial players that are likely to succeed in Africa-based markets will adopt the long view and seek to address the needs of the specific markets where they operate, rather than taking a one-size-fits-all approach. Extract: By 2022 respondents expected Nigeria to be their firms’ top market. South Africa is expected to slip to number two, and Kenya is expected to remain in third position. Nigeria’s rise in importance is expected to come at the expense of South Africa and Kenya, both of which are expected to see a decline in the number of respondents citing them as their first market of choice. However, there is a notable increase in Kenya’s being cited as the third-top market from 2016 to 2022.
Africa Capacity Report 2017: Building capacity for science, technology and innovation for Africa’s transformation (ACBF)
The report (pdf) which is based on surveys carried out in 44 countries across the continent makes a clear case for better ways of pursuing financing for development through STI, developing regional strategies for the development of the sector; revolutionizing capacity development; and, investing substantially in higher education/research with the right tools. In fact, the publication says African countries must commit to honoring the 1% of GDP pledge for research and development investment they made in 1980 and 2005, and even take it further, to around 3% of GDP. Currently, Africa accounts for about 5% of global GDP, but is responsible for only 1.3% of global expenditure on R&D. As a result, Africa remains disadvantaged on overall STI effort due to the low investment in STI capacity development. But for the continent to become competitive globally and close its development gap with the rest of the world, African governments must plug the STI investment gap.
West Africa: Governments must take bold steps to promote trade – Kofi Mbiah
The Chief Executive Officer of the Ghana Shippers’ Authority, Dr Kofi Mbiah, has asked governments of the West African sub-region to take bold steps to promote economic integration among member states by removing barriers affecting trade facilitation. He said the removal of tariff and non-tariff barriers, cutting down of delays and costs associated with the clearance of goods and also improving trade flows among others are critical for boosting trade in the sub-region with the exponential effects of improving the living conditions of the people. Dr Mbiah made the call in his opening remarks at the launch of the 1st Borderless Alliance Ghana Conference held on Wednesday in Accra under the theme “Positioning Ghana as a Gateway to West Africa – optimizing benefits of ETLS and TFA”. [Related: 6th Annual Borderless Alliance Conference(10-12 May, Ouagadougou). Concept note (pdf): Optimizing trade opportunities: the role of trade facilitation]
South Africa: February trade balance of R5.22bn (SARS)
The South African Revenue Service has releases trade statistics for February 2017 recording a trade balance surplus of R5.22bn. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland. The year-to-date trade balance deficit (1 January - 28 February) of R6bn is an improvement on the deficit for the comparable period in 2016 of R23.62bn. The R5.22bn trade balance surplus for February 2017 is attributable to exports of R87.79bn and imports of R82.57bn. Exports increased from January 2017 to February 2017 by R7.57bn (9.4%) and imports decreased from January 2017 to February 2017 by R8.86bn (9.7%).
Zimbabwe: ‘Zim should adopt rand to boost exports’ (NewsDay)
Scholar and senior economist Ashok Chakravarti told NewsDay in an interview on Tuesday that the current levels of real cash in circulation against deposits were alarmingly low at about $300 million, necessitating the introduction of the rand to ease cash pressures.
Egypt’s trade ministry plans to increase exports to $34bn by 2020 (Ahram)
Egypt’s trade and industry ministry is working on a strategy to almost double the nation’s exports by the year 2020, from the current $19bn to $34bn, according to a ministry statement on Wednesday. The strategy will include implementing new export plans and policies, as well as targeting new markets for cement, agricultural products, ready-made clothes, construction materials, chemical products, and engineering and electronic goods.
Rwanda: Trade deficit narrows by 25% in Jan-Feb 2017 (New Times)
The deficit reduced from about $296.57m in the first two months of 2017 to about $221.8m facilitated by a decrease in formal imports by 11.9% and growth in exports by 39.1%. The development was revealed during yesterday’s quarterly financial stability committee and monetary policy committee meetings chaired by central bank governor John Rwangombwa. The reduction in trade deficit consequently eased pressure on the Rwandan Franc and reduced depreciation, Rwangombwa said. “The franc depreciated by 0.7% as of March 24, compared to about 2.7% in the same period in 2016,” he noted. Based on the trends and reduced pressures, Rwangombwa is optimistic that the Franc will depreciate at an average of about 4% by the end of the year compared to about 9.7% in 2016. [Banks get funding to support export-oriented businesses]
COMESA insurers meet to revive regional scheme (The Chronicle)
Insurance experts within COMESA are meeting in Victoria Falls to deliberate on ways of revitalising the regional bloc’s insurance scheme. The Yellow Card Insurance Scheme is a regional motor vehicle insurance scheme that provides third party legal liability cover and compensation for medical expenses resulting from road traffic accidents caused by visiting motorists in any member state. The facility has been in force since 1986 when a Council of Ministers ratified it in Addis Ababa, Ethiopia, but has been faced with challenges such as delays in settlement of claims, low uptake, fraud as well as differences in individual member states’ laws. The strategic planning meeting, being attended by Burundi, Djibouti, DRC, Ethiopia, Kenya, Malawi, Rwanda, South Sudan, Tanzania, Zambia and Zimbabwe, seeks to foster a way forward in dealing with these challenges.
State Department reviewing conflict minerals sourcing (Bloomberg)
Their newly-launched review of how best to support responsible sourcing of conflict minerals could help determine the next step in a potential rethink of a Securities and Exchange Commission disclosure rule that requires listed companies to trace their use in products such as smartphones, cars and jewelry. The Trump administration seemed poised to suspend or rework the reporting rule—until Apple Inc., Tiffany & Co. and other major corporations said they would continue rooting out conflict minerals from their supply chains regardless. “That gave them pause,” Arvind Ganesan, who leads Human Rights Watch’s work on abuses linked to business and other economic activity, told Bloomberg BNA. Instead, the agencies’ month-long request for feedback could be an attempt to “repeal and replace” the SEC reporting requirement with other government policies or programs, said Sasha Lezhnev, associate director of policy at the non-profit Enough Project.
Nigeria: IMF concludes 2017 Article IV consultation
Under unchanged policies, the outlook remains challenging. Growth would pick up only slightly to 0.8% in 2017, mostly reflecting some recovery in oil production and a continuing strong performance in agriculture. Policy uncertainty, crowding out, and FX market distortions would be expected to drag activity.
FG moves to stop rejection of Nigerian food produce on global market (The Guardian)
The Federal Government is working to stop the rejection of Nigerian food produce at the international market. Towards this, a draft Food Safety and Quality Bill has been developed and would soon be sent to the Federal Executive Council for approval and to the National Assembly to be passed as an Act of parliament. Minister of Health, Prof. Isaac Adewole, who disclosed this yesterday at a meeting of Inter-ministerial Committee on Food Safety in Abuja, said government is planning to establish a system to ensure that only safe and wholesome food and products are traded within the country’s territory. He added that this would ensure significant reduction in food-borne diseases, strengthen institutional capacity for food safety and sustainable, effective trade that would boost the economy.
Nigeria heads new board of ECOWAS election management network
The Chairman of Nigeria’s Independent National Electoral Commission, Professor Mahmood Yakubu, has been elected President of the new five-member Board of the 15-nation ECOWAS Network of Electoral Commissions for the next two years. The workshop produced a Cotonou Declaration (pdf, in French) on the improvement of electoral processes and entrenchment of democracy in West Africa, at the behest of the ECOWAS Commission’s President H.E. Marcel de Souza, who officially opened the Conference.
African Union Commission, RECs discuss joint Framework for Cooperation (COMESA)
Representatives of the AUC and RECs and selected experts on democratic governance are meeting in Zambia’s capital to discuss the framework for cooperation towards the promotion of ratification, implementation and reporting the African Charter on Democracy, Elections and Governance. Delegates will discuss, among other things, opportunities RECs offer towards the promotion of universal ratification, implementation of and reporting on ACDEG by their respective Member States. To date, ACDEG has has been ratified by 29 out of 55 African Union Member States. The latest Member States to do so are Liberia which ratified earlier this month (7 March 2017), Algeria (10 January 2017), Comoros (6 January 2017), Seychelles (28 September 2016) and Namibia (30 August 2016). [Twitter updates: #dgtrends, #ACDEG]
Somaliland roots for ‘statehood’ at UN, AU (Daily News)
The Republic of Somaliland is now rooting for recognition at the AU and UN as a sovereign state, apparently in a bid to win legitimate rights as an independent state. Among its diplomatic forays, the country is now out to woo investors from Tanzania to go and invest in its finance, agriculture, hospitality and industry sectors as well as in marine services. Addressing journalists in Dar es Salaam yesterday, Somaliland Minister for Foreign Affairs and International Cooperation, Dr Saad Shire, said the country has all “the credentials” that a sovereign state is entitled to have.
World trade in services: evidence from a new dataset (IMF)
Using a newly constructed dataset on trade in services for 192 countries from 1970 to 2014, this paper shows that services currently constitute one-fourth of world trade and an increasingly important component of global production. A detailed analysis of patterns and stylized facts reveals that exports of services are not only gaining strong momentum and catching up with exports of goods in many countries, but they could also trigger a new wave of trade globalization. Research applications of the trade in service dataset on structural transformation, resilience, labor reallocation, and income distribution are outlined.
UK Prime Minister’s letter to Donald Tusk triggering Article 50: Looking ahead to the discussions which we will soon begin, I would like to suggest some principles that we might agree to help make sure that the process is as smooth and successful as possible. [A true partnership between Rwanda and UK, written by Lord Dolar Popat, UK Prime Minister’s Trade Envoy to Rwanda]
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108 million people in food crisis countries face severe acute food insecurity – situation worsening
New global report on food crises offers benchmark for action needed to avoid catastrophe
Despite international efforts to address food insecurity, around 108 million people living in 48 food-crisis countries were at high risk of or already facing severe acute food insecurity in 2016, a dramatic increase compared with 80 million in 2015, according to a new global report on food crises released in Brussels today.
The report, whose compilation required integrating several measurement methodologies, represents a new and politically innovative collaboration between the European Union and USAID/FEWSNET, regional food security institutions together with UN agencies including the Food and Agriculture Organization, the World Food Programme and Unicef.
The dramatic increase reflects the trouble people have in producing and accessing food due to conflict, record-high food prices in local markets in affected countries and extreme weather conditions such drought and erratic rainfall caused by El Niño.
Civil conflict is the driving factor in nine of the 10 worst humanitarian crises, underscoring the strong linkage between peace and food security, says the Global Report on Food Crises 2017 report.
By joining forces to deliver neutral analytical insights drawn from multiple institutions, the report – to be issued annually – enables better-informed planning decisions to respond to food crises in a more timely, global and coordinated way.
“This report highlights the critical need for prompt and targeted action to effectively respond to the food crises and to address their root causes. The EU has taken leadership in this response. In 2016, we allocated €550 million already, followed by another €165 million that we have just mobilized to assist the people affected by famine and drought in the Horn of Africa,” said Neven Mimica, Commissioner for International Cooperation and Development.
“The report is the outcome of a joint effort and a concrete follow-up to the commitments the EU made at the World Humanitarian Summit in Istanbul, which identified the urgent need for transparent, independent but consensus-based analysis of crises. I hope this document will be a strong tool for the whole international community to improve the coordination of our responses to crises,” added Christos Stylianides, Commissioner for Humanitarian Aid and Crisis Management.
Most critical situations are worsening
This year, the demand for humanitarian and resilience building assistance will further escalate as four countries are at risk of famine: South Sudan, Somalia, Yemen and northeast Nigeria.
Other countries that require massive levels of assistance because of widespread food insecurity are Iraq, Syria (including refugees in neighbouring countries) Malawi and Zimbabwe. In the absence of immediate and substantive action not only to save people’s lives, but also to pull them back from the brink of famine, the food security situation in these countries will continue to worsen in coming months, according to the new report.
“The cost in human and resource terms only increases if we let situations deteriorate,” said FAO Director-General José Graziano da Silva. “We can prevent people dying from famine but if we do not scale up our efforts to save, protect and invest in rural livelihoods, tens of millions will remain severely food insecure.”
“The numbers tell a deeply worrying story with more than 100 million people severely food-insecure, a level of suffering which is driven by conflict and climate change. Hunger exacerbates crisis, creating ever greater instability and insecurity. What is a food security challenge today becomes tomorrow’s security challenge,” said Ertharin Cousin, Executive Director of the World Food Programme. “It is a race against time – the world must act now to save the lives and livelihoods of the millions at the brink of starvation.”
The 108 million people reported to be facing severe food insecurity in 2016 represent those suffering from higher-than-usual acute malnutrition and a broad lack of minimally adequate food even with external assistance. This includes households that can cope with their minimum food needs only by depleting seeds, livestock and agricultural assets needed to produce food in the future.
Without robust and sustained action, people struggling with severe food insecurity risk slipping into an even worse situation and eventual starvation.
Access the Global Report on Food Crises 2017.
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Science, Technology and Innovation would catapult Africa to new heights of development, says ACBF report
“Africa’s remarkable economic growth over the past two decades is a source of hope but the continent cannot sustain and improve upon this trend without reinforcing the key catalyzers of science, technology and innovation (STI),” said the Executive Secretary of the African Capacity Building Foundation, Prof. Emmanuel Nnadozie, in a message being conveyed to worldwide audiences this week to mark a multi-location launch of the 6th edition of the Africa Capacity Report (ACR 2017).
This year’s Report was presented on 27 March 2017 to a wide array of audiences during events of the African Development Week 2017 in the Senegalese capital.
According to ACR 2017, STI has become even more critical for Africa after the adoption of the continent’s long-term development blueprint, Agenda 2063, the commitment to the UN Sustainable Development Goals and Africa’s own industrialization strategy.
Interestingly, Agenda 2063 is underpinned by STI as the engine of sustainable growth and economic transformation – a fact that led to the adoption of a 10-year Science, Technology and Innovation Strategy for Africa (STISA-2024) by AU leaders in June 2014. This makes the theme of ACR 2017, “Building Capacity for Science, Technology and Innovation for Africa’s Transformation”, very timely indeed.
The report which is based on surveys carried out in 44 countries across the continent makes a clear case for better ways of pursuing financing for development through STI, developing regional strategies for the development of the sector; revolutionizing capacity development; and, investing substantially in higher education/research with the right tools. In fact, the publication says African countries must commit to honoring the one per cent of GDP pledge for research and development (R&D) investment they made in 1980 and 2005, and even take it further, to around three per cent of GDP.
Currently, Africa accounts for about 5 per cent of global GDP, but is responsible for only 1.3 per cent of global expenditure on R&D. As a result, Africa remains disadvantaged on overall STI effort due to the low investment in STI capacity development. But for the continent to become competitive globally and close its development gap with the rest of the world, African governments must plug the STI investment gap.
Also speaking in Dakar as he paced through the Report, Dr. Stephen Karingi who heads the Capacity Development Division of the UN Economic Commission for Africa, remarked that “this is a report that African countries should appropriate in coming to terms with capacity gaps most especially in making use of science, technology, mathematics and engineering because these areas are critical for making progress in infrastructure and in driving industrialization.” He praised ACBF for its support to ECA and other African institutions in its campaign for human and institutional capacity development.
To Prof. Nnadozie: “The African Capacity Building Foundation remains committed to coordinating STI capacity development on the continent by building strategic partnerships as part of its 2017-2021 Strategy in support of the African Union Commission’s work in ensuring that STI is indeed the enabler in implementing Agenda 2063.”
Meanwhile multi location launches of the Report were scheduled for 28 March 2017 in Harare (Zimbabwe), Accra (Ghana), Abuja (Nigeria), Addis Ababa (Ethiopia), Dar es Salaam (Tanzania), Kigali (Rwanda), Lomé (Togo), Rabat (Morocco), Yaounde (Cameroon) and Stockholm in Sweden.
» Download: Africa Capacity Report 2017 (PDF)
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Can the relationship between Europe and Africa stand the test of time?
The European Union’s relationship with Africa is as old as the independence story.
The signing of the Treaty of Rome, which established the European Economic Community (EEC) 60 years ago in March 1957, came at a tumultuous time in relations between Europe and Africa.
Just weeks earlier Kwame Nkrumah had declared Ghana a republic, an event which was a turning point in the decolonisation of sub-Saharan Africa.
Nkrumah remarked that the treaty’s inclusion of colonial territories was to neocolonialism what the Berlin Treaty of 1885 had been to colonialism.
He had a point. Two of the six founding members of the EEC – Belgium and France – still held substantial colonial interests on the continent. Accession to the community thus posed the crucial question of what to do about them.
The question became contentious enough to threaten the collapse of the entire Treaty of Rome negotiation process. The other four members of the EEC were Germany, Italy, Luxembourg and the Netherlands.
France in particular was steadfast that its colonies be “associated” with the community. Paris envisaged that its preferential colonial terms of trade would be extended to the entire EEC. But Germany and the Netherlands were opposed, wary of being forced to share the financial and political responsibilities that came with trading with former colonies.
The French argument ultimately won, albeit with some compromises. The treaty’s association agreement would last five years and the preferences France enjoyed from its colonies would be gradually expanded to the rest of the EEC.
The agreement, inscribed into articles 131-136 of the treaty, served as the originator of Europe’s subsequent relationship with the African, Caribbean and Pacific Group of States (ACP). This was codified in the Yaoundé Agreements, the Lomé Convention and today’s Cotonou Agreement.
So this 60th anniversary is not just about Europe. The treaty created a framework for multilateral relations between Europe and Africa.
The principles of trade and aid enshrined in the treaty’s association agreement form the basis of Europe’s development agenda in Africa to this day, even though relations have expanded into many more areas in the 21st century.
A common future
The Treaty of Rome laid out the blueprint for the creation of the world’s largest single market. It also contributed to the post World War II process of cooperation and reconciliation in Europe.
The push for European unity persisted for 37 years, culminating in the creation of the European Union (EU) under the Maastricht Treaty in 1993.
Although difficult to imagine amid the doom and gloom of Brexit, rising populism and the migration crisis, there is still reason to celebrate when you consider the region’s relationship with Africa.
The EU, for all of its troubles, has generally been a progressive partner to Africa, especially with respect to the establishment of the Joint Africa-EU Strategy and the unique programming efforts it has generated.
This of course does not negate instances of neocolonialism, nor the damage done by the clumsy promotion of the European Partnership Agreements (EPAs).
The EPAs in particular remain a sore point. Indeed, the preferential trade terms given to African countries by EU member states have been judged discriminatory and in contravention of World Trade Organisation rules.
Beyond the EPA debate, a number of factors have contributed to challenges facing some of the original asymmetries between the two sides.
For one, the global South, and China in particular, continues to alter global trade dynamics. African countries and regional organisations now have more trading partners to turn to.
In addition, Africa is in the middle of constructive upheaval, brought on by more than 20 years of robust growth.
The Africa of today is not the Africa of 1957. The African Union is also a more robust partner than its predecessor, the Organisation of Africa Unity.
Trade and aid
Back in 1957, the Treaty of Rome laid down the twin principles of EU-Africa relations throughout the 20th century and beyond: trade and aid. These principles were framed within the larger idea of development cooperation.
The association agreement provided reciprocal trading arrangements between 31 ‘overseas territories’ – including 18 African ones – and the ECC countries. An overseas development fund was also created, with all six EEC members contributing to it.
Controversially, the agreement served to perpetuate African dependency on Europe. Even the Lome Convention’s much touted “non-reciprocal” principle, which was supposed to nurture African industries, further attached them to Europe.
The convention eventually met strong criticism as a system of “collective clientelism”, which was perpetuating dependency and “elite capture” in Africa.
This contradictory relationship between dependency and progressive thinking has made Africans understandably circumspect.
What next for Europe and Africa?
The twin principles of trade and aid still exist. But the growth of the EU-Africa partnership since 2000 – outside of EU-ACP channels – has broadened the relationship into less traditional areas such as science and technology, higher education, private investment, infrastructure and continental integration.
But Kwame Nkurumah’s 1957 criticism is still being levied at the EU today for its alleged neocolonial promotion of the EPAs. Pundits in East and Central Africa have been vociferous in their opposition to the agreements.
However, EU officials have a dramatically different interpretation. The EU Commissioner for International Cooperation and Development, Neven Mimica, described the 2016 EPA with six Southern African Development Community (SADC) members as helping to tap the economic potential of the private sector and increase trade.
With such contrasting perceptions, it is perhaps unsurprising that SADC is the only regional body to have signed an EPA with the EU despite more than 10 years of negotiation.
What is crucial is that both sides recognise how far they have come since the Treaty of Rome. And that they accept that a more equitable partnership requires continued commitment to cooperation.
John Kotsopoulos is a Research Fellow at the Centre for the Study of Governance Innovation, University of Pretoria.
This article was originally published on The Conversation. Read the original article.
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Worst humanitarian crisis in 70 years hits as Trump slashes foreign aid
The world’s largest humanitarian crisis in 70 years has been declared in three African countries on the brink of famine, just as President Donald Trump’s proposed foreign aid cuts threaten to pull the United States from its historic role as the world’s top emergency donor.
If the deep cuts are approved by Congress and the U.S. does not contribute to Africa’s current crisis, experts warn that the continent’s growing drought and famine could have far-ranging effects, including a new wave of migrants heading to Europe and possibly more support for Islamic extremist groups.
The conflict-fueled hunger crises in Nigeria, Somalia and South Sudan have culminated in a trio of potential famines hitting almost simultaneously. Nearly 16 million people in the three countries are at risk of dying within months.
Famine already has been declared in two counties of South Sudan and 1 million people there are on the brink of dying from a lack of food, U.N. officials have said. Somalia has declared a state of emergency over drought and 2.9 million of its people face a food crisis that could become a famine, according to the U.N. And in northeastern Nigeria, severe malnutrition is widespread in areas affected by violence from Boko Haram extremists.
“We are facing the largest humanitarian crisis since the creation of the United Nations,” Stephen O’Brien, the U.N. humanitarian chief, told the U.N. Security Council after a visit this month to Somalia and South Sudan.
At least $4.4 billion is needed by the end of March to avert a hunger “catastrophe” in Nigeria, Somalia, South Sudan, and Yemen, U.N. Secretary-General Antonio Guterres said in late February.
But according to U.N. data, only 10 percent of the necessary funds have been received so far.
Trump’s proposed budget would “absolutely” cut programs that help some of the most vulnerable people on Earth, Mick Mulvaney, the president’s budget director, told reporters last week. The budget would “spend less money on people overseas and more money on people back home,” he said.
The United States traditionally has been the largest donor to the U.N. and gives more foreign aid to Africa than any other continent. In 2016 it gave more than $2 billion to the U.N.’s World Food Program, or almost a quarter of its total budget. That is expected to be reduced under Trump’s proposed budget, according to former and current U.S. government officials.
“I’ve never seen this kind of threat to what otherwise has been a bipartisan consensus that food aid and humanitarian assistance programs are morally essential and critical to our security,” Steven Feldstein, a former deputy assistant secretary of state in the Obama administration, told The Associated Press.
In an interview last week with the AP in Washington, Senate Majority Leader Mitch McConnell rejected the proposed cuts to foreign aid. “America being a force is a lot more than building up the Defense Department,” he said. “Diplomacy is important, extremely important, and I don’t think these reductions at the State Department are appropriate because many times diplomacy is a lot more effective – and certainly cheaper – than military engagement.”
The hunger crises in Nigeria, Somalia and South Sudan are all the more painful because they are man-made, experts said, though climate change has had some impact on Somalia and Nigeria’s situations, said J. Peter Pham, the head of the Africa Center at the Atlantic Council.
South Sudan has been entrenched in civil war since late 2013 that has killed tens of thousands and prevented widespread cultivation of food. In Nigeria and Somalia, extremist groups Boko Haram and al-Shabab have proven stubborn to defeat, and both Islamic organizations still hold territory that complicates aid efforts.
If Trump’s foreign aid cuts are approved, the humanitarian funding burden for the crises would shift to other large donors like Britain. But the U.S.’s influential role in rallying global support will slip.
“Without significant contributions from the U.S. government, it is less able to catalyze contributions from other donors and meet even minimal life-saving needs,” Nancy Lindborg, president of the United States Institute of Peace, said in prepared remarks to the Senate Foreign Relations Committee on Wednesday.
Meanwhile, neighboring African countries will feel the immediate consequences of famine, experts said. On Thursday, the U.N. refugee chief said Uganda was at a “breaking point” after more than 570,000 South Sudanese refugees had arrived since July alone.
Others fleeing hunger could aim for Europe instead.
“We are going to see pressure on neighboring countries, in some cases people joining traditional migration routes both from the Sahel into Europe, or south into various destinations in Africa,” Joseph Siegle, director of research at the Africa Center for Strategic Studies, told the AP.
“You have 19 countries facing some degree of food stress in Africa, and three of them are facing famine conditions. All three of them are facing conflict, and the vast majority of the countries facing more serious crises are non-democratic governments,” Siegle said.
He described a series of possible consequences. Most likely there will be increased flows of people migrating from Somalia and the vast Sahel region north into Libya, where trafficking routes are a valuable source of finance for the Islamic State, he said.
Closer to home, people from South Sudan and Somalia seeking food likely will strain the resources of neighboring countries where political will and goodwill to refugees can be fleeting, said Mohammed Abdiker, director of operations and emergencies with the International Organization for Migration.
The regional consequences will depend on how the international community responds, Abdiker said.
Alex De Waal, executive director of the World Peace Foundation, summed up the situation: “Famine can be prevented if we want.”
Stability in the 21st Century: Global Food Security for Peace and Prosperity
As the new administration and Congress debate the appropriate balance of US diplomacy, foreign assistance, and military strength in light of modern security challenges, the Chicago Council on Global Affairs has issued a report on how US efforts to fight food insecurity around the world can provide increased security and economic vitality at home. The report was released at the Global Food Security Symposium in Washington, D.C. on 30 March 2017.
Food security is essential to national security and economic opportunity
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The world today faces enormous challenges, including the threats of rapidly increasing instability, conflict, and migration as a result of inadequate food supplies and water scarcity. To combat these threats, a commitment to global food and nutrition security is more important than ever.
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The United States – together with its allies – has never been better equipped to expand its historical commitment to food and nutrition security. This commitment will not only protect America’s national security, but also open up new business opportunities and partnerships in emerging economies and bolster the livelihoods of millions of smallholder farmers and entrepreneurs around the world.
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This report recommends how the US government – in partnership with national governments, the private sector, the scientific community, and civil society – can lead the way in ensuring that food systems deliver safe and nutritious food to those who need it, while enabling small farmers and rural economies to lift themselves out of poverty and thrive.
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Governments must take bold steps to promote trade – Kofi Mbiah
The Chief Executive Officer of the Ghana Shippers’ Authority (GSA), Dr Kofi Mbiah, has asked governments of the West African sub-region to take bold steps to promote economic integration among member states by removing barriers affecting trade facilitation.
He said the removal of tariff and non-tariff barriers, cutting down of delays and costs associated with the clearance of goods and also improving trade flows among others are critical for boosting trade in the sub-region with the exponential effects of improving the living conditions of the people.
Dr Mbiah made the call in his opening remarks at the launch of the 1st Borderless Alliance Ghana Conference held in Accra Wednesday March 29, 2017 under the theme “Positioning Ghana as a Gateway to West Africa – Optimizing Benefits of ETLS and TFA”.
“The African continent and its Regional Economic Communities (RECs) record less intra-regional trade than most other regions of the world. One of the major factors behind this low level of integration is the low level of Trade Facilitation implementation. Regional integration depends crucially on the facilitation of cross-border trade and, at the same time, many cross-border operations depend on cooperation among neighbouring countries,” he emphasised.
He noted that compliance with the Trade Facilitation Agreement (TFA) of the World Trade Organisation and particularly the Ecowas Trade Liberalisation Scheme (ETLS) are catalysts for inter-economic integration and growth.
The GSA boss added: “The ETLS also covers transit trade and establishes an ECOWAS Inter-State Road Transit (ISRT) scheme to ensure goods in transit flow easily without having to pay duties or other fees. A single logbook and single bond are planned to aid in these transit flows. This initiative intends to standardize axle load limits, create a regional vehicle insurance scheme, harmonize vehicle standards, and reduce road blocks along major corridors.”
Dr Mbiah commended efforts between his outfit and Borderless Alliance, a private sector-led regional advocacy group that promotes regional economic integration and free movement of goods and people in West Africa by tackling barriers to trade and transport in the region, in facilitating trade and building the capacity of shippers with the ultimate objective of making them more competitive
He mentioned the establishment of an e-platform which allows shippers to lodge complaints electronically and border Information Centres at vantage border posts of Ghana which provide real time assistance to shippers and transitors among others as part of the interventions the two institutions have collaborated to implement to boost trade.
Speaking on behalf of the minister of trade and industry, a deputy minister designate Carlos Ahenkorah, MP, stated that government has prioritized programmes to improve the business climate and regulatory reforms for industrial development and has as a result placed trade facilitation at the centre of trade reforms in Ghana.
“In this regard, trade procedures and custom processes at Ghana’s borders and ports have undergone major transformation and modernisation, particularly through the introduction of ICT and the implementation of the Single Window project,” he added .
The trades minister noted that even though there are still some challenges with the implementation of the ETLS with some reflecting in the Borderless Alliance’s perception survey report conducted on some key sections of the Tema-Ouagadougou trade corridor, the introduction of the single window project has reduced processing time of goods at the port from seven to three days and Customs have also become more responsive to phyto-sanitary inspection service.
On his part,the minister of transport, Mr Kwaku Ofori-Asiamah, emphasised on the need for Ghana to position herself well in the sub-region by addressing the barriers confronting the free movement of goods and persons with its neighbours.
He commended the Ghana Shippers’ Authority and the Borderless Alliance for their continuous collaborative efforts in promoting trade facilitation and encouraged them to do more.
The president of Borderless Alliance Ghana, Mr Ziad Hamoui, said his outfit will continue to collaborate with state agencies and the private sector in addressing the challenges inhibiting the free flow of goods and persons in a timely and cost effective manner.
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IMF urges Nigeria to remove currency curbs to boost economy
Nigeria should remove currency-trading restrictions and reduce its budget deficit and debt levels to help the economy recover this year, the International Monetary Fund said.
“Under unchanged policies, the outlook remains challenging,” the Washington-based lender said in an emailed statement after an article IV consultation with Nigerian officials. “Stronger macroeconomic policies are urgently needed to rebuild confidence and foster an economic recovery.”
The West African nation will probably seek $3.5 billion abroad for its 2017 budget to plug a deficit in President Muhammadu Buhari’s spending proposals of 7.3 trillion naira ($23 billion). The government returned to international capital markets on Wednesday for an additional $500 million after raising $1 billion of Eurobonds in February. Its debt-service costs doubled to 66 percent of revenue last year from 2015, the IMF said.
“Nigeria’s debt-servicing cost is quite high, and peculiar because it’s high due to low revenue,” Yvonne Mhango, an economist at Renaissance Capital, said by phone from Johannesburg. “The government should increase revenue by raising value-added tax, expanding the tax base and improving compliance.”
Economic Blueprint
Nigeria this month announced a four-year program to create 15 million jobs and boost an economy that shrunk by 1.5 percent last year, the first contraction since 1991. The blueprint also aims to boost economic growth to 7 percent by 2020 by lifting oil output, opening farmland and increasing investment in power, roads, rail and ports. Gross domestic product will probably expand 0.8 percent this year and 1.9 percent in 2018, the IMF said.
The plan aims to reduce the inflation rate to single digits from 17.8 percent in February. The central bank has kept its key rate at a record high of 14 percent since July even as price growth is at almost double the government’s 9 percent target.
Easing exchange-rate restrictions “should be supported by tighter monetary policy and fiscal consolidation to anchor inflation expectations and to limit the risk of exchange-rate overshooting,” the IMF said.
The naira lost about one third its value against the dollar when the central bank removed a currency peg in June. To keep it from further falling, the regulator continues to regularly sell dollars and Governor Godwin Emefiele has said they will enforce a managed float for the foreign-currency market.
Currency Restrictions
Authorities should “remove the remaining restrictions and multiple-currency practices, thus unifying the foreign-exchange market and helping regain investor confidence,” the IMF said.
The currency-trading restrictions and multiple foreign-exchange rates have impeded capital inflows and curbed lending, according to Renaissance Capital’s Mhango.
“Nigeria has to let the market be more involved in valuing the naira, and as the IMF says, needs tight monetary policy to attract capital flows, improve liquidity and stabilize the currency,” she said.
S&P Global Ratings spared the west African nation a downgrade earlier this month, affirming its B rating with a stable outlook, and said increasing crude output and government spending will support growth.
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World trade in services: evidence from a new dataset
Using a newly constructed dataset on trade in services for 192 countries from 1970 to 2014, this IMF Working Paper shows that services currently constitute one-fourth of world trade and an increasingly important component of global production.
A detailed analysis of patterns and stylized facts reveals that exports of services are not only gaining strong momentum and catching up with exports of goods in many countries, but they could also trigger a new wave of trade globalization. Research applications of the trade in service dataset on structural transformation, resilience, labor reallocation, and income distribution are outlined.
Introduction
The structure of economic production is continuously evolving, with trade in services playing an ever greater role. Services export is an increasingly important component of a nation’s export basket. Services exports are also growing as a share of the world economy. The share of services export in total goods and services export has doubled from around 9 percent in 1970 to over 20 percent by 2014.
Although there are several likely channels that are responsible for driving up demand for world trade in services, none is as instrumental as advances in technological change. Technological innovations provide a wide array of services to be carried out in one location and consumed in many other places. Historically, buyers and sellers needed to be face to face. However, increasingly many services between buyers and sellers can be traded globally across and within borders almost instantly through satellite networks. The internet and other systems of network technologies like mobile phones, big data, and artificial intelligence are providing technical changes to production techniques and business processes. Software has become the main component of all hardware systems. This has given services a physical presence like goods; they can be produced, and stored. But perhaps it is the virtual capabilities of services, such as being transported cheaply and swiftly in binary bits, that make it even more desirable than exported goods. These structural changes are putting services at the center of world commerce, perhaps heralding a new wave of globalization.
Are the drivers of growth and development shifting away from manufacturing into services? It may be too early to tell, but rapid inter-and intra-sectoral resource reallocations are offering new investments opportunities in a variety of tradable service activities. More recently, there is also a growing sentiment in policy and media that the pace of globalization driven primarily by exports in goods, may have started to decelerate after two decades of uninterrupted progress. Could trade in services support a future wave of globalization, trade and growth? These questions have sparked an interest in understanding the implications for trade in services on productivity, jobs and growth, but very little is known about global services trade.
A nascent yet growing body of evidence has begun to challenge the long held tenets of economic development that industrialization is the prime engine of growth. However, due to deeply rooted prejudice against service sector, this classical view still remains prevalent. In The Wealth of Nations, Adam Smith questioned the social value provided by “churchmen, lawyers, physicians, men of letters of all kinds, players, buffoons, musicians, opera-singers, opera-dancers, etc.” Similarly, William Baumol (1967) fostered the view that services are a sector resistant to improvements in productivity. Provision of services – such as restaurant meals, haircuts, and medical checkups – required face-to-face transactions. These did not lend themselves easily to standardization and trade, the source of growth in productivity and hence income. Furthermore, Kaldor (1967) put forth an argument for the supremacy of the industrial sector for the promotion of broad economic growth. Recent evidence highlights that business services seem to allow productivity growth by the same Kaldorian mechanisms that have traditionally made manufacturing the key driver of growth. It is well accepted that the stages of diversification follow a non-monotonic path through the development pathway. India’s idiosyncratic pattern of development has been driven by service-led growth, China’s growth as a manufacturing powerhouse quickly propelled its economy to a middle-income level. However, at this juncture many middle-income countries including China are seeking new sources of growth to be service-led. Further, as many resource-rich and low-income countries face the Dutch-disease symptoms, service-led growth may propel the manufacturing base and offers opportunities for future growth strategies in these countries. The growing tradability of services will remain an imperative for diversification and competitiveness of nations across the development spectrum.
In this paper, the authors introduce a new disaggregated annual panel data set on global trade in services for 192 countries, more detailed than any earlier efforts. The data is broken down into one and two-digit disaggregation, providing as many as 27 services export sectors.
Using this rich dataset, it is shown that trading services are gaining momentum in world trade and are becoming an increasingly important component of global production. Our analysis documents global trends in trading services and provides stylized facts documenting how countries differ on various dimensions of exporting services. The paper makes the case that trading services are not only catching up with exports of goods in many countries, but they could help continue the strong globalization process started by exported goods. The authors argue that this development would have serious implications to shifts in structural transformation, labor allocation, and income distribution – issues that they start to consider later on in the paper.
This paper was prepared by Prakash Loungani (IMF), Saurabh Mishra (University of Maryland), Chris Papageorgiou (IMF), and Ke Wang (IMF). IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed here are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Plan for the UK leaving the EU: Prime Minister’s letter to Donald Tusk triggering Article 50
Prime Minister Theresa May has written to European Council President Donald Tusk to notify him of the UK’s intention to leave the EU. Extracts from her statement delivered in Parliament on 29 March 2017 and the letter to Donald Tusk triggering Article 50 are available below.
Prime Minister’s Commons statement on triggering Article 50
Today the government acts on the democratic will of the British people. And it acts, too, on the clear and convincing position of this House.
A few minutes ago in Brussels, the United Kingdom’s Permanent Representative to the EU handed a letter to the President of the European Council on my behalf, confirming the government’s decision to invoke Article 50 of the Treaty on European Union.
The Article 50 process is now underway. And in accordance with the wishes of the British people, the United Kingdom is leaving the European Union.
This is an historic moment from which there can be no turning back. Britain is leaving the European Union. We are going to make our own decisions and our own laws. We are going to take control of the things that matter most to us. And we are going to take this opportunity to build a stronger, fairer Britain – a country that our children and grandchildren are proud to call home. That is our ambition and our opportunity. That is what this government is determined to do. ...
I choose to believe in Britain and that our best days lie ahead. And I do so because I am confident that we have the vision and the plan to use this moment to build a better Britain. For, leaving the European Union presents us with a unique opportunity. It is this generation’s chance to shape a brighter future for our country. A chance to step back and ask ourselves what kind of country we want to be.
My answer is clear. I want the United Kingdom to emerge from this period of change stronger, fairer, more united and more outward-looking than ever before. I want us to be a secure, prosperous, tolerant country – a magnet for international talent and a home to the pioneers and innovators who will shape the world ahead.
I want us to be a truly Global Britain – the best friend and neighbour to our European partners, but a country that reaches beyond the borders of Europe too. A country that goes out into the world to build relationships with old friends and new allies alike.
And that is why I have set out a clear and ambitious plan for the negotiations ahead. It is a plan for a new deep and special partnership between Britain and the European Union. A partnership of values. A partnership of interests. A partnership based on cooperation in areas such as security and economic affairs. And a partnership that works in the best interests of the United Kingdom, the European Union and the wider world. ...
We will pursue a bold and ambitious free trade agreement with the European Union that allows for the freest possible trade in goods and services between Britain and the EU’s member states; that gives British companies the maximum freedom to trade with and operate within European markets; and that lets European businesses do the same in Britain.
Because European leaders have said many times that we cannot ‘cherry pick’ and remain members of the single market without accepting the 4 freedoms that are indivisible. We respect that position. And as accepting those freedoms is incompatible with the democratically expressed will of the British people, we will no longer be members of the single market.
We are going to make sure that we can strike trade agreements with countries from outside the European Union too. Because important though our trade with the EU is and will remain, it is clear that the UK needs to increase significantly its trade with the fastest growing export markets in the world.
We hope to continue to collaborate with our European partners in the areas of science, education, research and technology, so that the UK is one of the best places for science and innovation. We seek continued cooperation with our European partners in important areas such as crime, terrorism and foreign affairs.
And it is our aim to deliver a smooth and orderly Brexit – reaching an agreement about our future partnership by the time the 2-year Article 50 process has concluded, then moving into a phased process of implementation in which Britain, the EU institutions and member states prepare for the new arrangements that will exist between us.
Mr Speaker, we understand that there will be consequences for the UK of leaving the EU. We know that we will lose influence over the rules that affect the European economy. We know that UK companies that trade with the EU will have to align with rules agreed by institutions of which we are no longer a part, just as we do in other overseas markets. We accept that.
However, we approach these talks constructively, respectfully, and in a spirit of sincere cooperation. For it is in the interests of both the United Kingdom and the European Union that we should use this process to deliver our objectives in a fair and orderly manner. It is in the interests of both the United Kingdom and the European Union that there should be as little disruption as possible. And it is in the interests of both the United Kingdom and the European Union that Europe should remain strong, prosperous and capable of projecting its values in the world.
At a time when the growth of global trade is slowing and there are signs that protectionist instincts are on the rise in many parts of the world, Europe has a responsibility to stand up for free trade in the interests of all our citizens. ...
We all want to see a Britain that is stronger than it is today. We all want a country that is fairer so that everyone has the chance to succeed. We all want a nation that is safe and secure for our children and grandchildren. We all want to live in a truly Global Britain that gets out and builds relationships with old friends and new allies around the world.
These are the ambitions of this government’s Plan for Britain. Ambitions that unite us, so that we are no longer defined by the vote we cast, but by our determination to make a success of the result.
Prime Minister’s letter to Donald Tusk triggering Article 50
On 23 June last year, the people of the United Kingdom voted to leave the European Union. As I have said before, that decision was no rejection of the values we share as fellow Europeans. Nor was it an attempt to do harm to the European Union or any of the remaining member states. On the contrary, the United Kingdom wants the European Union to succeed and prosper. Instead, the referendum was a vote to restore, as we see it, our national self-determination. We are leaving the European Union, but we are not leaving Europe – and we want to remain committed partners and allies to our friends across the continent.
Earlier this month, the United Kingdom Parliament confirmed the result of the referendum by voting with clear and convincing majorities in both of its Houses for the European Union (Notification of Withdrawal) Bill. The Bill was passed by Parliament on 13 March and it received Royal Assent from Her Majesty The Queen and became an Act of Parliament on 16 March.
Today, therefore, I am writing to give effect to the democratic decision of the people of the United Kingdom. I hereby notify the European Council in accordance with Article 50(2) of the Treaty on European Union of the United Kingdom’s intention to withdraw from the European Union. In addition, in accordance with the same Article 50(2) as applied by Article 106a of the Treaty Establishing the European Atomic Energy Community, I hereby notify the European Council of the United Kingdom’s intention to withdraw from the European Atomic Energy Community. References in this letter to the European Union should therefore be taken to include a reference to the European Atomic Energy Community.
This letter sets out the approach of Her Majesty’s Government to the discussions we will have about the United Kingdom’s departure from the European Union and about the deep and special partnership we hope to enjoy – as your closest friend and neighbour – with the European Union once we leave. We believe that these objectives are in the interests not only of the United Kingdom but of the European Union and the wider world too.
It is in the best interests of both the United Kingdom and the European Union that we should use the forthcoming process to deliver these objectives in a fair and orderly manner, and with as little disruption as possible on each side. We want to make sure that Europe remains strong and prosperous and is capable of projecting its values, leading in the world, and defending itself from security threats. We want the United Kingdom, through a new deep and special partnership with a strong European Union, to play its full part in achieving these goals. We therefore believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the European Union.
The Government wants to approach our discussions with ambition, giving citizens and businesses in the United Kingdom and the European Union – and indeed from third countries around the world – as much certainty as possible, as early as possible. I would like to propose some principles that may help to shape our coming discussions, but before I do so, I should update you on the process we will be undertaking at home, in the United Kingdom.
The process in the United Kingdom
As I have announced already, the Government will bring forward legislation that will repeal the Act of Parliament – the European Communities Act 1972 – that gives effect to EU law in our country. This legislation will, wherever practical and appropriate, in effect convert the body of existing European Union law (the “acquis”) into UK law. This means there will be certainty for UK citizens and for anybody from the European Union who does business in the United Kingdom. The Government will consult on how we design and implement this legislation, and we will publish a White Paper tomorrow. We also intend to bring forward several other pieces of legislation that address specific issues relating to our departure from the European Union, also with a view to ensuring continuity and certainty, in particular for businesses. We will of course continue to fulfil our responsibilities as a member state while we remain a member of the European Union, and the legislation we propose will not come into effect until we leave.
From the start and throughout the discussions, we will negotiate as one United Kingdom, taking due account of the specific interests of every nation and region of the UK as we do so. When it comes to the return of powers back to the United Kingdom, we will consult fully on which powers should reside in Westminster and which should be devolved to Scotland, Wales and Northern Ireland. But it is the expectation of the Government that the outcome of this process will be a significant increase in the decision-making power of each devolved administration.
Negotiations between the United Kingdom and the European Union
The United Kingdom wants to agree with the European Union a deep and special partnership that takes in both economic and security cooperation. To achieve this, we believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU.
If, however, we leave the European Union without an agreement the default position is that we would have to trade on World Trade Organisation terms. In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened. In this kind of scenario, both the United Kingdom and the European Union would of course cope with the change, but it is not the outcome that either side should seek. We must therefore work hard to avoid that outcome.
It is for these reasons that we want to be able to agree a deep and special partnership, taking in both economic and security cooperation, but it is also because we want to play our part in making sure that Europe remains strong and prosperous and able to lead in the world, projecting its values and defending itself from security threats. And we want the United Kingdom to play its full part in realising that vision for our continent.
Proposed principles for our discussions
Looking ahead to the discussions which we will soon begin, I would like to suggest some principles that we might agree to help make sure that the process is as smooth and successful as possible.
i. We should engage with one another constructively and respectfully, in a spirit of sincere cooperation
Since I became Prime Minister of the United Kingdom I have listened carefully to you, to my fellow EU Heads of Government and the Presidents of the European Commission and Parliament. That is why the United Kingdom does not seek membership of the single market: we understand and respect your position that the four freedoms of the single market are indivisible and there can be no “cherry picking”. We also understand that there will be consequences for the UK of leaving the EU: we know that we will lose influence over the rules that affect the European economy. We also know that UK companies will, as they trade within the EU, have to align with rules agreed by institutions of which we are no longer a part – just as UK companies do in other overseas markets.
ii. We should always put our citizens first
There is obvious complexity in the discussions we are about to undertake, but we should remember that at the heart of our talks are the interests of all our citizens. There are, for example, many citizens of the remaining member states living in the United Kingdom, and UK citizens living elsewhere in the European Union, and we should aim to strike an early agreement about their rights.
iii. We should work towards securing a comprehensive agreement
We want to agree a deep and special partnership between the UK and the EU, taking in both economic and security cooperation. We will need to discuss how we determine a fair settlement of the UK’s rights and obligations as a departing member state, in accordance with the law and in the spirit of the United Kingdom’s continuing partnership with the EU. But we believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU.
iv. We should work together to minimise disruption and give as much certainty as possible
Investors, businesses and citizens in both the UK and across the remaining 27 member states – and those from third countries around the world – want to be able to plan. In order to avoid any cliff-edge as we move from our current relationship to our future partnership, people and businesses in both the UK and the EU would benefit from implementation periods to adjust in a smooth and orderly way to new arrangements. It would help both sides to minimise unnecessary disruption if we agree this principle early in the process.
v. In particular, we must pay attention to the UK’s unique relationship with the Republic of Ireland and the importance of the peace process in Northern Ireland
The Republic of Ireland is the only EU member state with a land border with the United Kingdom. We want to avoid a return to a hard border between our two countries, to be able to maintain the Common Travel Area between us, and to make sure that the UK’s withdrawal from the EU does not harm the Republic of Ireland. We also have an important responsibility to make sure that nothing is done to jeopardise the peace process in Northern Ireland, and to continue to uphold the Belfast Agreement.
vi. We should begin technical talks on detailed policy areas as soon as possible, but we should prioritise the biggest challenges
Agreeing a high-level approach to the issues arising from our withdrawal will of course be an early priority. But we also propose a bold and ambitious Free Trade Agreement between the United Kingdom and the European Union. This should be of greater scope and ambition than any such agreement before it so that it covers sectors crucial to our linked economies such as financial services and network industries. This will require detailed technical talks, but as the UK is an existing EU member state, both sides have regulatory frameworks and standards that already match. We should therefore prioritise how we manage the evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes. On the scope of the partnership between us – on both economic and security matters – my officials will put forward detailed proposals for deep, broad and dynamic cooperation.
vii. We should continue to work together to advance and protect our shared European values
Perhaps now more than ever, the world needs the liberal, democratic values of Europe. We want to play our part to ensure that Europe remains strong and prosperous and able to lead in the world, projecting its values and defending itself from security threats.
The task before us
As I have said, the Government of the United Kingdom wants to agree a deep and special partnership between the UK and the EU, taking in both economic and security cooperation. At a time when the growth of global trade is slowing and there are signs that protectionist instincts are on the rise in many parts of the world, Europe has a responsibility to stand up for free trade in the interest of all our citizens. Likewise, Europe’s security is more fragile today than at any time since the end of the Cold War. Weakening our cooperation for the prosperity and protection of our citizens would be a costly mistake. The United Kingdom’s objectives for our future partnership remain those set out in my Lancaster House speech of 17 January and the subsequent White Paper published on 2 February.
We recognise that it will be a challenge to reach such a comprehensive agreement within the two-year period set out for withdrawal discussions in the Treaty. But we believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU. We start from a unique position in these discussions – close regulatory alignment, trust in one another’s institutions, and a spirit of cooperation stretching back decades. It is for these reasons, and because the future partnership between the UK and the EU is of such importance to both sides, that I am sure it can be agreed in the time period set out by the Treaty.
The task before us is momentous but it should not be beyond us. After all, the institutions and the leaders of the European Union have succeeded in bringing together a continent blighted by war into a union of peaceful nations, and supported the transition of dictatorships to democracy. Together, I know we are capable of reaching an agreement about the UK’s rights and obligations as a departing member state, while establishing a deep and special partnership that contributes towards the prosperity, security and global power of our continent.
White Paper: Legislating for the United Kingdom’s withdrawal from the European Union
The Great Repeal Bill White Paper was published today. It sets out the government’s proposals for ensuring a functioning statute book once we have left the EU.
The day after the Prime Minister triggered Article 50 – starting the formal process of leaving the bloc – a White Paper on the Great Repeal Bill sets out the Government’s approach to converting existing EU law into domestic law on the day we leave the EU.
The paper sets out how the Great Repeal Bill will deliver a smooth and orderly exit from the EU, by:
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repealing the European Communities Act 1972 – returning power to UK elected representatives and institutions;
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converting EU law into domestic law at the point of departure – giving certainty and allowing any changes to be made in a sensible, timely and considered fashion; and
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correcting EU law that will not function as it is converted into UK law – ensuring the statute book operates effectively.
This process will ensure that the same rules and laws will apply after we leave the EU as they did before, from the moment we leave. After the UK has left the EU and sovereignty has returned to the UK Parliament, it will be able to decide which elements of law to keep, change or repeal.
The White Paper, called ‘Legislating for the United Kingdom’s withdrawal from the European Union’, makes clear that existing workers’ legal rights will continue to be guaranteed in law.
A significant proportion of existing EU law will cease to work properly without changes being made.
To enable these laws to function properly on exit, providing certainty and stability, the Government needs to undertake a programme of legislation to correct the statute book while Article 50 negotiations take place.
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Banks get funding to support export-oriented businesses
Two local banks are set to benefit from a Rwf5.3 billion loan to finance export-oriented small- and medium-size enterprises (SMEs) under the Export Growth Fund.
The loan agreement was signed between Development Bank of Rwanda (BRD) and two of the leading partner financial institutions, I&M Bank and Banque Populaire du Rwanda (BPR), yesterday.
The initiative is in the framework of the Rwandan-German Development Cooperation, the Government of Rwanda through the Ministry of Finance and Economic Planning and BRD, as well as the German Development Bank (KfW).
The latter entered a financing and project Agreement to provide loans to financial institutions for on-lending to export-oriented SME’s in Rwanda.
Another part of the credit line, worth Rwf2.2 billion, is dedicated to capacity building to support the implementation of the project.
Speaking during the signing ceremony, BRD chief executive Alex Kanyankole explained that KfW extended the credit line to provide sustainable and tailored financial services for Rwandan small- and medium-size enterprises that have been undeserved due to high cost of finance and also those focusing on the expansion of their business with the overall target to enter (new) export markets.
He said interested SMEs now have an opportunity to access funds at low interest.
“We are happy to reach another milestone of concluding agreements with I&M Bank and BPR who are going to avail financing opportunities to our SMEs in the export sector. This collaboration is set to continue and we commit to dedicating our energy to increase finance in this sector,” said Kanyankole.
The German contribution is destined to support the Government’s already existing initiative, the Export Growth Fund, which was established by the Ministry of Trade, Industry and East African Community Affairs.
The project, being implemented by BRD, aims to broaden and deepen the range of products and services offered by financial institutions to SMEs with export potential or those which are already active in the export sector, and encounter limited access to export-related funding.
I&M Bank managing director Robin C. Bairstow and Banque Populaire du Rwanda (BPR) acting managing director Sanjeev Anand, expressed their delight at being parties to the agreement.
“We already have a good list of potential customers who qualify to benefit from this scheme hence we are glad to be part of it. The signing refines the parameters of our operations,” said Bairstow.
According to Eric Rutabana, head of corporate and business banking at BPR, a subsidiary of the Atlas Mara Group, the support will benefit all the SMEs that face challenges of accessing finance in banks to develop their products for export.
Targeted SMEs are categorised in agriculture and livestock, horticulture and floriculture, minerals, coffee and tea, among others.
“We are excited to sign this agreement because SMEs are the backbone of our economy. We will use this facility as much as possible and as fast as possible and we look forward to continued cordial working relations with BRD,” said Sanjeev.
Challenges for banks before
Faustin Byishimo, head of commercial banking in I&M Bank, said the bank currently offers short-term loans to SMEs.
“The main challenge we had is that we could not get money for long-term loans, it was limited to one year but we hope to get money that can see clients get long-term loans of up to nine years,” said Byishimo.
According to BRD, the SMEs should have accreditation and have rights to do business and have basic practices in line of export-oriented market.
Beneficiaries should also be able to demonstrate how their projects are beneficial.
BRD’s financial development objectives are focused on six key priority sectors that are key drivers of the economy; exports, agriculture, energy, affordable housing, education and special projects.
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Rwanda: Trade deficit narrows by 25 per cent in 2017
Rwanda’s trade deficit narrowed by 25.2 per cent in the first two months of 2017 compared to the same period last year, signaling optimism about the financial year’s performance.
Trade deficit is the difference in value between the imports and exports and are often used as a measure of a country’s external trade performance.
In this case, the value of imports is still higher than exports.
The deficit reduced from about $296.57 million in the first two months of 2017 to about $221.8 million facilitated by a decrease in formal imports by 11.9 per cent and growth in exports by 39.1 per cent.
The development was revealed during yesterday’s quarterly financial stability committee and monetary policy committee meetings chaired by central bank governor John Rwangombwa.
The reduction in trade deficit consequently eased pressure on the Rwandan Franc and reduced depreciation, Rwangombwa said.
“The franc depreciated by 0.7 per cent as of March 24, compared to about 2.7 per cent in the same period in 2016,” he noted.
Based on the trends and reduced pressures, Rwangombwa is optimistic that the Franc will depreciate at an average of about 4 per cent by the end of the year compared to about 9.7 per cent in 2016.
The country’s trade deficit also showed signs of improvement in 2016 compared to 2015 by a 5.9 per cent improvement from $1752.5 million to $1649.8 million driven by increase in value and exports.
Experts attributed the trends to a growing manufacturing and production base and value addition to a number of exports.
According to statistics from the National Institute of Statistics of Rwanda (NISR), local industries, buoyed by Made-in-Rwanda campaign, grew 10 per cent, while processing increased by 8 per cent.
The Made-in-Rwanda campaign aims at promoting production and consumption of locally-made goods and services which have for long faced stiff competition from imports.
Inflation
The rising inflationary pressures have been brought about by rising food prices due to weather conditions and transport inflation.
These pressures are expected to persist till June during the harvest season.
“There have been inflationary pressures for a while now and was mainly due to pressures from food and transport. We expect these pressures to persist until the harvest in June. Overall, we expected to see inflation averaging at about 7 per cent at the end of the year,” Rwangombwa said.
Inflationary pressures have been experienced across the region and have also been attributed to poor performance in the agriculture sector and increase in crude oil prices.
Kenya’s inflation in February stood at 9.0 per cent, Uganda at 6.7 per cent, Burundi at 20.7 per cent and Tanzania at about 5.5 per cent.
In 2017, the main drivers of growth are agriculture, financial services, which have been growing steadily over the years, as well as tourism and exports.
“We see commodity prices improving positively and we think that this year and next year, it is going to contribute to the rebounding of the economy,” said the governor.
The committees further noted that the financial sector remained stable and sound, to continue to support private sector development.
“In view of the above key developments and outlook, and to cement the outcomes of the previous decisions, the monetary policy committee decided to maintain its policy stance for the second quarter of 2017 by keeping the key repo rate unchanged at 6.25 per cent,” Rwangombwa said.
Repo rate is the discount rate at which commercial banks borrow from central bank.
A reduction in the repo rate means banks get money at a cheaper rate, while an increase means borrowing from the central bank becomes more expensive.
The rate was adjusted in December last year from 6.5 per cent as the central bank signaled to commercial banks to consider increasing loans issuance.
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Arab world diaspora’s strong attachment to home could play role in regional development
In the thick of the global immigration debate, the many benefits that diaspora populations bring to their host and home countries are at risk of being forgotten. The governments of most countries in the Middle East & North Africa (MENA) with large numbers of citizens scattered abroad – Palestine, Morocco, Iraq, Egypt, and Algeria – do little to reap the economic benefits of the bonds of kinship.
With a diaspora equal to at least 5% of its total population, or 20 million people, the MENA region has a much higher proportion of its citizens living in the diaspora than the world average. Mobilizing MENA’s diaspora would tap the expertise and networks of its professionals worldwide, broadening their role beyond that of sending remittances back home.
Remittances are valuable, particularly in times of hardship as a source of foreign exchange. MENA’s emigrants and their descendants sent about US$53 billion in remittances to relatives and friends back in their countries of origin in 2014, their value in Lebanon and Jordan making up about 15% of GDP in each country.
A new World Bank Group report, Mobilizing the Middle East and North Africa Diaspora for Economic Integration and Entrepreneurship, argues that governments in MENA should give more formal recognition to the fact that their diaspora could play a much broader role in the transfer of other funds, like direct investment, as well as knowledge or “brain gain”, skills, and professional networks.
Moving beyond remittances
There are some examples of this in the MENA region already. A large investment by aircraft manufacturers Bombardier of Canada to produce aircraft parts in Morocco was said to owe much to contacts established by an expatriate Moroccan at Boeing, leading to the contract, itself negotiated by the Moroccan government.
“Personal ties can make global business easier,” states the report.
“For me, the key information is it’s not just about remittances or governments in MENA thinking of the diaspora occasionally, only when they need it,” said Mariem Malouche, lead author of the report. “It’s about governments really reaching out to people and engaging them. There are millions of people living in the diaspora and they can play much more of a role in development.”
According to Malouche, what surprised her most in researching the report on MENA was “the very high commitment of citizens living in the diaspora and how involved and engaged they are, not only with their country of origin but also with their city of origin.”
A survey conducted among members of the MENA diaspora for the report concluded exactly this; the single most important factor in their interest was the sentiment of belonging. And the one reform that would most increase their involvement was for their respective governments to make them feel relevant, like active partners and actors capable of contributing in a broader variety of ways to the development of the local economy.
Lebanon is an example of this: its established diaspora numbers millions of people around the world. Members of its diaspora said that giving Lebanese mothers married to non-Lebanese the right to pass their Lebanese citizenship on to their children would make a big difference to them. Other Lebanese living abroad said they would like the right to vote back home.
The Philippines provides an example of good practice. With about 10 million of its citizens living and working abroad, its diaspora is equal to about 10% of its population, and it taps the potential by recognizing the positive role it can play.
The Philippines manages its relations with its diaspora at cabinet level, allowing its citizens abroad dual citizenship and overseas voting. It acknowledges what the diaspora brings to its society as a whole but also what it needs to receive: for diaspora to function well, the report says host governments should be committed to treating migrant and diaspora populations well. The Philippines advocates in favor of the rights of its citizens abroad. Most importantly for its migrants themselves are the benefits they receive, such as global legal assistance, the portability of their pensions, and help to one day return home and reintegrate.
More effort needed by governments
Morocco, whose government says it has 2.8 million citizens in the diaspora, and Tunisia, 1.2 million citizens abroad, both have government offices for their diaspora communities, and allow dual citizenship and overseas voting. Algeria also makes some effort to engage its diaspora of about 1.7 million, though people who consider themselves French-Algerian sometimes choose not to vote in Algeria. But it takes more to encourage the diaspora to overcome its deep mistrust of MENA governments. Formal recognition of diaspora communities would reassure them and is also something “elite diaspora” are particularly sensitive to.
At the moment, members of the diaspora cite “mentoring” and “joint collaboration” as their most common forms of involvement with people back home. Many are prepared to part with some money. In MENA, even amounts of up to $10,000 can give entrepreneurs a start.
Unemployment in many MENA nations is high, particularly among young college graduates and women. These are groups of people who MENA citizens living abroad should find it easy to identify with – in part because the majority of MENA citizens working in the diaspora are young professionals themselves. If just 1% of MENA’s diaspora is engaged more fully in the development of their countries of origin, that alone would mobilise 200,000 professionals, the actions of a few, as the report puts, making all the difference.
Despite reservations, MENA respondents in the diaspora feel strongly connected |
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Source: Mobilizing the Middle East and North Africa Diaspora for Economic Integration and Entrepreneurship |
» Download: Mobilizing the Middle East and North Africa diaspora for economic integration and entrepreneurship (PDF, 3.09 MB)
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tralac’s Daily News Selection
Today, in Pretoria: SADC Ministers of Labour and Home Affairs are gathered for ‘2017 Regional Conference on Migration Initiatives’. Featured tweet, @IOMROpretoria: Half of SADC member states have developed labour migration policies. #SADClabour
Ongoing, in Abidjan: Second International Conference on the Emergence of Africa. Downloads (pdf): speeches by Helen Clark, Akinwumi A. Adesina, presentation by Abdoulaye Mar Dieye: Cross-sectional analysis of 13 case studies of selected African countries’ experience towards emergence
Ongoing, in Kigali: trade policy conference hosted by IGC Rwanda and the Ministry of Industry and Trade. Featured tweet, by @sally_bm: Small hassles matter: cutting admin procedures/delays equivalent to 10% tariff reduction >> 80% trade volume increase. #MadeInRwanda
Later, this week: Afreximbank and FCI sub-regional factoring promotion conference (30-31 March, Doula); UNDP/DTI launch the Centre for Trade and Regional Integration (30 March, Pretoria)
An update on AfDB 2017 Annual Meetings (22-26 May, Ahmedabad)
Economic Partnership Agreements and the African Continental Free Trade Area (ATPC/UNECA): Policy recommendations (pdf): Maintaining policy space whilst negotiating international trade and investment agreements is crucial in order not to compromise the structural transformation efforts on the continent. This is especially relevant when negotiating bilateral and regional agreements with developed countries. In this light, Africa may consider adopting and using a continental negotiations template for such extra-Africa negotiations.
UNGA President urges Africa: Use innovation and technology to drive economic transformation (RNA)
Addressing a high-level meeting on ‘Innovations for Infrastructure Development and Sustainable Industrialization’ during the ECA’s Africa Development Week in Dakar, Mr Peter Thomson said harnessing this potential requires effective leadership to champion the necessary reforms to ensure the transformative potential of innovation and technology is enjoyed by everyone across Africa. “The rapid pace of advances in innovation and disruptive technology taking place across our world provides an opportunity for these tools to be harnessed in Africa towards advancing sustainable industrialization, development, and growth. Importantly these advances present opportunities to leapfrog high-carbon models, spur green economic growth, and build resilient economies.”
South Africa trade and investment policy:
(i) Illicit financial flows and Base Erosion and Profit Sharing - input by government agencies (PMG): The Standing Committee on Finance, the Portfolio Committees on Trade and Industry and Mineral Resources held a joint meeting on illicit financial flows to hear the views of the following stakeholders in the battle to stop the harmful effects of illicit financial flows (IFFs), transfer pricing and base erosion and profit sharing (BEPS): National Treasury; SARS Customs; Financial Intelligence Centre; Department of Trade and Industry; South African Reserve Bank; South Africa Police Service; National Prosecuting Agency and Department of Mineral Resources. This would lead to recommendations on strategies to deter IFFs and BEPS and ultimately lead to a Money Bill being introduced into Parliament on the matter. [Global Financial Integrity: Transnational crime and the developing world]
(ii) SA: An arbitration-friendly jurisdiction? (Clyde & Co): The International Arbitration Bill, gazetted on 28 April 2016, will shortly be introduced into the SA Parliament. The Bill provides for the incorporation of the Model Law on International Commercial Arbitration, as adopted by the United Nations Commission on International Trade-Law, as the cornerstone of the International Arbitration regime in South Africa. Despite the promising reforms that the Act will bring, it is unlikely that South Africa will become a hub for international commercial arbitrations overnight (refer to the comparative Australian experience discussed below). There also remain a number of legal issues which suggest hesitancy on the part of the South African government to embrace international commercial arbitration wholeheartedly.
Tanzania: Only 35% of development budget funds used so far (IPPMedia)
The government had, by February this year, released just 35% of the 11 trillion/- which was allocated for expenditure on development projects in the 2016/17 financial year ending in June, Finance and Planning Minister Philip Mpango revealed yesterday in Dodoma. Presenting highlights of the draft budget proposals for the coming 2017/2018 fiscal year, Mpango said close to 4trn/- was released for development expenditure, including money that was set aside for local government authorities. According to Mpango, various factors contributed to the slow release of the money, including debt payments, a rise in interest rates on international lending markets, and endless discussions with donors. “We should take into consideration that the decrease in donor funding has not affected Tanzania alone. Various other African countries have also been affected especially on development funds… such countries include Zambia, Ivory Coast, Botswana and Algeria,” he said. [Govt unveils 31.7tri/- Budget]
Tanzania: Contracts of 24 mining and natural gas firms out soon (Daily News)
In a report to the Parliamentary Committee on Energy and Minerals, Tanzania Extractive Industries Transparency Initiative Executive Secretary Benedict Mushingwe said yesterday that all companies have since been informed about this latest government move. “In implementing the requirements of the law governing TEITI, the Ministry of Energy and Minerals wrote letters to the 24 companies holding Mineral Development Agreements and Production Sharing Agreements informing about its plans to disclose (contents of the) agreements public,” Mushingwe said. He explained that the companies should have responded by now, informing the TEITI committee whether there were any sections in the agreements which they wouldn’t want made public. But he added that of the 24 firms, just two had since submitted their recommendations.
Botswana: Pelaelo implores Stanbic to list on BSE (Mmegi)
Bank of Botswana governor, Moses Pelaelo has advised Stanbic Bank Botswana to consider listing on the Botswana Stock Exchange as a way of showing commitment to the country and giving Batswana a chance to own shares in the bank. Stanbic Botswana’s asset base has grown significantly from P138 million in 1998 to P12 billion as at December 2016 and in the same period the bank has consistently made profits with its net income after tax increasing from P2.2 million in 1993 to P192 million in 2016.
Mozambique: Vale concludes sale of assets in Mozambique to Japan’s Mitsui (MacauHub)
After about three years of negotiations, the Mitsui group agreed to buy 15% of the 95% stake owned by the Brazilian group in the Moatize coal mine (the remaining 5% is owned by the Mozambican state) and half of the 50% the Vale group owns in the Nacala Logistics Corridor, which comprises a railroad between Moatize and Nacala and port facilities.
Nigeria bans importation of packaged tomato paste (Nigeria Today)
The federal government on Monday banned the importation of tomato paste, powder or concentrate. Speaking on behalf of the government, the Ministry of Industry, Trade and Investment also increased the tariff on importation of tomato concentrate among others from five to 50 per cent in order to revive the tomato sector. The development was seen in a document obtained by THISDAY from the Federal Ministry of Industry and trade and investment titled: ‘Implementation of the tomato sector policy’. Operators have also said that the current value of imported tomato paste in Nigeria is about $170m while $50m is spent on triple tomato concentrate.
Liberia: PATEL cites problems with ECOWAS tariff (Liberian Observer)
The National Chairman of the Patriotic Entrepreneurs of Liberia (PATEL), Presley S. Tenwah, said the Common Extended Tariff of ECOWAS, if amended by the Legislature, would be a bad law that leaves Liberian businesses at a disadvantage, arguing that most Liberians are engaged in small businesses. Tenwah said most of the goods Liberian businesses trade in, such as used clothes, used cars and the like, are not part of the goods that would benefit from the ECOWAS tariff. The PATEL chairman made the observation on Monday during a public hearing on “An Act to Amend the Act Ratifying and Adopting the ECOWAS Common External Tariff as Amended.” The public hearing was conducted by the chairman of the Joint Committee on Ways, Means, Finance & Development Planning and Commerce & Trade, Rep. Prince Moye.
Anabel Gonzalez: Three challenges Latin American economies must overcome to boost intraregional trade (World Bank)
A study just released by the office of the World Bank’s Latin America chief economist identifies important advantages of regional integration for Latin America’s economies: it clearly identifies the efficiency gains associated with deeper integration between the southern and northern parts of the region. According to the study, the average efficiency gains that countries like Argentina and Mexico could obtain from regional partners outside their sub-region are comparable to those that could be attained by trading with countries elsewhere in the world. So what is needed to boost intra-regional trade in Latin America? Some of them are obvious – for example, some countries would do well to reduce their tariffs and pursue formal trade agreements. On top of that, though, policy-makers increasingly see three key areas hindering the success of regional, and global, integration:
India’s overseas container trade volume doubles in 2016: Maersk report (Mint)
India’s overseas container trade volume doubled in 2016 to 10% compared to the previous year, showing signs of revival in global economic activity, according to a report prepared by transport & logistics company Maersk Group. While containerized exports jumped 11% in 2016 from a meagre 2% a year ago, containerized imports picked up to grow at 10% in 2016 from 8% in the previous year.
Why taxing remittances is a bad idea (World Bank)
In 2016, migrant remittance flows to developing countries amounted to $440 billion, more than three times the size of official development aid flows. In many countries, remittances are the largest source of foreign exchange. In India and Mexico, they are larger than foreign direct investment; in Egypt, they are larger than the revenue from Suez Canal; and in Pakistan, they are larger than the country’s international reserves. Recently, a number of rich countries that host a large number of migrants are considering taxation of outward remittances, in part to raise revenue, and in part to discourage undocumented migrants. We outline below nine reasons why taxing outward remittance flows is a bad idea:
Trade in services related to the environment (pdf, Joint Working Party on Trade and Environment, OECD)
Results from a case study looking at 61 companies providing environmental consulting and engineering C&E services — a type of environmentally related service — seem to corroborate the above finding that services trade restrictions are associated with a lower export performance by firms. Because environmental C&E services feed into numerous projects spanning all sorts of environmental domains, restricting the supply of these services makes the diffusion of cleaner technologies and practices unnecessarily costly. The case study also finds exporting firms to be larger, more productive, and to pay higher salaries than their domestically focused counterparts. Efforts to remove remaining obstacles to trade in environmentally related services could therefore have important implications for sector-wide productivity, skills, and earnings.
Today’s Quick Links:
ICGLR-EAC meeting: communiqué
Tanzania: Construction firms urged to team up with Chinese experts
The Belt, Road: New opportunities for China-Nigeria cooperation
KRA to install scanners at SGR stations to monitor cargo
Measuring the environment for e-commerce: a new tool
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Second International Conference on the Emergence of Africa opens in Abidjan
The Government of Côte d’Ivoire and the United Nations Development Program (UNDP), in partnership with the African Development Bank Group and the World Bank, is holding the second edition of the International Conference on the Emergence of Africa (ICEA 2017), in Abidjan from March 28 to 30, 2017 at the Sofitel Hotel Ivoire, under the theme “The implementation of plans for emergence in Africa”.
The ICEA 2017 is designed as a platform of exchange to stimulate debate on the conditions for the emergence of African countries in the light of the process of structural transformation in emerging countries. Two sub-themes, namely “Governance of Public Institutions” and “Structural, inclusive and sustainable transformation,” will also be discussed during a high-level panel, in workshops and side-events in the presence of Heads of State and Government, civil society organizations, research institutions (some 400 experts and State and non-State representatives) from 54 African, Asian, European and American countries.
The UNDP, the World Bank and the African Development Bank, will present studies during the sessions, as well as the lessons learned from the processes of emergence, the governance of public institutions and structural, inclusive and sustainable transformation. In addition to these main themes, 13 case studies based on the experiences of African countries will be discussed during the panels.
The first edition of the ICEA in 2015 ended with the adoption of the Abidjan Declaration on the Emergence of Africa, which recommended three important points, namely, the setting up of a Strategic Monitoring Centre, the organization, every two years, of a forum on good practices regarding emergence, and the establishment of a High-Level Committee to ensure the political follow-up of the said Declaration, as well as the creation of an Executive Secretariat.
Opening Speech by Helen Clark, UNDP Administrator
I am very pleased to join H.E. Alassane Ouattara, the President of Cote d’Ivoire, in welcoming you to this second International Conference on the Emergence of Africa.
I wish to thank the President and his Government most sincerely for organizing this important conference in collaboration with UNDP. I also thank the African Development Bank and the World Bank for their support for the conference.
The impressive turnout of participants from Africa and around the world underlines the importance of emergence for Africa. I welcome you all and, in particular, thank the Heads of State and Government present for joining us here in Abidjan.
Since we last gathered, in 2015, the international community has agreed on the ambitious and universal 2030 Agenda for Sustainable Development, and the associated Sustainable Development Goals. The SDGs aspire to eradicate poverty and hunger, fight inequality and discrimination, and tackle climate change. They also recognize the importance of peaceful and inclusive societies for the achievement of sustainable development.
Africa’s emergence will be a major contributor to realisation of the 2030 Agenda and of the African Union’s visionary Agenda 2063. Emergence must lift not only GDP per capita; it must lift human development in the broadest sense. This is recognised in the important “High 5s” agenda of the African Development Bank, with its emphasis on improving the quality of life for the people of Africa.
The 2015 Abidjan Declaration from the First International Conference on the Emergence of Africa recognized the potential for emergence across the continent and the progress already made. It also offered recommendations on how to accelerate progress. This second conference is an important opportunity to take stock of progress since then, and to share experiences, from both within and outside the region. We can also reflect on how emergence will contribute to the success of global, regional, and national development agendas.
To set the stage for the discussions at the conference, let me:
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elaborate on how emergence is already proceeding on the continent;
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note some of the challenges to emergence; and
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suggest some strategic actions which would be conducive to further progress.
1. Africa’s emergence: progress to date
We can see progress in:
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the substantial growth in infrastructure investments, across electricity, transport, ICT, water, and sanitation. These include significant improvements in ICT in Mali, Ghana, and Nigeria; in transportation systems in Kenya and Mauritius; and in increased water supply and improved sanitation in The Gambia, Senegal, Madagascar, and Tanzania. Better infrastructure means improved services and access for African citizens and improvement in the enabling environment for quality business investments.
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the steady increase in manufacturing output on the continent. In 2015, Africa’s total manufacturing output was worth around $500 billion, with Egypt, Morocco, Nigeria, South Africa, and Tunisia leading the way. McKinsey and Company estimate that with continued improvements to the business environment on the continent, manufacturing output could rise to $930 billion by 2025; and
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rapid transformation of economies, with shifts in employment from traditional to modernized agriculture and to non-agricultural sectors. Countries such as Ghana, Ethiopia, and Rwanda are diversifying at an accelerated rate, while productivity and value addition to agriculture is increasing in Burkina Faso, Ethiopia, Mali, Mozambique, Nigeria, and Rwanda .
The combined impact of these and other advances on economic and social development, is clear:
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African economies continue to be among the fastest growing in the world. The ten fastest growing economies on the continent increased their national income by five to 8.5 per cent in 2016, compared to a global average of 3.2 per cent;
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eighteen countries on the continent have now achieved medium to high human development status, reflecting improved health, education, and overall living standards. According to UNDP’s 2016 Human Development Report, Senegal, Zimbabwe, DRC, Mali, Niger, and Ethiopia were some of the fastest improvers on the global Human Development Index;
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significant strides have also been made in reducing multidimensional poverty – since 2005, it has fallen in thirty of the 35 African countries included in the global Multidimensional Poverty Index;
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around seventy per cent of African citizens currently live in a country which has seen improved governance between 2006 and 2015. This is positive for inclusive and sustainable development.
Emergence is driving transformation of the prospects of our host, Cote d’Ivoire, with preliminary figures estimating that it was Africa’s fastest growing economy last year. In 2016, Cote d’Ivoire’s GDP increased by around eight per cent, which is significantly higher than the Sub-Saharan African continental average of 2.0 per cent. Cote d’Ivoire is also making consistent progress on health and education outcomes, its infrastructure has greatly improved, and there have been significant gains in agricultural productivity and access to electricity and ICT. The country’s Human Development Index has risen by 1.4 per cent per annum since 2010 which is 38 per cent higher than the regional average.
More transparency, accountability, and efficient public services are also improving social service delivery and contributing to human development here. The Mo Ibrahim Index suggests that this country has made the most progress on the continent on improving citizen security and the rule of law.
The experience of Cote d’Ivoire demonstrates the importance of forward looking policies, structural reforms, and key investments in driving emergence. The new National Development Plan for 2016-2020 prioritizes structural economic transformation through industrialization, infrastructure development, and inclusive growth.
UNDP is proud to have supported the Government of Cote d’Ivoire in preparing the Plan, and in facilitating its alignment with the outcome of the 2015 International Conference on the Emergence of Africa and the 2030 Agenda.
We are now working with the Government to set up a monitoring and evaluation framework to follow the implementation of the plan, and also to organize a national dialogue on inclusive public policies and efficient budgetary processes. Looking ahead, we stand ready to use our global presence to facilitate the exchange of development experiences in areas of interest to the Government of Cote d’Ivoire.
2. Challenges to Africa’s emergence
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Continent-wide there is still an over-reliance on primary commodities, and the lower prices of some of these in recent years have dampened economic growth. Creating greater resilience to primary commodity price shocks calls for greater economic and export diversification and industrialization.
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Trade restrictions remain higher in Sub-Saharan Africa than anywhere else in the world. This, combined with a proliferation in bilateral and regional trade agreements, can negatively impact the policy space African countries need to promote emergence. Successful completion of the Doha Development Round of the WTO would be an important step in putting trade to the full service of Africa’s development.
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Institutional capacities need to be improved to support forward looking analysis, implementation, and monitoring of strategies and policies aimed at emergence;
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The gains from emergence to date are not equitably shared. On average, the top twenty per cent of earners in Africa have incomes which are more than ten times greater than those of the bottom twenty per cent. The unequal distribution of resources, power, and wealth, combined with inequitable social norms, sustain persistent inequalities. Gender inequality costs sub-Saharan Africa on average $US95 billion a year, or six per cent of the region’s GDP. Leaving no-one behind is a key element of the 2030 Agenda, and something which will be critical to the full emergence of Africa.
3. Accelerating Africa’s emergence
The 2015 Abidjan Declaration highlighted three pillars of Africa’s emergence: structural economic transformation, building the developmental state, and lifting human development. At UNDP, we see action needed in five strategic areas to drive progress on across these pillars:
First, Africa’s industrialization should focus on areas of comparative advantage, including building on agriculture and the extractive industries. That would support the continent to move up the ladder of value chains, and to facilitate the development of industrial clusters and growth of SMEs as backbones of the economy. A successful example of this comes from Ethiopia, which has demonstrated the potential of industrial parks and special economic zones in transforming manufacturing and driving industrialization.
Second, promoting entrepreneurship and leveraging the vitality of the private sector. This requires skills-building through education, technical, and vocational training to enhance employability and unleash the creative power of youth and women. By harnessing the potential of youthful populations, the emergent countries of Asia expanded their labour forces and became more competitive and productive.
Third, continued and large-scale investments in quality infrastructure are critical. The World Bank and the African Development Bank have estimated that in order to overcome critical infrastructure deficits, Sub-Saharan Africa needs to invest an additional $93.0 billion dollars per year in infrastructure until 2020. Stable electricity supply, good systems of road and rail networks, and efficient air and sea ports and communications systems are needed to drive emergence.
Fourth, sound social policies are needed to transform economic growth into human development gains. There are many examples of how social policies have translated into more inclusive growth, within and beyond Africa. Experiences from countries such as Cabo Verde, Mauritius, Tanzania, Senegal, and Rwanda can be replicated and scaled up.
Last, but not least, a developmental state with a clear and shared vision, accountable and transparent governance, and strong institutional capacity is vital. Accelerating emergence is one part of the equation; sustaining it is another. A state which promotes risk-informed and resilient development, including through disaster risk reduction and climate action, and social protection and social cohesion, is better prepared to drive and sustain the emergence agenda.
UNDP is actively working with African partners to document and share lessons and experiences from transformational initiatives on emergence. The thirteen-country case study on successes and challenges associated with the implementation of emergence to be presented at this conference is an example of this effort. Working with the African Development Bank and the World Bank, UNDP also plans to expand the partnership on emergence to other multilateral and bilateral partners which could help accelerate progress on emergence in Africa.
At the country level, UNDP is committed to supporting the integration of the three pillars of emergence into national development plans, and to align its own programmes with those pillars, the SDGs, and national development plans.
Conclusion
In conclusion, let me emphasise that the pursuit and promotion of emergence will accelerate human development in Africa, and is central to achieving the 2030 Agenda and Agenda 2063 on the continent.
Let me assure you of UNDP’s commitment to work with all partners to ensure that emergence and the benefits it brings become a reality across the continent.
I wish you a very successful conference.
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To improve investments, Africa must strengthen policies and regional integration of its markets
Africa wants to create one of the most attractive economic zones through a homogenised customs union and economic community but regulation and weak integration hinder investment opportunities.
“Africa needs more investments that ensure effective competitive policies,” stated Anthony Mothae Maruping, Commissioner for Economic Affairs at the African Union (AU) on Sunday, 26 March 2017 in Dakar, Senegal during the African Development Week at the session on Aligning the Pan African Investment Code with the Investment Chapter of the Continental Free Trade Area (CFTA).
Stephen Karingi, Director of the Capacity Development Division at the Economic Commission for Africa (ECA) noted that Africa attracts only 5% of global foreign direct investments as “it has not been able to harness its full investment potential because it has not been able to rid itself of the widespread perception that it is risky and an uncertain investment.”
To address this investment deficit, Mr. Karingi suggested Africa remove the bottlenecks impending more investment flows and this is where the African Investment Code (PAIC) may have a role. The Continental Free Trade Area (CFTA) – Africa’s own mega-trade deal – represents an opportunity for the continent to have “free movements of goods, services, people and capital.”
The CFTA can also counter the disadvantages of Bilateral Investment Treaties and Double Taxation Treaties as these tend to favour foreign investors and endow them with greater privileges in investment and profit repatriation, at the cost of national governments’ ability to regulate.
“Investments are like a pendulum – on one hand we want to attract investment and on the other hand we are told an open door policy will bring us to the promised land,” said Professor Melaku Desta of Economic Commission for Africa. He recommended the need for systematic regulation coherence in the continent to counter the problems that can arise from having a plethora of disjointed investment agreements.
Treasure Maphanga, Director of the Department of Trade and Industry at the African Union Commission remarked that “a valuable investment agreement needs to address the reality that Africa has to transform; address small-medium enterprises; promote intra-African trade and attract investments that work for our youth.” She noted the rise of investment in finance, transport and minerals but that beneficiation is still lacking.
Mrs. Maphanga called for “investment treaties to be clearer, harmonised and address the issue of fragmented markets.”
Mr. Karingi noted that the Pan-African Investment Code (PAIC) can incorporate best practices as a framework for cooperation at regional and continental levels to help the continent “shift the perception on investment” by seeing the “benefits of interconnectedness, value addition and job creation opportunities.” Free trade between African countries is necessary, if the continent is to benefit from investments.
The PAIC puts a vision, proposes an answer to reform and brings clearance and predictability so Africa can attract more investments according to Professor Mkane Mbengue of the University of Geneva. The Code is innovative in that it also proposes obligations for investors and not only rights privileges for investors, as is the traditional norm.
Million Habte from the African Union explained that the PAIC offers an opportunity to “establish an appropriate business climate and how Africa can adopt this model to suit their respective local situations.”
Africa is vibrant, has a young population and is urbanising at a rapid rate. It is at the forefront of innovative mobile technology use from financial transactions such as transfers, payment of bills to information services such as weather information and rapid response.
Africa is pushing to diversify its economies beyond the traditional spheres of raw commodities and making inroads in services and manufacturing. It is still grappling with integration of its market, intra-country trade and infrastructural deficits.
However, it also offers exciting investment opportunities for the world. The Economic Commission for Africa and the African Union therefore recommend harmonisation of investment treaties that advance the industrialisation of the continent, offer decent jobs for its young people whilst also allowing national governments to shape beneficial regulations for their populations.
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China committed to global development, considers Africa an important partner
China has pledged to continue with an active role in promoting global socio-economic development and considers Africa as an important partner in reforming world affairs.
This was part of the discussion at the recent National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) often referred to as the “Two Sessions” held from 5-15 March in Beijing.
The Two Sessions are a major policy debate held annually at this time, through which China reviews its national, regional and global development priorities, and implementation of annual and five-year plans.
In reviewing the annual work plan, Chinese Premier Li Keqiang said it is critical for all countries to continue working together to revive the global economy, which is experiencing some challenges due to a number of factors.
“All countries must work together on global trade,” Premier Li said, adding that China will remain an important engine for global socio-economic development.
He said China supports globalization, free trade as well as opening up its economy, and the country is already involved in various initiatives with different partners to promote global socio-economic development.
One such initiative is the One Belt One Road Strategy that was first announced by President Xi Jinping in 2013.
Titled “Visions and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road” and collectively known as “Belt and Road”, this a development policy with a holistic vision of economic, political and security development to reach out and initiate action to jointly build a new world order that is development-oriented, for mutual prosperity and human security.
This vision for the overland Silk Road Economic Belt, and the Maritime Silk Road by sea has the potential to change the global political and economic landscape through rapid development of infrastructure and transport corridors of countries along the routes, and the emphasis is on “joint”.
The initiative will establish new routes linking Asia, Africa and Europe. It has two parts – a new Silk Road Economic Belt linking China to Europe through Central Asia; and the Maritime Silk Road that links China’s ports with India and the African coast and through Suez to Europe.
There is already significant impact in some countries in Africa, and some ports are being constructed or reconstructed in Mozambique, the United Republic of Tanzania and Kenya.
In Kenya, the Mombasa-Nairobi Standard Gauge Railway line (SGR) is one of the first entry points in Africa and is already taking shape with the initial shipment of locomotives received in January.
Significant rehabilitation work has also been done at the port of Nacala and related road/rail infrastructure in northern Mozambique.
The SGR is expected to connect other countries in Africa including Rwanda and Uganda, as part of the African Union’s Agenda 2063 vision of a continent interconnected by road and rail.
Various finance institutions have been set up to finance infrastructure projects under the One Belt One Road Initiative such as the Silk Road Fund, Asia Infrastructure Investment Bank, and the New Development Bank.
Some of the domestic issues discussed by the Two Sessions in Beijing include unemployment and poverty reduction, a revision on the 70-year land-use of properties among others, and environmental pollution including a smog research fund.
A new fund will be set up to pool the knowledge of the country’s top scientists to discover the cause of smog that frequently blankets northern China in winter.
Foreign policy issues were discussed in the context of the need to promote global peace and stability as well as China’s role in reforming world affairs.
The NPC is China’s parliament in which 3,000 delegates review the government’s annual work report on results for the previous year, draft provisions of the law, and approve the work plan for the coming year in the context of the targets of the five-year plan.
The new year in China, sometimes called the lunar new year, begins after the Spring Festival, usually in February.
The “Two Sessions” held in March refers to the dual role of the CPPCC, a political advisory chamber which meets during the same period, as a system of consultative democracy. The 2,200 delegates who meet at CPPCC represent various political parties, private sector and civil society backgrounds to discuss and share ideas with policymakers.
Both the NPC and the CPPCC have secretariats that work year round to support the governance process.
There are a number of political parties in China, including the Communist Party of China (CPC) which is in power, and they are involved in a system of multiparty cooperation and political consultation that also includes the national organizations for women, youth, trade unions, and industry/commerce.
When the state is to adopt major policies or decide on major issues concerning the national economy and livelihoods, the CPC, as the ruling party, will consult with various ethnic groups (there are 56), political parties, people’s organizations, and unaffiliated experts, to reach common understanding through conferences, forums and briefings, before final decisions are made.
After years of practice, the multiparty cooperation and political consultation have been institutionalized and standardized in content and procedures, to become an important part of the regular political activity in the country.
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Adesina speaks of “Africa’s promise” at Emerging Markets Forum in Abidjan
“Africa will develop on its own terms, not based on the benevolence of others. And that is the only way we can make development faster and driven by our own needs – with a deep sense of urgency and responsibility.”
These were the words of African Development Bank Group President Akinwumi Adesina, who delivered the keynote address on Monday, March 27, 2017 in Abidjan, as part of a week-long conference on emerging markets organized by the Government of Côte d’Ivoire.
More than 300 participants from around the world, including corporate executives, government officials, financial decision-makers and some of the most influential private and public representatives on the African continent, came to listen to President Adesina reflect on the theme “Africa, forty years from now” at the 2017 Africa Meeting of the Emerging Markets Forum.
Adesina said he would rather talk about Africa’s promise to transform itself within the next 10 years, the span of the Bank’s High 5 development priorities – Light up and power Africa, Feed Africa, Industrialize Africa, Integrate Africa and Improve the quality of life for the people of Africa – rather than imagining the continent in 40 years’ time.
“Some 40 years from now, the world will be totally different,” he said, noting that “the future of Africa keeps getting postponed. It used to be 2020, now it’s 2063. I’m going to talk about Africa’s promise to transform itself within the next 10 years, the span of the High 5s.”
He noted that Africa cannot continue to develop in the dark. Africans are tired of being in the dark. And very little business, education, healthcare or entertainment can be done without some form of power. “Some 645 million people in Africa do not have access to electricity. Power must be at the top of everyone’s to-do list,” Adesina said.
To solve this, he said the Bank Group has committed to invest US $12 billion over the next five years in Africa’s power sector. “We expect to leverage another US $45-$50 billion in co-financing for energy projects in the region during the same period.
“The future is now. The future is already with us. Africa is there to be built today. But none of this can happen without political stability, peaceful and stable communities,” said Adesina.
The continent also needs to unlock its huge agriculture potentials and prioritize industrialization, he said, adding that there is need for governments to take big steps in the years to come. “The last 40 years showed that Africa could not feed itself. The next 40 will show that it can, and that it will. For it will have become the world’s powerhouse in food production and processing.
For it to be able to feed its own 2 billion people, as well as the other 7 billion on the planet, Adesina said, there is need for bold actions in the next 10 years.
To help make this happen, the Bank has made it a commitment to make of agriculture and agro-industrialization a factor of the continent’s transformation, by helping it get to the top of agriculture value chains. The Bank President expressed the need for preparing the continent’s youth population for the jobs of the future with emphasis on digital literacy, computer science, engineering, material sciences and biotechnology.
“These would form the core of efforts to push the continent’s industrialization,” Adesina observed, noting that “The Bank’s ambition is to help double the industrial GDP of African economies to US $1.72 trillion by 2025, over 30% of overall GDP.”
In closing, Adesina observed that our choices, the political will that our governments can affirm, the leadership we will be able to show to make the right choices will determine, what is reserved for each of the countries of our continent.
“But, let’s not think of 40 years from now. Let’s think of Africa in 10 years, for it has waited for far too long.”
Participants in the meeting included Côte d’Ivoire’s Minister of Planning and Development, Nialé Kaba; Benin’s Minister of Planning and Development, Abdoulaye Bio Tchané; Former IMF Director General, Michel Camdessus; Governor of the Central Bank for West African States, Koné Tiemoko Meyliet; Emerging Markets Forum CEO, Harinder Kohli, among others.
Background Papers
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Imagining Africa 40 Years From Now by Theodore Ahlers; French version
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Transforming Rural Africa: Growing a Productive Agriculture Sector by Kevin Cleaver; French version
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Demographics and Urbanization: Planning Cities That Work by Gregory K. Ingram; French version
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Africa’s Infrastructure Deficit: Closing the Gap by James Bond; French version
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New Threats to Africa’s Stability and Growth by Serge Michailof; French version
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Building Human Capital: Improving Education Quality by Kaisa Alavuotunki & Ritva Reinikka; French version
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The Neglected Burden of Death and Disability from Injuries in Low-Income Countries by Claude Martin jr., Rolf Jeker & James Harrison
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The Impact of Commodity Terms of Trade in Africa: Curse, Blessing, or Manageable Reality? by Claudio Loser & Ieva Vilkelyte
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Economic Partnership Agreements and the African Continental Free Trade Area
As of June 2016, the Economic Partnership Agreements (EPAs) have been concluded – but not signed and ratified – in three African regions, namely the East African Community, the Southern African Development Community and Western Africa. In addition, two interim EPAs – the Central Africa and Eastern and Southern Africa EPAs – are being provisionally applied by Cameroon since 2014 and Madagascar, Mauritius, the Seychelles and Zimbabwe since 2012.
The EPAs will deliver uneven outcomes with, on the one side, gains for some African countries, mostly those that are not least developed countries, in a few agricultural sectors; and, on the other side, more generalized gains for the EU. Furthermore, studies show that the EPAs may have adverse effects on intra-African trade and could generate significant trade revenue losses for African countries. Nonetheless, efforts are being made throughout the EPAs to address these issues and mitigate the effects of liberalization of revenues, notably through the proposed setting up of EPA implementation funds in most of the African EPA regions.
At this juncture, under the Western Africa – EU EPA a commitment has been made to allocate around 6.5 bn EUR for the period 2015-2020 as aid for trade support to the Western African region.
Policy space for regional integration
Anchored in the economic and trade cooperation chapter of the Cotonou Agreement[1], the EPAs pursue the objectives and principles of the former – as enunciated in the respective preambles – including by aiming “to foster smooth and gradual integration of the ACP States into the world economy, especially by making full use of the potential of regional integration and South-South trade”.
It is to be noted that provisions are laid down under the EPAs to maintain policy space for African States to conclude a free trade area between themselves without necessarily triggering the obligation to extend or deepen preferential treatment to the EU. However, due to significant differences arising from the different negotiations which established different degrees of liberalization commitments and lists of products excluded from liberalization, it may be difficult to align all the commitments when reaching the integration stage leading to an African customs union. At this point, renegotiation may be needed to ensure policy coherence.
Smart sequencing
The 2015 Economic Report on Africa by the United Nations Economic Commission for Africa (ECA) shows that deepening African economic integration in the context of the proposed Continental Free Trade Area (CFTA)[2] prior to the full implementation of the EPAs could offset the negative effects of those agreements on intra-African trade. However, this implies that the transition periods provided for under the EPAs are used to fast-track the regional integration of agenda of the African countries.
Detailed analysis on the impacts of the EPAs within the African context shows that, if fully implemented, not only would the CFTA offset the negative impacts on regional trade but would also boost regional trade with main gains in the industrial sectors. Should the CFTA be complemented by trade facilitation measures, it would further boost the positive effects and improve competitiveness of Africa’s products.
Policy recommendations
Maintaining policy space whilst negotiating international trade and investment agreements is crucial in order not to compromise the structural transformation efforts on the continent. This is especially relevant when negotiating bilateral and regional agreements with developed countries. In this light, Africa may consider adopting and using a continental negotiations template for such extra-Africa negotiations.
This Policy Brief was prepared by the African Trade Policy Centre (ATPC) at the UN Economic Commission for Africa.
[1] The ACP-EU Partnership Agreement, referred to as the Cotonou Agreement, was signed in 2000 in Cotonou, Benin, by 79 ACP States and the EU. The Agreement was revised in 2005 in Luxembourg, Luxembourg, and in 2010 in Ouagadougou, Burkina Faso.
[2] The CFTA negotiations were launched during the Summit of Heads of State and Government of the African Union that was held in Johannesburg in June 2015. The negotiations aim at establishing a continental-wide free trade area by October 2017.
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tralac’s Daily News Selection
Underway, in Cotonou: a ECONEC / ECOWAS workshop evaluating 10 years’ experience of electoral assistance in West Africa
Later this week, in Arusha, the EAC Council of Ministers. The session of senior officials is from Thursday-Friday (30-31 March). The Coordination Committee Session (Permanent /Principal Secretaries) takes place on 1-2 April followed by the Ministerial Session, 3-4 April. The meeting is considering the following matters:
CFTA updates:
(i) 8th Meeting of the Continental Task Force: The objective of the meeting is to review the status of implementation of previous decisions made by the Continental Task Force and consider recommendations of the CFTA Negotiating Institutions. The meeting will review draft agendas and documentation for the 2nd Meeting of Technical Working Groups on the CFTA, planned to take place in Nairobi (24 April – 6 May), and the 6th Meeting of the CFTA Negotiating Forum (scheduled to take place in Addis Ababa, 5-10 June). In his opening remarks, Mr Prudence Sebahizi, Chief Technical Advisor on the CFTA, pointed out that the meeting is taking place following completion of a number of studies requested by Member States. He deplored the fact that the works on modalities for both trade tariff liberalization and trade in services negotiations remain so far uncompleted. He also informed the meeting that H.E. Mahamadou Issoufou, President of the Republic of Niger, was mandated to champion the process of the CFTA to ensure that the deadline of the end of 2017 is met and report on measures taken to the next ordinary session of the Assembly in July 2017.
(ii) UNECA counsels respect of human rights in free trade agreements: We need to put people ahead of economic aggregates and focus on human rights, especially for the vulnerable when negotiating Africa’s Continental Free Trade Area said David Luke on Saturday at the launch of the report on Human Rights Impact Assessment of the African Continental Free Trade Area in Senegal’s capital. Speaking to delegates at the 10th African Development Week, Luke, Director of the African Trade Policy Centre, advised African states to carefully consider the overall benefits of the CFTA agreements and the possible negative impact for their populations. The impact assessment report, a joint effort between ECA, the Office of the High Commissioner for Human Rights and the Friedrich Ebert Stiftung, remarks that trade liberalisation efforts must be balanced and the impact of distribution should be checked.
EAC trade, regional integration policy updates:
(i) EAC states urged to harmonise standards for most traded goods: The East African Community partner states are being urged to expedite harmonisation of standards for the prioritised 20 most traded goods such as edible fats and oils so as to boost regional trade. According to Lilian Awinja, chief executive of the East African Business Council, the lack of a regional technical regulations framework contributes greatly to the application of national technical regulations, which do not have a common administrative approach neither in process nor in the list of standards declared as mandatory. “This situation is exacerbated by a frequent misunderstanding amongst stakeholders on the different roles of regulatory authorities and national bureaus of standards and the lacking coordination among those institutions.” Recently, the EABC validated the study on Impact Assessment of the East African Harmonised Standards on the business community, during a workshop held in Kampala. Pelagie Mbabazi, the Private Sector Federation liaison officer, who attended the validation workshop, said findings were general and the consultant will issue a final version after incorporating inputs from the meeting.
(ii) World Bank hails EAC for steady progress in regional integration: Mr Ahmadou Moustapha Ndiaye, the World Bank’s coordinating director on EAC integration, noted that the Community had been very active in recent years in engaging the bank and developing a programme of collaboration to support the implementation of its ambitious regional integration agenda. He said that this active engagement with the World Bank led to the development of a strong active support programme worth $2.97bn which represents 33% of total International Development Association regional lending in Sub-Saharan Africa as of today. He, however, disclosed that only 19% of the agreed amount had been disbursed as of now. The Secretariat, led by Amb. Liberat Mfumukeko, urged the Bank to support various priority areas including: the harmonisation of commercial laws across the EAC region; creation of an e-business register; issues of connectivity especially interlinking of banks; harmonisation of public financial management to similar standards across all the Partner States, and; harmonisation of statistics in the region to promote banking inter-operability.
(iii) Tools to enhance operations at One Stop Border Posts in EAC being developed: The EAC is developing a regional training curriculum to support the operationalization of OSBPs within the bloc. In a 20-24 March meeting in Kigali, held with the support of the GIZ-African Union Border Programme, Partner States’ experts from the Revenue and Immigration Authorities developed the tool, which aims at training OSBP officers on the rules and ways to operate in their different positions at their different posts in cooperation and coordination with their different counterparts.
COMESA: Formulation of a 53m Euros trade facilitation programme complete
The formulation of projects under the COMESA trade facilitation programme to be financed under the 11th European Development Fund has been finalized. This follows the conclusion of a two day regional workshop in Lusaka for Member States to validate the identified projects. Speaking at the workshop, Secretary General Mr Sindiso Ngwenya stressed the need to address the high cost of transporting goods in the region and thereby enhancing the competitiveness of firms in the region, especially SMEs. He said COMESA was preparing to publish its own Ease of Doing Business Report and Competitiveness Report in line with its guiding principles of “a learning, a knowledge and an innovative organization.” Head of Regional Cooperation at the EU Delegation in Zambia, Mr Matteo Sirtori, informed the workshop that a study on cross border trade was ongoing, aimed at fine tuning the activities previously defined in the Action document which was approved by the EU in 2016.
IFPRI Global Food Policy Report 2017: profiled analyses
(i) Informal food markets in Africa’s cities (Chapter 6): Notably, reliance on the informal sector varies depending on how wealthy a country is: 90% of households in the South African cities of Cape Town and Johannesburg buy their food from supermarkets compared with only 23% in Maputo, Mozambique. Indeed, many observers contend that supermarkets in Africa are still largely a niche element of food retail and will continue to be so in the near future. A study focused on Kenya predicts that supermarket chains will continue to capture only a fraction of the urban fresh fruit and vegetable market. Similarly, despite the presence of supermarkets in Zambia for more than 20 years, they still serve only a small share of the population. The informal economy is critical to urban food security for several reasons: [Chapter author: Danielle Resnick]
(ii) Africa regional analysis: Measures of poverty, hunger, and malnutrition have improved steadily if slowly in Africa south of the Sahara, as has agricultural value added. But African countries continued to face low commodity prices and limited external finance in 2016. A continentwide campaign known as “Seize the Moment” kicked off to accelerate efforts of the Comprehensive Africa Agriculture Development Programme (CAADP) to raise investments in agriculture in the region. But the impacts of severe drought, climate change, conflict, and rapid urbanization will create ongoing challenges in 2017. [The chapter authors: Tsitsi Makombe, Julia Collins, Ousmane Badiane]
FAO 2016 Regional Overview of Food Insecurity in the Near East and North Africa
BRICS: Towards an e-commerce policy framework and industry alliance (UNIDO)
UNIDO, in cooperation with the Shanghai Academy of Social Sciences, convened an expert meeting to discuss the development of e-commerce in BRICS. The meeting was part of UNIDO’s interregional project implemented with technical support from China to further cooperation between small and medium-sized enterprises in China and the other BRICS countries. The participants decided to encourage government bodies and business associations to establish a BRICS e-commerce industry alliance. They also endorsed a strategy and policy recommendations on improving the standardization of e-commerce and trade in BRICS. Addressing the meeting, Wang Zhan, President of SASS, expressed his organization’s eagerness to take the lead in the joint study report of policy framework on e-commerce of BRICS in cooperation with various stakeholders. Specialists from BRICS presented national study reports.
South Africa’s trade ministry signs MOU on cooperation with Bank of China (China Daily)
The MOU will enable both parties to treat each other as a preferred partner and share information on investment opportunities. It will also enable both parties to optimize their own advantages in initiating mutual investment promotion campaigns and to join hands in supporting enterprises of the two countries for more profound investments, as well as economic and trade cooperation. Both parties will hold a joint investment seminar on 8-11 May in China to promote opportunities in the interests of both countries. Rob Davies, minister of trade and industry, said South Africa will use the opportunity to promote the Special Economic Zones and try to attract investment, noting that South Africa’s relationship with China is bearing fruit with investments from Chinese companies.
Nigeria: Customs responsible for 82% of charges at Nigerian ports (ThisDay)
A study by Nigeria’s leading accounting firm, Akintola Williams Deloitte, has blamed the high cost of doing business at the nation’s seaports on the Nigeria Customs Service and other government agencies, claiming that customs processes are responsible for not less than 82.1% of the charges incurred by consignees. This assertion was contained in an industry report Public Private Partnership as an anchor for diversifying the Nigeria economy: Lagos Container Terminals Concession as a case study. Akintola Williams Deloitte stated that its value chain analysis of a 20-foot container laden with cargo worth N44.42million ($100,000) imported into Nigeria from China, revealed that about N6.5million would be required to clear and transport the container out of the port.
Paul Kagame: Time to change US-Africa engagement approach (New Times)
He observed (addressing an Atlantic Council Roundtable: “For decades, the United States has adopted a monolithic approach to dealing with Africa. It’s time for fresh-thinking on how to approach Africa and the assumptions that underlie this thinking, no matter the administration. It is really an opportunity to shape relationships with U.S and other partners in regards to Africa’s priorities,” he said. The change, Kagame said, also ought to be reflected in Africa’s expectations and mindsets from charity to mutual benefit when dealing with partners. “We in African need to shift from expectation of largesse from every incoming administration, to a mind-set of what Africa and the United States can do together, that is of mutual benefit,” he said.
Rosa Whitaker: China is not “moving relentlessly across Africa” (IPPMedia)
Most importantly, Africa is now better placed than ever to set its own agenda. The world is waking up to the fact that, with its youthful, rapidly urbanising population, Africa stands to be the next great driver of global demand and growth. To get there, the continent has enormous infrastructure gaps to fill. Those gaps themselves represent enormous opportunities. Who enjoys them and on what terms is at the discretion of African decision makers. Blanket smears of any ethnic group are always unacceptable. Proclaiming that China is “locking out the United States” is overly simplistic and simply not true. On the contrary, the US would do well to work with, rather than against, those investing in this great continent. [Rosa Whitaker was the Assistant USTR for Africa under the Clinton and Bush administrations]
Global Manufacturing and Industrialization Summit opens (UNIDO)
The inaugural Global Manufacturing and Industrialization Summit (GMIS) opened yesterday, providing a voice and a venue for leaders to transform manufacturing, encourage greater investment in capabilities, foster innovation and drive global skills development. The GMIS, which runs over three days at Abu Dhabi’s Paris-Sorbonne University, brings together 1,200 delegates including world leaders, expert industry CEOs and specialist researchers and academics. The GMIS is expected to conclude with an agreement on a global vision of the future of manufacturing, as well as on some transformational ideas that will improve the livelihoods of all.
Today’s Quick Links:
South Africa: Tourism and Migration, January 2017 statistics
Dr Akinwumi A. Adesina’s 2017 Emerging Markets Forum speech
UNDP: Abdoulaye Mar Dieye’s RCM statement
Mauritius: 10-year Master Plan to strengthen SME sector released
Brochure: The World Bank and the blue economy in Africa
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