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2017 AU-ECA Conference of Ministers: Committee of Experts’ meeting
Please note: This meeting was postponed until October 2017
As part of the Tenth Joint AUC-ECA Annual Meetings on the theme “Growth, inequality and unemployment”, the African Union Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration is meeting from 23-25 March 2017 in Dakar, Senegal.
The Committee of Experts will analyse the theme of the tenth Joint Annual Meetings (‘Conference of Ministers’) and make recommendations to the Ministers of Finance, Planning and Economic Development, meeting from 27-28 March, for adoption. The Committee will also review the state of economic and social conditions in Africa, assess progress on regional integration and statistical development on the continent, and consider other statutory issues relating to the work of the African Union Commission and the Economic Commission for Africa (ECA) secretariat, including consideration of the Pan-African Investment Code, African Inclusive Markets Centre of Excellence, Revised Pan-African Stock Exchange, Report of the Committee of Ten Finance Ministers on the 0.2 per cent levy on imports for financing the Union, Commodities Strategy, Continental Free Trade Area, and Agenda 2063 implementation report, among others.
Meeting of Member States Experts on the consideration of the PAIC and the AIMEC: Report
The meeting of the Experts from Member States on consideration of the Pan African Investment Code (PAIC) and the African Inclusive Market Excellence Center (AIMEC) was held on 21-23 November 2016, at the Laico Regency Hotel, in Nairobi, Kenya.
Dr. Rene Kouassi N’Guettia, Director of Economic Affairs Department at the African Union Commission, delivered opening remarks. He recalled that the present Meeting emanated from the last Specialised technical Committee (STC) on Economy, Finance and integration that was held in March 2016 in Addis Ababa, Ethiopia, which requested the African Union Commission to:
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Undertake deep consultation on the Pan-African Investment Code
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Undertake a feasibility study on the African Inclusive Markets Excellence Center
He noted that the African Inclusive Markets Excellence Center is intended to become the premier African regional platform for leadership and action on inclusive business and inclusive markets and an accelerator of best practices in inclusive business and inclusive markets programmes and policies. He informed the meeting that the objective of the meeting was to get the participant’s opinion about the Centre as the Member States are the main stakeholder of AIMEC and discussing how we can improve the concept of AIMEC. He informed the meeting that the African Union Commission is partnering with UNDP on the AIMEC project and received their support in the elaboration of the Business Plan.
He recalled that the third Conference of African Ministers of Integration (COMAI III) held in Abidjan (Côte d’Ivoire) from 22 to 23 May 2008 mandated the African Union Commission (AUC) to “develop a comprehensive investment code for Africa with a view to promoting private sector participation”. The decision was subsequently endorsed by the Heads of State and Government of the AU at Sharm El Sheikh Summit, Egypt in 2008.
He informed the meeting that the draft PAIC was considered by governmental and independent African experts on investment law at a series of consultations at regional and continental levels. They have made a thorough analysis of the Code and proposed amendments that have been incorporated and reflected in the final version of the Code.
He pointed out that the development of the PAIC is based on the idea that national, regional and continental dimensions must be taken into consideration in order to propose a conducive legal environment to promote the flow of investments in Africa and facilitate intra-African trade and promote cross-border investment.
The development of the PAIC forms part of a broader continental framework, namely Agenda 2063, based on a coherent strategic framework for development whose foundation is the promotion of a more inclusive and sustainable growth, the engine of structural transformation on the continent.
He finally thanked participants for their presence which shows their commitment to Africa’s development and called upon them to improve the draft PAIC as well as the AIMEC Business plan and validate both drafts in order to be submitted to African Ministers of economy, finance and integration at their next conference to be held end March 2017 for adoption.
African Inclusive Market Excellence Center (AIMEC)
The background and needs of the AIMEC was presented by a representative of UNDP. He presented the African Inclusive Markets Excellence Centre and informed the meeting that the objective is to get stakeholder feedback on the business plan and understand how to improve it, discuss how to implement AIMEC in an efficient and good way and discuss how next steps can be taken.
He highlighted that AIMEC is planned to be the premier pan-African action oriented platform on inclusive business (IB) and inclusive market development (IMD): identifying, promoting and facilitating the replication of best practice and innovation in IB and IMD policy, programming and partnerships.
Regarding the research methodology of developing AIMEC Business Plan, he explained that it integrates multiple sources and that Inclusive businesses bring low-income people to the value chain – on the demand side as customers, and on the supply side as employees, producers and entrepreneurs.
He noted that AIMEC is in full support with Africa’s development frameworks such as Agenda 2063 and AIMEC will collaborate with Regional Economic Communities (RECs) to incorporate best practice in promoting inclusive markets in regional value chains.
He informed the meeting that AIMEC will support more inclusive markets and businesses, thus facilitating job creation, income generation, poverty reduction, regional economic integration and inclusive growth. In addition, AIMEC will provide seed funding for the replication of good practices in IB and IM policy and will be the repository of top and actionable knowledge and good practices in the area of inclusive growth partnerships with Private Sector through IB and IM. Research at AIMEC will provide evidence whether and where sub-regional or country-specific action is needed according to specific circumstances.
A presentation of the details regarding the AIMEC’s strategy. The presenter focused on the mission, the vision, the services, the target audience, and the topics and the sectors to cover. AIMEC aims to be a recognized platform for thought leadership and action on inclusive business (IB) and inclusive markets (IM). The AIMEC’s activities can be divided into three pillars:
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Pillar 1: Identify the IB and IM policies and programs.
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Pillar 2: Facilitate the collaboration of key actors and facilitation of the replication, adoption and development of best practices.
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Pillar 3: Replicate and support scaling of successful programs and piloting of innovation in IB and IM.
AIMEC will target both the public and private sector stakeholders and will facilitate public-private collaboration. AIMECS will select an annual thematic sectors/focus, identify research in IB/IM programs and policies in (sub) sectors, and will dedicate a report to the selected themes.
A presentation of the organizational set-up of the centre was done. The presenter made proposals on the details of organizational set-up including the different options for ownership/legal structure, governance, staffing. The operational success factors are the following: clear ownership and leadership, Pan-African outlook, flexibility, ability to attract funding and earn money. The two options are:
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Structural option I: AUC owned centre and regarding the legal structure the centre should be a Project of an existing AUC unit or a trust/foundation;
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Structural option II: Centre owned by others organizations linked to AUC, with a pan-African outlook;
The following criteria for hosting the AIMEC were also proposed:
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The host country is interested in leading the development of solutions for IB and IM and will provide political support and leadership to the Centre.
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The location should be politically stable to ensure a conducive operational and working environment.
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The host country should supply financial and/or in-kind resources, at a minimum during the set-up phase.
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The Centre should be located close to relevant institutions to be able to build up networks and participate in events and meetings easily.
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It will be beneficial if the location has a high ease of doing business to enable smooth operations
Discussion
The meeting raised the following issues:
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The integration of various ongoing initiatives and processes within the AIMEC was mentioned as critical to the Center;
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The need to show solidarity between African countries;
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The necessity to review and harmonize fiscal policies in order to attract the entrepreneurs operating in the informal sector;
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The value proposition of AIMEC is clear and appealing for the participants. The initiative is very important, especially for small companies;
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The role of AIMEC in providing access to domestic and foreign markets outside Africa and the potential role of the diaspora;
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Necessity of collaboration with others institutions like African Development Bank and Regional Economic Communities;
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In addition to the annual report, the use of new technologies/virtual platforms for dissemination would be beneficial;
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The funding issue and the important role of the member states for an internal funding. The funds for AIMEC not yet secured but discussions with donors have started;
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The sectors to focus on: Agribusiness, energy but also fisheries;
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The AIMEC will not provide directly investment funds for small companies, but it might allocate funds for training and will identify best practices;
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The issues of trade barriers and road harassment: Some progress toward regional integration (AU passport, Common market in Africa, the financial institutions etc.). AIMEC will be an additional one;
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AIMEC a mechanism to promote public-private partnership for inclusive growth;
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The need to be action-oriented in order to be attractive. Move quickly from ideas/initiative to project/action;
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The organizational structure to recommend (UN, AUC or in between), the successful models that exist and the staff recruitment;
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Necessity that AIMEC is administrated by Africans;
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Necessity to clearly define the mechanism of management and funding;
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AIMEC should be an autonomous structure but with a reporting system supervised by the AUC;
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Need to avoid too much bureaucracy and slow decision making process;
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Possibility to initially start as a project/program.
Recommendations
The following recommendations were proposed:
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Clearly identify/define the concept of best practice and how to measure it;
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Not only focus on good practices but also on failures/bad practices;
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The AIMEC should be an AU’s centre;
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Make the centre autonomous, independent and technical; and
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Envisage the expansion of the centre and the creation of regional offices;
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Validate the Business plan and agree to submit it to the consideration of the STC in March 2017.
Pan-African Investment Code (PAIC)
A representative of the African Union Commission made a presentation on the Pan-African investment Code. He informed the meeting on the genesis, rationale and objective of the PAIC. He went to highlighting the mandate given by the African Ministers of Economy, finance and integration to undertake deep consultations and come up with an agreed text. He stressed on the need to focus only on articles reflecting the legal nature of the text (articles 2,3,51 and 52) as well as articles that did not reach agreement in Kampala meeting (articles 42,43 and 44). He finally recalled the importance of this meeting in finalizing the code that went through in-depth series of revisions and amendments.
Discussions
The detailed discussions were held on the following points
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Country representatives proposed comments on outstanding articles in addition of the amendments already received from 8 countries
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The need to review some provisions in the preamble of the PAIC
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The binding and non-binding nature of the code was discussed thoroughly
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The meeting put in place a drafting committee composed of the following Member States assisted by key consultants to review the text and make proposals:
- Egypt
- Chad
- Togo
- South Africa
- Kenya
- Uganda
- Zimbabwe
The drafting Committee reviewed the draft PAIC and made amendments to the preamble, Article 2, Article 3, Article 41, Article 42, Article 45, Article 50, Article 51 and deleted Article 52. The reviewed Code was presented to the participants and adopted with amendments.
Recommendations
The following recommendations were proposed:
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Adopt the PAIC as a guiding instrument on investment promotion and facilitation
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Need to harmonize the PAIC in the four languages and submit the amended PAIC for adoption by the African Ministers of Economy, Finance and Integration during their STC in March 2017 in Dakar, Senegal
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Recommend to the Ministers to use the PAIC as a reference framework document in the negotiation of the CFTA investment chapter.
Closing Remarks
In his closing statement Dr. René N’Guettia Kouassi, Director for Economic Affairs, AUC,underlined the importance of the PAIC towards achieving the AU Vision of “An Integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena”. He stressed the usefulness of the PAIC in the process of developing a sound and competitive private sector in Africa coherent with the transformative Agenda of the Continent under the global framework of Agenda 2063.
He expressed the appreciation of the AUC to the Member States for their positive contributions and inputs in improving the Draft Pan African Investment Code .He invited all Member States to remain committed to the Code and share it with their Ministries for their awareness. He Urged Member States for their unwavering support prior to the adoption by the AU Heads of State and Government.
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African capital markets: Africa in a changing global environment
The global economy, and in particular the Developing and Transition Economies, is currently facing two major challenges. The first challenge is sluggish growth leading to stagnant global trade, subdued investment and increasing policy world-wide uncertainty. The second challenge is being that the world is on the brink of the fourth industrial revolution which is expected to drive significant change to global industry and business models and possibly lead to a net loss of jobs.
Countries can only influence their own policies and ability to adapt to the changes that are expected to take place. African countries have generally made forward strides in adopting and/or revising investment laws in order to attract FDI inflows, particularly, into the manufacturing sector and providing incentives for investment. More can be done, however, in the area of facilitating investment by making it easier to invest in the various countries. African countries need to focus on improving their rankings in the Corruption Perceptions Index, which dropped significantly during 2016, and the Ease of Doing Business Survey thereby promoting their countries as the country of choice for the limited available FDI inflows.
African countries can also continue to focus on utilising all available funding to improve education, health and infrastructure so that they are prepared, to the best extent possible, for the fourth industrial revolution and to derive the best benefits available from the changes to come.
Africa in a Changing Global Environment
This report considers Africa’s position in the current global economic environment and measures how Africa ranks, by individual country, by region and as a continent, with competing Developing and Transition Economies with regards to the following areas:
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Competitiveness (as measured by The World Economic Forum’s Global Competitiveness Report, 2016-2017)
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FDI inflows (as measured by the UNCTAD World Investment Report, 2016 and UNCTAD Global Investment Trends Monitor Reports)
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Ease of doing business (as measured by The World Bank’s Ease of Doing Business Survey, 2016 and the Fraser Institute Annual Survey of Mining Companies Policy Perception Index, 2016)
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Corruption (as measured by the Transparency International Corruption Perception Index, 2016)
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GDP growth (as measured by BMI Research’s GDP growth forecasts)
This Report also measures each African country and region’s ranking in terms of the RMB Global Markets Research Where to Invest in Africa Report, 2016-2017.
This Report gives insights into what direction the world economy is expected to take in the context of the current trust crisis by Developed and other economies as identified in the Edelman Trust Barometer, 2017 resulting in the recent increase in populist views by the general populations of the world. It cites the risks to the world economy due to the resultant inward looking policies and protectionist measures as identified in the World Economic Forum’s Global Risks Report, 2017.
It also highlights the potential and expected global economic impact of the so called fourth industrial revolution as detailed in The World Bank Group’s Global Economic Prospects Report, 2017 and The World Economic Forum’s Future of Jobs Report, 2016 as well as The World Economic Forum’s Global Competitiveness Report, 2016-2017.
The fourth industrial revolution is building on the digital revolution, or third industrial revolution, that has been occurring since the 1950’s. According to The World Economic Forum, the fourth industrial revolution is characterised by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres with developments in the fields of artificial intelligence, machine learning, robotics, nanotechnology, 2D printing and genetics and biotechnology.
The Report documents how Africa, as a continent, regionally and by individual country, compares to its main Developing and Transition Economy competitors as an investment prospect for the limited available foreign direct investment (FDI).
The Report further suggests the areas over which individual African countries have control and can work towards improving in order to increase their attractiveness as an FDI inflows destination and their competitiveness in order to best position themselves to cope with and take advantage of the economic benefits offered by the fourth industrial revolution.
» Download: Africa in a changing global environment (PDF, 6.8 MB)
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tralac’s Daily News Selection
Starting today, in Stellenbosch: ICTSD workshop Leveraging services and digital potential for inclusive economic growth
Concluding today, in Geneva: UNCTAD’s Oceans Forum on trade-related aspects of Sustainable Development Goal 14
From last week’s MIKTA Trade and Investment workshop: Roberto Azevêdo’s speech, the presentations
African Economic Platform: updates
Mauritius Prime Minister calls for a single African market to promote African goods and services: What is now important is to take concrete actions in respect of the CFTA by aiming to complete the process of establishing an ambitious, comprehensive CFTA by December 2017. When Africa stands together in solidarity, when we start ‘Making across Africa’ for a single African market, we will see Africa rising. As leaders of the Continent, it will be our responsibility to find innovative ways to finance this vision of a united and integrated Africa. Finance Africa should therefore be our next step. Whether such finance comes from domestic resource mobilisation, accessing liquidity under various international funds, or other sources, needs to be identified.
Closing statement by Prime Minister of Mauritius: I am pleased to note that following the different fruitful discussions held among the participants, we have come up with a common strategy, focussed on four key areas: (i) The establishment of joint permanent commissions which will enhance business relations, particularly through the setting up of Industrial Parks and Special Economic Zones; (ii) State members to come up with concrete proposals to address the problem of skills mismatch through market related training; (iii) To address the impediments blocking seamless movement of goods and services; (iv) To promote a collaborative effort among the African financial services sector to in view of facilitating suitable investments.
Mugabe takes swipe at SA for not freeing up trade: Speaking at the inaugural meeting of the African Economic Platform, the veteran leader says some countries still wanted to dump their goods in other countries while those affected were battling to sell their goods and services to South Africa. Mugabe says free trade is important for regional integration. “In the SADC our region South Africa is our big boss because they are more developed than any of us. We have tried to economically think of how we can interact economically and culturally in the deference of the interest of our people. As you heard with the last speaker, the same has been happening in East Africa. It has not been that easy to be in step with each other.”
Bridges Africa: Is infrastructure the key to Africa’s economic transformation? (Volume 6, Number 2). Profiled contributions: (i) Christian Kingombe: How can transport infrastructure promote trade and sustainable development on the African continent? (ii) Niklas Malchow, Anna Waldmann: The development potential of cross-border infrastructure in Africa: a job creation perspective (iii) Yabin Wu, Xiao Bai: China’s infrastructure development strategy in Africa: mutual gain?
African Ministers adopt Declaration for the STC on Transport, Intercontinental and Inter-regional Infrastructures, Energy and Tourism
SADC to convene conference to present its energy infrastructure development plan to potential funders
ECOWAS and regional integration in West Africa (CSEA)
Based on a selected review of appropriate literature, the study (pdf) assesses the degree to which the organization has been able to achieve its agenda, focusing on the successes and challenges recorded, as well as political commitments to the regional body. Of particular importance is the extent to which ECOWAS takes cognizance of the need to reshape its agenda towards fostering all-inclusive education in the region. [The analyst: Muhammed Adekunle Yusuf]
From barriers to bridges: transforming the Ethiopia-Kenya border region (Huffington Post)
The Isiolo-Merille-Marsabit-Moyale road, is now complete; and it will be a transformational as it will link the region to Ethiopia, the second most populous country in Africa, and promote cross-border trade. In addition, this completes the Trans-Africa highway linking South Africa to Egypt. [The author: Siddharth Chatterjee, UN Resident Coordinator, Kenya]
South Africa: 2016 Fourth Quarter statement (SA Reserve Bank)
Global trade volumes increased in the final quarter of 2016, while higher rand prices of South African export commodities contributed towards a strengthening in the terms of trade. The trade balance switched from a small deficit in the third quarter of 2016 to a sizeable surplus in the fourth quarter. The value of merchandise exports increased in the final quarter of the year alongside improved demand for domestically produced goods and higher commodity prices. Mining exports increased significantly over the period, in particular iron ore and coal exports. The value of merchandise imports receded further as domestic demand remained subdued. This coincided with a narrowing of the shortfall on the services, income and current transfer account, as the net income deficit narrowed following a notable increase in dividend receipts from abroad. Consequently, the deficit on the current account of the balance of payments narrowed significantly to 1.7% of GDP in the fourth quarter of 2016. For 2016 as a whole, the deficit narrowed to 3.3% of GDP from 4.4% in 2015. [Poultry woes not due to imports, says Association of Meat Importers and Exporters]
African tax authorities equipped with tools to deal with transfer pricing issues (UNECA)
The African Minerals Development Centre, together with the Minerals and Energy for Development Alliance and the World Bank, has delivered the first of two regional workshops on transfer pricing in Africa’s mineral sector. The four-day intensive training in Dar es Salaam drew on the Transfer Pricing Source Book developed by the World Bank and MEfDA as well as the work on fiscal harmonization and illicit financial flows in the minerals sector in Africa undertaken by AMDC. The forthcoming second workshop will be geared towards Francophone and Lusophone countries. In accordance with the forward-looking framework, the AMDC works to support governments to strengthen their fiscal governance in ways that curb illicit financial outflows from the sector.
Afreximbank and TDB close $500m syndicated loan facility for Kenya
The Trade Development Bank, formerly known as PTA Bank, and the African Export-Import Bank have closed a $500m dual-tranche syndicated loan facility for the Government of Kenya which acted through the country’s National Treasury. The facility, for which Afreximbank and TDB acted as joint mandated lead arrangers, is part of a $1.55bn debt package of three facilities being arranged and raised in parallel by the National Treasury in the first quarter of 2017. The Afreximbank and TDB-led facility comprises two tranches made up of a $200-million 10-year amortizing loan by TDB and a $300-million five-year amortizing loan provided in equal parts by Afreximbank and TDB. The two tranches will be syndicated to development finance institutions.
Trade and Development Bank to set up a Regional Headquarters in Mauritius (GoM)
Mr Admassu Yilma Tadesse pointed out that the Board of Governors of the TDB has already given its approval for the setting up of its second Headquarters in Mauritius. This initiative, he added, will consolidate the position of Mauritius as a financial centre at the COMESA. Established in 1985, TDB is a multilateral, treaty-based financial institution with immunities and privileges, and currently a balance sheet of about $4bn. The Trade and Development bank has its headquarters in Burundi and three regional offices in Kenya, Zimbabwe and Mauritius.
Towards a regional Univisa (SARDC)
The Kavango-Zambezi (KAZA) Univisa was initially launched in November 2014. However, due to various challenges the system briefly stopped in December 2015, and later resumed in December 2016. Updating stakeholders on the implementation of the KAZA Univisa, the Zimbabwe principal director for immigration, Clemence Masango said a SADC Univisa is critical in promoting tourism in the region, adding that it was time for other countries in SADC to join the KAZA Univisa.
Achille Mbembe: Scrap the borders that divide Africans
Egypt poised to accelerate e-commerce growth with new e-commerce strategy (UNCTAD)
UNCTAD’s National E-commerce Strategy for Egypt outlines seven sub-strategies, some 30 recommendations aimed to strengthen Egypt’s performance in key policy areas, and six megaprojects. The new strategy report is supplemented by an action plan to support the implementation of the strategy. Through the strategy, the Government of Egypt set goals of raising the current level of e-commerce contribution to GDP and to doubling the number of its businesses currently selling online by 2020. [ECOWAS to boosts e-commerce through the postal sector]
Shifting fortunes and enduring poverty in Madagascar: recent findings (World Bank)
The report – Shifting Fortunes and Enduring Poverty in Madagascar: Recent Findings – analyzes the data of successive household surveys carried out by INSTAT and tries to reveal some of the dynamics that explains this lack of progress. Over the past fifteen years, Madagascar’s population has faced two political crises that have slowed economic growth, suffered severe climate shocks, and withstood the global rise in food prices. As a result, 70.7 percent of the people of Madagascar were living in poverty in 2012 and had not seen any significant improvement in their welfare. [Executive summary (pdf)]
Human Development Report 2016 (UNDP): Table 13, International integration (p 248, in Statistical Annex), provides indicators of several aspects of globalization. International trade is captured by measuring exports and imports as a share of GDP. Financial flows are represented by net inflows of foreign direct investment and flows of private capital, net official development assistance and inflows of remittances. Human mobility is captured by the net migration rate, the stock of immigrants, the net number of tertiary students from abroad (expressed as a percentage of total tertiary enrolment in that country) and the number of international inbound tourists. International communication is represented by the share of the population that uses the Internet, the number of mobile phone subscriptions per 100 people and the percentage change in mobile phone subscriptions between 2010 and 2015.
Brexit: Trade governance and legal implications for third countries (World Bank)
While precise impact of Brexit on the EU/UK trade and investment agreements with third countries will depend primarily on the terms of the withdrawal agreement to be concluded between them, most scenarios suggest an extensive process of amendment of the text and/or commitments in multilateral and bilateral agreements.
Economic upgrading through global value chain participation: which policies increase the value added gains? (World Bank)
First, the study finds that global value chain integration increases domestic value added, especially on the selling side, which holds across all income levels. Second, the results highlight the importance of policy for economic upgrading through global value chain integration. Although the study cannot claim causal evidence, all the assessed policy areas are consistently shown to mediate the effects of global value chains and magnify the gains for domestic value added. Third, a detailed analysis shows that several policy areas mediate the gains from global value chains more through integration as a seller. Finally, the study observes that many of the results are driven by high- and upper-middle-income countries.
Uganda agricultural value chain development programme: ESMF summary (pdf)
Greening regional trade agreements: OECD workshop report (pdf, OECD)
The focus of the workshop was on chapters of RTAs that are concerned mainly with issues other than the environment, such as market access, investment, government procurement, technical barriers to trade, subsidies, implementation and capacity building. The objectives of the workshop were: (i) to highlight the opportunities and challenges in greening RTAs; (ii) to take stock of current experience and insights in greening RTAs from different regions and stakeholders; and (iii) to identify key knowledge gaps and the possible way forward in greening RTAs.
Today’s Quick Links:
East African Kiswahili Commission discusses strategy implementation plan
COMESA’s 20th Heads of State and Government Summit will take place in October, in Burundi
Ethiopia: WCO conducts diagnostic mission on Post-Clearance Audit
Calestous Juma: Why African countries banning imports of fruit and veg is a blunt tool
UNIDO, World Bank joint workshop on cooperation modalities: presentation (pdf)
Fifth China Round Table renews support for LDCs seeking to join WTO
ICC response to G20 Finance Ministers communiqué: “A retreat into protectionism would be the wrong response to this challenge”
China’s trading partners alarmed by food import controls
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Shifting fortunes and enduring poverty in Madagascar: Recent findings
Off-farm activities in the rural areas would contribute to poverty reduction and could be stimulated by improved road connectivity and access to electricity
Weathering two political crises, disruptions in access to markets for textiles and manufacturing exports, severe climatic shocks, and global food price spikes, Madagascar made very little progress in improving the well-being of its population over recent years, as gains achieved after 2001 were reversed between 2005 and 2012, according to a new report.
The report – Shifting Fortunes and Enduring Poverty in Madagascar: Recent Findings – analyzes the data of successive household surveys carried out by INSTAT and tries to reveal some of the dynamics that explains this lack of progress. Over the past fifteen years, Madagascar's population has faced two political crises that have slowed economic growth, suffered severe climate shocks, and withstood the global rise in food prices. As a result, 70.7 percent of the people of Madagascar were living in poverty in 2012 and had not seen any significant improvement in their welfare.
Madagascar’s economy faces an array of challenges in reducing poverty, including severe infrastructure deficits, severe climatic events, poor transport links, tenuous access to markets, and in some cases counter-productive policy responses to external shocks. The report notes that micro-enterprises are unable to increase their productivity and profits due to conditions related to generalized poverty, low demand for non-agricultural goods and services, and difficulties with performance of hired workers and repaying credit. These enterprises, which employ the vast majority of off-farm workers, therefore, cannot grow, create more jobs, and bid up wages. These and other constraints have forced Madagascar’s poverty rate to remain exceedingly high.
The report’s other key findings are as follows:
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Madagascar’s poorest people experienced a substantial welfare loss between 2005 and 2012, after gaining ground between 2001 and 2005. Between 2005 and 2010, consumption for the poorest households declined an average 3.1 percent.
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The depth of poverty in Madagascar is also of great concern. On average the poor consume only 70 percent of the national poverty line, and this gap has only widened since 2005 after falling between 2001 and 2005; the increase in incomes needed to bring over 70 percent of the population out of poverty remains enormous.
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Between 2001 and 2012, the population responded to economic fluctuations and climatic shocks by shifting more heavily into agriculture and then in 2012 into off-farm activities, with a significant increase in secondary employment in services that year. These strategies were only partially successful in offsetting adverse influences on the poor’s livelihoods. Demand for off farm labor remained weak, and business opportunities limited.
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One important driver of the post-2005 trend has been a decline in the profitability of agriculture. Despite having accumulated more “assets” – more education, means of transport, and having experienced fewer adverse climatic events – the poor rural population was unable to fully offset a decline in the profitability of cultivating land between 2005 and 2010 by pursuing off-farm work.
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Domestic policies to counter spikes in world rice price combined with deteriorating transport conditions reduced agricultural incomes in 2010. A series of government measures kept the price of rice relatively stable for consumers, yet producers’ profits fell as they faced higher input costs yet remained unable to benefit from rising world prices. The costs to transport a 50-kilogram bag of rice increased 42 percent and the time required to reach a main urban center doubled to almost 12 hours, while distances to markets, schools, and health centers became more strongly related to poverty.
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Improving road connectivity for the poor and providing electricity in those communities where it can help stimulate more productive off-farm enterprises are essential for poverty reduction. Shorter distances to markets and higher rates of local electrification are powerful predictors of higher welfare. In urban areas, the level of education is also an important determinant. In rural areas, a high rice price is also linked to a higher level of well-being.
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Men earn significantly higher wages and business profits than women. Although female-headed households are not consistently poorer than male-headed ones, men earned 37 percent more than women in the labor market in 2012 after taking into account education, age, region, and urban conditions. In addition, female entrepreneurs are less likely to own an enterprise operating at the scale and profitability level that males do. Thus, male-headed households were more successful in offsetting the losses resulting from more severe climatic shocks and adverse trends in agricultural profits in 2010 through off-farm employment than female-headed ones.
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The generation of more productive off-farm employment can move people out of poverty, but accelerating such a process would require the creation of larger, more profitable enterprises that employ more workers. The prevalence of extremely small micro-enterprises in Madagascar results in a large misallocation of resources, and results in major productivity and income losses for both entrepreneurs and workers.
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The predominance of microenterprises that are relatively unprofitable points to market failures that are difficult to escape in a poor economy with relatively little ability to “enforce” agreements. A restructuring of the economy into larger enterprises is needed to raise productivity and incomes. Profitability levels are lower at the smallest scale, where the poorest entrepreneurs with the least capacity to reinvest, produce. Given increasing returns to capital, if owner-operated micro enterprises could increase their profitability by expanding gradually, productivity could rise even in the absence of investment by larger, more efficient, formal firms, which would trigger a restructuring of the market. However, in an economy characterized by poor entrepreneurs, firm owners are constrained to devote all of their income to household consumption and lack sufficient external financing to grow into higher profitability levels. At the same time, they hire too little outside labor, with almost 70 percent of owner-operated micro-enterprises employing only the owner.
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Labor markets in Madagascar, where households are the primary employers, are subject to considerable frictions, resulting in low labor demand and low wages. While agricultural laborers can be easily substituted for each other, their efforts are nonetheless difficult to monitor. Non-farm enterprises also face risks and costs in adjusting labor inputs, which appear to deter them from hiring more workers: Non-farm micro-entrepreneurs in both rural and urban settings prefer to accept lower expected profits than to incur the costs to find, screen, train, and supervise non-family labor.
Related tralac publications
Sustainability in Madagascar
Ron Sandrey and James Wilson - 8 Mar 2017
Madagascar: the trade policy and performance profile
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SADC seeks investment in energy
Southern Africa will soon convene a special conference to present its multi-billion-dollar energy infrastructure development plan to potential funders.
SADC Council of Ministers chairperson, Prince Hlangusemphi of the Kingdom of Swaziland said the investors’ conference is one of the issues approved by the Council which met ahead of a SADC Extraordinary Summit in Mbabane.
He said the conference, which will be jointly held with a ministerial workshop is intended “to showcase investment opportunities in the energy sector in SADC”.
SADC Executive Secretary, Dr Stergomena Lawrence Tax said the Secretariat is committed to the operationalization of the 2016 summit theme of “Resource Mobilisation for Investment in Sustainable Energy Infrastructure for an Inclusive SADC Industrialisation and the Prosperity of the Region.”
“To this end, we have secured funding to support a proposed High-Level Ministerial Workshop and a Regional Investors’ Conference on Regional Energy Projects to be officially launched by His Majesty King Mswati III in his capacity as SADC chairperson,” Dr Tax said.
She said the workshop and conference are expected to open up opportunities for investment in the energy sector “as well as leverage additional resources, focusing on specific flagship projects.”
Most of the energy projects to be presented are contained in the SADC Regional Infrastructure Development Master Plan (RIDMP) approved by SADC leaders at their 32nd Ordinary Summit held in August 2012 in Maputo.
The Energy Sector Plan of the RIDMP estimates the total cost of additional electricity generation capacity for the region to be in the range of US$114 billion to US$233 billion.
The related transmission investment costs to support new generation capacity are about US$540 million. This transmission investment does not, however, include planned transmission interconnectors and national backbone lines.
The Energy Sector Plan identifies 89 energy infrastructure projects, some of which will be showcased during the planned High-Level Ministerial Workshop and Regional Investors’ Conference on Regional Energy Projects.
According to the Energy Sector Plan, flagship projects in the electricity sub-sector include Inga III Hydropower Project in the Democratic Republic of Congo and the Mphanda Nkuwa Hydropower Project in Mozambique.
Inga Dam situated on the Congo River has the potential to produce about 40,000 megawatts of electricity, according to the Southern African Power Pool.
Dr Tax said special attention will be placed on the finalization of the SADC Resource Mobilisation Framework (Alternative Sources of Funding SADC Regional Programmes) during the ministerial workshop.
The framework will explore six different but co-related alternative sources of funding to determine how fiscal space could be created to enable SADC member states to finance regional programmes, projects and activities.
The six options for innovative sources of financing regional integration in SADC are the introduction of an export and import tax; a tourism levy; a financial transaction tax; a lottery system; philanthropy; and regional events.
It is estimated that SADC has potential to earn in excess of US$1.2 billion annually from these alternative sources of funding, a development expected to wean the region of dependency on International Cooperating Partners (ICPs).
It is estimated that less than 10 percent of regional projects are presently funded by SADC member states while the balance comes from International Cooperating Partners, according to the Secretariat.
This situation has compromised the ownership and sustainability of regional programmes.
The ministerial workshop and investors’ conference come against the backdrop of efforts by SADC to improve its power generation and transmission capacity in the face of shortages of electricity in the region.
The prevailing instability in the sector is compounded by many other factors, including the current reality where access to energy takes a national rather than regional approach; tariff levels that are not cost-reflective and caught between the viability and access conundrum; capacity issues at both national and regional levels; and energy sector reforms that are generally perceived to be moving at a sluggish pace.
A number of long-planned projects have failed to take off as the private sector appears reluctant to engage in partnerships with governments due to various challenges.
Private players often cite the poor returns, a function of tariff regimes that are not cost reflective, inappropriate financing formulas and poor governance as key factors in limiting their participation.
In addition to the impact of lack of investment in new infrastructure over the years, the region’s generation capacity is likely to suffer from the effects of climate change and the stronger El Nino-induced weather conditions that have seen dam levels in most countries dropping.
This situation has prompted most member states to resort to various coping mechanisms that include load shedding as well as other demand side management measures while longer term solutions are being sought to remedy the situation through improved supply.
Over the decade or so, a number of countries in SADC have had to resort to load-shedding as a stop-gap measure to conserve energy.
While load shedding has succeeded in restraining the overall electricity demand in the region to some extent, the measure has also affected socio-economic growth since the availability of energy is one of the key enablers of sustainable development, and is essential to the industrialization agenda.
The southern African region has a low access to electricity of about 42 percent compared to around 36 percent for the East African Community and 44 percent for the Economic Community of West African States, with some SADC countries having below five percent rural access to electricity.
The petroleum and gas sub-sector is plagued by volatile prices and although the region is endowed with coastal petroleum and gas resources, these are not directly available to the region, either due to foreign commitments or the lack of necessary infrastructure to exploit, process, store and distribute throughout the region.
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World’s most marginalized still left behind by global development priorities: UNDP report
Millions of people are not benefiting from progress, with the gap set to widen unless deep-rooted development barriers, including discrimination and unequal political participation, are tackled.
A quarter-century of impressive human development progress continues to leave many people behind, with systemic, often unmeasured, barriers to catching up. A stronger focus on those excluded and on actions to dismantle these barriers is urgently needed to ensure sustainable human development for all.
These are the findings of the Human Development Report 2016, entitled ‘Human Development for Everyone’, released on 21 March 2017 by the United Nations Development Programme (UNDP).
The report finds that although average human development improved significantly across all regions from 1990 to 2015, one in three people worldwide continue to live in low levels of human development, as measured by the Human Development Index.
“Leaving no one behind needs to become the way we operate as a global community. In order to overcome the barriers that hamper both human development and progress towards the Sustainable Development Goals, inclusiveness must guide policy choices,” said Swedish Prime Minister Stefan Löfven, speaking at the launch of the report in Stockholm on Tuesday, alongside UNDP Administrator Helen Clark and the report’s lead author and Director of the Human Development Report Office, Selim Jahan.
“The world has come a long way in rolling back extreme poverty, in improving access to education, health and sanitation, and in expanding possibilities for women and girls,” said Helen Clark. “But those gains are a prelude to the next, possibly tougher challenge, to ensure the benefits of global progress reach everyone.”
This is a concern in developed countries too, where poverty and exclusion are also a challenge, with over 300 million people – including more than one-third of all children – living in relative poverty.
Left behind and unable to catch up: systemic discrimination against women, indigenous peoples and ethnic minorities, among others
The report notes that not only are deprivations high, but disadvantages disproportionately affect some groups.
“We place too much attention on national averages, which often mask enormous variations in people’s lives,” stated Selim Jahan. “In order to advance, we need to examine more closely not just what has been achieved, but also who has been excluded and why.”
The report shows that in almost every country, several groups face disadvantages that often overlap and reinforce each other, increasing vulnerability, widening the progress gap across generations, and making it harder to catch up as the world moves on.
Women and girls, rural dwellers, indigenous peoples, ethnic minorities, people with disabilities, migrants and refugees, and the LGBTI community are among those systematically excluded by barriers that are not purely economic, but political, social and cultural as well.
In the case of women, the largest of these groups, the report notes that while global gender disparities are narrowing slowly, longstanding patters of exclusion and lack of empowerment for women and girls remain pressing challenges.
Women tend to be poorer, earn less, and have fewer opportunities in most aspects of life than men. In 100 countries, women are legally excluded from some jobs because of their gender, and in 18 countries, women need their husband’s approval to work. Dangerous practices like female genital mutilation and forced marriage continue.
Populations living in rural areas also face multiple barriers. For instance, children from poor rural households attending school are less likely to be learning reading, writing and mathematics.
Moreover, migrants and refugees often face barriers to work, education and political participation and more than 250 million people in the world face discrimination on the basis of their ethnicity, the report notes among other examples.
It is time to face up to deep-rooted barriers to development
“By eliminating deep, persistent, discriminatory social norms and laws, and addressing the unequal access to political participation, which have hindered progress for so many, poverty can be eradicated and a peaceful, just, and sustainable development can be achieved for all," Helen Clark said.
Marginalized groups often have limited opportunities to influence the institutions and policies that determine their lives. Changing this is central to breaking the vicious circle of exclusion and deprivation.
For example, indigenous peoples account for five percent of the world’s population, but 15 percent of people living in poverty. And members of the LGBTI community cannot actively advocate for their rights when same-sex acts between men are illegal in more than 70 countries.
The report calls for far greater attention to empowering the most marginalized in society, and recognizes the importance of giving them greater voice in decision-making processes.
The report also calls for a more refined analysis to inform actions, including making a shift toward assessing progress in such areas as participation and autonomy. Key data, disaggregated for characteristics such as place, gender, socioeconomic status and ethnicity, is vital to know who is being left behind.
Moreover, the report warns, key development metrics can overstate progress when they focus on the quantity, rather than the quality, of development. For instance, girls’ enrolment in primary education has increased, but in half of 53 developing countries with data, the majority of adult women who completed four to six years of primary school are illiterate.
Human development for everyone is attainable
“Despite progress gaps, universal human development is attainable,” said Selim Jahan. “Over the last decades, we have witnessed achievements in human development that were once thought impossible.”
Since 1990, one billion people have escaped extreme poverty, and women’s empowerment has become a mainstream issue: while as recently as the 1990s, very few countries legally protected women from domestic violence, today, 127 countries do.
The report stresses the importance of the 2030 Agenda for Sustainable Development to build on these gains, noting that the agenda and human development approach are mutually reinforcing.
The report includes recommendations to reorient policies to ensure progress reaches those furthest behind, and urges reforms of global markets and global institutions to make them more equitable and representative.
![](http://www.un.org/News/dh/photos/large/2017/March/21-3-2017undp.jpg)
Sub-Saharan Africa
Despite outpacing global human development growth rates over 15 years, sub-Saharan Africa remains burdened by the world’s most uneven distribution of development gains, with women, girls, people living in rural areas, migrants, refugees and those in conflict-affected areas systemically left behind. Gender inequality remains a serious challenge to human development in the region.
Understanding patterns of exclusion in the region
The report notes that some groups are more disadvantaged than others in almost every country. For example, in sub-Saharan Africa, women and girls, rural dwellers, people living in areas afflicted by conflict, and ethnic minorities have fewer opportunities than others.
Women in sub-Saharan Africa tend to live longer than men but receive less schooling and lower incomes. The report indicates that the HDI for women is 0.488 (classified as low human development) while that of men is 0.557 (medium human development). On average, the region loses an estimated US$95 billion annually to women’s lower participation in the paid labour force – and in 2014, that figure soared as high as $105 billion.
Women also suffer disproportionately in crises: during the Ebola outbreak, for example, women faced higher risk of infection due to their role in caring for the sick.
“Closing the human development gap for women and girls, excluded groups and people living in fragile situations is the challenge of our time,” said UNDP Africa Director Abdoulaye Mar Dieye. “We need policies that reach those left out and we need to invest more in empowering them economically and politically while building their resilience.”
In addition to women and girls, the report notes that rural populations also suffer deprivations both overt and hidden. In sub-Saharan Africa, 74 percent of those living in rural areas live in multidimensional poverty – reflecting acute deprivation in health, education and standards of living – versus 31 percent of those living in urban areas, where the poor tend to be isolated in slums with lower access to services.
But there are positive examples from the region of how things can improve. For example, the global under-five mortality rate was more than halved between 1990 and 2015, with the steepest decline in sub-Saharan Africa, which also extended life expectancy by six years. In 2010, Senegal targeted 191 rural villages for improved access to electricity, increasing access in those areas from 17,000 people in 2010 to 90,000 in 2012.
“We place too much attention on national averages, which often mask enormous variations in people’s lives,” stated Selim Jahan. “In order to advance, we need to examine more closely not just what has been achieved, but also who has been excluded and why.”
Conflict remains a challenge for the region, although over the past 15 years the number of countries in conflict has dropped. For example, the Central African Republic and South Sudan have experienced HDI declines over the past five years due to crises.
It is time to face up to deep-rooted barriers to development
The report argues that obstacles to human progress can compound over generations and make it harder to catch up. For example, lack of access to high-quality education, including in early childhood, risks perpetuating poverty later in life and for subsequent generations. Children from poor households and girls attending school in rural areas are especially disadvantaged and less likely than others to be learning critical skills like reading, writing and mathematics. Policy interventions are critical to enhancing learning outcomes, and also for future employment prospects and civic participation.
Further, the report points out that even as many basic deprivations are being addressed in the region, new challenges can emerge. Key development metrics can overstate progress when they focus on the quantity, rather than the quality, of development. For example, while more children are attending school and the education gap is closing, pupil-teacher ratios exceeded 40 to 1 in 23 countries in sub-Saharan Africa in 2011. And dropout rates are still very high, at 42 percent.
Sub-Saharan Africa leads the world in mobile banking, with 12 percent of adults having mobile bank accounts compared to 2 percent globally. Yet only 25 percent of the population is online. Lack of access to the Internet is increasingly a barrier to education, livelihoods and political participation, and many in the region risk falling further behind unless digital access is expanded.
“By eliminating deep, persistent, discriminatory social norms and laws, and addressing unequal access to political participation, which have hindered progress for so many, poverty can be eradicated and a peaceful, just, and sustainable development can be achieved for all,” Helen Clark said.
The report calls for far greater attention to empowering the most marginalized in society and recognizes the importance of giving them greater voice in decision-making processes. Key data, disaggregated for characteristics such as place, gender, socioeconomic status, and ethnicity, is vital to identifying who is being left behind.
Policies that prioritize inclusiveness are key to closing gaps
The report recommends a four-pronged national policy approach to ensure that human development reaches everyone.
First, it advocates reorienting universal human development policies to reach to those left out. Universal access to quality healthcare, education and other services are critical for extending human development to everyone. Ghana has made such efforts, including in early childhood education.
Next, it calls for removing barriers to particular groups with special needs, who may be disadvantaged by discriminatory laws and social norms. For example, gender gaps can be closed with policies that balance care work between women and men in the home and that use quotas to expand political representation among women, following the example of Rwanda.
Third, strategies can be put in place to make human development more resilient, such as for marginalized groups who are most at risk to public health crises like Ebola and climate-related natural disasters.
Finally, the rights of minorities can be guaranteed with anti-discrimination legislation, a fair judicial system and improved access to legal assistance through, for example, legal aid services.
With the inter-governmental commitment to the 2030 Agenda for Sustainable Development that includes the 17 Sustainable Development Goals, global attention has focused on leaving no one behind. Countries in sub-Saharan Africa can leverage this to build cooperation in the region and beyond to tackle persistent deprivations and inequalities. Regional and global cooperation will be especially important for reducing the vulnerabilities of marginalized groups to climate change, conflict and economic volatility.
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Smarter use of resources can add $2 trillion annually to global economy
Smarter and more efficient use of the world’s natural resources today means the next generation will reap annual economic benefits of $2 trillion by 2050, while offsetting the costs of ambitious climate change action, new research released on 16 March 2017 by the International Resource Panel shows.
The global population is set to grow by 28 per cent and is predicted to use 71 per cent more resources per capita by 2050. Without urgent steps to increase efficiency, the global annual use of metals, biomass, minerals such as sand, and other materials, will increase from 85 to 186 billion tonnes by 2050
The report, Resource Efficiency: Potential and Economic Implications, released at the G20 meeting in Berlin, found that while investment in ambitious climate action would cause a 3.7 per cent fall in per capita Gross World Product by 2050, this cost to the economy could be offset by more efficient use of resources.
For example, between 2005 and 2010, a UK programme recycled or reused seven million tonnes of trash destined for the landfill. This move saved six million tonnes of carbon dioxide emissions, close to 10 million tonnes of virgin materials and 10 million tonnes of water. It also increased business sales by £176 million, reduced business costs by £156 million and created 8,700 jobs.
Globally, more sustainable use of materials and energy would not only cover the cost of keeping global warming below 2 degrees Celsius, but also add an extra $2 trillion to the global economy by 2050.
“This is an environmental win-win,” said Erik Solheim, Head of UN Environment. “By making better use of our planet’s natural gifts, we will inject more money into the economy to create jobs and improve livelihoods. At the same time we will create the necessary funds to finance ambitious climate action.”
The report analyzed four paths that countries could take over the next three decades, ranging from ‘business as usual’ to a scenario where countries adopt both ambitious climate policies and improve resource efficiency.
Other key findings:
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Increased resource efficiency is practically attainable.
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There are substantial areas of opportunity for greater resource efficiency.
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Resource efficiency can contribute to economic growth and job creation.
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Improving resource efficiency is indispensable for meeting the costs of climate change targets.
The report also found that economic gains of resource efficiency will be unevenly distributed. A slower resource extraction would reduce revenues and affect jobs in some industries, such as mining and quarrying.
But even with these considerations, countries stand to gain more by implementing compensation and transfer policies to ease the transition to more efficient practices, than by continuing to support inefficient activities, according to the report.
In addition to economic benefits, the analysis also shows that resource efficiency and climate action would reduce global resource use by around 28 per cent in 2050 compared to current trends.
For G7 countries, resource efficiency, coupled with ambitious climate action, would increase Gross Domestic Product by $600 billion in 2050 ($600 per person, or 1 per cent).
About the International Resource Panel
The International Resource Panel is a group of eminent experts in natural resource management hosted by UN Environment. The report, Resource Efficiency: Potential and Economic Implications, was commissioned in 2015 by the Group of Seven (G7) countries and released in Berlin at a workshop on resource efficiency for the Group of Twenty (G20) countries.
Modelling for the report was carried out for the International Resource Panel by Australia’s Commonwealth Scientific and Industrial Research Organization (CSIRO) and Austria’s International Institute for Applied Systems Analysis (IIASA). It used four scenarios: Existing Trends, Resource Efficiency (which does not include climate action), Ambitious Climate, and Efficiency Plus (which combines the Resource Efficiency and the Ambitious Climate scenarios).
» Download: Resource Efficiency: Potential and Economic Implications (PDF, 5.73 MB)
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African Ministers adopt Declaration for the STC on Transport, Intercontinental and Interregional Infrastructure, Energy and Tourism
The Ministerial Session of the First Ordinary Session of the AU Specialized Technical Committee on Transport, Intercontinental and Interregional Infrastructure, Energy and Tourism (STC-TIIIET) convened on 17th March 2017 in Lomé, Togo, under the theme “Financing Infrastructure in Africa”.
The Session was opened by H.E. Komi Selom Klassou, Prime Minister of Togo, in the presence of Ministers responsible for transport, energy and tourism sectors from 38 African Union (AU) Member States, H.E. Dr. Amani Abou-Zeid, AUC Commissioner for Infrastructure and Energy, representatives of the Regional Economic Communities, the regional development banks and financial institutions, the continental specialized organizations, private sector, development partners and international organizations involved in energy, transport and tourism development.
The Prime Minister recalled that Africa will be hosting 25% of the world population is the continent of opportunities but also of issues and challenges to attract more economic investment. He called upon Ministers and High Level participants to come up with concrete proposals that will enable effective integration through infrastructure development as indicated in the AU Agenda 2063.
Regarding the areas of the STC, the Prime Minister highlighted the main energy, and transport projects that are included in the Programme for Infrastructure Development in Africa. He welcomed the initiative of the African Union Commission with the support of the AfDB and UNECA that aims at looking into new and innovative sources of financing in order to fast track the implantation of the projects.
In her keynote speech at the Opening Ceremony, H.E. Dr. Amani Abou-Zeid, AUC Commissioner for Infrastructure and Energy, said that African Heads of State and Government solemnly affirmed their commitment to strengthen the implementation of the Union’s Agenda 2063, the first ten-year plan of which is already operational.
“This is why the AUC, AfDB, NEPAD, UN-ECA, and RECs jointly launched the Africa Infrastructure Development Program (PIDA) whose objective is to provide African decision-makers with a coherent framework for regional and continental development in the energy, trans-boundary waters, transport, telecommunications and information and communication technologies sectors,” she added.
Highlighting the efforts being deployed for establishment of continental free trade area, establishment of the single market for air transport in Africa and transformation of the regional corridors into intelligent corridors, the Commissioner emphasized on need for mobilizing of efforts and resources in order to accelerate the implementation of transport and service infrastructure development programs, in particular those of the PIDA Priority Action Plan, harmonize transport policies, laws and regulations as well as continental standards.
Speaking earlier, H.E. Amadou Hott, Vice President of the African Development Bank, emphasized that access to sustainable energy services is a critical development enabler for Africa as the continent is still the least electrified region in the world. “We all know that Energy is at the base of any economic activity and no country will be able to progress unless reliable, affordable, and sustainable energy services are accessible to all,” he said.
Organized by AUC, the Republic of Togo, AfDB and the UNECA, the 1st STC-TIIIET aimed to assess progress and to achieve concrete advances in the financing of major infrastructure, notably those in the Priority Action Plan of the Programme for Infrastructure Development in Africa (PIDA/PAP), through decisions and consensus on investing in the preparation, structuring, implementation and risks mitigation of climate resilient infrastructure projects.
The Ministers considered and adopted the Rules of Procedures of the STC, elected the STC Bureau which will lead the work for the next two years and designate Sub-Committees that would focus on guiding implementation of the sector/sub-sector action plans and dedicate their efforts to making Africa the Preferred Destination for investment into Transport, Energy and Tourism in order to achieve the objectives of the AU Agenda 2063.
They also considered and adopted the Report of the Experts’ Meeting, which held from 13-16 March, the STC Action Plan and Ministerial Declaration which includes recommendations drawn from the Experts’ Report and sectorial Action Plans for infrastructure projects.
The outcomes of 1st STC-TIIIET will be forwarded to the forthcoming Summit of the AU Assembly for consideration and adoption.
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How can transport infrastructure promote trade and sustainable development on the African continent?
The role of infrastructure in economic development is widely recognised. How can the development of a more integrated transport infrastructure network support the achievement of the Sustainable development goals in Africa?
Recently, the heads of the Multilateral Development Banks (MDBs) and the IMF jointly stated that “no country has developed without access to well-functioning infrastructure.” More specifically, infrastructural development is essential for competitiveness and trade, which in turn can play a pivotal role in achieving sustainable development. This article looks at choices made in Africa on how to prioritise trade-related infrastructure and transport activities to advance sustainable development goals (SDGs), and also provide a few suggestions on how these efforts could be strengthened.
Overcoming constraints
Africa’s structural transformation and inclusive green growth, which are pre-conditions for reaching most of the SDGs, are hampered by a range of natural and man-made constraints. The latter constitute serious obstacles to deeper regional integration and are linked to the fact that Africa is divided into 54 economic spaces, including many landlocked (16) and least developed countries (34). These countries are further scattered across more than 30 overlapping sub-regional and regional organisations – what some experts have come to call a “spaghetti bowl”.
Because of this complex architecture, there is a wide range of soft infrastructure constraints obstructing the regional integration process, including the lack of harmonisation of policies, regulations, and procedures governing both trade and infrastructure development. In addition, poor hard infrastructure continues to cast a long shadow on Africa’s competitiveness and diversification. Finally, other significant constraints encompass institutional, administrative, and financial capacity, governance, and the coordination of efforts between the African Union Commission (AUC) and the regional economic communities (RECs), as well as among their member states.
Dismantling the barriers to moving goods and services across and between African countries, including by addressing the problems related to overlapping REC memberships, would thus go a long way to address Africa’s complex challenges to regional integration as a stepping stone towards reaching the SDGs. In particular, it is essential to scale-up investment in efficient, seamless, and cost-effective transport, energy, water, and ICT cross-boundary networks, as well as in soft infrastructure reforms such as one-stop border posts. The Programme for Infrastructure Development in Africa (PIDA), whose 51 programme and projects are meant to fully interconnect, integrate, and transform the African continent, is an important step in that direction. Constructing, rehabilitating, and maintaining reliable and efficient regional infrastructure would act as a catalyst for development, by bringing down the time and thereby the costs of cross-border trade and transport, which in turn would foster trade, the creation of decent jobs, inclusive green growth, and lead to an integrated continent as a pathway to sustainable development. In this process, the biggest gains would accrue to the most isolated and resource-deprived regions.
Moreover, regional commitments would also need to be harmonised with AU and REC member states’ external bilateral and multilateral trade and cooperation agreements, although such deals are easier to call for than to negotiate. For example, trade facilitation is a global problem which calls for a multilateral solution. When the WTO’s Trade Facilitation Agreement (TFA) entered into force on 22 February 2017 after two thirds of the organisation’s members ratified it, only 19 African countries had presented their instrument of ratification. This is unfortunate, because African countries in general, and LDCs in particular, are expected to see the biggest average reduction in trade costs resulting from the implementation of the TFA, although most RECs in Africa already have provisions in place addressing trade facilitation issues.[1]
Transport infrastructure as an “enabler” to achieve the SDGs in Africa
The literature has shown that access to transport, in particular through trunk and feeder roads, has a significant impact on inclusive growth, access to social services, and regional integration. In the framework of the SDGs more generally, transport plays a central role, as seven of the seventeen SDGs include specific targets that incorporate both rural and urban transport. Transport is thus recognised as an important tool for reducing emissions, improving equity, and reducing poverty.[2] But the reality is that Africa’s road infrastructure development – perhaps because of the continent’s difficult economic geography – is still very weak in terms of quantity, quality, or access, and is also characterised by missing regional links (see figure 1).[3] As a percentage of all the continent’s roads measured in length, less than 20 percent of roads are paved. On top of that, a substantial share of the road networks built in the 1970s and 1980s are in poor condition due to lack of maintenance.[4] Moreover, Africa’s rail transport system, which is essential for both freight and passenger transport, is even more poorly interconnected than the roads, since different rail gauges do not allow cross-border network connectivity and usage of the same rolling stock between neighbouring countries.[5]
Figure 1. Trans-African highways and major ports
Source: AfDB. Development Effectiveness Review 2012. Promoting Regional Integration.
It was partly on this background that in January 2015, China and the AUC signed a far-reaching agreement within the framework of AU’s Agenda 2063. The pharaonic vision is to link all African capitals by roads, high-speed trains, and air transport services. The implementation of common frameworks for the construction of regional infrastructure networks (such as AU Agenda 2063 and PIDA) is expected to boost intra-African trade, which has been identified as having more (manufacturing) value-added content than Africa’s trade with the rest of the world.[6] This would, in turn, boost job creation (SDG8) on the continent and contribute to advancing many other SDGs through various transmission mechanisms. Positive effects would also be especially important in remote rural areas, particularly in the 34 African LDCs where two thirds of the population live in rural communities. As rural transport networks improve, they provide the rural non-farm (impact-) enterprises and smallholder farmers with new economic opportunities, including through potential economies of scale, by accessing external input and output markets. This, in turn, can enable the implementation of nearly all the SDGs in rural Africa.
Notwithstanding the above-mentioned entry into force of the WTO TFA, given today’s context of increasing scepticism towards the benefits of multilateral trade, the next phase of Africa’s productive and export capacity building will have to come through Africa’s own mega-regional trade agreements, successively the Tripartite Free Trade Area (TFTA) and the Continental Free Trade Area (CFTA). Underlying these significant regional integration opportunities is the transport infrastructure network, which consequently will play a key role as an enabler to achieve the SDGs over the next 13 years. Transport facilitation, defined as the simplification and harmonisation of international transport procedures and the information flows associated with them, means faster, more efficient, and predictable exports and imports. However, as with hard infrastructure development, there is still a lot of ground to be covered in Africa to address the seven SDG transport targets. Africa’s infrastructure services are twice as expensive as elsewhere, reflecting both diseconomies of scale in production and high profit margins caused by lack of competition.
The most prominent step to overcome this challenge has been taken in October 2008, when heads of state and government representing the 26 member states of COMESA, the EAC, and SADC met in Kampala, Uganda, and signed the Tripartite Memorandum of Understanding, with the goal of establishing a single “grand FTA” covering the three RECs. The TFTA adopted a genuine developmental approach to the Tripartite integration process, anchored in three pillars: (1) market integration based on the TFTA (SDG 10.a; SDG 17.12 and 17.13); (2) infrastructure development to enhance connectivity and reduce costs of doing business (SDG 8.a); and (3) industrial development to address the productive capacity constraints (SDG 9). Building on this foundation, the TFTA adopted a Comprehensive Tripartite and Trade Facilitation Programme (CTTFP), which aims to develop transport and infrastructure in a coordinated manner. However, the implementation of CTTFP has faced a number of challenges such as the slow domestication of the protocols, the low level of implementation of the RTAs, and the proliferation of transport related non-tariff barriers (NTBs). These need to be addressed to reduce transport costs, boost trade, and ensure access to sustainable transport for all.
The existing literature does seem to confirm that both transport facilitation and hard infrastructure development indeed are enablers for development and inclusive growth, e.g. through the development of agriculture and rural livelihoods.[7] In particular, transport facilitation and transport infrastructure facilitate the flow of goods, services, and people, and lowers the cost of doing business, which allows economic activity to flourish. Since it is not yet possible to fully monitor the progress towards the SDG targets at the REC level, future research could seek to explore to what extent overcoming these CTTFP challenges are linked to the implementation of SDGs in the TFTA and the CFTA.
What should Africa and the international community focus on?
The sustained growth which African economies have achieved since 2004 needs to be reoriented to provide a stronger basis for the transition to sustainable development. Africa must thus intensify its efforts to foster structural transformation, in particular through regional integration, while keeping poverty reduction and sustainability concerns at the centre of its development aspirations. In order to succeed in such an ambitious programme, one of the keys lies in the development of a single and integrated regional road transport market characterised by harmonised policies.
Enhancing policy coordination
The development of a more competitive, integrated, and liberalised regional transport market on the African continent will be fundamental to achieving the SDGs, implementing the WTO’s TFA, and establishing well-functioning African mega-regional trade agreements such as the TFTA and the CFTA. Ineffective trade, transport, and infrastructure development strategies and low policy coherence are often due to an ad-hoc and fragmented approach to policy making and private sector consultation. Given their inter-sectoral linkages, uncoordinated policies can make it difficult to achieve the SDGs. Therefore, the development of a governance framework for inter-ministerial coordination and stakeholder policy consultation in the area of trade and transport facilitation policy making, both at the national level and at the RECs level, would be an important step in the right direction. It would help bring about coherence and complementarity in the regional integration policy making process, while ensuring alignment with the member states’ sustainable development objectives.
Sustainable transport infrastructure in countries in special situations
The development of reliable, efficient, and sustainable infrastructure systems, and especially transport infrastructure, is of particular importance for countries in special situations such as LDCs and landlocked developing countries (LLDCs). However, the levels of investment required for the development of large-scale regional infrastructure projects are often beyond the individual capacity of LDCs and LLDCs, hence the importance of regional cooperation and international support – including from a financial point of view. This could partly come from the improvement of international support measures to better fit the developmental needs of countries in special situations, as suggested by de Melo and Wagner who recommend allocating a greater share of aid for trade funds to countries with special needs in the area of trade facilitation, e.g. for establishing and strengthening national trade facilitation committees.[8] Such a more focused approach could also be adopted with regards to hard infrastructure.
Financing sustainable transport infrastructure: The role of PPPs
The increase in infrastructure investment needed to successfully implement the SDGs is considerable, with the cost of addressing Africa’s infrastructure needs estimated at around US$100 billion a year.[9] Although the largest share of Africa’s infrastructure is financed domestically, African governments should take advantage of the renewed interest from private investors and operators to improve and maintain the continent’s transport infrastructure network over the next decades. With this aim in mind, African governments, MDBs, and other relevant stakeholders should explore people-first public-private partnerships (PPPs) and innovative financing approaches, such as risk instruments that guarantee a certain volume of transactions, as means to attract private impact investment in support of infrastructural development and the SDGs.
Christian Kingombe is Senior Research Fellow at the Centre for Finance and Development, Graduate Institute, Geneva; Research Associate at the Centre for Socio-Eco-Nomic Development (CSEND); and Co-founding Managing Partner of 4IP LLC.
The views and interpretations expressed in this paper are those of the author and should not be attributed to either the Graduate Institute, Geneva, or CSEND. The author would like to thank Raymond Saner and Thibaut Mourgues for their comments and advice.
This article is published under Bridges Africa, Volume 6 - Number 2, by the ICTSD.
[1] WTO. “How does the TFA cut red tape at the border for easier trade.” 2017.
[2] Institute for Transportation & Development Policy. “The Role of Transport in the Sustainable Development Goals.” 2015.
[3] See Virtual PIDA information Centre (VPiC): http://www.au-pida.org/
[4] Kingombe, Christian. “An Enquiry into the Causes and Nature of the Transmission Mechanisms between Labour-Based Rural Roads, Sustainable Growth, and Agricultural Trade in Zambia’s Eastern Province.” PhD Thesis, University of London, 2011.
[5] African Development Bank Group. Africa in 50 Years’ Time: The Road Towards Inclusive Growth. September 2011.
[6] African Development Bank Group. “Intra-African Trade: An Analysis.” Mimeo, 2012.
[7] See, for example: UNCTAD. Least Developed Countries Report 2015: Transforming Rural Economies. 2015.
[8] De Melo, Jaime, and Laurent Wagner. “How the Trade Facilitation Agreement Can Help Reduce Trade Costs for LDCs.” E15 Initiative, ICTSD and the World Economic Forum, January 2016.
[9] “Africa needs $100 billion annually to close infrastructure financing gap – AfDB.” Premium Times, 13 December 2015.
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Mugabe takes swipe at SA for not freeing up trade
Zimbabwean President Robert Mugabe has taken a swipe at South Africa for what he says is Pretoria’s failure to open up free trade in the Southern African Development Community (SADC) region.
Speaking at the inaugural meeting of the African Economic Platform in Mauritius, the veteran leader says some countries still wanted to dump their goods in other countries while those affected were battling to sell their goods and services to South Africa.
Mugabe says free trade is important for regional integration. “In the SADC our region South Africa is our big boss because they are more developed than any of us. We have tried to economically think of how we can interact economically and culturally in the deference of the interest of our people. As you heard with the last speaker, the same has been happening in East Africa. It has not been that easy to be in step with each other.”
African Union Deputy Chair Luisa Diogo adds that the continent can only grow if it is united. Diogo says the youth need to play a central role in order to achieve good results through this platform.
“The road ahead is clear as Agenda 2063 provides us with the policy framework to accomplish the purpose which has been created. We have borrowed the keys from our communities on the promise that we unlock opportunities for all.”
Meanwhile, the Prime Minister of Mauritius, Kumar Jugnauth, has called on all African leaders to rely on each other’s strengths to make up for their weaknesses.
Jagnauth says the only way Africa can rise, is if its people work together.
“During these two days, we will have the opportunity to reflect in greater depth on how to boost inter-Africa trade – on the need for more flexible rules of origin on the removal of non-tariff barriers and on the measures that are required to grow on our manufacturing sector. It is important that we work together, to ensure the sustainability of the manufacturing processes and coordinate the various strategies of the production process across the continent.”
The conference which was adopted during the 29th Ordinary Session of the Executive in Rwanda in 2016, is set to boost African business through removing barriers that hamper growth. It's also expected to address policies that can influence investment attractiveness.
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tralac’s Daily News Selection
Today, at the WTO: MIKTA Trade and Investment Workshop
Starting today, in Accra: AU Protocol on Free Movement of Persons in Africa: meeting of Member States Legal Experts (20-24 March)
CSAE Conference 2017 on the theme Economic Development in Africa (19-21 March, Oxford): the papers from the four trade sessions: Trade 1, Trade 2, Trade 3, Trade 4
Africa Development Week 2017 (23-28 March, Dakar); profiled documents submitted to the Tenth Joint Annual Meetings, on the theme Growth, inequality and unemployment:
Report of the AU sub-committee of Director Generals of Customs on the theme From barriers to bridges – implementing One Stop Border Posts for improved trade facilitation: From the discussions that took place after interventions by the panelists, the meeting made, inter alia, the following observations: (i) There is need for consolidation of OSBP concept in the REC Policy and Legal Framework given that as the regional integration intensifies, such as at Customs Union level, there will be a Common Customs Act; (ii) The RECs have to include all government agencies in the OSBP Regional Laws and to ensure that there is capacity building across the region to improve efficiency; (iii) Customs Administrations need to engage respective Parliaments for the ratification and domestication of all Protocols and other legal instruments for the effective integration in Africa. Parliaments should also help expedite the laws that will remove legal impediments to the trade facilitation measures. [African Institute for Economic Development and Planning: draft revised statute (pdf)]
Abdalla Hamdok: Can Africa surprise the world by delivering the Continental Free Trade Area by the end of 2017? (ERF)
Despite the recent global trends and the rise of nationalism and protectionism I would like to believe still the global mega partnerships are going to be pursued by Africa’s trading partners. The big question is, can Africa surprise the world by delivering the CFTA by the end of 2017 as anticipated and also doubling intra-African trade within this decade? The state of play within the African Regional Economic Communities (RECs) and empirical work at ECA suggest that both are achievable. But for this to happen, there is a need to fast track the implementation strategy, including decisions on process and mechanisms. [The author is the acting Executive Secretary, UNECA]
World Bank Group announces record $57bn for Sub-Saharan Africa (RNA)
The bulk of the financing – $45bn – will come from the International Development Association (IDA), the World Bank Group’s fund for the poorest countries. The financing for Sub-Saharan Africa also will include an estimated $8bn in private sector investments from the IFC, a private sector arm of the Bank Group, and $4bn in financing from International Bank for Reconstruction and Development, its non-concessional public sector arm. While much of the estimated $45bn in IDA financing will be dedicated to country-specific programs, significant amounts will be available through special “windows” to finance regional initiatives and transformative projects, support refugees and their host communities, and help countries in the aftermath of crises. This will be complemented by a newly established Private Sector Window - especially important in Africa, where many sound investments go untapped due to lack of capital and perceived risks.
Jim Yong Kim: Africa’s next level of economic transformation (Sudan Tribune)
At the same time, there are trillions of dollars of capital in the developed world seeking higher returns. We see tremendous opportunities in developing countries for private sector investment in areas like infrastructure, which is crucial for jobs and growth. To bridge this financing gap, we will work with governments and use our resources to de-risk and leverage more private sector investment. On 20 March, I will begin a visit to Tanzania and Rwanda to see how these countries have achieved results and what we can learn from their innovations. I hope to discuss the need for better coordination with the private sector in our efforts to help client governments improve the business climate and mobilise resources.
G20 Finance Ministers and Central Bank Governors Meeting:
Communiqué (pdf): We will deepen as well as broaden international economic and financial cooperation with African countries to foster sustainable and inclusive growth in line with the African Union’s (AU) Agenda 2063. We launched the initiative “Compact with Africa” aimed at fostering private investment including in infrastructure. The initiative is demand-driven and respects country-specific circumstances and priorities. The initiative provides modules of good practices and instruments that could be applied in tailor-made investment compacts being implemented through the commitment of multiple stakeholders, such as individual African countries, International Financial Institutions (IFIs) and bilateral partners. [IMF Note prepared for the G20 meeting (pdf), IMF/OECD Tax Certainty report (pdf), G20 drops anti-protectionist pledge as price of US assent ]
Helmut Reisen: On MDB Balance-Sheet ´Optimization. The Communiqué released by G20 Finance Ministers and Central Bank Governors Meeting in Baden-Baden last weekend carries, beneath embarrassingly dropping their commitment to free global trade, a less noted declaration:
Extra Ordinary Summit of SADC Heads of State and Government: communiqué
Summit received the report of the Ministerial Task Force on Regional Economic Integration and approved the Costed Action Plan for SADC Industrialization Strategy and Roadmap 2015-2063. In approving the Action Plan, the Summit underscored high impact activities, effective monitoring and reporting and the role of the private sector as a key player in the implementation of the SADC industrialization agenda. Summit approved the resolutions of the Strategic Ministerial Retreat on the Regional Integration, which was held on 12th-14th March 2017 under the theme: “The SADC we want”. Summit noted progress on the operationalization of the 36th SADC Summit Theme, and urged Ministers of Finance and Investment supported by the Secretariat to finalize the SADC Resource Mobilization Framework and submit it for consideration in August 2017.
Consultative Meeting of IGAD Council of Ministers: statement
The key items on the meeting’s agenda were: the dire humanitarian situation in the IGAD region due to drought emergencies and cases of famine as well as regional peace and security issues particularly developments in Somalia and South Sudan. The Council further reaffirmed that it pursues a common and unified position on regional matters related to peace, security and humanitarian affairs particularly on the current situation in South Sudan and accords highest priority to address all outstanding issues in unison.
Is the East African Community broke? (EAC)
The activities of the EAC are perpetually grinding to a halt – unless immediate remedial measures are taken to remit the amount of US$ 24,016,930 owed to the EAC by the Partner States. Deeply concerned by this poor financial state of affairs, EALA has passed a resolution urging the Council of Ministers to immediately convene under matters of urgency to resolve the financial crisis in EAC by ensuring immediate and full disbursement of funds to the EAC. Currently: Kenya has contributed $4,395,707 (52.47%), Tanzania has contributed $2,553,203 (30.47%), Uganda has contributed $7,668,419 (91.53%), Rwanda has contributed $4,027,316 (48.07%) while Burundi has not contributed any amount to this financial year’s budget leaving an outstanding of $8,378,108, excluding arrears for the previous year amounting to $771,037.
Integration agenda not optional, Speaker Kidega (New Times)
During an interview with The New Times’ James Karuhanga, on the last day of EALA’s recent sitting in Kigali, Kidega talked about his frustrations with partner states that are stingy with funds, his worry that the East African Community’s integration agenda might suffer, and the issue of partner states that do not ratify important protocols that they negotiated and signed. [EALA not giving up on bills returned by Tanzania]
Nigeria to criminalise export of unprocessed minerals, says Minister (Premium Times)
The Minister of Mines and Steel Development, Kayode Fayemi, said in Lagos on Thursday at a Town Hall meeting with interest groups in the mining sector that government was taking the decision to stop the activities of some foreign nationals who have been taking unprocessed minerals though illegal routes out of the country. He said government would support and encourage operators to set up plants, process the minerals here and then export it. The minister stated that the economic diversification and employment generation could only be realised with operators cooperating with government on the mining policy.
Tanzania: Foreign investors reportedly unnerved by rise of ‘populist politics’ (IPPMedia)
A surprise export ban imposed on gold and copper concentrate by the Tanzanian government has forced several Australian mining firms to seek urgent assurances about the future of their operations in the country, according to a report in Australia’s Sydney Morning Herald newspaper. Perth-based Tanga Resources director John Stockley will fly to Tanzania today for talks with government officials after the country slapped a ban on the export of mineral concentrates and ores for metallic minerals, including gold, copper, nickel and silver. “If the Tanzanians wish to encourage foreign investment, they’re not helping by making these sorts of announcements,” Stockley said. [Miners now urge Tanzania govt to lift ore exports ban]
DRC sees Trump roll-back of Dodd-Frank law stoking insecurity (Bloomberg)
The suspension of Section 1502 of the Dodd-Frank Act “in the long run, will jeopardize the stability and security of the DRC” by encouraging an “escalation in the activities of non-state armed groups,” Mines Minister Martin Kabwelulu said in a letter to the Securities and Exchange Commission dated March 13 and seen by Bloomberg. Kabwelulu confirmed March 18 by text message that he sent the letter, and said a Congolese delegation will meet with the head of the SEC and U.S. Treasury Secretary Steven Mnuchin on Monday and Tuesday in Washington to discuss his government’s position.
A tale of three economies in Africa (StatsSA)
One of many comparisons between countries is the size of their economies. In the recent past, a number of people noted that Nigeria had overtaken South Africa as the largest economy on the African continent. Subsequently, articles were written about South Africa being pushed into third place by Egypt, only to regain the silver medal position shortly thereafter. So how accurate are comparisons of economic size?
Invest South Africa One Stop Shop launch: speech by President Zuma (GCIS)
We realised that we will not make headway with regards to investments unless we do something to make it easier to do business. The InvestSA One Stop Shops will be the focal point of contact in government for all investors to coordinate and facilitate with the relevant government departments involved in regulatory, registration, permits and licensing. Officials at the One Stop shop will ensure that we drastically reduce the red tape. As part of continuous improvement, InvestSA will coordinate inter-governmentally with the World Bank on a reform memo over a period of 3 to 5 years to improve South Africa’s Ease of Doing Business Rankings. We want to be reviewed by the World Bank and we are convinced that our rankings will improve considerably. The success of the One Stop Shop will depend on all stakeholders at the three spheres of Government supporting this initiative and improving turnaround times. It will also depend on good supervision and monitoring of the service.
South Africa: National Conference on International Migration (GCIS)
Speech by Minister Malusi Gigaba: To truly give meaning to Pan-Africanism, regional integration and Agenda 2063, we must make it easier for Africans to move in Africa. Towards this effect, we must: (i) work together to build maturity of civil registration and immigration management systems, (ii) clarify policy with respect to common market arrangements, and (iii) reconsider visa requirements and use innovative ways to ease movement where visas are required. SA’s international migration policy must contribute to nation building and social cohesion. As mentioned earlier, the migration policy shapes the future composition of the South African population. We must expand our narrow conceptions of who is a South African, previously defined in apartheid-colonial terms, to include new South Africans originating from all over Africa and the world.
Agriculture pulling Nigeria out of recession – Presidency (Premium Times)
Mr Shehu, who is the Senior Special Assistant on Media and Publicity to the President, said that Nigeria only imported 58,000 tons of rice from Thailand in 2015 as against 1.2 million tons in 2014. He revealed that due to the country’s growing rice production occasioned by the Central Bank of Nigeria’s decision to deny foreign exchange for the importation of rice “parboiled rice mills’’ in some Asian countries were shutting down production. According to him, this is because Nigeria, which is one of the world’s largest importers of rice no longer, buys rice from them. “Five of such mills in Thailand servicing Nigeria have stopped production due to the withdrawal of our patronage,” he added.
World Happiness Report 2017: the Africa chapter
Much of Africa is struggling (pdf): The Africa chapter (led by Valerie Møller, with Benjamin J. Roberts, Habib Tiliouine, Jay Loschky) tells a much more diverse story, as fits the African reality with its great number and vast range of experiences. But these are often marked by delayed and disappointed hopes for happier lives (see Chapter 4).
Today’s Quick Links:
Nigerian government commends Dangote Cement for self-sufficiency feat
Tanzania: Despite controversy handing coalfield to Dangote Cement, a step forward
Ethiopia, Djibouti make trade deal as economic ties deepen
Rwanda, China outline new cooperation areas
COMESA Business Council-Mauritius business seminar
Rwanda is ready for business, Musoni tells Chinese investors
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Extra Ordinary Summit of the Heads of State and Government of SADC held at Lozitha, Kingdom of Swaziland
Communiqué
Extra Ordinary Summit of SADC Heads of State and Government held at Lozitha Palace (Mandvulo), Swaziland on March 18th, 2017
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The Extra Ordinary Summit of the Heads of State and Government of the Southern African Development Community (SADC) was held at Lozitha, Royal Palace, in the Kingdom of Swaziland on 18th March 2017.
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Summit was attended by the following Heads of State and Government and or their representatives:
- Swaziland: H.M. King Mswati III
- South Africa: H.E. President Jacob Gedleyihlekisa Zuma
- Zimbabwe: H.E. President Robert Gabriel Mugabe
- Madagascar: H.E. President Hery Rajaonarimampianina
- Namibia: H.E President Hage Geingob
- Zambia: H.E. President Edgar Chagwa Lungu
- United Republic of Tanzania: H.E. Vice President Samia Suluhu Hassan
- Rep. of Congo: H.E. Prime Minister, Samy Badibanga Ntita
- Mozambique: The Rt. Hon. Prime Minister, Carlos Agostinho do Rosário
- Lesotho: Hon. Deputy Prime Minister, Mothetjoa Metsing
- Angola: Hon. General João Manuel Gonçalves Lourenço, Minister of Defence
- Botswana: Hon. Pelonomi Venson Moitoi, Minister of International Affairs and Cooperation
- Malawi: Hon. Francis Kasaila, Minister of Foreign Affairs
- Seychelles: H.E. Ambassador Barry Faure, Department of Foreign Affairs
- Mauritius: Mr. M.D. Phokeer, Director, Ministry of Foreign Affairs
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Summit was also attended by H.E. Dr. Stergomena Lawrence Tax, SADC Executive Secretary.
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His Majesty, King Mswati III of the Kingdom of Swaziland, Chairperson and host of the Extra Ordinary Summit welcomed the SADC Heads of State and Government and other delegates to the Kingdom of Swaziland.
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Summit noted and commended CENCO for the renewed mediation efforts, and urged the DRC stakeholders to finalize the Specific Arrangements for the Implementation of the 31 December 2016 Political Agreement, in particular, the nomination of the Chairperson of the National Monitoring Committee, and encouraged the opposition to expeditiously submit the nominees for the position of the Prime Minister.
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Summit called upon the International Community to support the DRC in the electoral processes that are expected to facilitate peaceful and successful elections.
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Summit received the report of the Ministerial Task Force on Regional Economic Integration and approved the Costed Action Plan for pdf SADC Industrialization Strategy and Roadmap 2015-2063 (2.34 MB) . In approving the Action Plan, the Summit underscored high impact activities, effective monitoring and reporting and the role of the private sector as a key player in the implementation of the SADC industrialization agenda.
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Summit noted progress made on the preparations for the establishment of the SADC University of Transformation; and directed the relevant SADC structures to finalize its implementation and to report back to Summit in August 2017.
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Summit approved the resolutions of the Strategic Ministerial Retreat on the Regional Integration, which was held on 12th-14th March 2017 under the theme: “The SADC we want”. The Retreat was to take stock of what SADC has achieved since its establishment in 1980, the challenges it was facing and what needed to be done to accelerate the pace and level of the SADC integration agenda. In this regard, the Summit noted the recommendations of the Ministerial Retreat and directed the Secretariat to develop an implementation plan and roadmap of the Conclusions of the Strategic Ministerial Retreat for its consideration in August 2017.
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Summit noted progress on the operationalization of the 36th SADC Summit Theme, and urged Ministers of Finance and Investment supported by the Secretariat to finalize the SADC Resource Mobilization Framework and submit it for consideration in August 2017.
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Summit endorsed the convening of a High-Level Ministerial Workshop and Regional Investors Conference on Regional Energy Projects to showcase investment opportunities in the energy sector, focusing on specific flagship projects; and directed the Secretariat to report progress on the activities under the three main aspects of the 36th Summit Theme, at its next meeting in August 2017.
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Summit received and considered the reports of the Facilitator and the Chairperson of the Oversight Committee to the Kingdom of Lesotho. While noting with concern the changed political dynamics that have necessitated the holding of snap elections, Summit urged the Kingdom of Lesotho to address the fundamental challenges and bring about political stability.
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Summit mandated the Facilitator and the Oversight Committee to closely monitor the political and security situation in the Kingdom of Lesotho during the election period.
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Summit mandated the Facilitator supported by the Oversight Committee to conduct a multi-stakeholder national dialogue before the elections set for 3rd June 2017 with the aim of building consensus and trust among all stakeholders and charting the way forward for the implementation of SADC Decisions.
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Summit endorsed the convening of a Double Troika Summit soon after the new Government is formed after the elections on 3rd June 2017, to engage the new Government of Lesotho on the need to implement the SADC Decisions and the recommendations of the SADC Commission of Inquiry through a roadmap with clear timelines. The engagement should also emphasise the need to address the fundamental challenges, commitment to implement SADC Decisions and the consequences of not implementing the decisions and observing timelines.
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Summit commended the SADC Facilitator for his continued support in assisting the Kingdom of Lesotho to achieve a lasting peace and political stability, and the Oversight Committee for its diligence and professionalism.
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Summit urged all parties to the Disarmament, Demobilization, Repatriation Reintegration, and Resettlement (DDRRR) programme to re-initiate it urgently to address the needs of those in the refugee camps and the surrender of elements that are still in combat.
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Summit noted that the mandate of MONUSCO-FIB, expires on 31 March 2017 and urged for the renewal to be aligned with Chapter VII of the UN Charter on peace enforcement so as to enable MONUSCO-FIB to deliver effectively, and to provide for the necessary means and capabilities to address the threat of the negative forces and the asymmetrical warfare that has emerged.
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Summit commended the President of the DRC, H.E. Joseph Kabila Kabange, the Government of the DRC, CENCO, political parties and other stakeholders for the continued efforts in addressing the political and security challenges.
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Summit commended Member States who supported Member States that suffered from the effects of the 2015/16 El-Nino induced disaster; and International Cooperating Partners and the Private Sector for the humanitarian assistance provided to support the Region.
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On the Outbreak of the Fall Armyworm in the SADC Region, Summit agreed to improve coordination and collaboration efforts to promote a harmonised approach in the management of the Fall Armyworm; and to mobilise resources to implement management and control strategies for Fall Armyworm and other plant and livestock pests including the Tuta Absoluta pest.
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Summit reaffirmed its solidarity and SADC’s responsibility to alleviate the suffering of the people following the effects of Cyclones Dineo and Enawo which resulted in flooding, and other disasters; and encouraged all SADC Member States to consider providing humanitarian relief support to the affected Member States. In this regard, Summit directed the Secretariat with support from Member States to urgently finalize and operationalize the regional disaster preparedness and response mechanisms; and operationalization of the Regional Disaster Preparedness and Response Fund.
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Summit commended the Executive Secretary Dr. Stergomena Lawrence Tax and the Deputy Executive Secretary for Regional Integration, Dr. Thembinkosi Mhlongo for their outstanding performance and approved extension of their contracts for another term of four (4) years.
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Summit noted that H.E. President Jose Eduardo Dos Santos of the Republic of Angola is retiring from the Presidency, and the ruling party has nominated Hon. João Manuel Gonçalves Lourenço, the current Minister of Defence of the Republic of Angola as Presidential candidate for the August 2017 general elections.
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Summit commended his H.E. President Dos Santos for his contribution in furthering the SADC political and economic agenda, and to the socioeconomic development of Angola, and wished him well in his retirement.
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The Extra Ordinary Summit was officially closed by SADC Chairperson, His Majesty, King Mswati III of Swaziland, who thanked all the Heads of State and Government for attending the Extra-Ordinary Summit of SADC Heads of States and Government.
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The SADC Heads of State and Government expressed their gratitude for the invitation by His Majesty, King Mswati III.
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Summit expressed its appreciation to the Government and the people of the Kingdom of Swaziland for hosting the Extra Ordinary Summit and for the warm hospitality extended to all the delegates.
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Is the East African Community broke?
Assembly calls for urgent remittances by Partner States to enable bloc meet its obligations
The activities of the EAC are perpetually grinding to a halt – unless immediate remedial measures are taken to remit the amount of US$ 24,016,930 owed to the EAC by the Partner States.
Deeply concerned by this poor financial state of affairs, EALA has passed a resolution urging the Council of Ministers to immediately convene under matters of urgency to resolve the financial crisis in EAC by ensuring immediate and full disbursement of funds to the EAC.
The Assembly further wants Council of Ministers to invoke provisions of the Treaty (Article 14 and Article 143) to reprimand the Partner States that are defaulting in taking care of their obligations. In the same vein, EALA has moved to establish a Select Committee to investigate the matter of financial paralysis and to report back to the House.
The Motion moved by Hon. Nancy Abisai and under Rule 30 of the Rules of Procedure also want the Council of Ministers to be proactive by ensuring the matter is on the agenda of the next EAC Summit meeting as a priority and matter of urgency and public importance.
The Motion avers that out of a total sum of US$ 41, 890,538 approved as the budget of the EAC Organs and Institutions funded by equal contributions from Partner States to cater for the Secretariat, East African Legislative Assembly (EALA), East African Court of Justice (EACJ), Lake Victoria Basin Commission (LVBC), the Kiswahili Commission, the Health Research Commission and the Competition Authority. The amount so far remitted at the Secretariat stands at US$ 18,644,645 which amounts to 44%, three months to the end of the financial year.
The Council of Ministers has previously resolved that all Partner States should be fully paid up by 30th December of every financial Year to enable the Community to function and operate smoothly. Each Partner State is required to pay USD 8,378,108. However, currently,
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Republic of Kenya has contributed US$ 4,395,707 (52.47%) leaving an outstanding of US$ 3,982,400 (47.53%)
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United Republic of Tanzania has contributed US$ 2,553,203 (30.47%) leaving an outstanding of US$ 5,824,905 (69.53%)
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Republic of Uganda has contributed US$ 7,668,419 (91.53%) leaving an outstanding of US$ 709,689 (9.47%)
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Republic of Rwanda has contributed US$ 4,027,316 (48.07%) leaving an outstanding of US$ 4,350,791 (51.93%)
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Republic of Burundi has not contributed any amount to this financial year’s budget (0.00%) leaving an outstanding of US$ 8,378,108 (100%) excluding arrears for the previous year amounting to US$ 771,037.
The figures exclude contributions earmarked for the Lake Victoria Fisheries Organisation (LVFO), the Inter-University Council of East Africa (IUCEA) and the Civil Aviation, Security and Safety Organisation Agency (CASSOA) which is a self-accounting institution of the EAC.
The Assembly is further concerned that non-remittance of the funds is recurring and the move has completely disrupted the functions of the Assembly. The results of which include, non-payment of allowances and personnel emoluments, delays in settlement of supplier invoices.
Hon. Dora Byamukama said the Community needs to take the matter of remittances seriously and proposed that it may be time for the different Organs and institutions to bid for their contributions directly as opposed to the current form where all monies are disbursed to the Secretariat first, before the Instituions and Organs receive the attendant portion.
“We are currently electing EALA Members as we speak – but if the matter persists, how will the activities of the Assembly work?” Hon. Dora pondered. She said a good number of staff may be insecure and anxious affecting their overall productivity thus that of the EAC as a whole. Compounding the matter further is that of image said the legislator. “The Banks may not be sure we will honour the obligations. This is a very serious issue,” she added.
Hon. Patricia Hajabakiga called for total goodwill on part of the Partner States in order to spur integration. She said the African Union which has a bigger membership had managed to finalise discussions on the matter of sustainability – while the EAC bloc which has a relatively manageable membership is yet to realise the objective.
Also rising in support of the Motion were Hon. Bernard Mulengani who said salaries and emoluments of all staff and Members of the Assembly were affected. The Suppliers are also affected, he said.
Hon. Yves Nsabimana said an analysis of the budget performance was pegged at 45% which he termed as worrying and that the image of the Community was bad calling for immediate remittances to the EAC.
Hon. Mike Sebalu noted with appreciation the contribution of Uganda saying it was inspiring even to the other Partner States. “I encourage everyone wherever they are to meet their obligations.” he said. He called on the EAC to look at alternative funding mechanism. Let us look at the ECOWAS model for example,” he said.
Hon. Dr James Ndahiro rooted for the alternative funding mechanism saying it was reliable, timely and predictable. “This is not the Community I knew five years ago. Something has gone wrong somewhere… there is loss of appetite to move integration forward,” he said.
Hon. AbuBakr Ogle called for establishment of a Select Committee of the House to look into the predicament of inadequate funds and to report back to the House.
Hon. Taslima Twaha remarked that it was a sad and dark day in the history of the Community.
Others who supported the resolution were Hon. Valerie Nyirahabineza, Hon. Sarah Bonaya, Hon. Odette Nyiramilimo, Hon. Shyrose Bhanji, Hon. Mukasa Mbidde and Hon. Susan Nakawuki.
Council of Ministers Dr Susan Kolimba reiterated Council of Ministers commitment to address the precarious funding issue.
Meanwhile, the Assembly adjourned after the successful completion of its 5th Meeting of the 5th Session on 16 March 2017.
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World Bank Group announces record $57 billion for sub-Saharan Africa
Following a meeting with G20 finance ministers and central bank governors, World Bank Group President Jim Yong Kim has announced a record $57 billion in financing for Sub-Saharan African countries over the next three fiscal years. Kim then left on a trip to Rwanda and Tanzania to emphasize the Bank Group’s support for the entire region.
The bulk of the financing – $45 billion – will come from the International Development Association (IDA), the World Bank Group’s fund for the poorest countries. The financing for Sub-Saharan Africa also will include an estimated $8 billion in private sector investments from the International Finance Corporation (IFC), a private sector arm of the Bank Group, and $4 billion in financing from International Bank for Reconstruction and Development, its non-concessional public sector arm.
In December, development partners agreed to a record $75 billion for IDA, a dramatic increase based on an innovative move to blend donor contributions to IDA with World Bank Group internal resources, and with funds raised through capital markets.
Sixty percent of the IDA financing is expected to go to Sub-Saharan Africa, home to more than half of the countries eligible for IDA financing. This funding is available for the period known as IDA18, which runs from July 1, 2017, to June 30, 2020.
“This represents an unprecedented opportunity to change the development trajectory of the countries in the region,” World Bank Group President Jim Yong Kim said. “With this commitment, we will work with our clients to substantially expand programs in education, basic health services, clean water and sanitation, agriculture, business climate, infrastructure, and institutional reform.”
The IDA financing for operations in Africa will be critical to addressing roadblocks that prevent the region from reaching its potential. To support countries’ development priorities, scaled-up investments will focus on tackling conflict, fragility, and violence; building resilience to crises including forced displacement, climate change, and pandemics; and reducing gender inequality.
Efforts will also promote governance and institution building, as well as jobs and economic transformation.
“This financing will help African countries continue to grow, create opportunities for their citizens, and build resilience to shocks and crises,” Kim said.
While much of the estimated $45 billion in IDA financing will be dedicated to country-specific programs, significant amounts will be available through special “windows” to finance regional initiatives and transformative projects, support refugees and their host communities, and help countries in the aftermath of crises. This will be complemented by a newly established Private Sector Window (PSW) – especially important in Africa, where many sound investments go untapped due to lack of capital and perceived risks.
The Private Sector Window will supplement existing instruments of IFC and the Multilateral Investment Guarantee Agency (MIGA) – the Bank Group’s arm that offers political risk insurance and credit enhancement – to spur sound investments through de-risking, blended finance, and local currency lending.
This World Bank Group financing will support transformational projects during the FY18-20 period. IBRD priorities will include health, education, and infrastructure projects such as expanding water distribution and access to power. The priorities for the private sector investment will include infrastructure, financial markets, and agribusiness. IFC also will deepen its engagement in fragile and conflict-affected states and increase climate-related investments.
Expected IDA outcomes include essential health and nutrition services for up to 400 million people, access to improved water sources for up to 45 million, and 5 GW of additional generation capacity for renewable energy.
The scaled-up IDA financing will build on a portfolio of 448 ongoing projects in Africa totaling about $50 billion. Of this, a $1.6 billion financing package is being developed to tackle the impending threat of famine in parts of Sub-Saharan Africa and other regions.
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G20 drops anti-protectionist pledge as price of U.S. assent
Finance chiefs of the world’s largest economies set aside a pledge to avoid protectionism and signed up to a fudged statement on trade instead, in response to the Trump administration’s call to rethink the global order for commerce.
Group of 20 nations said in a communiqué on Saturday that they are “working to strengthen the contribution of trade to our economies.” While the U.S. didn’t get all it wanted – such as a explicit pledge to ensure trade is fair – that’s a much pared-down formulation compared with the group’s statement last year, and omits a promise to “avoid all forms of protectionism.”
In two days of meetings in the German town of Baden-Baden, the argument by U.S. Treasury Secretary Steven Mnuchin, in his first appearance at an international forum in the role, reflects claims by President Donald Trump that his nation has had a bad deal from the current global trade setup. That attitude pitched him against most other delegates, who favored a multilateral, rules-based system as embodied in the World Trade Organization.
“My view is that the Americans were doing what any new administration would do – they were looking at the language through their lens,” said Bill Morneau, Canada’s finance minister, who made a last-ditch push for the compromise. “Their lens is: how can trade benefit the U.S.? Everyone else has the same lens, but every other country has the advantage of being at the previous meeting.”
The mood was highlighted the previous day at the White House, where Trump met German Chancellor Angela Merkel and repeated his complaints that his country has been treated “very, very unfairly” in trade arrangements.
While delegates greeted Mnuchin and said that he had been engaged in the process, they said he didn’t elaborate on how the U.S. considers itself to be treated unfairly. It wasn’t possible to reconcile his stance and that of the other members in any substantive way. Officials may continue to seek greater consensus on trade between now and the G-20 leaders summit in Hamburg in July.
I “regret that our discussions today didn’t end in a satisfactory manner,” French Finance Minister Michel Sapin said in a statement. In a press conference later, he said that “there wasn’t a G-20 disagreement, there was disagreement within the G-20 between a country and all the others. This isn’t a caricature, this is the reality of things.”
The communiqué also committed to “further strengthening the global financial architecture” and said members support work to finalize the Basel III framework on bank regulation. It dropped a reference to climate change, in the face of resistance from countries including the U.S., China, India and Saudi Arabia.
Economic Cooperation
As the end of the day approached, G-20 host Germany found itself trying to broker fresh compromises or risk dropping trade from the statement altogether. The final result was a statement longer on generalities than hard promises.
“We met at a time when the global economic recovery is progressing,” the G-20 said at the start of the communique. “But the pace of growth is still weaker than desirable and downside risks for the global economy remain. We reaffirm our commitment to international economic and financial cooperation.”
Communiqué: G20 Finance Ministers and Central Bank Governors’ Meeting
Baden-Baden, Germany, 17-18 March 2017
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We met at a time when the global economic recovery is progressing. But the pace of growth is still weaker than desirable and downside risks for the global economy remain. We reaffirm our commitment to international economic and financial cooperation. We reiterate our determination to use all policy tools – monetary, fiscal and structural – individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth, while enhancing economic and financial resilience. Monetary policy will continue to support economic activity and ensure price stability, consistent with central banks’ mandate, but monetary policy alone cannot lead to balanced growth. Fiscal policy should be used flexibly and be growth-friendly, prioritise high-quality investment, and support reforms that would provide opportunities and promote inclusiveness, while ensuring debt as a share of GDP is on a sustainable path. We emphasise that our structural reform and fiscal strategies are important components to supporting our common growth objectives and will continue to explore policy options tailored to country circumstances in line with the Enhanced Structural Reform Agenda. We reiterate that excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will consult closely on exchange markets. We reaffirm our previous exchange rate commitments, including that we will refrain from competitive devaluations and we will not target our exchange rates for competitive purposes. We will carefully calibrate and clearly communicate our macroeconomic and structural policy actions to reduce policy uncertainty, minimise negative spillovers and promote transparency. We are working to strengthen the contribution of trade to our economies. We will strive to reduce excessive global imbalances, promote greater inclusiveness and fairness and reduce inequality in our pursuit of economic growth. We agree on a set of principles to foster economic resilience which provides an indicative menu to be considered in the update of G20 countries growth strategies under the Hamburg Action Plan. We take note of the work on inclusive growth within the Framework Working Group.
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We will deepen as well as broaden international economic and financial cooperation with African countries to foster sustainable and inclusive growth in line with the African Union’s (AU) Agenda 2063. We launched the initiative “Compact with Africa” aimed at fostering private investment including in infrastructure. The initiative is demand-driven and respects country-specific circumstances and priorities. The initiative provides modules of good practices and instruments that could be applied in tailor-made investment compacts being implemented through the commitment of multiple stakeholders, such as individual African countries, International Financial Institutions (IFIs) and bilateral partners. We welcome the report by the African Development Bank (AfDB), International Monetary Fund (IMF) and World Bank Group (WBG) and other contributors for the Compact. We support the intention of Côte d'Ivoire, Morocco, Rwanda, Senegal, Tunisia, the AfDB, IMF and WBG, and interested bilateral partners to work on investment compacts and develop strong investment climates. We encourage the private sector to take advantage of the investment opportunities provided and invite other African countries, IOs and interested bilateral partners to join the investment compacts. We will support continuity of this work and its coherence with other initiatives.
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We remain committed to further strengthening the international financial architecture and the global financial safety net with a strong, quota-based and adequately resourced IMF at its centre. We support the efforts by the IMF to further enhance the effectiveness of its lending toolkit in line with its mandate, including possible new instruments. We are working towards the completion of the 15th General Review of Quotas, including a new quota formula by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019. We continue with our efforts to achieve a more effective cooperation between the IMF and regional financing arrangements, respecting their mandates. With a view to ensuring debt sustainability, we welcome Operational Guidelines for Sustainable Financing reflecting responsibilities of borrowers and lenders. The Compass for GDPlinked Bonds provides an overview of important aspects of this instrument. Given scarce public resources and the key role of the private sector for sustainable economic development, we welcome the work by Multilateral Development Banks (MDBs) on mobilising private capital. We call on MDBs to finalise Joint Principles by our next meeting and develop Ambitions on Crowding-in Private Finance by the Leaders Summit in July 2017. We look forward to the joint MDBs’ reports on the implementation of the MDBs Balance Sheet Optimisation Action Plan, the MDBs’ Joint Declaration of Aspirations on Actions to support Infrastructure Investment and an update on the Global Infrastructure Connectivity Alliance by the time of the Leaders Summit in July 2017. We invite the MDBs to take further measures in support of these initiatives. We welcome the Principles for Effective Coordination between the IMF and MDBs in case of Countries requesting Financing while facing Macroeconomic Vulnerabilities. We welcome the International Development Association (IDA18) replenishment that, among other goals, will double support to fragile states and emphasise private sector development.
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We recognise the importance and benefits of open capital markets and of improving the system underpinning international capital flows while continuing to enhance the monitoring of capital flows and management of risks stemming from excessive capital flow volatility. To support this goal, we look forward to the IMF’s and other IFIs’ further work in this area, including on macroprudential policies. A number of non-OECD G20 members have declared their intention to join the OECD Code of Liberalisation of Capital Movements starting already the process of adherence this year. We welcome the current review of the Code, including work on appropriate flexibility, while maintaining the Code’s current strength and broad scope. Those G20 countries that have not yet adhered to the Code are encouraged to participate voluntarily in the current review and to consider adhering to the Code, taking into consideration country-specific circumstances.
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An open and resilient financial system is crucial to supporting sustainable growth and development. To this end, we reiterate our commitment to support the timely, full and consistent implementation and finalisation of the agreed G20 financial sector reform agenda. We endorse the Financial Stability Board (FSB) policy recommendations to address structural vulnerabilities from asset management activities, ask the International Organization of Securities Commissions (IOSCO) to develop concrete measures for their timely operationalisation and ask the FSB to report on the progress of this work by the Leaders Summit in July 2017. We will continue to closely monitor, and if necessary, address emerging risks, in particular those that are systemic, and vulnerabilities in the financial system, including those associated with shadow banking or other market-based finance activities. We ask the FSB to present by the Leaders Summit in July 2017 its assessment of the adequacy of the monitoring and policy tools available to address such risks from shadow banking and whether there is need for any further policy attention. We also look forward to the FSB’s comprehensive review of the implementation and effects of the reforms to over-thecounter (OTC) derivatives markets and call on G20 members to complete the full, timely and consistent implementation of the OTC derivatives reforms where they have not already done so. We welcome the progress by the Committee on Payments and Market Infrastructures (CPMI), IOSCO and FSB towards developing guidance to enhance the resilience, recovery and resolvability of Central Counterparties (CCPs) and look forward to their publication by the time of the Leaders Summit in July 2017 as well as plans for any follow-on work as needed. We confirm our support for the Basel Committee on Banking Supervision’s (BCBS) work to finalise the Basel III framework without further significantly increasing overall capital requirements across the banking sector, while promoting a level playing field. We reiterate the importance of progress under the work plan to address misconduct risks in the financial sector and look forward to the report from the FSB by the time of the Leaders Summit in July 2017. We will continue to enhance our monitoring of implementation and effects of reforms to ensure their consistency with our overall objectives, including by addressing any material unintended consequences. We look forward to the FSB’s third annual report. We also welcome the FSB work to develop a structured framework for the post-implementation evaluation of the effects of the G20 financial regulatory reforms and we look forward to the framework, after an early public consultation of its main elements, being presented by the time of the Leaders Summit in July 2017 and published. We welcome the OECD Methodology for Assessing the Implementation of the G20/OECD Principles of Corporate Governance.
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To ensure that we will reap the benefits and opportunities that digital innovation offers, while potential risks are appropriately managed, we encourage all countries to closely monitor developments in digital finance, including consideration of cross-border issues, both in their own jurisdictions and in cooperation with the FSB and other international organisations and standard setting bodies. We welcome the FSB work on the identification, from a financial stability perspective, of key regulatory issues associated with technologically enabled financial innovation (FinTech).
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The malicious use of Information and Communication Technologies (ICT) could disrupt financial services crucial to both national and international financial systems, undermine security and confidence and endanger financial stability. We will promote the resilience of financial services and institutions in G20 jurisdictions against the malicious use of ICT, including from countries outside the G20. With the aim of enhancing our cross-border cooperation, we ask the FSB, as a first step, to perform a stock-taking of existing relevant released regulations and supervisory practices in our jurisdictions, as well as of existing international guidance, including to identify effective practices. The FSB should inform about the progress of this work by the Leaders Summit in July 2017 and deliver a stock-take report by October 2017.
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We support the work of the Global Partnership for Financial Inclusion (GPFI) to advance financial inclusion, especially of vulnerable groups, and Small and Medium-sized Enterprises’ (SMEs) participation in sustainable global value chains. We encourage an adequate coverage of opportunities and challenges of digital financial inclusion in the updated G20 Financial Inclusion Action Plan. We encourage G20 and non-G20 countries to take steps to implement the G20 HighLevel Principles for Digital Financial Inclusion. We emphasise the importance of enhancing financial literacy and consumer protection given the sophistication of financial markets and increased access to financial products in a digital world and welcome related OECD/INFE work. We welcome the progress made on the implementation of the G20 Action Plan on SME Financing and commit to further significant progress in improving the environment for SME Financing while continuing to encourage non-G20 countries to join this effort.
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We will continue our work for a globally fair and modern international tax system. We remain committed to a timely, consistent and widespread implementation of the Base Erosion and Profit Shifting (BEPS) package, welcome the growing membership of the Inclusive Framework on BEPS and encourage all relevant and interested countries and jurisdictions to join. We ask the OECD to report back on the progress of BEPS implementation, including on all the four minimum standards, by the Leaders Summit in July 2017. We look forward to the first signing round on 7 June 2017 of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS and to the first automatic exchange of financial account information under the OECD Common Reporting Standard (CRS), which will commence in September 2017. We call on all jurisdictions to sign and ratify the multilateral Convention on Mutual Administrative Assistance in Tax Matters and urge all relevant jurisdictions including financial centres which have not yet done so to commit without delay to implementing the CRS and to take all necessary actions, including putting in place domestic legislation, in order to start exchanges under the CRS at the latest by September 2018. Furthermore, we look forward to the OECD’s preparation of a list by the Leaders Summit in July 2017 of those jurisdictions that have not yet sufficiently progressed towards a satisfactory level of implementation of the agreed international standards on tax transparency. Defensive measures will be considered against listed jurisdictions. We continue to support targeted assistance to developing countries in building their tax capacity, following in particular the principles of the Addis Tax Initiative, and support the work of the Platform for Collaboration on Tax, which will deliver a progress update by mid-2017.
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We welcome the international cooperation on pro-growth tax policies and the work on tax and inclusive growth and tax certainty conducted by the OECD and the IMF. We acknowledge the report on Tax Certainty submitted to us and encourage jurisdictions to consider voluntarily the practical tools for enhanced tax certainty as proposed in that report, including with respect to dispute prevention and dispute resolution to be implemented within domestic legal frameworks and international tax treaties. We ask the OECD and the IMF to assess progress in enhancing tax certainty in 2018. As part of the BEPS project, we have undertaken a discussion on the implications of digitalisation for taxation in the OECD Task Force on the Digital Economy (TFDE). We will further work on this issue through the TFDE and ask for an interim report by the IMF and WBG Spring Meetings 2018.
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As an important tool in our fight against corruption, tax evasion, terrorist financing and money laundering, we will advance transparency of legal persons and legal arrangements via the effective implementation of international standards and the availability of beneficial ownership information in the domestic and cross-border context. In this regard, we welcome the work by the Financial Action Task Force (FATF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes. We look forward to a progress report from the OECD on its work in complementary tax areas relating to beneficial ownership by the time of the Leaders Summit in July 2017.
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We welcome the progress report and the 2017 work plan under the FSB-coordinated action plan to assess and address the decline in correspondent banking, so as to support remittances, financial inclusion, trade and openness. We welcome the publication of Guidance on Correspondent Banking Services by the FATF which will also support the provision of remittance services. We look forward to further work towards clarifying regulatory expectations, as appropriate. To further improve the environment for remittances, we support progress made by the GPFI with regard to facilitating remittances, including by promoting actions and policies that could lower their costs. We look forward to an update of National Remittances Plans by the end of 2017. Furthermore, we welcome joint efforts of FATF, FSB and GPFI to clarify in a dialogue with the private sector any specific issues relating to remittance providers, including their access to banking services, and report back to us on it by July 2017. We also ask all relevant stakeholders, including IOs, to continue to support countries in building domestic capacity to improve the supervisory environment for remittances and correspondent banking, notably through technical assistance.
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We reaffirm our commitment to tackle all sources, techniques and channels of terrorist financing and our call for swift and effective implementation of the FATF standards worldwide. We welcome and support the ongoing work to strengthen the institutional basis, governance and capacity of the FATF and ask the FATF for an update on the work by the FATF members by the Leaders Summit in July 2017. We call on all member states to ensure that the FATF has the necessary resources and support to effectively fulfil its mandate.
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We reaffirm our commitment to rationalise and phase out, over the medium term, inefficient fossil fuel subsidies that encourage wasteful consumption, recognising the need to support the poor. Furthermore, we encourage all G20 countries which have not yet done so, to initiate as soon as feasible a peer review of inefficient fossil fuel subsidies that encourage wasteful consumption.
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We welcome the recommendations of the Inter Agency Group on Economic and Financial Statistics (IAG) for sharing and accessibility of granular data. We look forward to the joint report of the FSB and IMF on the overall progress of the Data Gaps Initiative by our meeting in Washington, D.C. in October 2017. We also welcome the work of the IMF in consultation with the FSB and the Bank for International Settlements (BIS) to promote information sharing by compiling a publicly available macroprudential policy database, building on the IMF’s existing infrastructure.
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Africa’s next level of economic transformation
The G20 finance ministers met last week in Germany to discuss critical challenges facing the global economy, from climate change to migration to humanitarian emergencies like the unfolding famine in parts of Sub-Saharan Africa and the Middle East.
I left the discussions encouraged by the shared commitment to deal with these key issues. I shared how the World Bank Group is working to provide at least $1.6 billion for the famine-affected countries, steering funds to help those most vulnerable.
One of the most important undertakings at the G20 meeting, under Germany’s leadership, was the need to place a higher priority on the growth and development of Sub-Saharan Africa. There are many reasons, apart from the famine, why it is important to sharpen our focus on Africa.
The end of the commodity boom hit the region hard. In 2016, Sub-Saharan Africa’s growth slowed to an estimated 1.5 percent, the weakest pace in over two decades, as commodity exporters adjusted to low prices. That’s well below the annual economic growth the region was seeing before the global crisis. Regional GDP per capita contracted by 1.1 percent in 2016. Capital flows to the region, including FDI, declined in 2016. Overall investment growth dropped to near-zero in 2015 after averaging 5 percent from 2010-2015.
But Africa has shown significant signs of economic resilience, with 41 percent of Africans living in countries that have average GDP growth rates of over 5.5 percent. And in 2017, Sub-Saharan Africa is expected to see a modest rebound in growth, to 2.9 percent, rising above 3.5 percent in 2018 as the region continues to adjust to low commodity prices. This is a great opportunity for the international community to partner with the people of Africa to create conditions for faster growth and more sustainable development.
Last December, a coalition of more than 60 governments – from both developed and developing countries – helped replenish the World Bank Group’s International Development Association (IDA), our fund for the poorest, with a record $75 billion. Nearly 60 percent of this will be dedicated to Sub-Saharan Africa over the next three years, doubling IDA support for the region.
As part of the IDA funding, Africa is expected to have access to a significant level of resources through special finance windows to support regional programs and assistance to refugees, and an initiative to de-risk and mobilise private investment, especially in fragile environments.
A key priority is to help African countries invest in much-needed infrastructure by partnering with the private sector. The continent’s infrastructure needs are estimated at $93 billion, about 15 percent of the region’s gross domestic product. Right now, only $45 billion is invested in infrastructure – more than half of it being funded by the public sector. The financing gap is formidable, yet we know that investment in infrastructure can have a significant multiplier effect on growth for years.
At the same time, there are trillions of dollars of capital in the developed world seeking higher returns. We see tremendous opportunities in developing countries for private sector investment in areas like infrastructure, which is crucial for jobs and growth. To bridge this financing gap, we will work with governments and use our resources to de-risk and leverage more private sector investment.
On March 20, I will begin a visit to Tanzania and Rwanda to see how these countries have achieved results and what we can learn from their innovations. I hope to discuss the need for better coordination with the private sector in our efforts to help client governments improve the business climate and mobilise resources.
In these uncertain times, the World Bank Group will accelerate our support as countries in Sub-Saharan Africa work to reform their economies, diversify, and restore growth. Leaders understand the need for the tough second- and third-generation reforms that will lead to structural transformation. They know they cannot wait for sequential reforms, but need to work in parallel on many different fronts.
This sense of urgency will drive the World Bank Group’s work in Africa over the next three years. Working together, we can help African countries achieve the next level of economic transformation and meet the aspirations of the people we serve.
The author is the President of the World Bank Group. The views expressed here are solely the opinions of the author and do not reflect the views of Sudan Tribune.
Related: World Bank Group announces record $57 billion for sub-Saharan Africa
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S&P sees ‘better’ growth in BRICS in 2017
Ratings agency S&P Global Ratings (S&P) expects better economic growth in BRICS countries this year as Brazil and Russia recover from recessions, India and South Africa improve on their 2016 performance and China only slips slightly from high growth in 2016.
Jean-Michel Six, Global Head of Developing Markets at S&P, said in his presentation at the “What’s in store for South Africa in 2017?” seminar last week that he expected a gradual improvement in the next two years after a poor two years in 2015 and 2016. Brazil’s economy, for instance, is now 8 per cent worse off than in December 2014, while all BRICS currencies have depreciated against the US dollar since 2014.
“We have seen a recovery in world trade in recent months and emerging markets, including the BRICS, have seen increased capital inflows with the Institute of International estimating net inflows at $17.1 billion in February alone,” Six said.
S&P forecasts that South Africa’s real economic growth will rise to 1.4 per cent in 2017 from 0.5 per cent in 2016 and then increase further to 1.8 per cent in 2018.
Gardner Rusike, S&P’s associate director for sovereign ratings, said S&P still had a negative outlook on South Africa as the government talk of 2016 had to be turned into implementation.
It was worried about weak economic growth as the fourth quarter 2016 had seen another quarterly contraction, while political tensions between the Treasury and other arms of government dominated the headlines and policy reform in South Africa, such as the instruction by President Jacob Zuma to Eskom to sign Power Purchase Agreements with Independent Power Producers given in the February 9 State of the Nation Address still had to be implemented.
“If we see an increase in political tensions, continued infighting in state institutions which could derail the government’s plans in boosting economic growth, then that can impact on our forecasts on growth,” Rusike said.
He added that if improved policy implementation resulted in better business confidence and a consequent rise in business fixed investment, then South Africa’s outlook could be changed to stable. S&P undertakes semi-annual assessments of South Africa in June and December of each year.
South Africa’s private businesses have cut their spending on fixed investment due to policy uncertainty and subdued domestic and foreign demand even though corporate balance sheets have more than R700 billion in cash or near-cash equivalents.
The Rand Merchant Bank (RMB)/Bureau for Economic Research (BER) Business Confidence Index rose marginally to 40 in the first quarter 2017 from 38 in the fourth quarter.
This means only four out of every ten respondents were satisfied with business conditions. Since 2008 the BCI has only been above the neutral 50 mark on four occasions, which reflected poor follow through in terms of policy implementation and subdued domestic and foreign demand.
Grant Thornton’s International Business Report showed that 58% of executives surveyed in South Africa said they are delaying expansion plans because of uncertainty about South Africa’s future.
Nearly half are putting off investment decisions, a third are considering investing offshore and 23% were considering selling and moving elsewhere.
Already companies invested in green energy technology manufacturing plants have decided to close shop and move to other BRICS countries such as India and China after Eskom stopped signing Power Purchase Agreements with Independent Power Producers in July 2016. Despite instructions to sign them from the President in early February 2017, Eskom have still not signed any new ones in mid-March 2017.
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Key ECA reports to be launched during African Development Week in Senegal
The Economic Commission for Africa (ECA) will this week launch important reports at the second Africa Development Week that begins in Dakar, Senegal on 23 March ending March 28, 2017.
Apart from the flagship Economic Report on Africa 2017 and the second generation of Country Profiles focusing on 21 nations, the ECA will launch the Africa scorecard on domestic financing for health and the human rights impact assessment of the continental free trade area in Africa (CFTA).
The Africa scorecard on domestic financing for health will be launched on Saturday 25 March in conjunction with the World Health Organization (WHO). The two UN entities will during the Conference of Ministers host a side event of Africa’s health and finance ministers to promote dialogue on health financing and social protection for universal health coverage.
As a prelude to the ministerial meeting, the side event will include a presentation of a technical report prepared by the ECA and the WHO with discussion panels comprising selected ministers of health and financing and key development partners in the region being held.
Presentations will be made by experts on key issues related to financing for health systems and programs. Following the plenary sessions and discussions on the presentations, participants will work together to come up with recommendations of key actions related to health financing for ministers of finance in the region.
On the same day, the ECA, the Office of the United Nations High Commissioner for Human Rights and the Friedrich Ebert Stiftung organization will launch the human rights impact assessment of the continental free trade area in Africa (CFTA) report.
The organizations have conducted an assessment of the potential impacts of the CFTA in three key policy areas; food security, decent livelihoods and employment based on forecasts.
The assessment provides recommendations on how to ensure the CFTA advances and upholds these normative outcomes, taking into account the policy frameworks for the 2030 Agenda for Sustainable Development and Agenda 2063.
ECA’s Regional Integration and Trade Division Director, Stephen Karingi, said the side event, which will include a presentation of the findings of the assessment and recommendations with regard to CFTA, is timely because, among other things, the topic of the event complements the theme of the 2017 Conference of Ministers, which focuses on employment and inequality.
“Most importantly, the CFTA negotiations are expected to be completed by the end of 2017 so the discussions and launch are timely as CFTA negotiations continue,” said Mr. Karingi.
One of ECA’s partners, the African Capacity Building Foundation (ACBF), will launch the Africa Capacity Report 2017 which shows that capacity in its various dimensions, though improving, remains a problem for African economies generally
For example, the report notes that though two-thirds of African countries have STI policies and strategies, their capacity to implement them remains very low.
A side event will be held to discuss the report and managing and coordination large scale infrastructure projects for development. This will be in conjunction with the ECA and the African Union Commission.
Crucial discussions will also be held in side events hosted by the ECA and its partners on industrialization and infrastructure and the role of cities in ending the AIDS epidemic in Africa.
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From barriers to bridges: Implementing One Stop Border Posts for improved trade facilitation
Document prepared for the Tenth Joint Annual Meetings of the African Union Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration and the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development, taking place in Dakar from 27-28 March 2017
Report of the 8th Ordinary Meeting of the African Union (AU) Sub-Committee of Directors General of Customs
The 8th Ordinary Meeting of the African Union Sub-Committee of Directors General of Customs (AUSCDGC) was held from 17 to 18 November 2016 at the Monomotapa Hotel, in Harare, Zimbabwe. The theme of the meeting was “From Barriers to Bridges – Implementing One Stop Border Posts for Improved Trade Facilitation.”
Participants from the following Member States attended the meeting: Algeria, Burundi, Burkina Faso, Cameroon, Central Africa Republic, Comoros, Cote D’Ivoire, Democratic Republic of Congo, Ethiopia, Gambia, Ghana, Guinea,Liberia, Malawi,Mali, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, Sudan, South Africa, Tanzania, Togo and Zimbabwe. The Regional Economic Communities and International organizations present were COMESA, EAC, SADC, AfDB, UNECA and WCO. A representative of the Pan African Parliament (PAP) also attended the meeting.
Opening of the Meeting
Statement by Mr. Happias Kuzvinzwa Acting Commissioner General of Zimbabwe Revenue Authority
In his opening remarks, Mr. Happias Kuzvinzwa, the Acting Commissioner General of the Zimbabwe Revenue Authority (ZIMRA), welcomed participants to Zimbabwe and to the 8th Ordinary Session of the AU Sub-Committee of Directors General of Customs. He applauded the theme of the meeting noting how it relates to the subject of transforming trade barriers to bridges that facilitate smoother movement of goods and people and improved connectivity amongst African states.
Mr. Kuzvinzwa recalled how implementation of One Stop Border Posts (OSBPs) is one of the ways in which trade facilitation can be improved, particularly at borders. He gave as an example the Chirundu OSBP between Zambia and Zimbabwe where independent studies have shown improvement in efficiency by increasing truck clearances per day from 260 to 600, reducing truck clearance times from 3 days to an average of 3 hours, increasing the number of declarations dealt with from 380 to 700 per day and reducing clearance times for private cars from several hours to between 30 and 40 minutes. The Commissioner General informed the meeting that Zimbabwe was continuing to engage its neighbours bilaterally to facilitate the establishment of OSBPs at the other borders. He also noted that Africa had embraced the OSBP concept as a progressive initiative.
In his concluding remarks, Mr. Kuzvinzwa reminded delegates that the 8th Ordinary Session of the AUSCDGs Meeting would go down as a landmark event for Africa and urged participants to apply themselves diligently to make it a success. He appreciated the good work that had been done by the various technical working groups that had been meeting so far.
Statement by Ambassador Lazarus Kapambwe. Special Adviser on Economic Affairs to the AU Commission Chairperson
On behalf of Mrs. Fatima Haram Acyl, Commissioner for Trade and Industry of the AU Commission who was unable to attend the Directors General Meeting due to other commitments, Ambassador Lazarous Kapambwe welcomed participants to the 8th Meeting of the AU Sub-Committee of Directors General of Customs and thanked the Government and People of Zimbabwe for their hospitality.
Referring to the theme of the meeting, Amb. Kapambwe highlighted the importance of removing barriers to trade as a trade facilitation measure that would speed up the establishment of the Continental Free Trade Area. He then recalled the pertinence of the WTO Trade Facilitation Agreement and urged AU WTO Member States that have not yet done so, to accelerate its ratification and implementation. It is estimated that implementation of the WTO TFA could reduce the costs of trade by between 12.5 and 17.5% amongst both developed and developing countries respectively. In this regard, he urged Member States to implement the necessary trade facilitation measures that will ensure the tightening of loopholes in order to attain the AU’s vision of doubling intra-African trade by 2022.
Ambassador Kapambwe stressed the important role of Customs Administrations in facilitating the movement of goods, services and people across national borders. In conclusion, he called on Customs Administrations to facilitate the implementation of the decision of Heads of State and Government to impose a 0.2% levy on eligible imports into AU Member States to finance the activities of the Union on a reliable and predictable basis.
Presentation by the outgoing Chair
In his presentation, Mr. Deo Rugwiza Magera, the outgoing Chair of the AU Sub-Committee of the Directors General of Customs gave a summary of the activities held during his Chairmanship, from September 2015 to November 2016. He informed the meeting that the Bureau met in Kinshasa, the Democratic Republic of Congo in February 2016 to, amongst others; develop strategies on the implementation of the recommendations from the 7th Ordinary Session of the Sub-Committee of Directors General. Mr. Magera further informed the meeting that the Bureau took the opportunity to undertake a mid-term evaluation of its activities, as well as consider future activities and reflect on ways and means to improve the work of the Sub-Committee of Directors General of Customs.
At the end of the deliberations, the Bureau made the following recommendations;
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Authorise the Chair of the Bureau of AUSCDGC to send letters to Member States, to the Commission of the African Union, to the Regional Economic Communities and to International Organisations to recall the recommendations of the 7th meeting and encourage them to implement them;
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Encourage the participation of Customs Administrations in the Negotiating Forum for the implementation of the CFTA;
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Encourage the speeding up of reforms pertaining to computerisation of customs administrations with a view to facilitating exchange of data;
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Adopt a regional approach to interconnectivity of computerised systems as a stepping stone towards the continental level ;
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Encourage Member States to conclude bilateral and multilateral agreements with a view to promoting exchange of information ;
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Popularise the recommendations of the 7th meeting of the AUSCDGC within the meetings of the Directors General of Customs of WCO Sub-Regions as well as in all other customs and trade facilitation meetings;
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Undertake the review of the Rules of Procedure of the Sub-Committee of Directors General of Customs of the African Union in consultation with Member States;
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Authorise the Chair to explore alternative means of financing the implementation of recommendations issuing from meetings of the Sub-Committee of Directors General of Customs of the African Union in consultation with Member States.
Implementation of the import levy for financing the African Union Commission
A representative of the African Union Commission made a presentation on the decision of the African Union Summit of Heads of State and Government taken during their 27th Ordinary Session in Kigali Rwanda on the implementation of a 0.2% levy to finance the programs and operations of the African Union. In his presentation the presenter recalled the various initiatives at the African Union level to identify alternative sources of funding. He informed the meeting that after consideration of the various alternatives, the AU settled on instituting the 0.2% Levy on eligible goods, with 2017 as a transition period.
He further informed the meeting that in order to implement this decision, the Summit established a committee of ten Finance Ministers (F10) drawn from the five AU regions. Among others, the committee was tasked to work on the modalities of the implementation. He then shared with the meeting the guidelines as developed by the Committee of Ten (F10). Thereafter, he concluded by calling upon the meeting to provide recommendations on how best the modalities can be implemented, especially by Customs Administrations.
In the discussions that ensued after the presentation, the Meeting made the following observations:-
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That it will be important to clearly define “eligible imports into Africa” upon which the levy will apply, especially given that some AU member States already have trade arrangements with countries outside Africa
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That there is need to for member states to enact a legislative framework that will enable them to collect this levy
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That collection of the levy will entail some costs and hence there is need to carefully consider how this cost should be internalized
After the discussions, the meeting recommended that;
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A roadmap for implementation of the levy be developed, taking into account the 2017 transitional period
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A Technical Working Group be established to consider this matter further from a Customs perspective
Exchange of views on the meeting theme: “From barriers to bridges – Implementing One Stop Border Posts for improved trade facilitation”
A representative of Zimbabwe Revenue Authority made a presentation on the importance of OSBPs in promoting Trade Facilitation so as to stimulate discussions on the theme of the meeting and provide an opportunity for the Directors General to get acquainted to the background of the meeting theme. The presentation outlined the journey, achievements and challenges that ZIMRA went through in establishing the Chirundu OSBP, a border post between Zimbabwe and Zambia.
The presenter shared with participants the processes that the two countries went through in order to operationalize the Chirundu OSBP. This also involved enacting relevant legislation amongst others. To date, the OSBP is fully functional and benefits to trade include improved traffic turnaround time; reduced clearance time; reduced inspection costs as well as smooth flow of traffic. Both Customs Administrations do share resources available so as to achieve optimum use.
The establishment of the Chirundu OSBP provided a learning opportunity to the Governments of the two Customs Administrations. There was a realization on the need to involve all the border agencies and other stakeholders so as to have their buy-in and cooperation. Equally important was the need for computerization and use of ICT by the various border agencies to enable faster exchange of information. Further it was noted that cultural differences had to be addressed to inculcate a common sense of belonging in the common controlled area.
Panelists to the meeting theme included representatives from the African Development Bank; the Pan African Parliament, the World Customs Organization; Cote d’Ivoire Customs Administration and ZIMRA. The panelists raised the following issues;
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From the conceptualization stage, there is need to involve other Government Agencies and other stakeholders who have interests at the border
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Ensure that adequate funding for infrastructural development(both hard & soft) is readily available
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There is need for Change Management among all players so as to converge a variety of natural differences including cultural dispositions.
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Proper designs for traffic circulation have to be synchronized across the border.
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Political support is vital, especially from the highest level
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Need to implement effective national level interventions to remove NTBs, especially those relating to multiple controls at the borders.
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Border procedures in both countries supported by the automated systems need to be harmonized
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Road infrastructure should be in a state to be able to support operational requirements of the OSBP
From the discussions that took place after interventions by the panelists, the meeting made the following observations;
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There is need for consolidation of OSBP concept in the REC Policy and Legal Framework given that as the regional integration intensifies, such as at Customs Union level, there will be a Common Customs Act.
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The RECs have to include all government agencies in the OSBP Regional Laws and to ensure that there is capacity building across the region to improve efficiency.
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Customs Administrations need to engage respective Parliaments for the ratification and domestication of all Protocols and other legal instruments for the effective integration in Africa. Parliaments should also help expedite the laws that will remove legal impediments to the trade facilitation measures.
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Member States are encouraged to take advantage of the WCO instruments to support the OSBP operations such as the Transit Guidelines. Also available is the OSBP Source Book developed by the WCO in collaboration with the AUC, soon to be published by NEPAD.
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Member States may approach the AfDB for funding assistance through loans and grants
Thereafter, the meeting made the following recommendations:
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That Member States considering establishment of OSBPs to ensure involvement of other border agencies and all other relevant stakeholders
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Implementation of OSBPs should be accompanied by other trade facilitation measures and reforms and also change management strategies
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That Member States should consider regional approach in the implementation of OSBPs
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In the establishment of OSBPs, Member States should endeavor to incorporate international best practices
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There is need for involvement of national parliaments so as to develop legislation required for establishment of OSBPs
Recommendations
WE, the Directors General of Customs of the African Union assembled in Harare, Republic of Zimbabwe, on the 17th and 18th day of November 2016, on the occasion of our 8th Ordinary Session
RECOMMEND AS FOLLOWS:
A. On Accreditation of Customs Officials from AU Member States
i. That The AUC and the WCO should:-
a. Elaborate a joint program for supporting African Customs Administrations in their priority reform initiatives and
b. Continue to work together in increasing the pool of WCO-accredited Experts
ii. That African Customs Administrations should make their WCO pre-accredited and accredited Experts available to assist other Members in their reform and modernization initiatives.
iii. That the WCO should endeavor to fully accredit the pre accredited experts in the shortest period possible so that they are made available for use in the African region by the WCO, the African union Commission and the Regional Economic Communities.
iv. That The AUC should continue to look for resources for holding similar accreditation Workshops for experts from African Customs Administrations
B. On the Gap Analysis Study on the Implementation of the WTO Trade Facilitation Agreement in Africa
That the African Union Trade Facilitation Strategy should take into account recommendations from the Gap Analysis Studies
C. On the Development of the African Union Trade Facilitation Strategy
To African Union Member States
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That Customs Administrations collaborate with the private sector and are consulted on issues of Trade Facilitation.
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That African Union Member States explore the Introduction of Trade Facilitation Courses in the education curriculum especially at the University level in collaboration with such institutions as the Trade Law and Policy Center for Africa (TRAPCA)
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That African Union Member States should endeavor to encourage each other to implement Trade Facilitation measures under the WTO Trade Facilitation Agreement.
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Member States are urged to strengthen National Committees on Trade Facilitation through inter-alia, the inclusion of other border agencies and private sector representative organizations for the sustainable adoption and implementation of trade facilitation reforms.
To the African Union Commission and the Regional Economic Communities
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The African Union Commission continues to provide a Platform for exchange of Information and experiences on the implementation of Trade Facilitation measures in Africa.
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That the AUC should take steps to collaborate with the WCO to exploit synergies with Development Partners so as to leverage TFA implementation support for Member States Customs Administration and RECs.
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The African Union Commission and the RECs should continue to encourage the African Union Member States to adopt where necessary regional approaches in the implementation of the WTO Trade Facilitation Agreements
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The AUC and the RECs are urged to develop training, capacity building and sensitization programs on substantive TFA provisions for all stakeholders.
To International Organizations
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The WTO and other International Organizations should continue to assist African Union Member states in building their Capacity for the implementation of the WTO Trade Facilitation Agreement
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That the WCO shares with the RECs the available pool of accredited experts on Trade facilitation so that they can also be utilized in regional capacity building programs.
D. On Implementation of the Import Levy for Financing the African Union
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A roadmap for implementation of the levy be developed, taking into account the 2017 transitional period
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A Technical Working Group be established to consider this matter further from a Customs perspective.
E. On the Theme of the Meeting: From Barriers to Bridges – Implementing One Stop Border Posts for Improved Trade Facilitation
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That Member States considering establishment of OSBPs to ensure involvement of border agencies and all other relevant stakeholders
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Implementation of OSBPs should be accompanied by other trade facilitation measures and reforms and also change management strategies
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That Member States should consider regional approach in the implementation of OSBPs
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In the establishment of OSBPs, Member States should endeavor to incorporate international best practices
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There is need for involvement of national parliaments so as to develop legislation required for establishment of OSBPs
F. On Any Other Business
That there be a meeting of the Sub-Committee of Directors General to enable them prepare common positions prior to the WCO Council Sessions.
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