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Underway in Walvis Bay: African Corridor Management Alliance launch (@snkaringi). Tweet by @heiniesuo: Inaugural meeting of #African #Corridor #Management #Alliance: "We need a continental approach to corridors" – @snkaringi of @ECA_OFFICIAL
EAC Sectoral Council on Trade, Industry, Finance and Investment: minutes (EABC Trade and Policy Brief)
The EAC Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) held its ordinary meeting from 30th Jan to 3rd Feb. 2017 at the EAC Headquarters in Arusha, Tanzania. In the course of the meeting the issues pertaining to trade, customs, industry and investment, which form the bedrock of EAC integration, were thoroughly discussed and agreed upon. In brief form some of the policy related issues which were deliberated during the meeting include:
Road freight transport services reform: guiding principles for practitioners, policy makers (World Bank, IRU)
The successful collaboration between the World Bank Group and IRU has resulted in the first ever guide to improve quality and competition, based on practical examples of regulatory reform in other countries. It is aimed at governments and policy-makers in emerging and developing economies – where mobility of cargo is almost entirely dependent on the road transport sector. Typical performance gaps include high costs, reduced profitability, lack of road safety, environmental concerns, bureaucracy and corruption. Regulated carriers are often required to compete against informal operators outside of regulatory frameworks. Changing this scenario to establish a level playing field improves transparency, safety and sustainability. Offering a complete framework – from an evaluation of the existing systems through to implementation of change – the Guide demonstrates how to analyse data to identify areas of focus and then outlines how to structure a detailed action plan. [New IRU guidelines on goods reception to reduce accidents and improve efficiency]
WCO acknowledges Zambia’s progress in customs modernization (WCO)
Secretary General Mikuriya met the management team of ZRA to discuss progress in customs reform and modernisation including the challenge ahead. Zambia Customs has progressed steadily using the WCO standards and programmes. One example of the need for engaging other government agencies is the single window. Zambia has since appointed the ZRA to be the lead agency for single window project. While an e-payment system was realised for automated Customs procedures linking all 18 commercial banks in the country, other government agencies are yet to implement an e-payment system. Another challenge is the regional undertaking of trade facilitation measures.
Customs in post-crisis situations: the SPC ++ project (WCO)
In the framework of the WCO Securité Par Collaboration (SPC ++) project, a WCO Research Unit official visited the Central African Republic to conduct a field analysis of the border areas in the north-western part of the country. A detailed report synthesizing the outcomes of the mission, and recommendations for improved and reinforced responses to the situation in the central and eastern part of the country, was presented to the Director General of the Central African Republic’s Administration. The SPC ++ project was inspired by a project proposal first presented by Nigerian Customs during the 21st Regional Conference of Directors General of the West and Central Africa Region in April 2016. Five countries were selected for analysis and inclusion in the final reporting outcomes: Cameroon, Chad, Niger, Nigeria and the Central African Republic. The project aims to equip these Administrations with the technical resources necessary to operate along fragile borderlands by embedding a Customs, trade and taxation dimension into the states’ responses to insecurity at the border.
Effects of the backhaul problem on global trade (VOX)
For models of international trade to accurately represent the real-world costs, transport costs cannot be ignored. This column argues that, additionally, we cannot assume that transport costs are symmetrical, because of a backhaul capacity problem that constrains international shipping. Domestic tariffs, which benefit the domestic import sector and harm the foreign export sector in standard models of international trade, can also harm the domestic export sector and benefit the foreign import sector. [The analysts: Jota Ishikawa, Nori Tarui]
Kenya: US firm seeks $600m for botched geothermal project (Daily Nation)
The firm, WalAm Energy Inc, wants the World Bank arbitration body, International Centre for Settlement of Investment Disputes (ICSID), to compel Kenya to pay it for terminating its 30-year exclusive prospecting licence in 2012, which it says was done in breach of a contract between it and the government. Kenya terminated the licence arguing that WalAm had failed to honour terms of the contract as regards construction of power plants. Attorney-General Githu Muigai has challenged the suit, raising questions on WalAm’s country of origin. Prof Muigai says the contract Kenya signed with WalAm indicated that it was registered in Canada, yet the firm has now presented itself as US-listed.
Uganda’s EALA election: about money or love for East Africa? (Daily Monitor)
Unlike the previous elections, this one has attracted an unprecedented number of interested people - 48 contestants; 38 independent, six NRM, two FDC, one DP and one UPC. The similarity is that they have both had their own share of controversies. The last one was about long serving members trying to bend rules to ensure they stay serving even when the law was clear that no one serves beyond two terms. This year, it’s about excessive use of money and ring-fencing positions in some parties. But what explains the surge in interest? President Museveni, while opening an NRM caucus session to pave way for the party to choose its six candidates, warned against contestants taking the East African Legislative Assembly simply as a bureau for employment. “These elections are not just elections; these are not employment bureaus; you are not here to give jobs to jobless people, you are here to select people to support the integration of East Africa,” he cautioned the voters - an assembly of NRM Members of Parliament.
EAC tops in alternative finance sourcing, new report shows (New Times)
The East African region recorded the largest market share of the continent’s alternative finance market in 2015, accounting for 41% of total African market share compared to 24% for West Africa and 19% for Southern Africa. Generally, the market grew by 59% in 2015 to $242m, according to a new report, “Africa & Middle East Alternative Finance Benchmarking Survey”. The study report released last week by the Cambridge Centre for Alternative Finance (CCAF), in partnership with Energy 4 Impact, UKAid and CME Group Foundation is the first survey focusing on Africa and the Middle East. Similar studies have focused on other regions. [Download: The Africa & Middle East Alternative Finance Benchmarking Report]
Namibia Trade Forum looks into poultry dumping claims (Namibia Economist)
The poultry trade between South Africa and Namibia is not clearly defined, leading to confusion regarding the actual origin of many chicken products imported into the Southern African Customs Union. This surfaced after SACU announced a 13.9% tax on chicken of EU origin. South Africa is the largest importer of poultry into Namibia. But whether specifically chicken products originated in South Africa itself, Brazil, the US or the EU, is often not clear and such imports into Namibia are not scrutinized. Trade experts say the link between the dumping of poultry products from Brazil into Namibia via South Africa and the inability to establish clear rules or origin, is contributing to the so-called chicken war which is raging between South African producers and importers. The current stand-off has a major impact on the Namibian producer given that local chicken prices are a factor of South African production costs. The NTF’s trade flow tracer study to separate how much of imported chicken comes from which source is said to focus more on the price impact on the consumer and retailer than on the local cost of production.
Namibia: Budget cuts drown fisheries (The Namibian)
Fisheries Minister Bernhardt Esau on Friday said his ministry would struggle to determine the total allowable catches and also protect Namibia from illegal fishing due to a 42% budget cut. Due to the shortage of funds, there would also be limited funds for fuel for fisheries inspectors to go out and monitor, survey and police Namibia’s marine resources, both onshore and offshore. [A discussion on UNCTAD’s Trade and Environmental Review, fisheries data for Africa (tralac)]
SADC: Regional Qualifications Framework given new boost (UNESCO)
After a four day study visit in Brussels, four senior officials from Botswana, South Africa and Swaziland developed action points to reinforce the work that needs to be done to implement the SADC Regional Qualifications Framework.
In Kigali: Stakeholders discuss ‘Smart Cities’ implementation roadmap (New Times)
The consultative workshop brought together experts in urban development and planning, environment, investors, entrepreneurs and innovators as well those from construction and transport, among other areas. “The biggest thing that came out of this workshop is the clear vision of what we want from smart cities. We talked about connectivity, security, digital service delivery, efficiently managed utilities, environment protection, health, education, and the list goes on. Everything that makes the lives of city dwellers good,” he told The New Times on the sidelines of the workshop.
Social dimensions of the New Partnership for Africa’s Development: report of the Secretary-General (pdf, UN)
The report is submitted pursuant to Economic and Social Council resolution 2016/7 to review progress made in the social dimensions of the New Partnership for Africa’s Development. Examined herein is progress in eradicating poverty, reducing hunger and inequality, enhancing food security, improving education and health outcomes, creating jobs and promoting women’s empowerment and gender equality and peace, security and good governance. Also discussed is the importance of mobilizing financial resources for inclusive development. Policy recommendations for the accelerated and sustained development of Africa are provided. [Related: CSocD55 High Level Panel Discussions. Profiled presentation: Martin Ravallion on poverty reduction strategies (pdf)]
Misheck Mutize, Sean Gossel: Why the BRICS alternative rating agency may not work (The Wire)
Given that BRICS is home to half the world’s population, accounts for more than a quarter of the world’s economic output and has recently set up a nascent New Development Bank, the countries under its banner have, between them, the capacity to establish an influential credit rating institution. But questions have been raised about whether the new rating agency satisfies a financial need or is politically motivated. And if it will be competent to provide an independent, objective and credible credit rating service based on sound methodology. China has already expressed concerns about the credibility of a new agency. Analysts have also strongly criticised the probable adoption of the existing ‘issuer-pay’ model. This would mean that the current model is simply replicated. Considering that the three major rating agencies control more than 90% of the world’s ratings business, establishing a new one wouldn’t be easy. It could take years, or even decades, to gel. [Related: Stemming the tide of de-risking through innovative technologies and partnerships (pdf, G24), Jomo Kwame Sundaram: Major crisis, minor reforms (IPS)]
T20 Africa Conference: communiqué (SAIIA)
An Africa-G20 partnership should address the diversity of challenges the continent faces and find appropriate solutions at country, regional and pan-African as well as global levels. A number of specific policy recommendations were formulated during the conference. They concern the governance mechanisms to sustain G20-Africa cooperation as well as African Think Tanks’ participation in the T20 process. In addition, thematic working groups developed and presented specific policy recommendations on how the G20 and Africa should strengthen cooperation in the fields of (i) infrastructure, (ii) e-commerce and the digital economy, (iii) agriculture, food security and climate action, (iv) trade and investment, (v) international cooperation on tax matters, as well as the (vi) political and social environment of sustainable development. These sectoral recommendations can be found in the Annex of the present Communiqué.
African challenge, African hope: resource-seeking by the Indian state (Modern Diplomacy)
This paper attempts to analyze how the Indian state is managing its institutional strategy in the midst of inter-state competition for energy resources in the African continent. On its way to becoming the third largest economy globally, India is expected to import 61% of its energy resources, while the demand for energy resources by India is expected to outpace that of China by 2035.
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Namibia Trade Forum looks into poultry dumping claims
The poultry trade between South Africa and Namibia is not clearly defined, leading to confusion regarding the actual origin of many chicken products imported into the Southern African Customs Union (SACU). This surfaced after SACU announced a 13.9% tax on chicken of EU origin.
South Africa is the largest importer of poultry into Namibia. But whether specifically chicken products originated in South Africa itself, Brazil, the United States or the European Union, is often not clear and such imports into Namibia are not scrutinized.
Maria Immanuel, Trade Analyst at the Namibia Trade Forum (NTF) said that over 60% of Namib Poultry Industry’s (NIP) production of frozen bone-in portions and local retailers’ importation of Individually Quick Frozen (IQF) chicken will be affected by the temporary tax safeguard.
Namib Poultry is the only significant local commercial poultry producer. It has not been able to fully supply the local demand for chicken. This has resulted in Infant Industry Protection measures not being enforced but quantitative poultry restrictions have continued nonetheless.
NPI supplies about 1200 tonnes of chicken to the domestic market and the deficit is imported. Current import restrictions on the poultry industry allows Namibian retailers to import a maximum of 1500 tonnes of chicken products per month. Namibia’s poultry consumption is estimated to be approximately 3000 tonnes per month.
Trade experts say the link between the dumping of poultry products from Brazil into Namibia via South Africa and the inability to establish clear rules or origin, is contributing to the so-called chicken war which is raging between South African producers and importers.
The current stand-off has a major impact on the Namibian producer given that local chicken prices are a factor of South African production costs. The NTF’s trade flow tracer study to separate how much of imported chicken comes from which source is said to focus more on the price impact on the consumer and retailer than on the local cost of production.
A researcher at Tralac, the South African trade research organisation, Willemien Viljoen’s comments on the state of the poultry industry and the trade remedies being sought to protect the local market suggest addressing structural problems and the lack of competitiveness of the local industry which has been cited as the actual contributing factor to the struggling regional domestic industry.
According to Viljoen, there is discontent among poultry producers and lawmakers in South Africa as the producers requested safeguard measures. However, for poultry imports from the EU, the current SADC EPA agreement is governing trade, and under this dispensation, restrictive import tariffs on poultry are not allowed unless an import imbalance threatens the existence of domestic producers. In what measure this applies to poultry imports from other jurisdictions, is not clear adding to the confusion around SA producers’ demand for some form of protection.
After almost two years of investigation, the South African International Trade Administration Commission (ITAC) and the Minister of Trade and Industry in South Africa approved the 13.9% import tax on poultry of EU origin, after it was found that EU imports pose a serious threat to South African producers.
What this means according to the Namibia Trade Forum is that a safeguard measure applied as a tariff acts as a trade remedy between countries that have a preferential trade arrangement between them.
Such a safeguard measure as negotiated in the SADC EU EPA could be applied to normalise or offset a real or potential imbalance. This agreement came into force in October 2016.
Referring to the impact of trade agreements in general, the World Trade Organization’s Director General, Roberto Azevêdo stated that trade is very high on the political agenda at the moment.
“I recognize the concerns about globalization – and the need to respond. The net positive effect of trade means nothing if you’ve lost your job. “So we need better domestic policies to support people and get them back to work. But attacking trade won’t help here,” he said.
See the official Media Trade Brief from the Namibia Trade Forum below, reproduced with permission.
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Update on EAC integration following the meeting of the EAC Sectoral Council on Trade, Industry, Finance and Investment
EABC Trade and Policy Brief as at 10 February 2017
The EAC Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) held its ordinary meeting from 30th Jan to 3rd Feb. 2017 at the EAC Headquarters in Arusha, Tanzania. In the course of the meeting the issues pertain to trade, customs, industry and investment which form the bedrock of EAC integration were thoroughly discussed and agreed upon.
In brief form some of the policy related issues which were deliberated during the meeting include:
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Implementation of the Single Customs Territory (SCT)
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Rules Of Origin with regard to Edible Oils of Chapter 15 of the Revised EAC Rules of Origin
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Denial of Community Tariff Treatment to Edible Oil Made From Sim Sim, Sunflower, Soya Beans and Maize
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Denial of Duty Free Market Access of Wheat Flour from Tanzania to Kenya
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Progress Report on the Comprehensive Review of the EAC CET and EAC Rules of Origin
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Consideration of the Draft Regulations on Motor Vehicle Assemblers
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Solar Spare Parts and Accessories
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Trade in Services
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Report of the EAC Experts on the EAC-EU EPA
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Progress Report on Modalities for Promotion of Textiles and Leather Industries in the EAC Region
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Study on the Modalities for the Promotion of Automotive Industry in the Region
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Progress Report on the Implementation of the EAC Regional Pharmaceutical Manufacturing Plan of Action (EACRPMPOA)
Progress made in the implementation of the Single Customs Territory (SCT)
In considering the report of the Committee on Customs which met in November 2016, the SCTIFI was informed that Partner States had not implemented the agreed roll out of product due to financial constraints and insufficient officers to be deployed at the respective entry points of the Partner States. To address this challenge the Customs Committee considered and adopted the EAC guidelines for the deployment of staff to other Partner States. The Committee on Customs also agreed that the deployment guidelines will facilitate officers of the host Partner States to act on behalf of the other Revenue Authorities in the verification of goods to be transferred.
On the implementation of SCT processes and ICT enhancements the meeting was informed that during the period May to October 2016, the team developed, tested and deployed the ex-warehousing and transfer of duty paid goods still under Customs control (re-export) modules, developed the SCT Export process; developed a concept paper for implementation of a Centralized SCT Proof of Concept platform and bilateral meetings between URA/TRA and KRA/TRA that resolved intra-trade, ex-warehousing and re-export issues between TRA and URA/KRA. On overall, out of 37 (thirty seven) processes targeted under SCT, only ten (10) have been implemented. Although modules are fully developed, Partner States decided to roll-out different products at different times depending on risk levels. So far, only Rwanda has put 100% of the products under SCT. Uganda, Burundi, Kenya and Tanzania committed to have a 100% roll-out by July 1st 2017 as per the directive of the Committee on Customs. Burundi is yet to complete implementation of the warehousing modules for both imports and intra-trade. OBR has so far started the piloting of warehoused goods under the COMESA RCTG bond system.
On compliance and enforcement it was reported that the relevant TWG met and developed operational instruments for the smooth implementation of the SCT. However The Republic of Kenya observed that under the SCT, goods were being declared under the warehousing regime. They further noted that goods which can be prescribed by the Commissioned not to be warehoused are not harmonised across all the Partner States. This may cause a risk in regard to diversion of such goods if not monitored. The Republic of Kenya therefore proposed that a compliance and enforcement mechanism be instituted to manage goods declared for warehousing under the SCT.
The Secretariat reported that warehousing is a legitimate regime under customs and the matter of compliance and enforcement is being handled by the Committee on Customs. The initiative to manage warehousing includes regionalisation of the electronic cargo tracking system and interconnectivity of customs systems to enable seamless exchange of information. To address this challenge the SCTIFI directed the Secretariat that a regional warehousing management mechanism be developed and implemented to mitigate the risks.
Regarding the progress report for the development of a framework for EAC Customs Bond it was reported by the EAC Secretariat, with the support of Trademark East Africa, acquired the services of a consultant to provide consultancy services for the development of a draft framework for a Regional Customs bond.The Consultant commenced the assignment in January 2016 and submitted the final report to the EAC Secretariat on 20th September 2016.
The Secretariat had submitted the report to Partner States for internalization and comments.
The meeting urged Partner States:
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To submit their comments before the meeting of stakeholders is convened to deliberate on the reports and develop the implementation roadmap.
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The SCTIFI directed the Secretariat to convene a meeting of stakeholders to discuss the way forward for the implementation of the EAC Customs Bond.
Progress Report on the Comprehensive Review of the EAC CET and EAC Rules Of Origin
The Meeting noted that the 34th Meeting of the Council of Ministers directed the Secretariat to undertake a comprehensive review of EAC CET and Rules of Origin and report to SCTIFI by September, 2017 (EAC/CM 34/Directive 60). In implementing this directive, the Secretariat organized a Regional Task Force Preparatory meeting from 12th to 16th December, 2016 in Kampala, Uganda. The meeting discussed and deliberated on a numbers of item including Methodology, Scope of Work and Road Map for undertaking the comprehensive review of CET and EAC Rules of Origin and Criteria for Review of the EAC Common External Tariff.
After deliberating the report the SCTIFI directed the following:
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The Secretariat to hold a meeting of Tariff Experts to transpose the EAC CET 2012 to 2017 HS Version in February, 2017;
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The Secretariat to convene a Video Conference (VC) to finalise the draft data collection instruments;
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That the comprehensive review of EAC Rules of Origin should await the finalisation of the comprehensive CET Review; and
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The Secretariat to find within the entire budget of the Secretariat areas in which a re-allocation can be done to raise USD 230,750 needed for completion of the exercise.
Update on trade in services
In line with reviewing the Partner States’ Schedules of Commitments on Trade in Services as provided for in the EAC Common Market Protocol, it was reported that the Experts considered and revised the draft Guidelines for reviewing the Partner States’ Schedules of Commitments on trade in services. However, the Experts did not agree on the proposed modalities on approach for scheduling the Partner States’ commitments on trade in services. The Republic of Burundi, Republic of Kenya, Republic of Rwanda and Republic of Uganda were of the view that the hybrid approach with benchmarks should be used while the United Republic of Tanzania was of the view that the positive list approach should continue being used. The United Republic of Tanzania further observed that the technical committee had no mandate to extend to other five (5) service sectors. Under the proposed hybrid approach, Partner States would continue scheduling commitments for the already scheduled seven (7) sectors using the positive list approach and would adopt a negative list approach for the remaining five (5) sectors.
On Draft Regulations on Free Movement of Services and Services Suppliers the Meeting was informed that the Experts considered and revised the draft Regulations on Free Movement of Services and Service Suppliers. The Experts agreed to broaden the scope of the Regulations in order to focus on services and services suppliers rather than narrowing the focus on services suppliers.
However during the Experts meeting the Partner States had divergent positions on whether to include Intra-Corporate Transferees, and Trainees in the categories of services suppliers. The Republic of Burundi, Republic of Rwanda, Republic of Kenya and Republic of Uganda were of the view that the categories should explicitly include intra-corporate transferees and trainees given that their free movement is not provided for under the Common Market Protocol (CMP).The United Republic of Tanzania was of the view that Intra-Corporate Transferees and the “Graduate trainees” should not be included as categories of service suppliers. Tanzania is of the view that Intra-Corporate Transferees according to the definition of the service supplier are workers and “Graduate” Trainees are neither workers nor services suppliers.
In addition, the Partner states had divergent positions on whether to include National Treatment regulation. The Republic of Burundi, The Republic of Rwanda and the Republic of Uganda and the United Republic of Tanzania were of the view that we maintain the Common Market Protocol provision on National Treatment.
The Republic of Kenya was of the view that national treatment with a list of limitations should be explicitly included in the regulations.
During the Meeting, the Republic of Kenya noted that listing all National Treatment limitations would be an onerous task and that the National Treatment provision in the Common Market Protocol effectively defines the spectrum of a national treatment violation. In this regard, the meeting agreed that the National Treatment provision in the Common Market suffices and therefore there is no need to include National Treatment in the Regulations
The SCTIFI after thorough discussions directed the Secretariat to:
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Submit the finalised concept paper on the approach for scheduling the Partner States’ commitments on trade in services by 7th February 2017;
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Urged Partner States to consider introducing Horizontal Commitments to cater for Inter corporate transferees and graduate trainees during the process of developing their respective schedules of commitments;
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Directed Secretariat to submit to Partner States the finalised terms of reference for development of a mechanism for the removal of trade in services restrictions by March 2017;
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Directed the Partner States to further revise their respective schedules of commitments; and
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Directed the Partner States to submit their revised Schedules of Commitments to the Secretariat by 31st March 2017.
Report of the EAC experts on the EAC-EU EPA
The Meeting was informed that on 19th to 22nd December 2016, an EAC Experts meeting was convened to explore the way forward on implementing the Summit directives on the EAC-EU EPA negotiations. On the concerns about the EPA, Partner States reported as follows:
- Republic of Kenya and Republic of Rwanda had no concern in relation to the signing of the EPA.
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On the side of the Republic of Burundi her main concern was the decision of EU to unilaterally suspend direct partnership with the Government of Burundi.
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The Republic of Uganda had no concern with EAC EU EPA but has an interest for the Partner States to move to sign the Agreement as a bloc; and exploring available options in the event that some EAC Partner States sign the EPA and others do not.
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The United Republic of Tanzania had several concerns which include:
- Effects of EPA on EAC industrial development;
- Effects of the EU subsidies and domestic support to their farmers on EAC farmers accessing EU market;
- Bridging the gap of revenue losses resulting from substantial trade liberalization;
- Effect of BREXIT while UK is one of the major trading partners of EAC countries;
Other Concerns raised, worth consideration by EAC Partner States
5. What is the rationale of Burundi signing EPA while the EU has imposed embargo on her exports? How will EAC Partner States avoid such scenarios of EU to unilaterally put embargos on trade under the EPA while Article 136 of the EPA still refers to the same agreement which EU has used to put embargo to Burundi;
6. How will the EAC Partner States operationalize Article 13 (2) on movement of goods while there is no free circulation of goods in the region and no refund mechanism for customs duty paid to another Partner State;
7. What is the effect of Most Favoured Nation clause under EPA to the future EAC engagement with third parties;
8. How will the bilateral and multilateral safeguards assist the EAC countries in protection of any economic injury to domestic industries while the EPA has already put limitation before the injury is even known?
9. How can individual EAC Partner States denounce the EPA if it feels that her interests are infringed;
10. What lessons can the EAC Partner States learn from the review made by CARIFORUM on the implementation of EPA;
11. How does EPA strengthen regional integration in ACP States while EU is segregating ACP states on the ground of those who will sign and those who will not sign EPA in cumulation under Article 4 of the Rules of Origin;
12. How can EAC Partner States can have the same priviledges as provided under Article 5 of the Rules of Origin on cumulation in EU?
13. What is the legal implication of having an agreement which binds third Parties who are not privy to the agreement as it is under article 147 of the EPA which introduces a Joint Declaration which binds the EAC with unknown third parties? How will EAC Partner States hold the EU Party liable as one Party in case of failure to implement any of the EPA provisions while Article 132 (1) of the EPA does not define the EU as one Party when it comes to the definition of parties and fulfilling of their obligations?
14. How will the EAC Partner States bridge the gap in their balance of trade with EU while continuing trading with raw materials, taking into account that EPA has limited EAC policy space in instituting duties and taxes on exports?
15. Explore how to proceed in the event that some EAC Partner States sign the EPA and some do not sign.
After discussions the SCTIFI directed:
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The Secretariat to finalise the study on the issues raised above and convene a dedicated session of experts to consider the study report;
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The Secretariat to convene an extra-ordinary SCTIFI on the sidelines of the 35th Council to consider the report of the dedicated session in (b) and make recommendations to the 35th Council on the way forward on the EAC-EU EPA matter.
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T20 Africa Conference Communiqué: Africa and the G20 – Building alliances for sustainable development
Introduction
For the first time since the establishment of the Think20 (T20) process, Think Tanks from across Africa have met with T20 Think Tanks on African soil to discuss the G20 agenda and potential opportunities for Africa – G20 cooperation. The T20 Africa conference provided a forum to discuss how Africa and the G20 could build alliances to promote sustainable development both on the continent as well as globally.
The T20 Africa conference was organized by the South African Institute of International Affairs (SAIIA), the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) and the Kiel Institute for the World Economy (IfW) with support from the DIE’s Managing Global Governance (MGG) network and the Global Economic Governance (GEG) – Africa program. The conference was addressed by Germany’s Parliamentary State Secretary of the Ministry for Economic Cooperation and Development, Thomas Silberhorn, and the Deputy Governor of the South African Reserve Bank, Daniel Mminele. It was attended by 240 high-ranking delegates from African and G20 Think Tanks, African regional organizations (African Union, NEPAD, UNECA, African Development Bank), the South African and German governments, the European Union and the OECD, as well as other G20 engagement groups such as the Business20 (B20). The conference was part of the official T20 process, one of seven G20 engagement processes.
This communiqué is presented by the three co-hosts of the conference: SAIIA, DIE and IfW Kiel. The co-hosts will communicate the findings of the conference to their respective governments, the G20 Sherpas as well as African regional organizations and governments. The results will feed into future T20 events in particular the Think20 Summit: “Global Solutions” on 29-31 May 2017 in Berlin. The co-hosts will continue to reach out to G20 members, G20 engagement groups, and African and international institutions to sustain African participation in the T20 and G20 processes and to facilitate sharing of experiences, mutual learning and joint initiatives.
G20 and Africa
The African Union’s (AU) Agenda 2063 “The Africa We Want” has defined a vision and action plan for the continent’s sustainable socio-economic transformation. Its first 10-year implementation strategy was adopted by the AU Summit in 2015. Africa also has a strong commitment to the implementation of the 2030 Agenda for Sustainable Development that heads of state and government decided upon at the UN Summit in September 2015. The Agenda 2063 as well as the 2030 Agenda for Sustainable Development should define the engagement between the G20 and Africa. At the G20 Hangzhou Summit in September 2016, G20-leaders adopted the G20 Action Plan on the 2030 Agenda reaffirming their commitment to align their work with the 2030 Agenda and to enhance policy coherence for sustainable development. Building on the achievements of the Chinese presidency, the German G20 presidency intends to foster G20 cooperation and partnership with Africa.
Key recommendations
The T20 and African Think Tanks welcome the emphasis of the German G20 Presidency on strengthening G20-Africa cooperation. The policies of the G20 countries directly impact upon sustainable development in Africa. At the same time, developments in Africa will influence prosperity and stability worldwide. Key examples for strong interdependencies between Africa and the G20 include climate change, the consequences of the financial and economic crisis, pandemics, terrorism as well as migration and refugees. Given these inter-dependencies, G20 and Africa should make more efforts to build alliances for sustainable development. There was a strong call by African participants that Africa takes the intellectual lead on the global discourse about Africa. Moreover, discussions during the conference indicated that joint challenges for Africa and the G20 can only be addressed through investments in an effective, inclusive, and open education system.
A shift of paradigm in engagement between Africa and the G20 is needed. Participants at the T20 Africa conference underlined the importance of developing an overarching narrative that globalisation should benefit everyone and leave no one behind. An open world economy that achieves this goal is therefore essential. In particular, fostering sustainability with a focus on climate and the implementation of the 2030 Agenda for Sustainable Development are of great relevance for global development. The G20 and African countries should be equal partners in tackling the current global crisis. The limits of the current globalisation model have become visible in various global crises such as the economic and financial crisis, rising inequalities, increasing economic protectionism, and rising nationalism. On that basis, T20 members see an urgent need to identify shared interests and problems of G20 members and African countries with a view to supporting more effective international cooperation on these.
An Africa-G20 partnership should address the diversity of challenges the continent faces and find appropriate solutions at country, regional and pan-African as well as global levels. A number of specific policy recommendations were formulated during the conference. They concern the governance mechanisms to sustain G20-Africa cooperation as well as African Think Tanks’ participation in the T20 process. In addition, thematic working groups developed and presented specific policy recommendations on how the G20 and Africa should strengthen cooperation in the fields of (1) infrastructure, (2) e-commerce and the digital economy, (3) agriculture, food security and climate action, (4) trade and investment, (5) international cooperation on tax matters, as well as the (6) political and social environment of sustainable development. These sectoral recommendations can be found in the Annex of the present Communiqué.
ANNEX: Recommendations of Sectoral Working Groups
The working groups focused on areas where G20 engagement with Africa is key to promote global sustainable development. In line with our reasoning above, we propose that the G20 activities are as closely embedded in existing African initiatives and institutions as possible.
I. Infrastructure investments
The scale of infrastructure investment needs in Africa is much larger than for other regions. Investment needs cut across countries, regions, and sectors. The international community should respond by supporting high quality infrastructure (poor quality infrastructure leads to high costs in the medium- to long-term). The G20 can play a critical role. Non-involvement is not an option.
The G20 and Africa should not limit their cooperation to large-scale projects but include smaller projects as well that can be scaled up. A focus should be on cities, where infrastructure investment can improve education, health and sanitation, respond to the urbanization trend in Africa, and facilitate regional integration. The private sector needs to be pulled in more strongly to finance infrastructure. There should be a focus on local currency lending and bond markets to avoid LDCs borrowing in hard currency and not being able to repay these loans if their currencies are devaluated given international shocks.
Africa and the G20 should work together to expand existing international initiatives to include African perspectives more strongly: The G20 has been active in the infrastructure space since 2012 through the Global Partnership for Infrastructure. Through this partnership the deficits and bottlenecks for infrastructure development in G20 countries were approached in a systematic way in order to clear back logs and ensure adequate progress. This partnership should be extended to Africa. The Global Partnership for Infrastructure should contribute by focusing on quality data collection, developing toolkits and benchmarks for infrastructure development across Africa. African initiatives here exist: the G20 should aim to support these initiatives.
Africa and the G20 should emphasise the sustainability of infrastructure investment: New infra-structure should be of high quality, have a low carbon footprint and should align with continental plans, like Agenda 2063, and key international agreements such as the 2030 Agenda and the Paris Agreement. Financing models of infrastructure investment will have to be innovative if the current deficit of US$ 100 billion per annum is to be addressed. Public contribution remains important, but it is estimated that up to 7% of Africa’s GDP needs to be invested at a time when the fiscal space is constrained, given recent rising debt levels. Thus private capital has to be leveraged through public funds.
The G20 should support the African Development Bank (AfDB), as a key agent for change on the African continent, in finding innovative solutions to financing, including blended financing that attracts private capital. The G20 should recognise that Multilateral Development Banks, especially the AfDB, have a critical role to play in improving the environment for infrastructure investment. The G20 should support the AfDB in its efforts to develop skills, focus on quality, targeted research as well as attracting private financing.
II. E-commerce and the digital economy
African countries are confronted by a potential digital divide. Access to the internet and related digital services is low and in most countries, the supporting regulatory framework and necessary data and logistics infrastructure are not in place. On the other hand, there are multiple examples of e-commerce success stories across Africa; and the wide use of mobile phone technology has created many new opportunities for African entrepreneurs and consumers alike. It has also enabled the provision of key government services to more distant communities.
To cross this divide and take full advantage of the benefits that can be derived from participation in the digital economy, will require substantive action in three main areas: regulation, education and infra-structure. Specifically, to support the growth of digital trade and investment in Africa, the G20 should support African initiatives to:
Develop and where appropriate harmonize laws and regulations in e-commerce (including, for example, support to the negotiation of regional trade agreements that incorporate aspects of the digital economy). Specific attention will need to be given to developing policies and laws that serve to pro-mote inclusion and access to the digital economy for African consumers and producers, without undermining legitimate domestic security and local development interests. The impact of taxation, on trade in digital products, is of particular concern, as is the manner in which e-commerce can be harnessed to contribute to ongoing sustainable development initiatives.
Strengthen supporting infrastructure, including sufficient and competitive access to data through undersea cables, but also through the improvement of warehousing, postal and communication facilities. This may require consideration of a specialist financing facility; or could be linked to wider discussions on infrastructure finance in Africa.
Address the intersect between education and development, and specifically, the need for early expo-sure to the digital economy. This may involve the establishment of new cooperation mechanisms between regional and international institutions or workgroups in order to advocate for in-creased education around digitization, and additional investment in the up-skilling and re-skilling of entrepreneurs and workers in Africa.
At this stage, the continent does not have a common position on e-commerce, or a platform at which these issues are widely discussed; and the experience and views of countries and Think Tanks is likely to differ widely. There are also concerns that African countries are not engaging in discussions on e-commerce issues even at a multilateral level. The G20 should support engagement by African countries on e-commerce issues to encourage their greater engagement within larger fora, such as at the WTO. However, prior to taking these discussions forward at the G20, it may be important to first develop an informed framework for engagement, which accurately reflects the regulatory, infrastructure and education priorities and interventions of African countries. Further dialogue with African countries will likely be required in order to populate this framework.
IV. International Trade and Investment
African governments should strengthen their lead in promoting an enabling investment and trade climate that is conducive to sustainable development. G20 should provide political leadership by promoting inclusive, fair and sustainable trade and investment with and in African countries and beyond Afri-ca. While there are many ways in which African countries can foster trade and investment (e.g. governance reform, improving business climates, deepening regional economic integration), the G20 can also support this endeavor.
Strengthen the multilateral trading system and combat protectionism: The G20 should renew their commitment to strengthen the multilateral World Trade Organization (WTO) as the most inclusive trade forum and the commitment not to introduce new protectionism.
Foster synergies with the 2030 Agenda: In light of the G20’s Action Plan on the 2030 Agenda, G20 members should support a more proactive positioning of trade and investment in helping countries achieve their SDGs. Reference to the 2030 Agenda can also help to change the narrative around trade, for example by underlining that losers from global trade policies should be supported.
Expand and improve trade preferences for African economies: G20 members’ preferential regimes should be reformed with the aim of focusing the benefits on the countries that need trade preferences the most. G20 members that currently do not offer trade preferences should consider establishing preferential regimes as well. All preference schemes should include rules of origin that allow for the widest cumulation possible to encourage cross-border value chains with and across African countries.
Foster value addition in African economies: African governments should more systematically enact trade and investment policies that exploit the opportunities at hand already today. G20 members should support African supply-side capacities and the integration of Small and Medium Enterprises (SMEs) into cross-border value chains, for example by helping them to comply with public and private standards.
Promote trade facilitation: The WTO Trade Facilitation Agreement, which will soon enter into force, offers substantial potential for African economies. The G20 and Africa should therefore support the implementation of the Trade Facilitation Agreement, for example by strengthening the Global Alliance for Trade Facilitation.
V. International cooperation on tax matters
Despite great advances in the global cooperation on tax matters, governments still lose revenue needed to finance sustainable development because of corporate tax avoidance and illicit financial flows (including its commercial tax evasion component). New policy tools have been introduced to address aspects of base erosion and profit shifting (BEPS), such as abusive transfer pricing and aggressive tax planning. However, implementation of the new mechanisms has not always been as swift as hoped for. Developing countries, particularly in Africa, are often faced with capacity problems when trying to keep up with the pace and complexity of the current reform agenda.
Therefore, the G20 should work towards extending the framework of international tax governance such that global standards are developed on a truly multilateral basis, and can be implemented as such. In addition, the G20 should promote increased international cooperation with regard to data collection and data accessibility in key aspects of taxation, such as customs data on international trade (including e-commerce) or beneficial ownership of assets. This is a key element of evidence-based tax policy. The digital economy and digital (crypto) currencies are increasingly being used to facilitate trade and payments in the global village. The G20 should ensure that the multilateral tax (and customs) frameworks should be relevant and appropriate for this digital world.
To foster tax certainty, pre-dispute mechanisms, such as Enhanced Engagement Programs can strengthen mutual trust and certainty, and should be supported by regional and international organizations. Tax uncertainty has two dimensions: multinational corporations face uncertainty in their investment decisions, and governments face uncertainty about their tax incomes. In cooperation with regional organizations from Africa and other parts of the world, the G20 should promote model legislations and the development of common standards that are easy to implement.
International cooperation should also be enhanced with regard to countries’ tax expenditures, through aligning reporting standards and evaluation methods to improve the efficiency of the tool of tax exemptions for all countries. In addition, G20 members should stop requesting tax exemptions for their development cooperation spending in recipient countries.
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tralac’s Daily News Selection
TFTA update: Egypt’s cabinet approves COMESA, EAC, SADC free trade agreement
Tinashe Kapuya: ‘US-Africa trade and investment relations: what can we expect from a Trump Administration?’ (pdf, Agbiz)
As we consider the various scenarios of an Africa-US trade and investment relationship, it is important for the continent to craft its own vision of a bilateral trade relationship with the Americans. The fundamental lesson coming out of the first two weeks of a Trump Administration is that the US will be radically different and will have a different way of doing business. It will be important to observe how the Trump Administration will handle the AGOA annual review – and any emerging the out-of-cycle reviews – as these will serve as critical learning points that will deepen and broaden our understanding of what the future of Africa-US trade relationship will look like.
Regional infrastructure project preparation: NEPAD-IPPF update (AfDB)
Taking stock of achievements during 2016 at the Business Strategy Workshop for NEPAD-IPPF held at the headquarters of the AfDB in Abidjan, Shem Simuyemba (NEPAD-IPPF Fund Manager), said that during 2016, NEPAD-IPPF had approved a total of $14.8m for the preparation of eight regional projects covering energy, transport and water. Under its current strategic business plan for 2016-2020, NEPAD-IPPF requires funding of about $250m to prepare 80 to 100 regional infrastructure projects expected to generate $25bn in infrastructure investments. NEPAD-IPPF is also increasingly linking its project preparation work to financial closure and part of the thrust of its new business orientation is to engage early with project developers, financiers and investment houses to ensure that NEPAD-IPPF prepared projects respond better to investor needs.
COMESA, COIDIC discuss cooperation framework on infrastructure (COMESA)
COMESA and the Chinese Overseas Infrastructure Development and Investment Corporation have finalized negotiations for a memorandum of cooperation on infrastructure development in the COMESA region. This followed a visit to the COMESA Secretariat by the Deputy Chief Executive Officer of COIDIC Mr Nicholas Mitsosi and his team on Friday 3rd February 2017. The MoC is expected to cover all infrastructure projects go between member states and individual countries such as roads, rail, information and communications technologies and energy among others. [Global Customs Chief in COMESA to discuss partnership]
Africa’s cities: opening doors to the world (World Bank)
The report, Africa’s Cities: Opening Doors to the World, notes that to grow economically as they are growing in size, Africa’s cities must open their doors and connect to the world. Africa’s urban population stands at 472 million people today. As cities grow in size, another 187 million people will be added to urban areas by 2025. In fact, Africa’s urban population will double over the next 25 years, reaching 1 billion people by 2040. Extract: Because of manufacturing’s importance in entering regional and global markets, one can look at the share of manufacturing in GDP to see whether an urbanizing economy is opening its doors to the world — or closing them. For example, we compare the structures of non-African and African economies during periods when the urbanized share of the population rises to 60%. Based on a cross-section of African and non-African economies, the comparison shows that Africa’s cities are indeed trapped in the production of nontradables for local markets. As the African economies attain 60% urbanization, their share of manufacturing in GDP stays flat (or somewhat falling) at about 10%. In contrast, the manufacturing share of the non-African economies rises from 10% to nearly 20% (falling back only when urbanization exceeds 60%). Why have African urban economies remained local? Two reasons stand out:
Africa’s ports revolution: setting the scene for economic take-off (GCR)
Part 1: Africa’s port sector is grossly deficient in both quantity and quality of harbours, quays, cranage, storage systems and hinterland transport. How deficient? Although China and Africa have similar populations (respectively, 1.4 billion and 1.2 billion), in 2015 the five largest Chinese ports moved more than 118 million twenty-foot-equivalent units (teu), whereas Africa’s top five moved less than 10 million. According to Lloyd’s List, the entire continent accounts for just 3% of world container traffic. It is a remarkable fact that 90% of Africa’s total trade, including its internal variety, moves by sea. This is partly because it can’t move any other way: road networks within countries are often inadequate and, outside South Africa and the Maghreb, rail systems are “a losing game”, to quote a recent study by the African Development Bank. [The analyst: David Rogers]
Part 2: Africa’s ports revolution: West Coast to welcome the world
2016, bad year for Nigerian ports, official data show (Premium Times)
From 5369 in 2013, the number of vessels that berthed at ports in Nigeria dropped to 4025 in 2016, representing the lowest in four years. The National Bureau of Statistics made this known in its 2013-2016 Shipping and Port Related Activities Data, released on Wednesday. According to the bureau, the number of vessels dropped from 5369 in 2013 to 5349 in 2014. In 2015, the figure dropped to 5090 and reduced drastically to 4025 in 2016. Similarly, the report said the Gross Registered Tonnage at the ports peaked at 146,820,488 in 2014 and dropped to 144,207,122 in 2015 before sliding to 122,186,758 in 2016. [Downloads: Shipping and Port Related Activities Data report, infographics]
Nigeria, South Africa trade volume fell to N1.3 trillion in 2016 (Premium Times)
South African Ambassador to Nigeria, Lulu Aaron-Mnguni, says trade volume between the two countries dropped to about N1.3 trillion (R55bn) in 2016. The trade volume decreased by 11.29% from N1.5 trillion (R62bn) in 2015. The trade between the two countries increased steadily from N488 billion (R20.6bn) in 2010 to N1.5 trillion (R62bn) in 2015. He said the gradual movement was attributed to Nigeria’s demand for automotive parts, South Africa’s export cars, vehicles, structures and parts of structure, uncoated paper and paperboard.
Zimbabwe: Govt repeals 15% levy on basic goods (The Chronicle)
The Government has shelved the implementation of Statutory Instrument 20 of 2017, which imposed a 15% VAT on basic consumer goods to pave way for further consultation. Businesses and suppliers had taken advantage of the new tax regime to increase prices by margins of up to 40% in the last few weeks thereby sparking public outcry. The suspended tax was proposed in the 2017 national budget and had been imposed on rice, margarine, cereals, maheu, potatoes, meat (pork, beef, fish and chicken) with effect from last month. Finance Minister Patrick Chinamasa said Zimbabwe and other SADC member states had ratified the SADC Protocol on Finance and Investment in which member states are mandated to harmonise taxation matters and coordinate tax regimes. In an endeavour to harmonise taxation matters, Minister Chinamasa said the SADC region has developed VAT guidelines, which enable member States to sustain and enhance tax revenues on an equitable and efficient basis. As such he said the regional bloc had agreed that the list of zero rated and exempt products should be streamlined. [South Africa announces end to special dispensation for Zimbabweans]
Three postings on Rwandan trade issues:
New RDB boss to prioritise services, exports promotion (New Times): The new chief executive of Rwanda Development Board, Clare Akamanzi, took office Thursday, promising to prioritise the services sector and increasing the volume of the country’s exports. She said one of the main things she would focus on during her tenure would be to help add value to locally produced commodities. Her other priority, she said, will be to promote innovation to help ensure that Rwanda’s journey to achieve its aspirations as a regional services hub is achieved. Akamanzi, who was sworn in on Wednesday, replaced Francis Gatare, who was moved to the newly created Mines, Petroleum and Gas Board – as its chief executive. Both officials are members of the cabinet.
Tea output increases in 2016, but export revenue drops (New Times): Rwanda’s tea production increased marginally last year, but the country’s annual export earnings dropped, according to the National Agricultural Export Board monthly report for December 2016. The report released yesterday indicates that tea output rose marginally by 1.82% to more than 108.3 million kilogrammes in 2016, up from 106.4 million kilos recorded in 2015. However, the sector’s export receipts declined to $63.42 million over the period, down from $72.86m earned in 2015, indicating a $9.44m, or 12.96% drop, compared to revenue recorded in 2015.
The political economy of import substitution in the 21st Century: the challenge of recapturing the domestic market in Rwanda (LSE): Import substitution has been marginalised from development policy discourse since the 1970s. This paper examines the Rwandan government’s recent attempt at reintroducing industrial policy with some attention devoted to ‘recapturing the domestic market’ – a term used to replace the ignominy associated with ‘import substitution.’ The paper examines two cases – cement and textiles – where such policies have been recently established in Rwanda. [The analyst: Pritish Behuria]
Zambia: 2017 copper output may climb to record as price rebounds (Bloomberg)
Finance Minister Felix Mutati said in an interview Thursday in Kenya’s capital, Nairobi that production is set to exceed 800,000 metric tons. That would beat the record 790,007 tons reached in 2013. “It’s looking cheerful, the price is close to $6,000 - at that level, most of the mines in Zambia are making money, they are beyond breakeven,” Mutati said.
Taveta traders accuse Tanzania border officials of harassment (Business Daily)
Taita Taveta traders using the Taveta-Holili border point have urged the government to engage Dar es Salaam to stop increased harassment by Tanzanian authorities. The traders accused the Tanzania creating obstacles that impede free trade between the two countries. The traders said despite Nairobi and Dar es Salaam signing a joint trade pact to allow traders to cross the border freely, Tanzanian police at the border continue to harass Kenyans arbitrarily. Taita Taveta Chamber of Commerce director Sofia Mnene said Kenyan traders thought the East African Community integration treaty would ease trade but it has instead became a nightmare.
Kenya: RVR faces losing deal over unpaid Sh600m concession fees (Daily Nation)
The operator of the Kenya-Uganda railway risks closure after the government issued the Egyptian-controlled firm a termination notice over unpaid fees amounting to Sh600 million. Kenya Railways Corporation (KRC) managing director Atanas Maina told Parliament that it had issued a termination notice to Rift Valley Railways (RVR) for failing to remit concession fees for the year to December 2016. RVR, which is 80% owned by Cairo-based Qalaa Holding, won a 25-year contract in November 2006 to run the 2,352km Kenya-Uganda railway for the cargo business, and a five-year contract for the passenger unit.
Germany warms up to Kenya in Sh3 billion plan (The Standard)
Yesterday, the European powerhouse signed a joint declaration of intent on the establishment of the Eastern African-German University of Applied Sciences in Kenya at the second German-African Business Summit, which is being held on African soil for the first time. The Sh3 billion deal will see the Thika-based institution offer undergraduate, masters and vocational vocational-oriented academic training in close co-operation with industry players. This will be key in providing technical and blue-collar competence to service German firms seeking to set up shop in Kenya and the region.
India unwilling to bend to WTO’s demand, to expedite talks (Economic Times)
India will send an expert team to Geneva in March to expedite negotiations on food security and a global agreement on services at the WTO before its ministerial meeting in Argentina in December. India is unwilling to bend or yield on WTO’s demand for a discussion on food security, commerce and industry minister Nirmala Sitharaman said after meeting WTO director general Roberto Azevedo on Thursday. “We will send a team to Geneva to talk on details...We will not start from zero,” the minister said, referring to the G-33 proposal that seeks to amend WTO rules on agriculture.
DG Azevêdo visit to India: ‘Advancing global trade and the role of the WTO’
2017 International IP Index (GIPC)
The US Chamber of Commerce has released its 5th annual International IP Index, The Roots of Innovation, rating 45 world economies on patents, trademarks, copyright, trade secrets, enforcement, and international treaties. The economies benchmarked in the 2017 Index account for 90% of global GDP.
Related: Intellectual Property index: India remains near bottom (The Hindu), GIPC’s Mark Elliott: India has the potential to become a leader among innovative economies
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New UK economic development strategy puts emphasis on trade and the world’s poorest economies
Trade and investment will occupy a strengthened, pivotal place in the UK’s development policy, indicates UK’s Department for International Development (DFID) in its “first ever economic development strategy”.
The document, released last week, details how DFID intends to work across government departments through an approach that integrates trade, investment, and aid policies to foster economic development and drive poverty reduction.
“DFID’s first Economic Development Strategy sets out how investment in economic development will help developing nations speed up their rate of economic growth, trade more and industrialise faster, and ultimately lift themselves out of poverty,” reads a press release jointly issued by DFID and its Secretary of State for International Development Priti Patel.
While DFID’s focus on economic development is not new, the document attempts to build on previous efforts and “bring them together into something that is more actionable, and more coherent,” according to Stefan Dercon, the department’s chief economist.
Through this strategy, which is presented as a “vital part” of the new “Global Britain” doctrine, DFID vows to put a particular emphasis on the world’s poorest countries, many of which are to be found in Africa. At a time when demographic trends on the African continent are expected to result in hundreds of millions of young people entering the job market in the next decades, the document stresses the importance of building African economies’ capacity to create jobs and absorb these new entrants.
Last summer, UK citizens’ vote to leave the EU had left many observers wondering what impact a so-called “Brexit” would have on the UK’s aid, economic development, and trade policies, in particular towards African countries. While some experts had underlined potential risks for African partners, others had stressed that the referendum could open a new promising chapter in the UK’s trade and development cooperation relations with the continent.
“With dramatic increases in population across Africa and Asia, developing nations must act fast to create jobs and investment, which is why Global Britain is leading a more open, more modern approach to development through our economic development to help the world’s poorest countries stand on their own two feet,” said Patel according to the press release.
Focus on trade
The first among the eleven key messages of the strategy is a pledge to focus on “trade as an engine for poverty reduction.” In July 2016, following her appointment as Secretary of State for International Development, Patel had already spelled out her conception of a development policy that integrates trade and poverty reduction.
“We will continue to tackle the great challenges of our time: poverty, disease and the causes of mass migration, while helping to create millions of jobs in countries across the developing world – our trading partners of the future,” she declared.
In line with this vision, the strategy’s announced goal is to strengthen developing countries’ ability to trade more with external partners, including the UK, and integrate into global value chains. In that regard, DFID considers that the UK’s exit from the EU will provide a propitious opportunity to develop a more holistic approach that brings together trade policy, aid that tackles barriers to trade, and investment promotion.
“Just as Britain is resetting its international relationships, it is a really good moment to also reset our relationships with poor countries, and work with them around linking trade, economic opportunities, and development for their benefit,” said Stefan Dercon in its presentation of the strategy.
In order to do so, DFID intends to work in close collaboration with the Department for International Trade to develop and strengthen the UK’s trade and economic relationships with developing countries, including by continuing to open its market and provide export opportunities to the world’s poorest countries that “need it most.”
The strategy also mentions explicitly the World Trade Organization, indicating that the UK will also push at the multilateral level for global trade rules that better serve developing countries’ needs.
“Using our voice in the World Trade Organization, we will argue for better and fairer trading rules for developing countries and strengthen our approach to ‘aid for trade’,” reads the document.
Part of the department’s trade-related work should also be conducted through DFID’s Trade and Investment Advocacy Fund, which provides support to developing countries in their efforts to participate in and benefit from trade and investment agreements.
While DFID underlines that its approach to trade will be focused on reducing poverty, which Patel defines as the most urgent task, the strategy makes clear that it will also serve the British national interest. As such, DFID’s approach will help build new trade partners that will support British national prosperity in the future through mutually beneficial economic cooperation, while keeping migration pressures in check by providing more decent job opportunities in the developing world.
Private investment, “innovative” financing mechanisms
The economic development strategy will be marked by an increased role for DFID’s private investment arm, the CDC, which will be “at the heart” of the new approach. Along with UK’s exit from the EU, the recapitalisation of the CDC has been identified by some observers as one of the big shifts that will shape DFID’s future work.
However, the strategy should not affect the total amount of financial resources spent by DFID on economic development – which currently stands at around £1.8 billion per year.
“DFID will increasingly use Development Capital to create jobs, catalyse private sector investment and build markets in challenging settings,” reads the strategy.
“Right now there is a desperate shortage of private and public investment in the world’s poorest countries, despite the significant opportunities. The UK will catalyse investment by using innovative financing approaches, as well as helping countries to improve their investment climate,” indicates Patel in the foreword of the document.
The strategy thus aims at ensuring that more investment is channelled to developing economies through financial markets and institutions. In this regard, DFID indicate it will work with the City of London so that it becomes “a leading financial centre for the developing world,” promoting economic development and decreasing developing countries’ need for aid.
The document also identifies sectors that are key to unlocking growth and structural transformation in developing economies – including energy, infrastructure, urban planning, manufacturing, commercial agriculture, and financial services – and which will be at the centre of DFID’s development work.
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Improving conditions for people and businesses in Africa’s cities is key to growth – World Bank report
Africa’s cities are growing in population – adding the size of another Nigeria to cities by 2025 – so have a critical role to play in their countries’ economic growth, says a new World Bank report released on Thursday.
Improving conditions for people and businesses in African cities by aggressively investing in infrastructure and reforming land markets is the key to accelerating economic growth, adding jobs, and improving city competitiveness.
The report, Africa’s Cities: Opening Doors to the World, notes that to grow economically as they are growing in size, Africa’s cities must open their doors and connect to the world. Africa’s urban population stands at 472 million people today. As cities grow in size, another 187 million people will be added to urban areas by 2025. In fact, Africa’s urban population will double over the next 25 years, reaching 1 billion people by 2040.
“What Africa needs are more affordable, connected, and livable cities,” said Makhtar Diop, World Bank Vice President for Africa. “Improving the economic and social dividends from urbanization will be critical as better developed cities could transform Africa’s economies.”
The report notes that Africa is urbanizing at lower incomes than other developing regions with similar urbanization levels. In 1968, when countries in the Middle East and North Africa region became 40 percent urban, their per capita GDP was $1,800 (2005 constant dollars). And in 1994, when countries in the East Asia and Pacific region surpassed the same threshold, their per capita GDP was $3,600.
By contrast, Africa, with 40 percent urbanization, today has a per capita GDP of just $1,000. This means that every dollar of public investment in cities needs to be done as efficiently as possible, and leveraging as much as possible other sources of finance – from private sector, international partners, and citizens.
Rapid urbanization at lower incomes has meant that capital investment in African cities has remained relatively low in the region for the past four decades – at around 20 percent of GDP. In contrast, urbanizing countries in East Asia – China, Japan, and the Republic of Korea – stepped up capital investment during their periods of rapid urbanization.
Lacking capital investment, the report emphasizes that investments in African cities’ infrastructure, industrial, and commercial structures have not kept pace with concentration of people, nor have investments in affordable formal housing. The potential for coordinated investments in infrastructure, residential, and commercial structures is great, which will enhance agglomeration economies and connect people with jobs.
The report explains that because of this lack of connection, African cities are among the costliest in the world both for businesses and for households, leaving cities “out of service and closed for business”. African cities are 29 percent more expensive than cities in countries at similar income levels. African households face higher costs relative to their per capita GDP than do households in other regions – much of it accounted for by housing, which costs them a full 55 percent more than in other regions. In Dar es Salaam, for example, 28 percent of residents live at least three to a room; in Abidjan, 50 percent. And in Lagos, Nigeria, two out of three people live in slums.
Adding to this, city dwellers pay around 35 percent more for food in Africa than in low-income and middle-income countries elsewhere. Overall, urban households pay 20-31 percent more for goods and services in African countries than in other developing countries at similar income levels.
In addition, urban workers in Africa are also forced to pay high commuting costs, or they cannot afford to commute by vehicle at all, and the informal minibus systems are far from cost efficient, leaving many to have to walk to work. The need to walk to work limits these residents’ access to jobs. Without sufficient formal development, informal settlements that are relatively central and thus close to jobs – such as Kibera in Nairobi, and Tandale in Dar es Salaam – are constantly growing in population.
The need for higher wages to pay higher living costs makes businesses less productive and competitive, keeping them out of tradable sectors. As a result, African cities are avoided by potential regional and global investors and trading partners.
Given these costly conditions, the opportunities for tremendous gains in efficiency and productivity can lead to African cities becoming a strong catalyzer of economic development.
According to the report, the key to freeing Africa’s cities from their low-development trap is to set them on a path toward physical and economic density, connecting them for higher efficiency and boosting expectations for the future:
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The first priority is to formalize land markets, clarify property rights, and institute effective urban planning that allows land to be brought together.
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The second priority is to make early and coordinated infrastructure investments that allow for interlinkages among housing, infrastructure, commercial, and industrial development.
“What cities do now will determine their shape and efficiency not just for years to come, but for decades or even centuries,” stressed Ede Ijjasz-Vasquez, Senior Director of the World Bank’s Social, Urban, Rural and Resilience Global Practice.
“From a policy standpoint, the answer is to address the structural problems affecting African cities. Africa needs to strengthen institutions that govern land markets, and coordinate urban and infrastructure planning. Fragmented physical development – cities in Africa are 20 percent more fragmented than Asian and Latin American ones – is limiting productivity and livability.”
Somik Lall, Lead Urban Economist at the World Bank and author of the report,added that, “From an investment standpoint, Africa’s leaders and policy makers need to focus on early, coordinated infrastructure investments. Without this, they will remain local cities, closed to regional and global markets, trapped into producing only locally traded goods and services, and limited in their economic expansion. African cities need to create an internationally competitive tradable sector in order to stay open for business. For that to happen, city leaders must urgently have a strong and new urban development path for Africa.”
The Africa’s Cities report and its underlying research was supported by the UK’s Department for International Development (DFID).
» Download: Africa’s Cities: Opening Doors to the World (PDF, 12.91 MB)
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Efficient trucking is a growth enabler: New IRU-World Bank guide to reform
The World Bank and the International Road and Transport Union (IRU) have jointly released a new guide on Road Freight Transport Services Reform that shows how efficient trucking facilitates trade, reduces poverty and generates prosperity. Key conclusions highlight the importance of the driver, condition of vehicles, technical inspections and business-enabling regulation.
The successful collaboration between the World Bank Group and IRU has resulted in the first ever guide to improve quality and competition, based on practical examples of regulatory reform in other countries. It is aimed at governments and policy-makers in emerging and developing economies – where mobility of cargo is almost entirely dependent on the road transport sector.
Typical performance gaps include high costs, reduced profitability, lack of road safety, environmental concerns, bureaucracy and corruption. Regulated carriers are often required to compete against informal operators outside of regulatory frameworks. Changing this scenario to establish a level playing field improves transparency, safety and sustainability.
As IRU Secretary General Umberto de Pretto noted, “the goal is to foster transparent regulatory environments in which start-up and established carriers can both grow and professionalise their operations, improving safety, sustainability, resilience and competition.”
Offering a complete framework – from an evaluation of the existing systems through to implementation of change – the Guide demonstrates how to analyse data to identify areas of focus and then outlines how to structure a detailed action plan.
“The billions invested in road infrastructure will only yield their full potential for economic growth and job creation if logistics services are operating efficiently along these roads. This guide provides a set of principles to help policymakers and practitioners assess the different challenges in road transport, and select a reform path most suited to a country’s stage of economic development and its institutional capacity,” explained José Luis Irigoyen, Senior Director for Transport and ICT at the World Bank.
Professional training is highlighted in view of key findings, which show employment in road transport services reaching up to 5% of the total and a recent study in East Africa, which found that there were 1.2 jobs for each truck on the road. Establishing qualifications frameworks and delivering internationally recognised training promotes eco-driving techniques and leads to fewer crashes and fines, lower fuel consumption and less vehicle maintenance.
In parallel, fleet renewal incentives and vehicle inspections can radically change performance. Since the mid-1970s, average fuel consumption has decreased by 40% from 50 litres/100km to 30 litres/100km in 2008. Formalised operations, modernised freight tracking and communications systems also help to streamline the industry.
An example of deregulation of the industry in Mexico in 1989 showed a decline in the cost of commodity distribution by 25%. The case study reinforces the need for the creation of a business-enabling environment for the development of a safe, reliable but competitive road transport industry.
About the World Bank Group
The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. Working closely with its 189 member countries, the World Bank Group provides financing, advice and other solutions that enable countries to address the most urgent challenges of development.
About IRU
IRU is the global industry association for road transport, driving the sustainable mobility of people and goods across the planet. Founded in 1948 to help rebuild trade across a war-torn Europe, IRU is today an independent international organisation active in more than 100 countries on every continent.
The IRU Academy is the world’s leading global professional road transport training organisation. With a network of 65 Associate Training Institutes in more than 46 countries, the Academy trains thousands of drivers and transport operators every year. The IRU Academy also develops campaign initiatives to raise awareness on certain issues, and increases global standards in professional road transport training to keep our roads safer.
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DG Azevêdo visit to India: Advancing global trade and the role of the WTO
Director-General Roberto Azevêdo told a meeting of the Confederation of Indian Industry (CII) in New Delhi on 9 February that a number of trade issues of interest to India’s economy were under discussion at the WTO, ahead of the 11th Ministerial Conference in Buenos Aires this December.
He drew attention to discussions on agriculture issues and the facilitation of services trade, where India has been playing a leading role in discussions in Geneva, and pledged his support to help advance this work. During his visit the Director-General met with Minister Nirmala Sitharaman as well as representatives from the private sector and experts across a range of sectors, including agriculture.
Quoting the words of India’s first Prime Minister Jawaharlal Nehru on the eve of independence about India being “on the verge of bold advance”, the Director-General said: “I am here this week to listen to India’s priorities and concerns, and see how the WTO can help. India is a very active WTO member – and a strong supporter of multilateralism on the global stage. Working together, I am sure that we can continue paving the way for India’s bold advance.”
“Advancing Global Trade and the Role of the WTO”
Remarks by DG Azevêdo in New Delhi, 9 February 2017
It’s great to be back at the Confederation of Indian Industry. Thank you for your kind invitation.
I am very pleased to join you on my fourth visit to India as WTO Director-General.
And I have to say that few places are as dynamic and vibrant as India.
On the eve of the country’s independence, Prime Minister Nehru described India as a country “on the verge of bold advance”.
Of course there were challenges along the way, but I think it’s fair to say that this vision is bearing fruit today.
India is now the fastest growing G20 economy, with GDP growth forecast at 7.2% in 2017.
And there are strong signs that the country will continue on this path.
India’s commitment to stimulate growth and lift up the poorest and most vulnerable is quite evident and must be praised.
India is carrying out a wide range of reforms to improve and strengthen institutions. The demonetization initiative to help formalize the economy is an obvious example.
Tax reforms will also render India an even more attractive destination for investments, besides leading to gains in scale and more effective supply chains.
India is also working to upgrade its infrastructure and has created programmes to improve the business environment.
I would like to commend India’s courage in pursuing these reforms. These efforts are being recognized worldwide.
The World Bank’s “Doing Business Report” last year reflects the challenges before the economy. But it shows the progress that is being made. India’s indicators on Getting Electricity, Paying Taxes, Trading across Borders and Enforcing Contracts have sharply improved.
In the World Economic Forum’s Global Competitiveness Index, India jumped up 16 places last year, now ranking 39th out of 138 countries.
I think we are seeing India take its place on the world stage as a confident, dynamic country, which is ready to do business.
I think that these are all positive developments, especially in the current global context.
This is proving to be an uncertain period in the global economy. The outlook for trade growth has weakened significantly and global flows of foreign direct investment have not returned to pre-crisis levels.
The WTO expects the final figure for trade growth in 2016 to be around 1.7 per cent. This would mark the slowest pace of trade growth since the financial crisis.
For 2017, our studies suggest that trade will grow between 1.8 and 3.1 per cent. This is largely due to the lackluster performance of the global economy.
And in such a fragile scenario, we are hearing more and more talk about inward looking policies.
While this is often the case when global growth is slow, we must emphasize that turning to protectionism would not solve the problems before us – it would make them worse. Raising barriers to trade would hurt us all, and dampen the prospects of growth everywhere – including here in India.
A charge often made against trade is that it disrupts labour markets, leading to unemployment. Yet, trade is actually a relatively minor factor here.
The impact of new and more advanced technologies on employment and manufacturing is much more significant. Studies suggest that around 80% of job losses are due to technology and innovation.
We all know that technological progress and higher productivity is indispensable for sustained growth and development. India is seeing the transformative potential of technology, with IT goods and services becoming increasingly important for the economy.
So the answer is not to reject these forces. Quite the opposite: we must embrace them and learn to adapt.
So instead of raising barriers to trade, we have to make it work better. We have to ensure trade opens up more opportunities, for more people.
Trade is vital for growth, development and jobs. It has helped to lift a billion people out of poverty – and is a key element of the new Sustainable Development Goals, supporting a range of other important policy aims. Each country must find the right mix of policies that optimizes trade’s contribution to its social and economic development.
Looking ahead, we must ensure that trade continues to play a positive role here in India and across the globe. Therefore, it is vital to strengthen the global trading system.
For many years, little progress was made in global trade talks. However, things have started to change at the WTO.
In the last three years, we have agreed a number of new trade deals, which have brought significant economic impacts.
The WTO’s Trade Facilitation Agreement is the biggest global trade deal so far this century, and it will enter into force in the coming weeks. India ratified the agreement early last year, helping us to get to this point.
The economic benefits of the deal will be very significant. Globally, it could boost exports by up to one trillion dollars each year, with the biggest gains being felt in the poorest countries.
Estimates show that the full implementation of the Agreement could reduce trade costs in India up to 13.9 per cent.
WTO members have also made important progress on agriculture.
In 2013, members agreed the Bali Decision on Public Stockholding for Food Security Purposes.
This decision protects developing countries from legal challenges at the WTO in connection with governmental support for stockpiling staple foods at guaranteed prices, in the event that it should exceed the legal limit. This is often referred to as the “peace clause”.
Members later clarified the decision to state, unequivocally, that this peace clause would remain in force until a permanent solution is found.
This was an important step – and of course it was particularly important for India. Nonetheless, there remains a lot to do to take this work forward – and I’ll come back to this in a moment.
Members took a further set of decisions on agriculture in 2015, including a recommitment to advance work on an agricultural special safeguard mechanism and a deal to abolish agricultural export subsidies.
There is much more to do in order to reduce distortions in agricultural markets, but these were important steps forward.
In fact, eliminating these export subsidies is the biggest reform in global agriculture trade for 20 years. This was actually one element of the UN Sustainable Development Goal on Zero Hunger. So it is a big achievement that we delivered just three months after the goals were agreed in New York!
WTO members have made important progress on other fronts as well.
Members have agreed on a number of steps to help the most vulnerable to integrate into the trading system and build their trading capacities.
Significant decisions have also been taken on cotton and cotton products, opening foreign markets for the most vulnerable producers – and promptly ending cotton export subsidies.
In addition, a group of members struck a deal to eliminate tariffs on a range of new generation Information Technology products. Trade in these products is worth around 1.3 trillion dollars each year. That’s bigger than global automotive trade.
This run of agreements is unprecedented for the organization. And as a result, people are beginning to sit up and take notice. We are seeing a renewed interest in the work of the organization.
This is clearly very positive.
Our next Ministerial Conference is in Buenos Aires at the end of this year. That could be an important opportunity to make further progress in our talks.
The debate at the WTO is very dynamic at the moment. Members are discussing how we can make progress in a wide range of areas – including on longstanding negotiating issues that are part of the Doha Round.
Many of the issues being discussed are of key importance to India.
For example, several papers have been submitted in the area of domestic support in agriculture.
The ideas put forward here still haven’t been able to bridge the existing gaps. However, these ideas are being intensely debated and we must do our best to get outcomes in this area in Buenos Aires.
On other fronts, as mandated by ministers, work is ongoing to find a permanent solution on public stockholding. We have a clear and mandated deadline for finding a solution by the Ministerial Conference at the end of the year. We must redouble our efforts to meet this deadline.
Work is also ongoing on a Special Safeguard Mechanism for developing countries, which would help deal with import surges or price declines of food products that can harm domestic production. There is strong support for this, particularly from developing countries that are net food importers.
If we are to be successful on all these issues, members must step up their efforts. I will do all I possibly can to drive this forward – but progress is in the hands of members. We must shift gears and intensify the work to deliver on these matters. India’s leadership will be critical to help advance these debates.
There have also been interesting discussions on services, with India taking a leading role. The paper that India has put forward on “Trade Facilitation in Services” is a very welcome initiative. For a long time, negotiating efforts have focused on other areas. However, there seems to be a growing appetite from members to advance conversations here.
For the great majority of countries the services sector accounts for the greatest share of domestic production and employment. Therefore services have become a key part of trade policy and an essential tool of economic development and connectivity.
In India, commercial services represent 36 per cent of total exports, making the country the fifth largest exporter of services globally.
So I think it is very positive that members want to do more in this area.
India’s paper on “Trade Facilitation in Services” puts forward a number of ideas to support the flow of trade in services. For example, it includes suggestions for:
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Provisions to facilitate movement of persons;
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Measures to support consumption of health services abroad;
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Facilitation of cross-border information flows;
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Cooperation among competent authorities; and
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Development provisions and technical assistance.
This takes on some challenging issues – but I welcome that ambition. Taking this forward will require further efforts to engage, clarify and explore possibilities with a range of partners. I have no doubt that India will continue to take these conversations forward. And I look forward to discussing how to advance this issue with Minister Sitharaman when we meet later today.
Of course, the WTO Secretariat will be pleased to continue supporting India on this and on other initiatives.
Beyond this, some members have been talking about a number of other issues, such as:
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How to help smaller companies to trade,
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Steps on investment and investment facilitation, and
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How to harness the power of e-commerce to support inclusiveness and to help connect small suppliers, including looking at how to improve connectivity infrastructure in developing countries.
These conversations are still taking shape and it is up to members to take them forward – or not.
My sense is that members want to use the WTO’s platform to ensure that debates are inclusive, so that all can have a say on these issues.
And despite differences on how to advance these conversations, there are some important commonalities. For example, there is a strong desire to maintain development at the centre of our work. There is also a shared desire to keep making progress this year, and build on the successes of the last two WTO ministerial conferences.
So members must build on these commonalities and continue talking to each other in a constant search for common ground.
The WTO is a member-driven organization. It is members’ task to decide the direction of our negotiating work, to submit proposals, to consult, revise, and build convergence.
As Director-General, my role is to help facilitate these exchanges, but I can’t make things happen.
It is up to members to drive any initiative forward. We succeed when members are both ambitious and flexible – and when they are ready to recognize the diversity of circumstances among the membership in finding solutions that work for all.
I am here this week to listen to India’s priorities and concerns, and see how the WTO can help. India is a very active WTO member – and a strong supporter of multilateralism on the global stage.
Working together, I am sure that we can continue paving the way for India’s “bold advance”.
Thank you.
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Tanzania steps up war on counterfeits
Tanzania’s Fair Competition Commission destroyed counterfeit goods worth over $ 8 million between January and December last year.
The counterfeits were impounded from 24 swoops conducted at several places across the country, as well as 95 regular inspections at the port of Dar es Salaam.
“Of these, counterfeits worth Tsh13.41 billion ($6 million) were impounded during normal inspections at the port of Dar es Salaam and inland container depots (ICDs) within the city, while fake goods worth Tsh5.29 billion ($2.3 million) were confiscated during impromptu raids,” said Godfrey Gabriel, the acting director of the Department of Consumer Protection and Anti-Counterfeits (DCPA).
“The FCC has managed to destroy goods worth Tsh850.372 million ($380,224) in Mwanza and Dar es Salaam during the same period,” he added.
Confiscated
Among the goods confiscated were ink cartridges, toothbrushes, wines, electrical appliances and equipment, Nokia and Techno mobile phones, razor blades, body lotions, shoe polish, and beauty products.
Mr Gabriel said the National Environmental Management Council (NEMC) has proposed specific personnel for the destruction of different types of goods.
“Currently the destruction of such goods is no longer undertaken at the Pugu Kinyamwezi dumpsite. The counterfeits are now destroyed by crushing and removing parts that can be recycled. The main focus of the commission is to make certain that these goods are completely destroyed. The commission supervises the destruction of such goods in a manner and system that follows laid-down regulations.”
This year, the commission plans to strengthen inspection at entry points.
Together with the Tanzania Revenue Authority, the commission will follow-up on goods entering the country to capture shipments that are suspected of containing counterfeit goods.
The commission has already obtained a permit to inspect and impound counterfeit goods at airports.
“All of these efforts are expected to drastically reduce the problem of counterfeit goods and thus protect consumers in Tanzania,” said Mr Gabriel.
The Commission also plans to train primary school children to understand their rights and obligations as consumers. This training would include education on how they can avoid counterfeit goods.
“The Commission will undertake a pilot exercise to provide such training to primary schools in Morogoro town, and thereafter spread it to other areas taking into consideration availability of resources,” Mr Gabriel said.
The commission’s communication and public relations officer Frank Mdimi said the increase in the worth of goods impounded last year was because traders were now declaring the true value of their imports.
“This administration under President Magufuli has become very tough on imports and their value. The huge amount of counterfeit goods destroyed last year, worth Tsh18.67 billion, could be attributed to the goods in question having their actual value,” said Mr Mdimi.
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tralac’s Daily News Selection
Today in Delhi: India to pitch global services accord to WTO chief Azevedo (The Hindu)
India will make a presentation on Thursday to WTO Director General Roberto Azevedo and India Inc. on New Delhi’s proposal for a global pact to boost services trade. The proposed Trade Facilitation in Services (TFS) Agreement at the WTO-level aims to ease norms including those relating to movement of foreign skilled workers/professionals across borders for short-term work. Among the objectives of the proposed pact, official sources said, is ensuring portability of social security contributions, as well as making sure fees or charges for immigration or visas are reasonable, transparent, and non-restrictive (or impairing the supply of services) in nature. It also aims to pave the way for a single window mechanism for foreign investment approvals. [Roberto Azevedo interview: WTO provides the means to deal with trade concerns]
Ron Sandrey: Services trade in Africa (tralac)
This paper examines the African services trade to set a background for assessing the main issues for consideration in the current Continental Free Trade Area (CFTA) negotiations. This is done systematically by firstly looking at the actual trade data in order to see who the main traders are and assess the extent to which South Africa dominates the trade. We then look at some of the issues associated with barriers to services trade and how the CFTA may address these.
CFTA negotiations: AU statement on Kigali meeting
“The CFTA will involve an increase in the movement of Goods across borders. Indeed one of the objectives is to boost Intra-African Trade. To achieve this, there will be need to ensure that the divergent national customs laws are harmonized and the procedures simplified together with effective cooperation by Customs administrations”, he highlighted. The Head of Trade Division also emphasized the importance of services as he mentioned that services sector contribute on average around 50% of GDP for many African countries economies. He noted that to facilitate the conclusion of the CFTA negotiations by 2017, the AUC developed a draft CFTA Model Text on both Trade in Goods and Trade in Services as instructed by the Heads of State and Government’s Assembly in July 2016. He informed the Meeting that the draft text was considered by the RECs and members of the Continental Task Force on the CFTA last month.
Call for papers: Boosting intra-African trade through RECs (COMESA)
The objective of this call (pdf) is to seek for empirical and/or policy oriented research papers to address issues pertinent to the agenda of regional integration in COMESA in the context of boosting Intra-Africa trade. The theme should be considered along any one of the following sub-thematic areas: (i) Market integration, (ii) Investments, (iii) The Blue Economy, (iv) Industrialization, (v) Economic Infrastructure. The abstracts and papers will be reviewed and successful authors invited to make presentations at the Third COMESA Research Forum scheduled for July 2017 in Kigali, Rwanda. Select papers will be peer reviewed and published in COMESA’s flagship publication “Key Issues in Regional Integration Volume VI”
Trade between China and Portuguese-speaking countries falls for 2nd consecutive year (Macauhub)
The value of trade between China and Portuguese-speaking countries fell in 2016 for the second consecutive year, reaching $90.874bn, with an annual contraction of 7.72%, according to official figures released by Forum Macau. In 2015, the value of trade between China and the eight Portuguese-speaking countries was $98.474bn, which was a decrease of 25.73% compared to the $132.581bn recorded in 2014. With Angola, which comes second in terms of value, bilateral trade with China reached $15.579bn (-20.94%), with Angolan companies exporting goods, mainly oil, worth $13.818bn (-13.54%) and importing goods worth $1.761bn (-52.69%). Two-way trade between China and Mozambique amounted to $1.859bn (-22.29%), with China exporting goods worth US$1.379bn (-28.19%) and importing goods in the amount of $479m (+6.17%).
Indonesia, Mozambique to bolster trade ties (Jakarta Post)
After a 13-year absence, Foreign Minister Retno LP Marsudi visited Mozambique with an entourage of business players from the private and public sectors, including representatives from the Indonesian Chamber of Commerce and Industry (Kadin), the Indonesia Eximbank and shipbuilder PT PAL. She hoped that the presence of Eximbank and Kadin would help provide concrete solutions to one of the biggest stumbling blocks in Indonesian-African trade relations: trade cooperation financing.
Arab-Africa Trade Bridges Programme: inaugural forum (Zawya)
The International Islamic Trade Finance Corporation is organising the launching forum of the Arab-Africa Trade Bridges Programme – 22-23 February, in Rabat – in partnership with the Islamic Development Bank and the Minister-Delegate for Industry, Trade, Investment, and Digital Economy, in charge of Morocco’s Foreign Trade. The programme reflects the significant role of trade as a lever of sustainable economic growth, job creation, and poverty alleviation. It is necessary to further capitalise on the existing – but still untapped – trade potential between Arab and Sub-Saharan African countries.
Zimbabwe: Treasury creates foreign currency management system (NewsDay)
Government has created a “managed foreign currency” system, which will see the central bank retaining 50% of the export proceeds to be distributed to companies, as it moves to resolve foreign payments delays. This comes as the Confederation of Zimbabwe Industries is on record saying the delays in paying foreign suppliers have led to manufacturers failing to meet production deadlines, with a growing number now facing the prospect of closing. Finance minister Patrick Chinamasa yesterday told reporters on the sidelines of the official opening of Lesaffre Zimbabwe’s new baking centre that the delays were as a result of the government taking too long in plugging the siphoning off of foreign currency from the market in 2016.
Zambia: 2016 investment pledges up marginally to $3.4bn - ZDA (Lusaka Times)
Zambia recorded $3.4bn in investment pledges in different sectors of the economy in 2016, representing a 0.7% increase from the previous year. The Zambia Development Agency says the energy sector registered the highest amount of pledged investment, followed by manufacturing and agriculture.
Tanzania anticipates Chinese investment to boost economy (The Exchange)
The economy of Tanzania has a prospect of sky rocketing as the country awaits close to 1,000 Chinese extra-large investors who are in line to inject some investment values in specific economic zone. These horizons include textile, manufacturing, fishing, mining, and agriculture across the board following mutual bilateral relations between the two countries. “Massive investments will come from large scale Chinese investors eyeing to invest in those sectors to boost the country’s financial income through direct foreign investment and other contributions that will be brought by them,” Tanzania Overseas Chinese Association, Chairman of Superintendent, Andrew Huang said. “For the time being we have about 20,000 business people from China who are operating in different sectors in rural and urban areas across the country,” he said.
Uganda Economic Update (World Bank)
For FY 2016/17, there are indications that the current account deficit could increase to a value above 7% of GDP, with South Sudan markets remaining risky or completely closed; global oil prices continuing to increase and therefore exerting upward pressure on the import bill; the Government investment program accelerating; the tourism receipts reducing in response to new developments including the Kasese clashes in western Uganda and avian flu outbreak; and transfers declining as a result of global uncertainties. Therefore, the value of imports is expected to increase from 18% of GDP in FY 2015/16 to 20.4% in FY 2016/17, while a deceleration in the growth of exports will see these inflows paying for only 55% of the import bill. Already, during the first quarter of FY 2016/17, the trade and services deficits worsened to $395m and $255m respectively, largely because of these factors. [Part 1: The state of the economy; Part 2: Deeper finance can unlock growth accelerators]
Somalia: IMF Executive Board concludes 2016 Article IV Consultation (IMF)
The annual trade deficit during 2014–15 was about 55.5% of GDP and was largely financed by remittances and grants. For the same period, the current account registered an annual deficit of 8.6% of GDP and was covered mostly by foreign direct investment, mainly by Somali diaspora.
The struggle for East Africa’s oil and gas exports (IPPMedia)
Regardless of the reasons behind Uganda’s and Tanzania’s pipeline decision, the demise of the Uganda-Kenya Crude Oil Pipeline (UKCOP) is a blow to Kenya in terms of regional standing, oil export potential, revenues from transit fees and the development of critical infrastructure. Why did Kenya fail to effectively counter Tanzania’s charm offensive?
IGAD: Statement by the Executive Secretary on the drought in the Greater Horn of Africa
In the drought affected cropping lands (over Deyr area in Somalia and coastal Kenya), 70 to 100 percent crop failure has been registered. Livestock mortality has been particularly devastating amongst small ruminants with mortality rate ranging from 25 to 75 percent in the cross border areas of Somalia-Kenya-Ethiopia. In addition, livestock prices have dropped by as much as 700%. Terms of trade have declined in the region, with Ethiopia registering a figure of almost 10%. This is exacerbated by a substantial negative impact on external balances, as well as a small impact on financial sector-soundness in the other countries. The overall impact on fiscal positions is a likely increase in current budget spending and deterioration in the fiscal balance and weak adaptation capacity. Despite the downtrend in global agriculture commodity prices, the drought has resulted in an increase in domestic food prices in the region. Cereal prices (e.g. maize) have gone up by about 130%, while those of critical food items such as oils, beans and wheat flour increased by at least 50% in some pastoralist areas. The limited financial and institutional capacity for effective adaptation to reduce exposure and vulnerability will result in limited safety net to the most vulnerable households.
Nigeria to raise tomato import duty to boost local production (Reuters)
Nigeria will increase custom duties for tomato imports and waive tariffs for some farming equipment to stimulate local production and investment in the agriculture sector, its trade minister said on Wednesday. "We are going to go up. We will be announcing what the new tariffs are but clearly there is a new set of tariffs," Okechukwu Enelamah told reporters, without giving details. Customs duties on some greenhouse equipment currently amounting to as much as 20 percent would be removed. [1st Nigeria Food Safety and Investment Forum: UNIDO input]
Enabling the Business of Agriculture 2017 (World Bank)
Improving agriculture regulations in low and middle income countries could go a long way toward feeding the world’s growing population and improving farmers’ livelihoods around the world, says the latest edition of the World Bank Group’s Enabling the Business of Agriculture (EBA) 2017 report, released yesterday. The report argues that, while many countries are already home to strong, commercially-oriented agriculture, more needs to be done, for example, by lowering transaction costs for farmers and firms engaged in domestic trade and exports, by improving water permit systems for irrigation, or by providing better conditions for microfinance institutions. Smart regulations that ensure safety and quality control while avoiding burdensome and inefficient requirements are highlighted in the report as good practices that governments may wish to consider as part of their reform efforts.
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First meeting of the CFTA Technical Working Groups (TWGs) discusses technical issues related to the Continental Free Trade Area
The African Union Commission organized the First Meeting of the Continental Free Trade Area (CFTA) Technical Working Groups from 6 to 7 February 2017 in Kigali. The objectives of the Meeting were amongst others, to provide the experts with a background of the CFTA and enable an appreciation of the groundwork covered so far.
It was to provide an understanding of the approved terms of reference so that the Technical Working Groups appreciate the nature and breadth of their assignments. It was also to provide the experts with an overview of the draft legal text and appendices which will be used as inputs to the negotiations.
The meeting was attended by relevant experts, in the technical areas as determined by each African Union Member States together with the relevant experts from the Regional Economic Communities (RECs), other members of the Continental Task Force (CTF) and the United Nations Conference on Trade and Development (UNCTAD).
The Meeting takes into account the first aspiration of the 10-year plan of Agenda 2063 whose objective is to see "A prosperous Africa based on inclusive growth and sustainable development".
With this in mind, the Meeting focused on fast-tracking the establishment of the Continental Free Trade Area (CFTA) by the indicative date of 2017. In so doing, the Technical Working Groups (TWGs) focused attention to Trade in Services (TIS), Non-Tariff Barriers (NTBs) and Technical Barriers to Trade (TBTs), Sanitary and Phytosanitary (SPS) Measures, Rules of Origin (RoO), Legal and Institutional Affairs, Trade Remedies, and Customs Procedures and Trade Facilitation.
In his introductory remarks on behalf of Mrs. Treasure Thembisile Maphanga, Director for Trade and Industry of the African Union Commission, Mr. Nadir Merah, Head of Trade Division, expressed the gratitude of the AU Commission to the Government and People of Rwanda for hosting this Meeting.
He underscored the importance of the Technical Working Groups’ work during the two weeks and mentioned that the outcomes of the Meeting will allow the negotiating institutions recognized by the Rules of Procedures for CFTA Negotiations, i.e. the Negotiating Forum, the Senior Trade Officials, and African Trade Ministers to reach consensus and have a smooth landing zone. Mr. Nadir pointed out that one of the most important areas of Goods negotiations is Customs issues.
“The CFTA will involve an increase in the movement of Goods across borders. Indeed one of the objectives is to boost Intra-African Trade. To achieve this, there will be need to ensure that the divergent national customs laws are harmonized and the procedures simplified together with effective cooperation by Customs administrations,” he highlighted.
The Head of Trade Division also emphasized the importance of Services as he mentioned that Services sector contribute on average around 50% of GDP for many African countries economies. He noted that to facilitate the conclusion of the CFTA negotiations by 2017, the African Union Commission developed a draft CFTA Model Text on both Trade in Goods and Trade in Services as instructed by the Heads of State and Government’s Assembly in July 2016. He informed the Meeting that the draft text was considered by the RECs and members of the Continental Task Force on the CFTA last month. He concluded by thanking cooperating partners for their continued support for the CFTA process and wished fruitful deliberations to the Meeting.
The Director General for Trade and investment of the Ministry of Trade and Industry of Rwanda, Mr. Robert Opirah stressed that Rwanda was highly privileged to host this 1st round of the Technical Working Groups to discuss the opportunities for enhancing Intra-African Trade and Industrialization as part of the Continental Free Trade Area.
Mr. Opirah recalled the objectives and advantages of the CFTA and pointed out that the CFTA is a good platform for creating greater synergy and partnerships for the business communities of all the countries. He urged and encouraged all chief negotiators present to try to build consensus in all matters of the negotiations and keep the spirit of partnership which, he said, will address some of the constraints Africa is facing in order to increase Intra-Africa Trade and advance the Africa competitive agenda.
In conclusion, he called for fruitful sharing of experiences and emphasized that it is these noble aspirations of increased market access within Africa’s own region that the CTFA negotiations should strive to achieve.
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COMESA call for papers 2017: Boosting intra-African trade through RECs
COMESA-ACBF Capacity Building Project in Economic and Trade Policy Analysis and Research
Following the Eighteenth African Union Summit of Heads of State and Governments’ meeting held on 23-30 January 2012 in Addis Ababa, Ethiopia, focusing on the theme of “Boosting Intra-Africa Trade”, the role of Regional Economic Communities (RECs) has become more pronounced in implementing the Abuja Treaty establishing the African Economic Community and the Constitutive Act of the African Union.
The RECs, as the building blocs of the African Union, have continued to individually pursue integration agenda both as a development and transformative strategy whose basis is free trade, customs unions and common markets within their respective jurisdictions.
In pursuit of this agenda landmark commitments have been made; key among them the decision by Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) to establish a single Free Trade Area (FTA). The Tripartite FTA launched on 10 June 2015 in Sharm el Sheikh, Egypt covers 26 countries representing more than half of AU membership.
The launch of the Tripartite FTA has galvanized interest towards a much broader Continental FTA. The AU Ministers of Trade in their Sixth Ordinary Session held on 29 October, 2010 in Kigali, Rwanda, in response to the progress made in the implementation of FTAs and Customs Union in various RECs, recommended the fast-tracking of the establishment of an African FTA. Consequently, negotiations are in the preliminary stages and the launch of the CFTA has an indicative date of 2017.
At the continental level, consolidation of all these individual efforts is expected to result to an African Common Market (ACM) and an African Economic Community (AEC) in which economic, fiscal and sectoral policies are continentally uniform. This should culminate into breaking down of tariff and non-tariff barriers thereby enhancing intra-African trade.
COMESA, as one of the largest of the AU recognized RECs in Africa is playing a critical role in consolidating the regional markets. COMESA was established in 1994 to replace the Preferential Trade Area for Eastern and Southern Africa (PTA) set up in 1981 within the framework of the Organization of African Unity (OAU) Lagos Plan of Action and the First Act of Lagos. The COMESA regional bloc currently comprises of 19 Member States (Burundi, Comoros, Democratic Republic of Congo (DRC), Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe).
COMESA successfully established a Free Trade Area (FTA) in October 2000 with the key aim of facilitating regional integration through zero customs tariffs on goods traded among the member states. COMESA envisages to progress to a Common Market and eventually to a full Economic Community by 2025. COMESA’s regional integration agenda covers a range of issues from trade and monetary affairs, investment, agriculture, infrastructure, gender, climate change, standards, and security among other trade related issues.
Despite progress in the conclusion of various negotiations agenda, there remains slow implementation of agreed obligations by member states. This is partly due to prevailing capacity gaps in both the member states and the secretariat in rolling out the implementation. It is against this background that COMESA-ACBF capacity building programme in Economic and Trade Policy Research and Analysis was initiated to enhance the capacity of member states and the secretariat to undertake policy oriented research to foster evidence based policy decision making.
Objective of call for papers
The objective of this call is to seek for empirical and/or policy oriented research papers to address issues pertinent to the agenda of regional integration in COMESA in the context of boosting Intra-Africa trade.
Research Theme
COMESA therefore calls for papers under the theme, “Boosting intra-African trade through RECs: Perspectives from COMESA regional integration programmes”.
The theme should be considered along any one of the following sub-thematic areas:
- Market integration
- Investments
- The Blue Economy
- Industrialization
- Economic Infrastructure
COMESA now invites researchers to submit extended abstracts and full papers under the different research areas. The abstracts and papers will be reviewed and successful authors invited to make presentations at the Third COMESA Research Forum scheduled for July 2017 in Kigali – Rwanda. Select papers will be peer reviewed and published in COMESA’s flagship publication “Key Issues in Regional Integration Volume VI”.
Find out more in the Call for papers 2017 below.
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India to pitch global services accord to WTO chief Azevêdo
India was expected to make a presentation on Thursday to World Trade Organisation (WTO) Director General Roberto Azevêdo and India Inc. on New Delhi’s proposal for a global pact to boost services trade.
The proposed Trade Facilitation in Services (TFS) Agreement at the WTO-level aims to ease norms including those relating to movement of foreign skilled workers / professionals across borders for short-term work.
Among the objectives of the proposed pact, official sources said, is ensuring portability of social security contributions, as well as making sure fees or charges for immigration or visas are reasonable, transparent, and non-restrictive (or impairing the supply of services) in nature.
It also aims to pave the way for a single window mechanism for foreign investment approvals.
Besides, the proposal is to ensure cross-border insurance coverage to boost medical tourism, publication of measures impacting services trade and timely availability of relevant information in all the WTO official languages as well as free flow of data/information for cross-border supply of services.
The presentation is slated to be made by two senior Commerce Ministry officials at a Confederation of Indian Industry-event, the sources said.
TFS vs TFA pact
They said the officials will stress that the TFS Agreement will be “meaningful only if it has comprehensive scope and covers measures across all modes of supply (for services delivery in cross-border trade), relating to entry into the market as well as those applied post-entry.”
The sources said the presentation, however, will specify that the proposed services pact is similar to the Trade Facilitation Agreement (TFA) in Goods adopted by the WTO Members in 2014 to ease customs norms for boosting global goods trade.
The proposed TFS pact is also about ‘facilitation’ – that is “making market access ‘effective’ and commercially meaningful and not about ‘new’ (or greater) market access.”
World Bank data shows the growing share of services in the world economy, the sources said, adding, however, that global trade flows in services remain subject to numerous border and behind-the-border barriers.
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Uganda Economic Update: Let’s solve the finance puzzle to accelerate growth and shared prosperity
The days of queuing up at the bank for a teller are numbered. More Ugandans are accessing cash at their convenience – at point of sale, and also via automated teller machines, the internet, and the mobile money services.
According to the World Bank’s most recent Uganda Economic Update, “Step by Step: Let’s Solve the Finance Puzzle to Accelerate Growth and Shared Prosperity,” financial services have expanded rapidly in Uganda over the past decade with approximately eight million adults now having access to an account at a formal financial institution.
This is thanks in part to the rising growth of mobile money and opening of a credit reference bureau in 2008. About 8 million adult Ugandans own a bank account. This pushes the share of the adult population with access to financial services to 52 percent, up from 28 percent in 2009. With 7 million active users, mobile money, has greatly increased access to cost effective financial services, such as saving, money transfer, and paying bills. Confidence in the formal financial system however remains low, and the high interest rates make borrowing very expensive for businesses and households.
“Access to financial services is an important step to achieving financial inclusion. Global experience shows that countries that have been able to achieve rapid, equitable economic growth have developed their financial systems to effectively mobilize savings and intermediate resources and channel these into productive activities,” said Rachel Kaggwa Sebudde, World Bank senior economist and lead author of the Update.
According to the report, the puzzle manifests in the mismatch between the low return on savings and the high cost of borrowing. Savings attract 3-6 percent annual return while interest rates on loans range between 22 and 25 percent. Low credit rates support household and business spending, while high returns on deposits encourage more savings. Uganda currently ranks at 120 out of 138 countries in affordability of financial services by the World Economic Forum’s Global Competitiveness Report (2016-2017). The high cost of credit, and other short comings like limited financial market infrastructure, and costly access to physical infrastructure that enables financial services, have made formal regulated services unattractive to many consumers. This is also preventing Uganda’s financial sector from reaching its potential to support economic growth.
“Increasing access to low cost and safe financial products for firms will spur business investments and economic growth. Similarly, financial products targeted at the informal sector, rural households and women will create jobs and build resilience against shocks,” said Ms Christina Malmberg Calvo, World Bank Country Manager for Uganda.
Uganda’s economy is not performing according to expectations. Growth declined by 0.2 percent in the first quarter of 2016/17. The economy had been anticipated to rebound strongly on the back of planned public spending on infrastructure, and increase in private sector credit to raise productivity. However, the continued weak domestic economic environment, worsened by the low commodity and fuel prices in international markets, the crisis in South Sudan, and severe drought have continued to strain investment and exports, and hence slowed down growth.
According to the Update, Uganda’s economy will need to continue adjusting to these shocks and strengthen the financial system, which remains jittery due to the high level of non-performing assets and the Central Bank’s recent takeover and resolution of Crane Bank, previously the third largest bank. If the economy overcomes these shocks and grows at an average of 2.5 percent per quarter, the overall rate of growth for FY 2016/17 could rise to 4-5 percent. However, this rate of growth is far below the over 10 percent required for the country to outpace the population growth rate and realise its development aspirations to achieve middle income status by 2020.
The report notes that a big percentage of the population remains unserved by credit due to high costs. Interest rates often range between 22 and 25% of the total value of the borrowed amount. Depending on the duration of the loan, consumers can end up paying more than twice the value of the original amount, which prevents many businesses and households from accessing bank loans. On the other hand, the low return on savings – 3 to 6 percent annually – and the high cost of credit have created a mismatch in the financial system which has constrained household and business spending.
Proximity to services also remains a key hindrance to the population, according to the report. Consumers have to travel over long distances to access formal financial institutions, many of them located in urban areas. Another constraint is the difficulty of the rural poor, women and the informal sector to meet the stringent documentation requirements.
Undertaking reforms aimed at stimulating consumers’ access to a wide range of services, and reducing the cost of credit could boost growth and insulate the economy from risks and the impact of negative shocks during an economic downturn like the current one. Continuing efforts to strengthen the legal, regulatory, institutional and supervisory framework of the financial sector to ensure it is safe and sound is equally important in restoring consumer confidence.
The majority of the unbanked rely on personal savings, the report says, or borrow from informal unregulated intermediaries including “loan sharks”. A big proportion of the population keeps their savings in form of cash stored at home, or in livestock, gold, or other similar assets – all of which expose the owner to high risk.
The report notes that greater access and deepening of financial services could help reduce poverty and vulnerability by enabling Ugandan, including the rural poor, to diversify their sources of livelihood, reduce hunger, and increase their resilience from shocks and failing back into poverty. Easier access to financing is also crucial to expanding agricultural production through investing in better technology and agri-input, in order to raise rural incomes, generate jobs and raise productivity across the economy, the report says.
The Government has put policies and strategies in place to leverage the financial system to support economic growth. The National Financial Inclusion Strategy has paved way for agent banking, which will allow financial institutions to contract retail outlets to process financial services. The introduction of Islamic banking, bancassurance, and an increase of commercial bank capital threshold are further important innovations, the report says, while the creation of an independent Deposit Protection Fund will offer greater protection to consumers.
“Strong intermediation structures will build confidence in the financial system, encourage savers, ease access to credit for borrowers and lower the costs of credit, which in turn reduces the overall transaction costs for enterprises, making them more competitive,” said Valeriya Goffe, World Bank senior financial sector specialist and co-author of the report.
The report recommends that these measures are combined with efforts to improve the business environment, promoting financial literacy, introducing valid identification documents, encouraging land registration and titling, and strengthening consumer protection measures.
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tralac’s Daily News Selection
From tralac’s roundtable, yesterday, on global, African, and South African trade and trade-related developments: the background paper, by Taku Fundira
CFTA negotiations update: 200 delegates discuss technical elements of the Free Trade Area Agreement (Rwanda News Agency)
The AU’s Chief Technical Advisor on the CFTA, Prudence Sebahizi: "Delegates will make recommendations to the Negotiating Forum which will hold its meeting in Addis Ababa at the end of February 2017. The Negotiating Forum is made up of one representative per African country, that is, chief negotiator and his deputy." He stressed that a total of seven working sessions, corresponding to seven areas of discussion, would be held in Kigali in two phases. The first session takes place from 6-10 February; the second session from 13-17 February. The first session comprises four areas which are: (i) Trade in services; (ii) Rules of origin; (iii) Sanitary and phytosanitary measures; (iv) Non-tariff barriers and technical barriers to trade. The second session integrates a further three areas: (i) Commercial Corrective Measures; (ii) Customs procedures and facilitation of trade exchanges; (iii) Legal and institutional affairs.
Each session in Kigali brings together 200 delegates. At the end of the first session 100 delegates will return to their respective countries, replaced by 100 others who will join the 100 or so delegates who will participate fully in both sessions. According to the Chief Technical Advisor, the texts governing the African Common Market will have to be finalized before the end of 2017, as recommended by the African Heads of State. "Our texts on the African Common Market should be ready for signature at the end of 2017. We can organize an extraordinary summit on this issue of signature to accelerate the integration of the continent," explained Sebahizi. [Translated from: Deux cents délégués africains discutent sur les éléments techniques de l’Accord sur la Zone de Libre Echange Continentale]
Tackling illicit financial flows: can Africa rise to the challenge? (UNECA)
Optimizing Domestic Revenue Mobilization and Value Addition of Africa’s Minerals (pdf): the report was prepared at the request of the AU Heads of State and Government. It examines the management of Africa’s mineral resources, with a particular focus on optimizing revenue mobilization through the harmonization of fiscal regimes, in particular royalties, across the continent. The report presents different options for harmonization and their implications for supporting domestic revenue mobilization and regional value chains. The report reviews experiences from other countries and regions, with view to identifying good practices for designing and implementing effective fiscal regimes in Africa.
International Forum for NTF Committees: two commentaries by Dr Sangeeta Mohanty (Cross Border Research Association)
Part 1: The following panel discussions centred on the role of regional organisations in Africa and Latin America and the Caribbean along with the bottlenecks affecting the implementation of TF reforms. Parallels were drawn between the African and Latin American context where regional integration is largely missing. The main challenges appear to be limited human and financial resources, different priorities among members and agencies, duplication of efforts across existing agencies, weak monitoring and evaluation process, private sector exclusion from decision-making, limited coordination of NTFCs at regional and sub-regional levels, the different mandates and goals of NTFCs, and vested interests of different parties. Panellists recommended a variety of solutions, such as empowering regional committees with the capacity to coordinate, mobilising of resources, harmonising and standardising procedures, aligning facilitation and compliance, enhancing regional competitiveness, and ensuring public-private cooperation.
Part 2: The forum concluded with an extensive discussion around the specific role of NTFCs in the evaluation and monitoring of reform processes and in shaping the future of Trade Facilitation. An overview of the WCO tools for monitoring and evaluation was given, namely the Time Release Study and the SAFE Framework of Standards – Self- Assessment Checklist. The private sector was viewed as a valuable instrument in the monitoring process. Since businesses have legitimate reasons for efficient border management, leveraging public-private dialogue in each step of the reform process was considered vital. Coordinated Border Management and Information and Communication Technologies, ICT, were considered two important pillars of Trade Facilitation reforms. Strengthening border management and ICT based modernisation of services is expected to play an increasingly significant role in global trade.
The case for a Europe-led ‘Africa Infrastructure Investment Bank’ (Beyondbrics, FT)
Europe should create a new institution, the African Infrastructure Investment Bank, that brings to Africa all the accumulated experience of the EIB and EBRD, finances projects that meet the required thresholds, and attracts the right levels of human, financial and political capital needed for this enormous challenge (working in partnership with the current African Development Bank). Additionally, a Europe-led African Infrastructure Investment Bank would create the right level of engagement between the two continents, with neither unjustified patronising nor unjustified complaining. This institution would address once and for all the (mis)perception that Europe and the US only come with check lists rather than with cheque books. [Commentary by Miguel Azevedo, Citigroup]
Günter Nooke: ‘Who does DG Trade think it is?’ (DIE)
For the 2017 summit, it would be both very noble, as well as offering a vote of confidence, if the EU Commission and the member states were to offer a moratorium on EPAs for ten plus ten years, and if we jointly promoted the larger market in Africa, funded infrastructure, created educational opportunities and provided know-how and investment guarantees as described in the EU’s External Investment Plan, i.e. if we took steps in a different direction together. To get the debate under way, allow me to end with a classic double-entendre (from football coach Giovanni Trapattoni), now related to the EPA negotiations: who does DG Trade think it is? [Note: The next EU-Africa summit is due to take place in Abidjan in November]
Ghana ends first round of oral defence in maritime border dispute with Ivory Coast (CitiFM)
Ghana’s new Attorney General, Gloria Akuffo, who led the legal team, questioned Ivory Coast’s claims, despite a long standing agreement on their maritime boundary under their domestic laws. Ivory Coast has accused Ghana of using the development of its oil industry to annex the territory which does not belong to it. However, disputing this argument, Madam Akuffo said Ghana had developed its oil industry based on pre-existing maritime boundary the two countries have mutually recognized over the years. “It is on the basis of this tacit, mutual understanding that, that over many years Ghana has developed this industry step by step, openly, from the first licensing of blocks, through decades of studies, exploratory drilling and the eventual drilling of wells” she told the Special Chamber when it resumed public hearing on Tuesday, February 6, 2017.
Indonesia, South Africa talk to boost trade (Jakarta Post)
Foreign Minister Retno LP Marsudi was in Cape Town on Monday for bilateral talks with her South African counterpart. She said an agreement was struck with South Africa’s International Relations and Cooperation Minister Maite Nkoana-Mashabane to finalize a plan of action for both countries’ 2017–2021 Strategic Partnership, which would act as the basis of future economic cooperation. Afterwards, Retno spoke to a South African-Indonesian business forum, inviting local businesses from the energy, shipping, and strategic industry sectors, as well as travel agents and importers of furniture and foodstuffs, to “trade, invest in and tour” Indonesia. Members of the Indonesian Chamber of Commerce and Industry (Kadin) and state export financier Indonesia Eximbank were also present, completing the promotion-heavy entourage. One of the results of the forum includes a plan to import 18 containers worth of consumer goods from Indonesia, as well as an assessment of plans to build an instant noodle production facility in South Africa.
Mauritius: Foreign Affairs Minister invites Indian investors to invest in Africa through Mauritius (GoM)
Minister Lutchmeenaraidoo highlighted that doing business with Africa is one of the three pillars to boost the Mauritian economy along with the blue economy and the Maritime Hub. Mauritius relies heavily on strategic partnerships to develop new activities and in this context it seeks to encourage Indian operators to take an interest in them and to explore ways of collaboration within the framework of South-South cooperation, he added. He underscored that with a new opening strategy, Mauritius can become a regional power within the next ten to fifteen years. He further explained the Mauritian approach to putting in place instruments such as special purpose vehicles to channel international capital towards development projects in Africa.
The World in 2050 (PwC)
We project that the world economy will roughly double in size by 2042, growing at an annual average rate of around 2.6% between 2016 and 2050. We expect this growth to be driven larely by emerging market and developing countries, with the E7 economies of Brazil, China, India, Indonesia, Mexico, Russia and Turkey growing at an annual average rate of almost 3.5% over the next 34 years, compared to just 1.6% for the advanced G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US. We will continue to see the shift in global economic power away from established advanced economies, especially those in Europe, towards emerging economies in Asia and elsewhere. As shown in Figure 1, the E7 could comprise almost 50% of world GDP by 2050, while the G7’s share declines to only just over 20%.
Lucian Cernat, Marion Jansen: ‘Talking trade in the post-truth era: bringing the numbers that matter’ (Vox)
Today’s challenge for economists is thus to show that the effect of globalisation on the median voter is positive. One way to do this is to create a more direct link between firms, voters and trade policymakers.
US trade data signals shift from goods to services (Nikkei Asian Review)
US exports of goods fell about 3% to $1.45 trillion in 2016 on a strong dollar even while the country logged a massive surplus in services, highlighting a shift in the economy’s focus. The figure fell a second straight year, according to Department of Commerce data released Tuesday. But the total deficit in goods also decreased 1.5% to $734.3 billion, thanks mostly to lower prices for such fuels as crude oil. Even without this boost, the US trade balance improved steadily over the last decade.
US 2016 trade gap with Japan was second-largest; deficit with China is half the total (Japan Times)
The US trade deficit in goods with Japan was its second-largest in 2016, totaling $68.94 billion, according to new US government data. The trade gap with China was five times bigger, topping the list at $347.04 billion, the Commerce Department said Tuesday. That was, however, 5.5% lower than a year earlier. The deficit with Germany, the previous No. 2, shrank 13.3% to $64.87 billion as shipments to Germany surged 12.4%. The deficit with the European Union narrowed 5.9% to $146.34 billion.
USA has run annual trade deficits for 41 straight years (CNS News)
The last time the United States ran a trade surplus was 1975 - when Gerald Ford was president. The Census Bureau has published historical data on annual US trade balances going back to 1960. In 13 of the 16 years from 1960 through 1975, the US ran goods-and-services trade surpluses (pdf) and surpluses in the trade of goods (merchandise) alone (pdf). But in each of the 41 years after 1975, according to data released by the Census Bureau and the Bureau of Economic Analysis, the US has run both a merchandise trade deficit and a goods and services deficit.
The global role of the US economy: linkages, policies and spillovers (World Bank)
This paper analyzes the role of the United States in the global economy and examines the extent of global spillovers from changes in US growth, monetary and fiscal policies, and uncertainty in its financial markets and economic policies. Developments in the US economy, the world’s largest, have effects far beyond its shores. A surge in US growth could provide a significant boost to the global economy. Tightening US financial conditions - whether due to contractionary US monetary policy or other reasons - could reverberate across global financial markets, with adverse effects on some emerging market and developing economies that rely heavily on external financing. In addition, lingering uncertainty about the course of US economic policy could have an appreciably negative effect on global growth prospects. While the United States plays a critical role in the world economy, activity in the rest of the world is also important for the United States. [Services in the TPP: what would be lost?]
Peru Free Trade Agreement could help India diversify in LatAm region (Financial Express)
At present, India’s bilateral trade to the Latam region is heavily concentrated in Brazil, with more than 35% of Indian goods landing in the country in 2015-16. Peru was the third-largest destination for Indian goods in the region with exports of $703.12 million during 2015-16. An FTA with Peru was originally thought of as test case to leverage the markets of the latter’s preferential trade partners in the region, observed Sandip Samaddar, head, Americas, Federation of Indian Chamber of Commerce (FICCI). Peru has preferential trading arrangement with about 53 countries. Given the fact that nearly 95% of Peru’s exports are covered by FTAs, this seems to be viable strategy. In order to implement this strategy, Indian companies have to aggressively integrate with the regional value chains in the Latin American region. This requires resource commitment from companies and a well-laid-out plan that would bear fruit only in the long run.
Trade, not poverty, could become focus of £1.3bn UK aid pot, watchdog warns (The Guardian)
The UK’s aid watchdog has warned that a £1.3bn pot of UK aid money intended primarily to reduce global poverty could become focused on trade with wealthier economies such as China and Brazil. The Independent Commission for Aid Impact also cautioned that potential suppliers of services to the government’s prosperity fund had been providing advice – often at a UK embassy level – on the designs of programmes in “ways that are not sufficiently transparent”. Icai called on the fund to improve its levels of transparency overall, saying there was too little public information available about its work.
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Tackling illicit financial flows – can Africa rise to the challenge?
At this year’s Africa Mining Vision day, some of Africa’s most influential mining industry leaders and government counterparts debated strategies to counter Illicit Financial Flows (IFFs) from the mining sector in order to boost domestic resource mobilization.
Held on the margins of Mining Indaba, the Africa Mining Vision Day session consisted of a number of activities, including a panel that examined gaps in the design and implementation of key instruments used in mineral-rich countries to mobilize domestic revenues.
“As such mobilization grows ever more important for Africa’s long-term development, curbing IFFs becomes an increasingly urgent issue,” noted the session. Estimates by the United Nations Economic Commission for Africa (ECA) show that, between 2000 and 2010, more than half (56.2%) of the IFFs from Africa came from the extractive sector.
Giving a pan-African perspective, African Union Commissioner for Trade and Industry, Fatima Haram Acyl, said, “An effective mineral-led industrialization strategy will therefore require new ways of looking at Africa’s rich minerals and metals endowment.”
Panel members underscored that achieving the transformative potential of Africa’s resources requires a new way of thinking about minerals which aligns with the continent’s owned priorities of industrialization and diversification through value addition, processing, beneficiation and the creation of strong mineral led linkages with other sectors of our economies.
The session, which is a feature of Mining Indaba’s annual Africa Mining Vision Day/Ministerial Symposium, was hosted by the African Minerals Development Centre (AMDC). AMDC has also recently published a major report on new approaches to tackling IFFs as a follow-up to the AUC/ECA High Level Panel on IFFs, led by former South African President Thabo Mbeki.
Background
Estimates by United Nations Economic Commission for Africa show that, over the period 2000-2010, more than half (56.2%) of the IFF from Africa came from the extractive sector and highly concentrated in few countries. The African Union High Level Panel Report on Illicit Financial Outflows estimates that over $50 billion leave the continent annually. Global Financial Integrity assesses that as a share of GDP, the continent bears the most disproportionate burden of cross-border unrecorded financial outflows approximating 8.6 percent of its GDP.
The AMDC report, ‘Impact of Illicit Financial Flows on Domestic Resource Mobilization: Optimizing Africa’s Mineral Revenues’, published in January 2017, provides policy recommendations on illicit financial outflows from the mineral sector in Africa. The related 2016 report, Optimizing Domestic Revenue Mobilization and Value Addition of Africa’s Minerals, is available to download below.
Africa Mining Vision (AMV)
Formally adopted by African heads of state in 2009, the AMV puts Africa’s long term and broad development objectives at the heart of all policy-making concerned with mineral extraction. It is the continent’s own response to tackling the paradox of great mineral wealth existing side by side with pervasive poverty.
The African Minerals Development Centre (AMDC) works with Member States of the African Union (AU) to fast-track alignment of their mineral sector development to the Africa Mining Vision, to achieve better developmental outcomes. AMDC currently work with more than half of all AU Member States.
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Two hundred African delegates discuss the technical elements of the Continental Free Trade Area Agreement
Two hundred delegates from African countries are discussing the technical elements of the Continental Free Trade Area (CFTA) Agreement from 6 to 10 February 2017, and these technical elements are linked to each of the seven Areas studied, according to the Chief Technical Advisor of the ZLEC, Prudence Sebahizi.
“Delegates will then make recommendations to the Negotiating Forum that will hold its meeting in Addis Ababa at the end of February 2017. The Negotiating Forum is made up of one representative per African country, Chief negotiator and his deputy by country,” he said.
He stressed that a total of seven working sessions corresponding to seven areas of discussion will be held in Kigali in two phases: the first session includes four technical areas, organized from 6 to 10 February 2017. The second session includes three technical areas which will be held from 13 to 17 February 2017.
The first session comprises four areas which are: 1. Trade in Services; 2. Rules of Origin; 3. Sanitary and Phytosanitary Measures (SPS); 4. Non-Tariff Barriers (NTBs) and Technical Barriers to Trade (TBTs).
While the second session integrates three areas that are: 5. Commercial Corrective Measures; 6. Customs Procedures and Facilitation of Trade Exchanges; 7. Legal and Institutional Affairs.
Each session brings together two hundred delegates. But by the end of the first session a hundred delegates will return to their respective countries and they will be replaced by a hundred others who will join the hundred or so delegates who will participate fully in both sessions.
“On the whole, this first session of the Technical Groups on the ZLEC constitutes the Negotiating Forum, that is to say the Negotiating Groups designated by the Member States to conclude Agreements on the ZLEC. The objective of these negotiations is to arrive at the Common Market for all the countries of Africa. This Common Market is similar to that of the Community of East African States (EAC), considered as a Regional Economic Community (REC),” Sebahizi continued.
Africa has a total of five RECs. The aim will be to harmonize the standards for all RECs that are at different levels of integration between the common market and the ZLEC.
In other words, the REC of the Community of East African States (EAC) is advanced and has already signed the Common Market Agreement, which means the free movement of goods and services and factors Production, such as human resources, capital and labor.
While the other continental RECs are at a lower level, that of the ZECA, which means a signed agreement restricting itself only to the movement of goods and services.
According to the Chief Technical Advisor of the ZLEC, the texts governing the African Common Market will have to be finalized before the end of 2017, as recommended by the African Heads of State.
“Our texts on the African Common Market should be ready for signature at the end of 2017. We can organize an extraordinary summit on this issue of signature to accelerate the integration of the continent,” said Sebahizi.
He recalled the six successive stages of integration of the African Continent, to have: To constitute RECs; Establishing RECs; Create a Continental Customs Union in 2019; Creating an African common market in 2022; Create a Monetary Union and an African Economic Community as a final step in 2018.
This article has been translated from the original in French: Deux cents délégués africains discutent sur les éléments techniques de l’Accord sur la Zone de Libre Echange Continentale
Better agriculture regulations could help feed world’s growing population, says WBG report
Improving agriculture regulations in low and middle income countries could go a long way toward feeding the world’s growing population and improving farmers’ livelihoods around the world, says the latest edition of the World Bank Group’s Enabling the Business of Agriculture (EBA) 2017 report, released yesterday.
The report argues that, while many countries are already home to strong, commercially-oriented agriculture, more needs to be done, for example, by lowering transaction costs for farmers and firms engaged in domestic trade and exports, by improving water permit systems for irrigation, or by providing better conditions for microfinance institutions. Smart regulations that ensure safety and quality control while avoiding burdensome and inefficient requirements are highlighted in the report as good practices that governments may wish to consider as part of their reform efforts.
“Sustainable, inclusive investments in the agriculture and food sectors help create jobs – on farms, in markets, cities, towns and villages and throughout the farm-to-table food production and supply chains – which, alongside improved access to affordable and balanced, diverse diets, are key to fighting extreme poverty and for boosting shared prosperity,” said Preeti Ahuja, Practice Manager, World Bank Food and Agriculture Global Practice.
“Governments have a key role to play in supporting economically, socially and environmentally responsible policies and practices that help smallholders while removing burdensome processes that add to food costs and discourage agribusinesses from entering the market.”
The latest EBA report, the third in an annual series, presents data on legal barriers for farmers, entrepreneurs and businesses operating in agriculture in 62 countries and across the topics of land, seed, fertilizer, machinery, water, livestock, finance, markets, transport, and information and communication technology (ICT). The 2017 edition also expands its survey of laws and regulations that impact environmental sustainability and gender.
Globally comparable data helps countries know where they stand, compare their performance with that of their neighbors, and identify areas for improvement that are critical to building a thriving agribusiness sector.
For example, obtaining export documents for agricultural produce takes on average 6 days in Sub-Saharan African countries, compared with only 2.3 days in the Middle East and North Africa region. Such delays not only increase business costs, but also increase food waste and make it more likely that shipments will be rejected upon arrival due to spoilage or low quality. Securing permission to sell and use new tractors can also be very time-consuming: it takes 270 days and costs about 604 percent of income per capita to complete this process in South Asia, versus 21 days and 7 percent of income per capita in East Asia and the Pacific. Drawn-out processes reduce the incentives for agricultural machinery manufacturers and suppliers to develop or import new and updated tractors that could otherwise help to modernize agricultural processes and improve productivity.
“Government regulations affect agricultural development through several dimension, including agricultural inputs such as seed, fertilizer, land and water, as well as small-scale and remote farmers’ access to financial services,” said Federica Saliola, Program Manager, World Bank Vice Presidency for Development Economics.
“Boosting agribusinesses requires public policies and regulations that foster growth in the agriculture and food sectors, improve the functioning of markets, and enable agribusinesses and food entrepreneurs to better meet the growing demand for food.”
» Download: Enabling the Business of Agriculture 2017 (PDF, 7.9 MB)
The Enabling the Business of Agriculture (EBA) project focuses on identifying and monitoring regulations that affect agriculture and agribusiness markets. EBA aims to inform and encourage policy decisions that support inclusive participation in agricultural value chains and foster an environment that is conducive to local and regional businesses in agriculture. The project is supported by several donors, namely United Kingdom’s Department for International Development (DFID), the Government of Denmark, the Government of the Netherlands, Bill and Melinda Gates Foundation, and the United States Agency for International Development (USAID).
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Kagame African Union reform team seeks to realign key bloc’s institutions
A team of experts led by Rwandan President Paul Kagame have come up with proposals to end duplication of roles by various Africa Union organs; and to cede some roles to regional economic communities. If implemented, the proposals will realign a dozen or so institutions of the AU.
The proposals were collated from views gathered from various experts and regional blocs, and contained in a report presented at the 28th AU summit in Addis Ababa, Ethiopia, last week.
“The point is to think strategically about which organisation at which level is best placed to take the lead in a given case. The AU should focus on a fewer number of priority areas that are by nature continental in scope, such as political affairs, peace and security, economic integration (including the Free Trade Area), and Africa’s global representation and voice,” said President Kagame.
The team also proposed a clear division of labour between the AU, regional economic blocs, regional mechanisms (such as Igad), member states and other continental institutions, in line with the principle of subsidiarity.
The reforms also target the efficient and effective management of the business of the continental body at both the political and operational level and also to ensure that they can be sustainably financed by member states.
Working with President Kagame on the reforms were Donald Kaberuka, former president of the African Development Bank; Carlos Lopes, former executive secretary of United Nations Economic Commission for Africa and Cristina Duarte, former minister for finance and planning of Cape Verde.
Other members were Strive Masiyiwa, executive chair of Econet Wireless; Tito Mboweni, former governor of the South African Reserve Bank; Amina J. Mohammed, Minister for Environment of Nigeria; Mariam Mahamat Nour, Minister for Economy, Planning and International Co-operation of Chad and Vera Songwe, regional director for West and Central Africa at the International Finance Corporation.
The team, however, said the key problem facing the AU was lack of implementation of resolutions and reforms that have been put forward over time.
“The Assembly has adopted more than 1,500 resolutions. Yet there is no easy way to determine how many of those have actually been implemented. By not following up to ensure that our decisions are implemented, we are effectively saying that they don’t matter. As a result, we have a dysfunctional organisation with limited credibility among member states, global partners and citizens alike,” President Kagame told the summit.
He warned that the reform agenda will come to nothing unless member states resolve to do things differently and take responsibility and ownership of the key changes, adding that, the reforms would require re-evaluation of the AU Commission’s structure to establish the right staffing levels needed to deliver on mandates and an audit of red tape and bottlenecks that impede effectiveness.
The experts also suggested a number of operational management reforms to be considered, including enhancing the election of the chairperson of the AUC, to make the process more transparent and robust.
The team’s report says that the AU’s top leadership should be lean and performance-oriented, giving special attention to governance organs.
Mechanisms
“Although the New Partnership for Africa’s Development (Nepad) has been incorporated into the Commission as a technical body, in practice it has not been fully integrated,” the report says, proposing it be institutionalised as the AU’s development agency.
The experts say the African Peer Review Mechanism (APRM) should be strengthened to track implementation, and oversee monitoring and evaluation in key governance areas of the continent.
For the judicial organs and the Pan-African Parliament, the recommendation is that their roles and functions be reviewed and clarified, while assessing progress to date.
“To ensure that the Peace and Security Council meets the ambition foreseen in its Protocol, a reform is recommended that could include strengthening its working methods and its role in conflict prevention and crisis management, as well as developing clear rules for cases where the situation in a Council member country is on the agenda of the Council,” the report is quoted.
It was also proposed that the African passport be made available to all citizens without delay.
The experts found that the current working methods of the AU are inefficient and impede decision-making and implementation. The delays in summit sessions and overloaded agendas, which have turned the AU into a meeting room, were also highlighted.
The team also suggested reforms in the way meetings are conducted to make them more productive.
Financing
President Kagame’s team said the continent must finance Union activities, calling it “a question of independence and dignity and the ability to set our own agenda.
“Our programmes are 97 per cent funded by external donors and as of December 2016, less than half of member states had paid their assessment in full,” the reports notes.
The team backed a new financing formula known as the Kigali Decision fronted in Kigali in July 2016 by Dr Kaberuka, that proposed how member countries could raise $1.2 billion annually to fund AU activities.
However, several countries are already asking for more time to include the commitment in their national programmes and to come up with the necessary legal frameworks to guide it. The new formula was to kick off in the 2017/18 fiscal year.
“The main recommendation in this area is that the Kigali Decision on Financing should be implemented in full and without undue delay. In addition, some complementary measures to reinforce the Kigali Decision should also be considered,” the report says.
The reform team further suggested that the current scale of contributions be revised based on the principles of ability to pay, solidarity and equitable burden-sharing to avoid risk concentration.
It was recommended that a high-level panel of heads of state and government supervise the implementation process and establish a reform implementation unit at the Commission.
The reform proposals were discussed at the Addis summit and incoming AU chairman President Alpha Conde of Guinea and AUC chairperson Moussa Faki Mahamat will take the initiative in implementing the changes.