Search News Results
Africa’s ports revolution: setting the scene for economic take-off
With its crippling deficiency in ports and overland transport infrastructure, Africa has been cut off from modern world trade.
But over the next five years, thanks to international investment, much of the continent will be fitted with state-of-the-art deepwater container terminals able to handle supersized box carriers, plus modern transport networks to distribute them.
In this special GCR report, the authors chart how Africa, through the concerted push for the “million-teu port”, is steering toward the path of economic take-off, similar to east Asia’s post-war development.
The story that dominated the African construction sector at the end of 2016 was the commissioning of a standard-gauge electric rail line between Addis Ababa and Djibouti. This 750km line, built at a cost of $4bn, has given landlocked Ethiopia a much-needed outlet to the Indian Ocean. The previous link, a railway completed by the French in 1917, fell into dereliction in the 2000s. Its replacement is capable of moving freight at 120km/h (passengers travel at 160km/h), all the way to the microstate of Djibouti. The project “glows with the radiance of a prospectively multi-beneficial enterprise”, as a journalist writing for the African Exponent website described it.
On the other hand, Ethiopia had not really suffered from being cut off from global markets, because it has had almost nothing to take to them: in 2007, its largest trading partner was Germany, to which it exported $51m of goods, principally coffee beans. Most of the internal economy was taken up with subsistence farming.
By 2015 that picture had been utterly transformed. The country’s total exports increased eightfold in value, to just under $6bn, and China was its dominant partner, buying $275m of them and supplying $4.7bn of its imports. So, the lion’s share of the freight that the new line will carry will be boxes filled with Chinese manufactured goods, arriving at the Chinese-built container terminal of Doraleh and travelling east to west. It was not surprising, then, that the actors who financed and built the railroad were three Chinese banks and two Chinese contractors, all of them controlled and co-ordinated by the Chinese government.
The chances are good that, in another eight years, this picture will change again. Despite severe political difficulties with sections of its own population, Ethiopia has become the demonstration project for African economic take-off: as well as the railway, some of the continent’s most ambitious power schemes are being constructed, of which the best known is the Grand Ethiopian Renaissance Dam, which was paid for largely with indigenous capital. Once that is complete, other electrified railways will follow, and the basis will be laid for the growth of manufactured goods to replace coffee, oil seeds, gold and cut flowers as the country’s main foreign currency earners.
And this shift is the real point of the Djibouti railway: at the moment 100% of containers arrive in African ports full and 80% leave empty. If Ethiopia is to achieve middle-income status by mid-century, as the World Bank optimistically predicts, then the contribution of manufacturing will have to rise from the 10% level, where it is now, to the 30% that China has achieved, and those manufactured goods will have to find markets around the world. The same applies to all African countries who have set their sights on economic development. For that to happen, something will have to be done about Africa’s ports.
The inactive continent
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.
This partly reflects the fact that much of the continent’s exports consist of primary commodities such as oil, gas, mineral ores and tropical agricultural produce that are moved on breakbulk cargo ships or tankers, but it also indicates just how little Africa participates in global trade. Throughout its history, as a supplier of involuntary manpower to the Americas from the 16th to 19th centuries, and as site for colonial plantations in the 19th and 20th centuries, Africa has always shown a net loss in its dealings with the rest of the world.
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. For example, Mombasa in Kenya is the largest port in east Africa, and last year succeeded for the first time in handling a million containers. However, the country’s main railway, completed by the British in 1901 (dubbed the “Lunatic Express”) has only enough capacity to move one in 20 of those boxes, so there is a continuous traffic jam of trucks trying to enter and leave the city.
Another factor is the inability of most of the continent’s ports to deal with container ships built after the 1970s. Any vessel that carries more than 3,000 containers – that is, a Panamax or greater – requires a draft of more than 12m, meaning they’d get stuck some distance from the wharf in most African ports.
Then there is the question of whether ships are “geared”, meaning whether they carry their own cranes to load and unload their boxes. Pretty much all modern container ships are gearless – cranes take up too much space and require too much maintenance. However, most African ports require ships to do their own lifting. The result is that, with the exception of the modern terminals such as those at Durban, Tanger Med, Doraleh and Port Said, Africa’s manufactured goods are moved by slow, old “feeders” hauling around 1,200 boxes – the containerised equivalent of a tramp steamer.
As well as the difficulty of physically moving containers into and out of ports, there is the additional problem of getting them through customs and agreeing what import duty is to be paid – a process of unpredictable length, in which time is always on the port authorities’ side.
This means that the average length of time between bringing a container to a port by ship and dispatching it into the hinterland by road or rail is much longer in African ports than elsewhere. A World Bank paper from 2012 noted that, that, with the exception of Durban, dwell times average about 20 days in African ports, compared with three to four days in most other international ports. This average conceals the extreme variability of the statistics. For example, figures for the Cameroonian port of Douala in 2009 show that 19% of containers were dealt with in fewer than six days, but more than 12% took between 20 and 30 days, and a further 12% took between one and three months to be processed. This is a serious matter under any circumstances, but when those containers are filled with goods required for, say, a construction project, the consequential costs are painful to contemplate.
Enter the dragon
The good news for Africa is that this crippling deficiency is beginning to be tackled. China’s demand for oil and minerals, as well as its superabundance of capital for external investment, had led to a surge in economic activity in the east and west of the continent, particularly Nigeria, the Great Lake states and the Ethiopian highlands. To see how pervasive the influence of China has been over the past 10 years, consider the growth in the number of African countries who have China as their primary economic partner. Alongside trade, there has been a large number of other construction and civil engineering projects, as well as a transfer of Chinese managerial skill, capital, commercial networks, and often sizeable – and controversial – immigration flows.
China’s economic ties with Africa
This has led to an equivalent surge in port construction projects. Over the next five years, much of sub-Saharan Africa is going to be fitted with state-of-the-art deepwater container terminals that are able to handle supersized box carriers, as well as modern transport networks to distribute them. Alongside the ports, there will be tax-free special economic zones to stimulate foreign investment in manufacturing, and the chance to follow the post-war path of east Asia towards economic take-off.
In the coming weeks, this GCR special report analyses the rise of the “million-teu port” on all Africa’s coasts, and looks at the chances of an infrastructure-led transformation in Africa’s prospects.
We start with West Africa.
Related News
tralac’s Daily News Selection
Today in Cape Town: tralac is hosting a regional roundtable to consider global, African, and South African trade and trade-related developments of the past year and prospects for 2017
Today in Gaborone: Indicators for measuring, benchmarking productive capacities and structural economic transformation in Botswana
Profiled trade events to diarise: WTO@20 Conference (16-18 February, Delhi), From trade rules to trade deals: whither US trade policy in the Trump Administration? (TUTWA and partners, 28 February, Johannesburg), tralac’s Annual Conference 2017 (6-7 April, Cape Town), 50 years of doing business in Botswana (6-8 March, Gaborone)
Featured tweets on CFTA negotiations, now underway in Kigali: @AUTradeIndustry: The 1st @_AfricanUnion Technical Working Group Session on the Continental Free Trade Area, kicked off [Monday] in #Kigali, #Rwanda; @CK_Knebel: Today, joint technical working group on #SPS #TBT #NTB. Crucial work to boost intra-African #trade in #CFTA. @UNCTAD providing support.
CFTA negotiations perspectives, preparations:
Nigeria begins negotiations on CFTA adoption (The Guardian): In a statement made available to The Guardian by the office of the Federal Ministry of Industry, Trade and Investment, yesterday, the Minister noted that the Nigerian Negotiating team departed for Kigali, Rwanda, on Monday for another round of text-based negotiations in the Technical Working Groups of the Negotiating Forum for the Continental Free Trade Agreement. According to Okelamah, the Nigerian trade team will continue to argue for “flexibility” that allows it to safeguard the economy from a flood of imports, even as it remains an open economy. Consisting of eight negotiators drawn from the Ministry of Industry, Trade and Investment and the Ministry of Finance, the team is expected to engage colleagues from 53 other African nations on the emerging draft substantive text of the CFTA, being reviewed in the six TWGs.
Ghana: ‘Move quickly on the CFTA agreement’ - Director (GhanaWeb): Mr Nyame-Baafi (Director of Multilateral, Regional and Bilateral Trade at the Ministry of Trade and Industry), addressing a three-day workshop for members of the inter-institutional committee in Koforidua, stated that Ghana stood to gain substantially from the trade deal, given its competitive edge over many African countries, when it came to the export of goods and services. The goal was to sensitise and share information to allay any anxieties, to achieve a national consensus, particularly on specific trade and related matters so as to protect, preserve and promote the collective national interest at the on-going CFTA negotiations, expected to be concluded by the close of the year. The workshop also deliberated on the recent ratification of the WTO Trade Facilitation Agreement and the Ghana-European Union interim Economic Partnership Agreement.
Presentations from Brussels Briefing 47, Regional trade in Africa: drivers, trends and opportunities, are posted. Profiled presentations: (i) Ousmane Badiane (IFPRI) : Trends in African agriculture trade, (ii) Dominique Njinkeu (African Trade and Sustainable Development): Challenges and successes in implementing regional trade agreements
Afreximbank signs cooperation agreement with ACBF (Afreximbank)
Under the terms of the MOU, the two institutions will work together to build capacity for research and policy formulation and implementation through think tanks and private sector organisations to uncover innovations in effective economic integration, intra-African trade and export development. Other areas of collaboration include the promotion of the harmonization of standards across Africa and the leveraging of ACBF’s advocacy programme to support Afreximbank’s efforts to deepen intra-African trade and accelerate the implementation of the Bank’s new Strategic Plan.
Financing infrastructure in Africa: inaugural meeting of the AU STC on Transport, Transcontinental and Interregional Infrastructures, Energy and Tourism (13-17 March, Lomé)
The specific objectives are to: (i) review the implementation status of the Decisions and Declarations adopted at the previous ministerial conferences and African Union (AU) Assembly sessions on transport, energy and tourism; (ii) evaluate the progress made by major regional and international institutions in financing and investing in regional projects in the energy, transport and tourism sectors, especially those in the Priority Action Plan of the Programme for Infrastructure Development in Africa (PIDA-PAP) and other flagship projects under the AU Agenda 2063; (iii) analyse ways of increasing domestic and regional financial resources for funding regional transport, energy and tourism projects; (iv) adopt updated action plans for infrastructure programmes and initiatives to be undertaken for the period 2016-2018 at regional and continental levels. [Downloads: event resources]
Global impacts of counterfeiting and piracy to reach $4.2 trillion by 2022 (ICC)
Titled The economic impacts of counterfeiting and piracy, the report provides estimates on the wider social and economic impacts on displaced economic activity, investment, public fiscal losses and criminal enforcement, and concludes that these costs could reach an estimated US$1.9 trillion by 2022. Taken together, the negative impacts of counterfeiting and piracy are projected to drain US$4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk by 2022. Frontier’s analysis builds on a 2016 report published by the OECD and the EU Intellectual Property Office, which estimated the value of the international trade in counterfeit and pirated products at $461bn in 2013, or as much as 2.5% of all international trade. This represents an increase of more than 80% over the findings in OECD’s ground-breaking 2008 report
SA Chamber of Mines welcomes second Eunomix report on Unctad’s ‘mis-invoicing report’
The 2nd Eunomix report, published today on the Chamber’s website addresses the “missing” $19.5bn. All indications are that this amount is explained by gold sent by other countries for refining to the Rand Refinery in Germiston. Foreign gold now accounts for about 50% of the gold processed at that institution. Ghana and Mali are among the main customers. The discrepancies arise because some of those countries record the gold returned to them as imports. South Africa does not record such gold as exports, as the origin and ownership of the gold lies outside South Africa. The Chamber of Mines has requested Eunomix now to proceed with looking at the other South African discrepancies alleged as mis-invoicing by Unctad, namely $600 million in iron ore and $24 billion for silver and platinum.
Botswana: 2017 Budget Speech (GoB)
The preliminary balance of payments projections for 2016 point to a surplus of P5 billion, compared to a deficit of P57 million recorded in 2015. The significantly larger surplus in 2016 is mainly due to a positive current account balance. The current account balance is projected to record a larger surplus of P25.7 billion in 2016, compared to P10.5 billion in 2015, underpinned by the anticipated trade balance surplus. Exports are expected to have grown by 21%, while imports are expected to decrease by 9% in 2016, mainly as a result of the slight recovery in the diamond market and continued depression of the domestic demand for imports. As at the end of December 2016, foreign exchange reserves stood at P76.8 billion, compared to P84.9 billion in December 2015, representing a decline of 9.5%. In terms of the US dollar and the Special Drawing Rights, these reserves stood at $7.2bn and SDR5.3 billion, respectively. A fall in reserves is primarily as a result of an increase in demand for foreign exchange to pay for imports, notably for imported electricity by Botswana Power Corporation. These levels of reserves are equivalent to 17 months of import cover of goods and services.
Angola: 2016 Article IV Consultation (IMF)
Spillovers: Outward spillovers to the region are generally limited given Angola’s marginal trade and financial flows with countries in the region, although a few countries, such as the Democratic Republic of Congo and Namibia, which border Angola, are being more affected by the economic difficulties in Angola through cross-border trade. Although Angola is Portugal’s largest export market outside the EU and several Portuguese banks are present in the Angolan banking system through joint-ventures with local investors, the magnitude of these interests remain relatively small if compared with the size of the Portuguese economy. On the other hand, inward spillovers from China and Europe could be tangible if their economic growth significantly slows down, putting further downward pressure on oil prices.
Tanzania in need of $46bn in power investment by 2040 (IPPMedia)
A power system master plan released on Monday by the Ministry of Energy and Minerals said 70% of capital expenditures would be financed by debt and the rest by the government’s own resources. "Currently, power supply in Tanzania cannot meet the demand. Such imbalance has to be solved as soon as possible," said the government’s updated power blueprint (pdf). "The power demand growth rates for industrial and commercial sectors are expected to reach 18% per year from 2015 to 2020," it added. Tanzania aims to boost power generation capacity to 10,000 megawatts over the next decade from around 1,500MW at present, by using some of its vast natural gas and coal reserves to end chronic energy shortages and boost industrial growth. [Related: Natural gas utlisation master plan 2016-2045 (pdf)]
Nigeria exports two million jobs to China with the textile industry dysfunction (Premium Times)
Nigeria had over 200 functional factories in the 1980s, producing fabrics for the local and international markets. This is however not the case three decades after. For instance, the industry once created 500,000 direct jobs in the 1980s and about two million indirectly at that time. Up till the 80s, Nigeria generated $2bn naira annually as revenue from the textiles industry. And, between 1985 and 1991, the industry grew by an average of 65% annually. The textile subsector was responsible for 25% of the entire manufacturing sector in Nigeria. The subsector was a national pride then! There were other textile mills, mainly in Lagos, such as International Textile Ltd and First Spinner Ltd, etc. We had factories in Kano and Ibadan also. However, today, most of the factories have shut down due to frustration, poor protection, mismanagement, smuggling, little or no access to funds, power instability, and the high cost of inputs.
Kenya: Echoes of past as Midiwo betting Bill goes after foreign investors (The Standard)
A proposal to ban foreigners from holding a stake in betting firms has raised eyebrows among sector players. The Bill, by Gem MP Jakoyo Midiwo, is set to go through the Second Reading in Parliament this week, and has been characterised as attempting a controversial return to the past. The Betting, Lotteries and Gambling Amendment Bill of 2016 has several other radical proposals, including limiting winnings to Sh30 million. Adding its voice to opposition against the proposed law, the Kenya National Chamber of Commerce and Industry said it was largely “anti-business”, and could negatively affect foreigners’ perception of Kenya as an investment destination.
Dar, Lilongwe sign business accord (Daily News)
Tanzania and Malawi have signed corporation agreement in the areas of politics, diplomacy and air transport. The two countries met under a Joint Permanent Commission of Cooperation (JPCC) over the weekend and discussed ways to solve the Lake Nyasa conflict.
The impact of mining on spatial inequality: recent evidence from Africa (World Bank)
This paper investigates the relationship between mining and spatial inequality in Africa during 2001-12. The identification strategy is based on a unilateral causation between mining and district inequality. The findings show that when minerals are aggregated, mining increases district inequality. But an analysis of individual minerals shows that mining affects district inequality positively and negatively, suggesting that mineral wealth can be a curse and a blessing. Further analysis suggests that these results largely depend on whether mining is active or closed, the scale of mining operations, the value of minerals extracted, and the nature of mining activities -- important dimensions for shaping mining policies aimed at bolstering socioeconomic development in Africa. [The analysts: Tony Addison, Amadou Boly, Anthony Francis Mveyange]
Why is inequality high in Africa? (pdf, AfDB)
This study utilized unit record data from Demographic and Health Surveys for 44 countries in 102 waves covering the period 1989-2011 and approximately over a million households to analyze the drivers of wealth/asset inequality in Africa. This approach, besides having the advantage of utilizing household level information, it allows for consistent comparison of inequality across countries and time. The focus is mainly to understand the roles of inequality in opportunities that appeal to public policy such as those that operate through interventions in labor markets, particularly education and migration, and price distortions affecting asset markets. We undertook the analysis at two levels: inequality between and within countries. [The analysts: Abebe Shimeles, Tiguene Nabassagaa]
- - -
Related News
tralac’s Daily News Selection
Today in Gaborone: Botswana’s Budget 2017/18
President Paul Kagame: address on AU reform issues at Heads of State and Government retreat (GoR)
The previous landmark studies of the African Union’s organs and institutions served as the starting point of the review, notably the 2007 Adedeji Report and the 2016 Mekelle Report. Three observations stood out. First, the institutional quality of the African Union has been a concern for a long time, virtually since its founding in 2002. Indeed, the problems documented then are not so different from those on our minds today, namely poor execution, lack of focus, overdependence on external funding, an unclear division of labour with other continental organisations, and a perception of irrelevance for African citizens. Second, there is no shortage of sensible ideas for reform. In many cases, despite the passage of time, the recommendations are as relevant as ever. Third, these proposals have had almost no impact. Despite wide consensus about their merit, as reflected in adoption by the Assembly of Heads of State, the agreed reforms were simply never implemented.
Industrial clusters: the case for Special Economic Zones in Africa (UNU-WIDER)
To seize these opportunities African governments will need new approaches to industrial policy. In this paper, we consider the role of SEZs as an instrument of industrial development. Public policies to bring a critical mass of investors into SEZs are often a prerequisite to breaking into global markets in manufacturing. We begin in Section 2 by defining agglomeration in a general sense and provide theoretical arguments for why firms tend to naturally cluster together. Following this we present some of the empirical evidence for agglomeration in low and low-middle income countries, its drivers and the impact of agglomeration on firm-level productivity. In Section 3 we consider the rationale for policies that actively encourage firms to cluster together through the establishment of SEZs, and we review the past performance of SEZs in Africa.
In Section 4, we give an overview of the current status of African SEZ programmes and summarize the various policy measures that are in place to promote them. Section 5 looks at recent efforts by China to support spatial industrial policy in Africa. China’s Ministry of Commerce is undertaking the development of a number of ‘official’ SEZs, and a number of private Chinese investors have set up industrial zones outside of these official arrangements. We review the status of these initiatives and use the case of Ethiopia, the country in which the Chinese SEZ model is most advanced, as a window into the possible costs and benefits of the new approach. In Section 6 we conclude by identifying some key factors that are needed for the success of SEZs in Africa. [The authors: Carol Newman, John Page]
Related: Kippra wants setting up of special economic zones fast-tracked, Lekki Free Trade Zone developer expands project in Kenya
JETRO to push Japan-India business collaboration in Africa (Japan Times)
The Japan External Trade Organization plans to promote partnerships between Japanese and Indian companies looking to expand their presence in Africa by leveraging their mutual expertise, JETRO officials said. The move is aimed at reducing market risks by combining the experience and knowledge of Indian firms in the African market with the technical and funding capabilities of Japanese companies to tap growth opportunities on the continent, the officials said. Reiko Furuya, director of JETRO’s New Delhi office, said it is organizing a conference in March to discuss collaboration in Africa, among other topics. Izuru Kobayashi, chief operating officer of the Economic Research Institute for ASEAN and East Asia based in Jakarta, said the Japanese and Indian governments are planning to start consulting on selecting specific projects in Africa as per the November statement.
Retno LP Marsudi: ‘Indonesia and Africa: beyond the Bandung Spirit’ (Jakarta Post)
Notwithstanding the positive signs, we cannot be complacent. Our trade value with Africa is dwarfed by the trade value between the continent and India, which stood at $70bn or by Africa-China trade that reached $200bn. We realize that current bilateral cooperation between Indonesia and Africa is still way below potential, and as such Indonesia is determined to advance its cooperation with Africa. A testament of that commitment is my visit to three African countries this week, namely to Egypt, South Africa and Mozambique. It will lay the ground for President Joko “Jokowi” Widodo’s tour to the region in the near future. The focus of our relations will be economic cooperation. [The author is Indonesia’s Foreign Minister]
Is Kenya getting a raw deal from trade ties with China? (Business Daily)
“This is one of the most lop-sided trade relationships in the world. In fact if you stripped out titanium, the Kenya export pipe to China would read close to zero. Clearly both governments need to energise their responses to this problem,” said Mr Aly-Khan Satchu, chief executive of Nairobi-based investment advisory firm Rich Management. “AGOA was a US silver bullet for exactly the same problem and China will surely have to look at something similar.” Mr Satchu said countries such as Ethiopia had managed to create policies that protect local industries and Kenya should take a similar route.
Uganda mortgages oil to China to get Standard Gauge Railway (Daily Monitor)
After denying countless times that they cannot borrow against future oil revenues, the government at long last has admitted staking the country’s oil as a “guarantee” for receiving the first batch of loan from China’s EXIM Bank for the much hyped Standard Gauge Railway project. Details available to Sunday Monitor indicate that Attorney General William Byaruhanga gave a no objection to ministry of Finance, the principal signatory to the loans, arguing that “nothing prohibits the government from using oil revenues directly as guarantee for the payment of loan for the SGR project.”
Anzetse Were: ‘Africa must now get ready for Trump-inspired China shift’ (Business Daily)
Chinese factories are already moving to Africa and Trump may incentivise the relocation of labour intensive manufacturing from China to Africa where wages are cheaper. Thus, in trying to protect America, Trump’s policies may push China further into Africa. Time will tell whether Trump is truly serious about China; and Africa will be at the centre of the action.
Song Wei: ‘China should give more ‘soft’ aid to Africa’ (Global Times)
As such, China should continue to cooperate with African countries on infrastructure projects, but should move beyond that to imparting China’s experience and translating its confidence in its development path, theory and system into an intangible force that is internationally recognized. Nevertheless, the current cooperation framework focused on hardware infrastructure doesn’t cater to new situations. First, the framework doesn’t help with precise poverty alleviation in African countries, as insufficient importance attached to "soft" environment planning makes it hard for China to accurately fit into development plans proposed by its African partners. Second, it’s unfavorable for the dissemination of China’s governance experience, considering that the completion of infrastructure projects discontinues China’s sharing its values and ideas in the continent. Third, it’s detrimental to the improvement of China’s national image in Africa, as most of the infrastructure projects have remained closed and have triggered scepticism among local people. [The author is an associate researcher with the Chinese Academy of International Trade and Economic Cooperation]
Safeguards in the South African poultry sector: an economic perspective (Econex)
The recent decision by the Department of Trade and Industry to implement a provisional safeguard duty of 13.9% on frozen bone-in chicken imports from the European Union (EU) has placed renewed focus on the South African poultry industry. Poultry producers state that increased imports are threatening to derail the industry in the form of job losses and plant shutdowns. Last year, the South African Poultry Association applied for a safeguard duty on imports of frozen bone-in chicken from the EU. The International Trade and Administration Commission of South Africa (ITAC) is continuing its investigation, but approved a provisional safeguard duty on 15 December 2016. During the initial investigation, Econex was instructed by Shoprite to conduct an economic analysis. [The analysts: Colin McCarthy, Helanya Fourie, Willem van Lill]
Intra-SACU trading relationship (tralac)
This synopsis should be read in conjunction with the spreadsheet on tralac’s website, and the two documents together contain the following data: (i) Graphical illustrations of SACU intra-trade over the last decade, for the top six traded products - a second graph is provided based on the top products traded at the start of the period, since the shifts over the decade are substantial; (ii) an input-output matrix showing all the bilateral trade flows and a relational trade flow figure based on the matrix data; (iii) data and figures describing dependence and asymmetry in the intra-SACU trading relationships. [Various downloads] [The analyst: John Stuart]
Kenya: Mount Kenya region develops Sh100bn economic blueprint (Daily Nation)
In the plan, the counties will spend about Sh10bn each, although most of the investment will be private-sector driven, with the government providing infrastructure such as revived roads and railways to create a conducive business environment. This comes a year after the governors signed a memorandum of understanding establishing the Mt Kenya and Aberdare Counties Economic Bloc, with a population of 17 million people. Priority pillars of the organisation are agriculture and agri-business, industrialisation, healthcare, tourism, water and resource management, infrastructure and ICT.
Egypt: Ministry of Industry creates export strategy to Africa for next 3 years (Daily News)
Minister of Industry and Trade Tarek Kabil announced that the ministry will complete the establishment of a new strategy that aims at increasing exports to Africa within the next three years. He added that the ministry cooperated with five export councils, namely the chemical and fertilisers, building industries, food, engineering, and medical councils, to create the strategy. About 80% of all Egyptian exports to Africa are from those councils, according to a statement issued by Kabil on Sunday. The minister said that the strategy includes a business plan with a timetable, targeted countries, and implementation mechanisms that open new markets for Egyptian exports to Africa. Kabil explained that the strategy focuses on the African market, which receives Egyptian exports worth of $3.7bn.
Today’s Quick Links:
SADC Development Finance Resource Centre: Annual Report 2016
Guangzhou’s Silk Road to Africa
EAC at a crossroads after Kenya failure to clinch continental post
SEATINI-Uganda: ‘Consolidate EAC regional market, forget about EU pact’
Malusi Gigaba: ‘Prioritise South Africans for jobs’
Related News
Address by President Paul Kagame at the Retreat of the AU Heads of State and Government
Delivered in Addis Ababa, Ethiopia on 29 January 2017
Good morning and thank you for setting aside the time to participate in this retreat.
Six months ago, at our last Summit in Kigali, we made two important decisions.
The first was to institute a new levy on eligible imports, to finance the budget of the African Union.
The second decision, directly related, was to complete the ongoing institutional reform of the African Union, to ensure that our money is put to good use.
As mandated by the Assembly, I am honoured to report back to you today, with some recommendations on the proposed reforms, to build an African Union that is fit for purpose.
Let me start by thanking all who put their trust in the process, beginning with the Chairperson of the African Union, my brother, President Idriss Deby.
I particularly appreciate the many Heads of State, who took the time to offer invaluable input and advice. This was a great encouragement, and I thank you.
Among the many experts and officials who were consulted, I would wish to particularly acknowledge the Chairperson of the Commission, Dr Nkosazana Dlamini Zuma, and the President of the Pan-African Parliament, the Honourable Roger Nkodo Dang, for sharing their counsel and experience. Thank you very much.
To better carry out the mission entrusted to me, I sought the expertise of a pan-African advisory team. I wish to thank them for their hard work and their committed service to our continent. Many have kindly joined us here today.
- Ms Cristina Duarte, former Minister of Finance of Cabo Verde
- Dr Donald Kaberuka, former President of the African Development Bank
- Dr Acha Leke, Senior Partner at McKinsey & Company, in Johannesburg
- Dr Carlos Lopes, former Executive Secretary of the United Nations Economic Commission for Africa (UNECA)
- Mr Strive Masiyiwa, Executive Chairman, Econet Wireless
- Mr Tito Mboweni, former Governor of the South African Reserve Bank
- Hon. Amina J. Mohammed, Minister of Environment of Nigeria
- Hon. Mariam Mahamat Nour, Minister of Economy and International Cooperation of Chad
- Dr Vera Songwe, Regional Director for West and Central Africa at the International Finance Corporation
The previous landmark studies of the African Union’s organs and institutions served as the starting point of the review, notably the 2007 Adedeji Report and the 2016 Mekelle Report.
Three observations stood out.
First, the institutional quality of the African Union has been a concern for a long time, virtually since its founding in 2002.
Indeed, the problems documented then are not so different from those on our minds today, namely poor execution, lack of focus, overdependence on external funding, an unclear division of labour with other continental organisations, and a perception of irrelevance for African citizens.
Second, there is no shortage of sensible ideas for reform.
In many cases, despite the passage of time, the recommendations are as relevant as ever.
Third, these proposals have had almost no impact.
Despite wide consensus about their merit, as reflected in adoption by the Assembly of Heads of State, the agreed reforms were simply never implemented.
In other words, serious problems were repeatedly identified. Solutions were found. Decisions were made to apply the solutions. And very little happened.
This realisation signalled that the present study would require a fundamentally different approach. To complete the institutional reform of the African Union, the crisis of implementation must first be addressed.
But before that, it is important to take a step back and be proud of being African.
We have the capacity for change, and the African Union, by virtue of how it has emerged from our historical experience, is actually a part of that positive endowment.
For more than a century, the idea of the fundamental unity of Africans has sustained all of us through countless struggles.
Whether to liberate ourselves from foreign domination or to set our people on a path to dignity and prosperity, we had no choice but to come together as Africans in shared purpose and action.
Out of that necessity, we are fortunate to have inherited a set of institutions, notably the African Union and its predecessor, which are anchored in the values of respect, tolerance, and solidarity that we share as Africans.
As a result, and on that basis, there has often been good progress in terms of the well-being and security of our citizens, which would have been unattainable working as individual entities.
Proof that we can do it is not hard to find.
For example, ECOWAS and the East African Community have already made freedom of movement a reality within those regions.
Therefore, there is no technical obstacle to extending this practice more widely, as we have agreed to do with the African passport.
Another example is how the recent crisis in Gambia was handled.
The leaders of ECOWAS agreed on the simple principle that the rights of Gambian citizens had to be respected.
The effort was successful for two reasons. They worked closely and patiently together to find a just and peaceful resolution, and they put the interests of the people first, rather than those of this or that individual.
As a result, an exceptional service has been obtained for the Gambian people and actually for all of us in Africa.
I want to commend ECOWAS, and all of the leaders involved, especially President Alpha Conde of Guinea, President Mohamed Ould Abdel Aziz of Mauritania, President Macky Sall of Senegal, and President Muhammadu Buhari of Nigeria.
I want to say that you made us proud by demonstrating that the ideals we always talk about here in the African Union really do mean something.
Not only was a human catastrophe averted, but we can now gather here for our retreat, bearing in mind this powerful example of what can be achieved by acting in solidarity.
Nevertheless, the unfortunate truth is that Africa today is generally ill-prepared to adequately respond to current events.
Disturbing developments impinge on us from around the globe, in the form of climate change, mass migration, violent extremist ideologies, and political upheavals taking place in many states.
Without an African Union that delivers, the continent cannot progress, and we face the likelihood of yet another generation of lost opportunity.
This shows that Heads of State were correct to push to accelerate the institutional reform of the African Union as part of the effort to make it financially independent.
Yet it has always been Africa’s moment. The demeaning anecdotes that infect the portrayal of Africa deepen cynicism amongst our own youth who internalise the idea of a helplessly dysfunctional continent.
We should take responsibility for the part we have contributed to these negative images and work to change perceptions by coming together in real solidarity to transform our approach to the business of developing and protecting this continent.
The question at any given time is whether we choose to be present and put in place the institutional capacity needed to seize whatever advantages are available.
Continuing to defer necessary reforms to the future is an implicit decision to do nothing. It means accepting our conditions as inevitable and Africa’s subordinate place in the community of nations as natural.
Looking around Africa, any of us can give examples of situations that hurt deeply because we know they would not exist if we had acted much earlier, as we agreed to do so many times over the years.
There are lives lost in childbirth, villages filled with uneducated children, people locked in refugee camps for decades because of who they are, and countless families who lack the means to guarantee basic dignity.
As noted in the report submitted to you, tens of thousands of young African bodies have been swallowed by the sea, or abandoned in the desert, in pursuit of a decent life for which they are prepared to risk everything, because they believe there is no hope at home.
They testify to the urgent need to act.
Before briefing you on the proposed recommendations, I first want to speak to you from the heart.
The effectiveness of the African Union is our business and our responsibility.
Reform does not start with the Commission. It starts and ends with us, the leaders, who must set the right expectations.
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.
The reform agenda will come to nothing unless we resolve to do things differently at the level of our values and mindset in terms of taking responsibility and ownership.
It is not about feeling responsible for causing those bodies in the Mediterranean or the low level of trust that too many citizens have in our public institutions.
Playing the blame game does not solve problems. The kind of responsibility I am talking about is about addressing problems head-on and finding solutions, regardless of how they were caused.
A related issue is the persistence of divisive politics amongst ourselves. We can be inclusive without forcing people into categories. We have to all pull together. African solidarity cannot be a mere slogan.
Aside from it being counterproductive and contrary to our ideals, these divisions expose us to various forms of manipulation by others.
Africa is large and complex. But even the biggest and strongest country among us is not really very big in the global context.
Even if it were possible for some of us to go it alone, it is also true that we are better off having a highly-functional entity, like the African Union, and going forward together.
Just look at how other regions are organised, where states with more economic production than much of Africa combined find benefit in joining together with neighbours to go even further.
We are hard-pressed to embrace change and in fact, seen from the vantage point of the present, we are already too late. We cannot avoid reckoning with the hard truth of previous failures, otherwise the same mistakes will keep coming back.
But acknowledging where we have fallen short, does not mean being bound by it. The only mistake would be to allow the situation to become cyclical.
Instead we should own up, accept it, and most importantly keep trying with more chance of success based on a clearer understanding of where we went wrong in the past.
As we have seen, we have everything needed to succeed.
To fail Africa again would therefore be unforgivable.
Against that background, the imperative to strengthen our Union is very clear.
Mr Chairman, Excellencies:
Let’s now turn to the recommendations that emerged from our consultations.
We have to do the following four things:
-
Focus on key priorities with continental scope
-
Re-align African Union institutions in order to deliver against those priorities
-
Manage the business of the African Union efficiently and effectively at both the political level and the operational level
-
Finance the African Union ourselves, and do so sustainably
Allow me to take a few moments to present the specific recommendations proposed in the report under each of these areas of action.
Having clear focus in terms of priorities remedies the African Union’s fragmentation while providing a formula for a better division of labour with Regional Economic Communities.
The point is to think strategically about which organisation at which level is the best placed to take the lead in a given case.
-
The first recommendation here is that the African Union should focus on a fewer number of priority areas which are by nature continental in scope, such as political affairs, peace and security, economic integration (including the Continental Free Trade Area), and Africa’s global representation and voice.
-
Accordingly, the second recommendation related to focus is that there should be a clear division of labour between the African Union, Regional Economic Communities, Regional Mechanisms (such as IGAD), Member States, and other continental institutions, in line with the principle of subsidiarity.
With clarity of focus, an understandable rationale emerges to guide the process of re-aligning the African Union’s dozens of distinct structures and institutions in terms of efficiency and ability to deliver.
This process must be conducted with due care and diligence.
-
An audit of bureaucratic bottlenecks and inefficiencies that impede service delivery is recommended, which should be conducted, and acted upon without delay.
-
Second, the Commission’s structures should be evaluated, to ensure they have the right size and capabilities to deliver on the agreed priority areas.
-
The Commission’s senior leadership team should also be lean and performance-oriented.
Certain organs and institutions require special attention.
For example, although NEPAD has been incorporated into the Commission as a technical body, in practice it has not been fully integrated.
-
The recommendation is that NEPAD should be fully integrated into the Commission, possibly as the African Union’s development agency, aligned with the agreed priority areas, and underpinned by an enhanced results-monitoring framework.
-
Next, the African Peer Review Mechanism (APRM) could 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 should be reviewed and clarified, while assessing progress to date.
-
To ensure that the Peace and Security Council (PSC) meets the ambition foreseen in its Protocol, a reform is recommended which might 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 PSC.
-
The Specialised Technical Agencies (STAs) should be reviewed and streamlined, with only those connected to the African Union’s priority focus areas maintained.
The Constitutive Act specifies that the Permanent Representatives Committee is “charged with the responsibility of preparing the work of the Executive Council and acting on its instructions”.
However, in practice the PRC has assumed the role of supervising the day-to-day work of the Commission. Consultations suggest that this activity has increased the Commission’s inefficiencies.
Moreover, some decisions of the Assembly of Heads of State and Government have been delayed by the PRC or even disregarded, suggesting that the PRC has taken on an unwarranted role in the decision-making process.
- Accordingly, the recommendation is to ensure that the PRC’s rules and procedures are in line with its mandate, and that it should focus on facilitating communication between the African Union and national capitals and acting as an advisory body to the Executive Council, rather than supervise the Commission.
Re-aligning the African Union is also about better connecting with citizens.
-
To this end, the African Union should establish women and youth quotas across its institutions, as well as an appropriate way to bring in private sector participation.
-
Other initiatives to pursue are an African Volunteer Corps, sports and cultural exchange among member states, and making the African passport available to all citizens without delay.
-
Finally, identify and provide a set of new capabilities or ‘assets’ in the form of common services valued by member states and citizens. For example, it could provide neutral arbitration and competition services, or a common technical platform for the data and analysis needed to assess Africa’s progress toward its development goals.
We must also manage the business of the African Union more efficiently both at the political and operational levels.
The African Union Summit’s working methods are inefficient and impede decision-making and implementation.
Summit sessions are often delayed and marked by overloaded agendas that do not focus on the strategic issues requiring the attention of Heads of State.
There is limited opportunity for leaders to achieve consensus on key issues before the plenary session, and consultation with Regional Economic Communities is inadequate.
It is recommended to reform the working methods of the Summit in the following ways.
-
The African Union Assembly should handle an agenda of no more than three strategic items at each Summit, in line with the Mekelle recommendations. Other business should be delegated to the Executive Council.
-
One Summit per year should be convened at Assembly level, except for extraordinary sessions.
-
The second Summit of the year should focus on coordination with Regional Economic Communities, with participation by the Bureau of the African Union Assembly, together with the chairs of the Regional Economic Communities and Regional Mechanisms. Ahead of this Summit, the African Union should play a more active coordination and harmonisation role with the Regional Economic Communities, in line with the Abuja Treaty.
-
External parties should be invited to Summits on an exceptional basis and for a specific purpose determined by the interests of the African Union.
-
Partnership Summits convened by external parties should be reviewed with a view to providing an effective framework for African Union partnerships. Rather than all countries, Africa could be represented by the current Chairperson of the African Union and his or her predecessor and successor, the Chairperson of the Commission, and the Chairpersons of the Regional Economic Communities.
-
To ensure continuity and effective implementation of Assembly decisions, a troika arrangement between the outgoing, the current, and the incoming chairpersons should be established. This would require the incoming chairperson to be selected one year in advance.
-
Heads of State may only be represented at Summits by officials not lower than the level of Vice President or Prime Minister. (In fact, on this particular one, there was a case where the President is not there, nor the Prime Minister, ministers, ambassador, then it has gone to secretaries of the embassy, and so forth. I don’t think this is appropriate.)
-
The current sanctions mechanism should be strengthened and enforced. This would include consideration of making effective participation in African Union deliberations contingent on adherence to Summit decisions.
On operational management, the following recommendations should be considered.
-
The election of the Chairperson of the Commission should be enhanced by a robust and transparent governance process (for example, candidate manifestos).
-
The Deputy Chairperson and Commissioners should be competitively recruited in line with best practice and appointed by the Chairperson of the Commission, to whom they should be directly accountable, taking into account gender and regional diversity, amongst other considerations.
-
The Deputy Chairperson role should be reframed to be responsible for the efficient and effective functioning of the Commission’s administration.
-
The title of Chairperson and Deputy Chairperson could also be reconsidered.
-
A fundamental review of the structure and staffing needs of the organisation, as well as conditions of service, should be undertaken to ensure alignment with the recommended priority areas.
The fourth area is the one we started with: financing the African Union. We have agreed that we have to pay for ourselves. It is a question of independence and dignity and the ability to set our own agenda.
Our programmes are 97 per cent funded by external donors – 97 per cent – and as of December 2016, less than half of member states had paid their assessment in full.
The resolution on financing last July was also the catalyst for this study on institutional reform. That is not an accident. Once you’re the one paying, you automatically become more concerned about getting good value for money.
But neither can we solve the issue by coming to depend disproportionately on the bigger states amongst us. We all have to contribute our fair share to ensure that the African Union stays focused on our interests and priorities.
- Therefore, 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 re-inforce the Kigali Decision should also be considered.
-
The current scale of contributions should be revised based on the principles of ability to pay, solidarity, and equitable burden-sharing, to avoid risk concentration.
-
The Committee of Ten Finance Ministers should assume responsibility for oversight of the African Union budget, and develop a set of ‘golden rules’ setting our clear financial management and accountability principles.
The final element applies equally to all the points raised. We need to implement.
However we decide to proceed, we cannot leave the implementation of the reforms to chance or treat it as routine. Both in the Assembly and in the Commission, the responsibility for delivery of the reform agenda must be clearly assigned.
There is a clear expectation outside this room, that we will not defer the difficult reforms to the future anymore.
Even if we can’t fix everything at once, let’s agree to move forward and do what we can. That way the reform process will gain momentum as awareness is built that more is possible than we realise.
-
Accordingly, the recommendations here are to establish a high-level panel of Heads of State and Government to supervise the implementation process, and to put in place a reform implementation unit at the Commission.
-
Additionally, a legally binding mechanism should be established to ensure that commitments to implement these reforms are respected.
No one should be afraid of losing anything they have. That is not what this report or process is about. It’s about getting more for all of our people.
Instead, we should be very worried about continuing to miss opportunities that could transform the lives of our people. We need to feel challenged by that.
Critique the details in the report, as you see fit, Your Excellencies. It is about what is best for Africa, not about who produced which idea. The verdict is yours.
What is important are the overarching objectives that have been captured, describing the place we need to get to, following on from an increased sense of urgency about the cost of doing nothing.
What remains is for us to evaluate, improve, decide, and then do it.
Some items we can agree to do immediately. Others require further study and consultation, for the medium or long term. It is up to us to sequence things and set the next steps in motion.
Let’s also face the fact that the way in which we have recorded our decisions up to now has not been effective. Perhaps a more explicitly binding mechanism is needed to get these reforms done, something with real consequences for non-compliance where appropriate.
It has been my humble and honourable task to pursue this assignment, as best as possible.
The recommendations and analysis offered here are intended as input to our discussion on the way forward.
If we do our part, we can expect a realigned and re-energised African Union to perform significantly better and to continue improving year upon year.
I thank you very much, Your Excellencies.
Related News
tralac’s Daily News Selection
A tiny slice of services trade in a globalised world: introducing tralac’s latest capacity-building initiative
tralac is currently in the process of launching its first online course: just this small endeavour – developing, marketing and delivering an online course has involved people and money from several countries, the cross-border provision of education services, the cross-border provision of design and illustration services, the cross-border provision of software and no doubt even more. This micro example is just one illustration of the interactions that have been made possible by technology and remind us that services are very much tradable across borders – and that trade is not limited to large corporations, but benefits small NPCs like us, as well as tech start-ups like the ones we are trading with. Of course, it also benefits the consumers of our new education service – which will make our capacity building accessible to students all over the world. [The analyst: Ashly Hope]
Transition in the AU Commission: a mid-March hand-over
A day following the conclusion of the 28th Ordinary Summit of Heads of State and Government, during which new leadership was elected, mid-March 2017 has been agreed upon as the date for the effective handing-over ceremony from the outgoing to the incoming Chairperson, Deputy Chairperson and Commissioners of the AUC. The meeting was also attended by the outgoing and incoming Commissioners.
Least developed countries propose new caps on trade-distorting farm subsidies at WTO (ICTSD)
WTO members must agree to cuts and new ceilings for trade-distorting farm subsidies, says a proposal from a group of dozens of the world’s poorest countries at the global trade body. The submission from the group of Least Developed Countries was tabled by Benin on 13 January, but has not yet been discussed by negotiators, trade officials told Bridges. It identifies “urgent” actions to be taken ahead of the WTO’s ministerial conference in Buenos Aires this December, as well as a separate set of measures which the group believes need to be tackled in the longer term. The proposal follows a flurry of submissions from other countries and groups that were tabled at the WTO in November.
Rick Rowden: ‘FT strangely silent on two African free-trade deals’ (a letter to the FT)
Summary challenges facing the SA poultry sector (DTI presentation to Select Committee on Trade and International Relations)
The Deputy Director General of Industrial Development at the Department of Trade and Industry, Garth Strachan, says stakeholders need to do everything in their power to save jobs in the poultry industry. Strachan was part of a delegation from the department, which briefed the Select Committee on Trade and International Relations in Parliament on Thursday. The Deputy Director-General at the dti, Xolelwa Mlumbi-Peter, emphasised the need for the poultry industry to take advantage of new market access opportunities in the Gulf, as this would assist to avert job losses. [Download DTI presentation (pdf)] [tralac discussion: The ongoing chicken wars put in perspective]
Tanzania: December 2016 Monthly Economic Review (pdf, Bank of Tanzania)
External Sector Performance: During the year ending November 2016, a surplus of %246.6m was recorded in the balance of payments compared to a deficit of $95.2m in the corresponding period in 2015. To a large extent, the improvement was a result of substantial fall in imports and increase in exports. Annual value of exports of goods and services amounted to $9,426.5m in November 2016 compared to $8,855.1m recorded in the corresponding period in 2015. During the year ending November 2016, import value of goods and services declined by 15.8% to $10,257m from corresponding period in 2015. All major categories of imports decline, except for oil and industrial raw materials (Table 4.2).
Kenya, SA to form joint council, committee to negotiate trade (The Star)
Kenya and South Africa are mulling over establishing a joint business council and joint technical committee to address issues related to migration and trade barriers. The council will mainly bring business people on board, while the technical committee will be a government-to-government affair. The Kenya National Chamber of Commerce and Industry Mombasa chairman James Mureu said there have not been serious cooperation between the two countries, which makes them lose out on their business potential. Mureu said the two units will also focus on twinning Mombasa with Durban as tourism destinations and trade hubs. “We can do a lot of trade between the cities bearing in mind that we deal in shipment of goods,” he said. [Built Environment Professions Export Council expands membership base: aims to further SA Inc approach in Africa]
Zimbabwe: Government rules out Rand adoption (The Herald)
Government will not adopt the South African rand, nor will it reintroduce the Zimbabwe dollar until macro-economic fundamentals are addressed, legislators heard yesterday. Finance and Economic Development Minister Patrick Chinamasa said it was not prudent for the government to adopt the rand as its official currency when it had no control over its exchange rate. Minister Chinamasa said this in the National Assembly while responding to concerns by lawmakers during a debate on the Finance Bill. [Kariba power generation up 70%]
Mozambique: Zambezi Valley development plan update (AIM)
The Mozambican government on Tuesday approved a “Special Plan for the Territorial Organisation of the Zambezi Valley”. Speaking to reporters after a meeting of the Council of Ministers (Cabinet), the Minister of Land, Environment and Rural Development, Celso Correia, said the plan lays down a development strategy for the Zambezi Valley for the next 30 years, covering the central provinces of Sofala, Manica, Tete and Zambezia.
Kenya/Uganda: Rotich to negotiate for more SGR funds on trip to China (Business Daily)
Treasury secretary Henry Rotich is set to fly to China later this month to negotiate for more loans to build the Naivasha-Kisumu-Malaba Standard Gauge Railway line. The Kenyan and Ugandan governments on Thursday agreed to jointly pursue implementation of the Nairobi-Malaba-Kampala SGR project and have it completed within 42 months. “The Cabinet Secretaries/Ministers responsible for finance and transport to jointly visit EXIM Bank of China from 27th February to 4th March 2017 to discuss the financing modalities. The dates of the visit are subject to confirmation by the government of the People’s Republic of China,” said the joint communique signed by Kenya’s Treasury Secretary Henry Rotich and his Uganda counterpart Matia Kasaija with Cabinet Secretary James Macharia and Uganda’s Engineer Monica Azuba Ntege signing on behalf of their respective transport ministries. “The two governments (Kenya and Uganda) are committed to full utilisation of the Mombasa-Malaba-Kampala SGR facility upon completion.”
Kenya loses round one in sea row case with Somalia (Daily Nation)
Judges at the International Court of Justice on Thursday dismissed the two reasons fronted by Kenya’s lawyers that there exists an alternative method of resolving the matter and that the case is invalid because the alternative method had not been exhausted. In a ruling, the court’s President Ronny Abraham poked holes into a Memorandum of Understanding signed between Kenya and Somalia, which Nairobi had said constitutes an agreement to use the UN Commission on Law of the Sea instead of the court. [Download: Full text of the ICJ judgement]
Jibrin Ibrahim: ‘Nigeria’s undying love of multiplying parastatals’ (Premium Times)
The Daily Trust of 30 January 2017 carried a report about the National Assembly’s plans to create about 25 additional federal agencies through laws that are being processed. Almost every draft bill has a proposal for the establishment of a new agency to run whatever is being proposed in the bill. The 25 mentioned are just those that are about to be finalised. There are actually about 150 new agencies being considered by our legislators at this time. The Daily Trust report shows that about N2.98 trillion or 40.1% of the N7.28 trillion 2017 federal budget will be used to run 541 existing federal agencies, departments, commissions, institutes, bureaux and other bodies.
After an enormous effort, the Buhari Administration has succeeded in reducing the percentage of recurrent expenditure and raising capital expenditure to N2.4 trillion or 30% of the federal budget. However, the path we are on, of multiplying agencies, would take us back to where we were two years ago when over 90% of the budget was allocated to recurrent expenditure to run ministries and agencies. Most of the federal agencies that are annually guzzling trillions have duplicated roles; dozens hardly do anything apart from paying salaries and pretending to work.
Factoring’s growth in Africa tied to strengthened legislation (Afreximbank)
African countries must implement strong legislation to foster the growth of factoring in order to enhance access of the continent’s small and medium-sized enterprises to much-needed finance, participants at a sensitisaton seminar discussing Afreximbank’s Model Law on Factoring heard today in Nairobi. The seminar, organized by the African Export-Import Bank (Afreximbank) for the financial community, legal practitioners and legislators in East Africa in the wake of last year’s launch of the Model Law, discussed the best ways to develop legal frameworks for factoring using the law.
Ana Revenga, Anabel Gonzalez: ‘Trade has been a global force for less poverty and higher incomes’ (World Bank)
A retreat from global integration would erode these gains, especially in developing countries. For example, abandoning existing agreements in the Americas would have particularly large negative welfare effects in countries like Mexico (4 to 9%), El Salvador (2 to 5%), and Honduras (2 to 5%), according to early research at the World Bank. Work-in-progress by some of our colleagues in the World Bank’s Research Group seeks to quantify the potential tradeoff between the efficiency gains and inequality costs of trade liberalization using household survey data from 53 low and middle income countries (Artuc, Porto and Rijkers, “Trading-off the Income Gains and the Inequality Costs of Trade Policy,” mimeo: World Bank, 2017, in progress). In spite of heterogeneity in the distributional impacts, hard trade-offs are found only in a relatively small number of countries (such as Burundi, Nigeria and Gambia). In the vast majority of countries (including Egypt, Pakistan, and South Africa) trade liberalization significantly raises incomes with at most trivial inequality costs.
Azevêdo underscores growing importance of services in world trade (WTO)
Speaking at the launch at the WTO of the “Research Handbook on Trade in Services” published by Edward Elgar Press on 26 January, WTO Director-General Roberto Azevêdo highlighted the increasing contribution of services to world trade and said that the services sector is an essential tool of economic development and connectivity. The new publication brings together contributions from a range of experts who examine the services sector from various economic and legal perspectives.
The economic effects of labour immigration in developing countries: a literature review (pdf, OECD)
Since August of 2014, this joint project developed a methodology to measure the economic contributions of migration and identified data sources and gaps. Through national consultation seminars held from April to December 2015, the project successfully launched in ten partner countries: Argentina, Costa Rica, Côte d’Ivoire, Dominican Republic, Ghana, Kyrgyzstan, Nepal, Rwanda, South Africa and Thailand. The project is carrying out an in-depth assessment of the economic effects of labour immigration and will publish the results in forthcoming detailed reports. This review, a background report for the OECD Development Centre-ILO-EU project, is a first step to explore the impact of immigration on different segments of the economy: labour markets, production sectors, fiscal balances and economic growth. Together with the country-level analysis, it aims to better inform policy makers and help them design and implement evidence-based immigration and integration policies. [The analysts: Marcus H. Böhme, Sarah Kups]
- - -
Related News
Least developed countries propose new caps on trade-distorting farm subsidies at WTO
WTO members must agree to cuts and new ceilings for trade-distorting farm subsidies, says a proposal from a group of dozens of the world’s poorest countries at the global trade body.
The submission from the group of Least Developed Countries (LDCs) was tabled by Benin on 13 January, but has not yet been discussed by negotiators, trade officials told Bridges. It identifies “urgent” actions to be taken ahead of the WTO’s ministerial conference in Buenos Aires this December, as well as a separate set of measures which the group believes need to be tackled in the longer term.
The proposal follows a flurry of submissions from other countries and groups that were tabled at the WTO in November.
Trade-distorting support in agriculture continues to create unfair competition for LDC producers, the proposal says, noting that “the bulk of LDC farmers are small-scale or semi-subsistence farmers.” It also argues that the farm sector is “crucial” for export revenues, rural livelihoods, poverty reduction, and food security.
The LDC group is made up of 48 countries recognised as least developed by the United Nations, of which three dozen are WTO members, with another eight negotiating to join the organisation.
World leaders have said they will take steps to tackle trade restrictions and distortions in agricultural markets so that they can achieve the 2030 goal of ending hunger and achieving food security worldwide. This objective is one of the 17 Sustainable Development Goals (SDGs) that were adopted under the United Nations in 2015.
“We are contributing to the debate,” one LDC negotiator told Bridges.
Call for “urgent” action
The LDC group says there is an “urgent need” for action on harmful agricultural subsidies before the Buenos Aires ministerial.
The LDCs propose that WTO members agree by the time of the conference to a limit on the sum of all trade-distorting support measures.
This would include highly trade-distorting payments currently classified as “amber box” under WTO rules, alongside similarly distorting support which is allowed under a “de minimis” clause so long as it does not exceed a certain minimal share of the value of production. Finally, the new cap would include support classified as production-limiting “blue box” payments at the WTO, which currently faces no limits under global trade rules.
Although the proposal does not specify exactly how the new limits would be calculated, sources familiar with the proposal said that such an approach could allow members to negotiate a new ceiling on the total level of trade-distorting support provided. Many countries currently provide support that is substantially below existing limits on amber box support under WTO rules.
Trade-distorting support concentrated on specific products should also be disciplined, the group said, especially for products of specific interest to LDCs.
Trade officials at the global trade body have repeatedly said that the bulk of WTO members favour an outcome on domestic support at the Buenos Aires ministerial.
Cotton: four options
The LDCs also single out cotton for particular attention by the time of the ministerial, suggesting four possible approaches for tackling distortions on global markets for the product.
For well over a decade, reform of cotton subsidies in wealthier nations has been a central negotiating demand of LDCs from four West African countries – Benin, Burkina Faso, Chad, and Mali – known collectively as the Cotton 4 or C-4.
The LDCs propose that governments could agree a fixed numerical limit on domestic support for cotton, or a limit defined as a percentage of the value of cotton production.
They could also consider a limit on trade-distorting cotton support defined as a share of total product-specific support, or a cap on cotton subsidies as a percentage of gross agricultural revenue from cotton.
“There’s a glaring need to deliver there,” one developed country negotiator told Bridges.
A high ambition agenda
Without specifying a timeframe, the group also argues that WTO negotiations need to deliver a binding overall limit to the sum of all trade-distorting domestic support, and “total elimination” of product-specific payments that exceed “de minimis” thresholds.
Currently, for both product-specific and non-product-specific support, these “de minimis” thresholds are set at five percent of the value of production for developed countries, and at ten percent for most developing countries – with China accepting a lower ceiling of 8.5 percent as part of commitments made when it joined the WTO.
Countries should agree to a “progressive decrease” in permitted support levels, the proposal says. While past WTO agreements required countries to make gradual cuts in trade-distorting support over an agreed implementation period, existing rules do little to incentivise countries to make further moves towards less trade-distorting types of farm support.
Furthermore, governments should agree to clarify criteria and disciplines for farm subsidies which currently can be provided in unlimited amounts on the basis that they cause no more than minimal trade distortion – dubbed “green box” support at the WTO. These green box subsidies include payments for “public goods,” such as research, pest and disease control, or environmental protection; however, they also include more controversial schemes such as decoupled income support programmes.
Negotiators should also agree to the total elimination of “all types of domestic support” that have distorting effects on the cotton market, the group says.
“The overall ambition is high,” one official familiar with the proposal told Bridges.
New WTO agriculture negotiating chair needed
New Zealand ambassador Vangelis Vitalis, the recent chair of the WTO agriculture negotiations, has now returned to Wellington to serve as Deputy Secretary in the Ministry of Foreign Affairs and Trade. The personnel change means that WTO officials are now consulting ambassadors to identify possible candidates who are likely to command consensus support from the trade body’s membership.
Sources said that Harald Neple, the Norwegian ambassador who chairs the WTO General Council, is overseeing the consultation process.
Negotiators are hoping that the selection process can be completed ahead of a meeting of the General Council that has been scheduled for the end of February.
Trade officials told Bridges that the LDC proposal is likely to be discussed in informal meetings of the WTO negotiating body on agriculture once the new chair has been appointed – although there is also nothing to prevent members from meeting among themselves beforehand.
Initial reactions
Trade negotiators from different world regions told Bridges that their initial reactions to the LDC proposal were positive.
“I think it’s good that the LDCs are taking this initiative,” one source said, adding that the group has “the strongest moral position to be advocating for reform.”
However, others cautioned that the response from countries that provide high levels of trade-distorting support would be critical.
Recently reported figures from the US government indicate that the country provided US$14 billion in trade-distorting agricultural domestic support in 2014, the most recent year for which data has been submitted to the WTO. Beijing has said it provided ¥123 billion (US$18 billion) in equivalent support in 2010, while Tokyo has reported ¥1140 billion (US$14 billion) in 2012.
Some negotiators said they were concerned about the more protectionist trade stance and scepticism about multilateralism that some officials in the new US administration had expressed – with some also anticipating an increase in litigation under the WTO’s dispute settlement mechanism.
“People are very preoccupied, I think,” one negotiator told Bridges.
However, other sources said that countries that favour trade reforms would continue to call for action ahead of the Buenos Aires ministerial.
“I don’t think it makes any difference: you’re still going to see a push,” another negotiator said.
Related News
SA government committed to resolve the poultry crises
A number of interventions are being identified which include measures to boost competitiveness, value-addition and technology upgrading; trade measures; export support to assist the domestic industry to access foreign markets; industrial finance and incentives with conditions for improving competitiveness; and measures to promote growth and transformation of the poultry industry among others.
This was said by the Department of Trade and Industry officials during a briefing to the Select Committee on Trade and International Relations about the challenges facing the Poultry Sector in Parliament on 2 February 2017.
The poultry industry employs 48 000 and 63 000 direct and indirect jobs respectively and is therefore important to ensure the sustainability of the industry.
The Deputy Director General of Industrial Development at the dti, Garth Strachan said stakeholders need to do everything in their power to save jobs in the poultry.
“There is a broad agreement that manufacturing-led growth is critical for high economic and employment growth and the poultry sector is critical to this effort. To this effect, government through the establishment of the Action-focused Government Task Team has taken the support for the sector to another level through the structured mechanism. This team will develop a common response to the complex challenges facing the domestic industry,” he adds.
“The team will receive inputs and undertake research where required; identify possible areas for intervention; engage with different stakeholders; make recommendations for intervention and unblock areas for intervention,” Strachan said.
According to Strachan, shared responsibilities between the state, private sector and labour are vital to the sector. This he says will allow growth, competitiveness, job retention, raise production, raise exports and market share.
The Deputy Director-General at the Department of Trade and Industry (the dti), Ms Xolelwa Mlumbi-Peter emphasised the need for the poultry industry to take advantage of new market access opportunities in the Gulf as this would assist to avert job loses.
The committee also heard that while there are US imports of chickens, these are not the source of the present crisis of the poultry. In 2015 South Africa and the US made a breakthrough in the long-standing dispute of the export of bone-in chicken pieces from the US. The deal secured South Africa’s participation in the African Growth and Opportunity Act (Agoa) for the next 10 years!
According to the Paris agreement, the US was allowed to export of 65 000 tons a year to South Africa. However, it has emerged that the US has not fully utilised the quota optimally. Therefore, Agoa is not the main contributor for the current poultry crises.
» See also the tralac Discussion by Willemien Viljoen: The ongoing chicken wars put in perspective
Related News
Azevêdo underscores growing importance of services in world trade
Speaking at the launch at the WTO of the “Research Handbook on Trade in Services” published by Edward Elgar Press on 26 January, WTO Director-General Roberto Azevêdo highlighted the increasing contribution of services to world trade and said that the services sector is an essential tool of economic development and connectivity.
The new publication brings together contributions from a range of experts who examine the services sector from various economic and legal perspectives. The book was presented by its co-editors – Pierre Sauvé from the World Trade Institute at the University of Bern and Martin Roy from the WTO Secretariat. Other participants included Pakistan’s WTO Ambassador, H.E. Dr. Syed Tauqir Shah, Hamid Mamdouh, Director of the WTO’s Trade in Services and Investment Division, Lee Tuthill from the WTO Secretariat, and Erik van der Marel from the European Centre for International Political Economy (ECIPE).
In his opening remarks, DG Azevêdo said: “Trade in services, when measured in value added terms, accounts for almost 50% of world trade. Despite this, trade in services is still sometimes regarded as an emerging issue, or something that is only of interest to some countries. This view simply doesn’t reflect the reality today. It seems that we need to update our trade policy software.”
In reference to the work of the WTO, he continued: “On negotiations, transparency and monitoring, disputes, or capacity building, our success depends to a significant degree on our ability to reflect the reality of the trading system, with services playing a major role. It is a key part of trade policies and an essential tool of economic development and connectivity.”
Ambassador Shah spoke about the critical link between trade in services and e-commerce and stressed the importance of discussing development aspects of the services sector. He said: “Used well, e-commerce is a real development tool and an enabler for small players. Promoting fair competition between online and offline services is critical for developing countries. Digital technologies can be transformational by promoting inclusion, efficiency, and innovation, but if the digital economy is not accessible, affordable and open, it will result in inequality, control and concentration. Today’s discussion is what we need: to help developing and least-developed countries understand the challenges and articulate their needs.”
Services: Exploring the (Still) Understudied Dimension of International Trade
Pierre Sauvé and Martin Roy introduce their new book aimed at better understanding trade in services.
Services represent the greatest share of domestic production and employment in a large majority of economies, and account for about two thirds of the world’s foreign direct investment stock. While services have been traded internationally for centuries (for example, via maritime transport or postal services), their tradeability has exploded with recent advances in information and communications technology and the global expansion of the Internet. Services are the backbone of e-commerce, constitute essential inputs for trade in goods, ensure the functioning of global supply chains, and also constitute ‘final exports’ for direct consumption abroad. Basically, services help keep the world connected and underpin economic growth and development.
Despite this, trade in services remains an under-researched area in scholarship on international economics, law, and political economy. The Edward Elgar Research Handbook on Trade in Services, composed of 22 chapters by expert contributors, sheds analytical light on a number of issues, old and new, that confront those interested in the services economy and its increasing salience in international trade and investment.
On the economics side, the book’s contributions underscore key emerging trends and explore the latest research questions. The chapter by Roy highlights recent policy trends in trade in services and points out that governments in both developed and developing countries have engaged in more liberalization than in new protectionist policy measures, including during the latest economic downturn. Chapter 2, Measuring trade in services in a world of global value chains, by Maurer, Magdeleine and Lanz, complements this picture by depicting trends in services trade flows, documenting the growing role of services in global value chains (GVCs).
Chapter 3: Trade costs and global value chains in services by Miroudot and Shepperd provides further analysis of the role of services in GVCs, adducing evidence that trade costs in services are quite high. The authors show how governments’ restrictive trade policies contribute to such costs, and explain how the link between trade restrictions and trade costs varies across sectors. A key finding is that intermediate trade costs are more sensitive to trade restrictions. Given the importance of trade in services in the GVC era, this has centrally important policy implications.
Van der Marel (Chapter 4: Ricardo does services: Service sector regulation and comparative advantage in goods) explores the extent to which policy affecting services may constitute a source of comparative advantage for trade in goods. He shows how countries possessing institutions capable of enacting sound regulatory policies in key service input industries once liberalization has taken place will experience greater ease in exporting goods which are more dependent on such services.
Other fundamental economic issues covered by the book include the impact of preferential services agreements on trade in services (in the Chapter by Shingal), the role of services in enhancing the competitiveness of developing economies (Sáez and Taglioni), and the challenges and opportunities of regulatory reform in service industries (Sáez and Molinuevo).
The Research Handbook’s second section explores a range of legal and rule-making challenges that confront policy-makers in services trade. The section’s seven chapters take stock of the limited degree of judicial activism displayed to date in services trade and the reasons for the stark contrast observed with respect to trade in goods. In his contribution, Leroux assesses two decades of services trade jurisprudence in the WTO, noting that, absent negotiating progress, the vast majority of significant developments under the General Agreement on Trade in Services (GATS) have resulted from WTO Panel and Appellate Body reports. While limited, the jurisprudence has tackled important and basic issues. Asking whether WTO adjudicatory bodies have succeeded in clarifying the areas left grey by the negotiating process, Leroux posits that, on balance, the GATS reveals attributes of quality wine – getting better, if ever so incrementally, over time.
The multilateral rule-making agenda in services, and possibly to a lesser extent the preferential one, remain works in progress. The growth of services trade has further amplified the gap between international rules and reality on the ground. This section of the book delves into a number of these issues. Krajewski’s chapter explores the development of rules for non-discriminatory domestic regulations, a long-standing negotiating item on the WTO agenda, and a key feature in a number of preferential trade agreements. For their part, Hoekman and Mavroidis explore the scope that may exist for the adoption of disciplines targeting the form and substance of standard-setting in service industries. Delimatsis pursues this conversation by looking into issues raised by standardisation efforts in the European Union, particularly in the fields of professional and financial services.
The remaining chapters of this section address some of the paramount ‘new’ topics that are fuelling discussions among trade negotiators and that appear as motivations for a number of recent preferential trade agreements (PTAs). One such issue is the rising influence of state-owned enterprises on trade in services. In their contribution, Hufbauer and Stephenson highlight the important role that SOEs play in the services sector around the world in key sectors and discuss their significance in relation to cross-border trade (GATS Mode 1) and commercial presence (GATS Mode 3). They then proceed to identify some of the major gaps in the WTO and selected PTAs with respect to disciplines on the potentially trade, investment and competition-impairing effects of SOE practices, both domestically and in their international operations.
A second topic of paramount importance in discussions of new trade rules for services pertains to digital trade and, more specifically, to cross-border data flows. Burri documents the impact of the Internet revolution and the expansion of the digital environment, which has both enabled services trade and been enabled by services reforms. The chapter shows how these technological developments have yet to be fully reflected in international economic law, and discusses how and whether WTO rules can accommodate such new realities. The contribution by Tuthill analyses the new trade obstacles that on-line information-oriented service suppliers are facing. Tuthill then reviews the existing and proposed trade rules that industry and governments hope will govern cross-border data flows, including multilateral provisions in the context of the GATS.
The final section of the book addresses a range of political economy challenges that reveal the extent to which services and the process of economic development have become intertwined. For example, Chanda’s chapter highlights the links between demography, trade and migration, and the consequent implications for trade in services through the temporary cross-border movement of labour. The author argues that sending and receiving countries need to actively pursue bilateral labour arrangements as well as broad-based economic agreements that cover services, investment and labour mobility, so as to benefit from their demographic complementarities.
The chapter by Wilson looks at the fundamental, yet understudied, interaction between services trade and competition policy. Looking at examples from his native Pakistan, the author shows how negotiated market opening for trade in services, while necessary, will rarely be sufficient to secure the hoped-for efficiency and consumer-welfare gains.
Berry, Bohn, and Mulder look into the growing involvement of emerging economies in global trade in business services and value chains over the last two decades. They identify contributing factors, and the underlying policy choices, that have facilitated growing developing country involvement in business trade services and their growing integration in GVCs.
Sauvé and Ward, for their part, discuss the WTO services waiver for least developed countries (LDCs). Noting the difficulties in operationalising the waiver, they argue for feasible, mutually acceptable, commercially relevant, and development-friendly advances. To benefit from preferences granted, the chapter posits that LDCs will have to address export difficulties that often have a regional or neighbourhood character, and to tackle their own supply-side constraints with the help of the Aid for Trade initiative.
Preferential trade agreements (PTAs) on services have proliferated over the past 15 years, and present both a challenge and an opportunity for the WTO and its members. VanGrasstek and Mashayekhi explore the reasons for the very different approaches taken by developing countries in the negotiation of such agreements. Meanwhile, Broude and Moses look at services PTAs from a different angle. Using insights from cognitive psychology and behavioural economics, they explore negotiating dynamics in services negotiations, focusing on governmental preferences for ‘negative’ vs ‘positive’ listing, a key structural issue in services agreements.
Gari’s concluding chapter draws attention to the underlying factors that account for the limited successes of multilateral negotiations on trade in services to date and discusses various ways to improve the GATS’ effectiveness. Key factors taken up in this regard relate to the nature of services trade – for example the fact that services restrictions cannot be negotiated as straightforwardly as tariffs – the emergence of new trading powerhouses, and an increasingly complex trade agenda. Among possible ways forward, Gari suggests that Members willing to move forward on the liberalization of trade in services be allowed to do so within the WTO framework but on a variable geometry basis, whereby negotiations are conducted in an open and transparent manner, and with a view to extending negotiating outcomes to non-participants on an MFN treatment basis, in a manner similar to that used in the WTO’s Information Technology Agreement or negotiations on environmental goods.
This post was originally published on the Elgar blog on 12 October 2016.
Related News
Trade has been a global force for less poverty and higher incomes
In the ongoing debate about the benefits of trade, we must not lose sight of a vital fact. Trade and global integration have raised incomes across the world, while dramatically cutting poverty and global inequality.
Within some countries, trade has contributed to rising inequality, but that unfortunate result ultimately reflects the need for stronger safety nets and better social and labor programs, not trade protection.
Merchandise trade as a share of world GDP grew from around 30 percent in 1988 to around 50 percent in 2013. In this period of rapid globalization, average income grew by 24 percent globally, the global poverty headcount ratio declined from 35% to 10.7%, and the income of the bottom 40 percent of the world population increased by close to 50 percent. This big picture evidence is buttressed by compelling micro-econometric studies on pro-poor income and consumption gains.
-
The 2001, US-Vietnam free trade agreement reduced poverty in Vietnam by increasing wage premiums in export sectors, spurring job reallocation from agriculture, forestry and fishing into manufacturing, and stimulating enterprise job growth.
-
A study of 27 industrial and 13 developing countries finds that shutting off trade would deprive the richest 10 percent of 28 percent of their purchasing power, but the poorest 10 percent would lose 63 percent because they buy relatively more imported goods.
-
In many developing countries, export growth has been associated with greater gender equality. Exporting firms generally employ a significantly higher share of women than non-exporters. In Cambodia’s export-oriented garment sector, which is one of the main providers of wage employment in Cambodia, 85 percent of all workers are women.
A retreat from global integration would erode these gains, especially in developing countries. For example, abandoning existing agreements in the Americas would have particularly large negative welfare effects in countries like Mexico (4 to 9 percent), El Salvador (2 to 5 percent), and Honduras (2 to 5 percent), according to early research at the World Bank.
Within countries there are invariably losers as well as winners from trade and globalization. Households are likely to be affected differently depending on their physical and human capital endowments, their consumption patterns, and their incomes. Among developing countries, which we study most closely at the World Bank, there are countries where the direct effect of trade on the wage distribution has been equalizing (e.g. Brazil), and others where it has been un-equalizing (e.g. Mexico). Trade also reduced the (relative) wages of the poor in India in the 1990s, so that poverty decreased less in rural districts more exposed to trade liberalization.
Work-in-progress by some of our colleagues in the World Bank’s Research Group seeks to quantify the potential tradeoff between the efficiency gains and inequality costs of trade liberalization using household survey data from 53 low and middle income countries[1]. In spite of heterogeneity in the distributional impacts, hard trade-offs are found only in a relatively small number of countries (such as Burundi, Nigeria and Gambia). In the vast majority of countries (including Egypt, Pakistan, and South Africa) trade liberalization significantly raises incomes with at most trivial inequality costs.
Despite the potentially negative effects of trade on some, what happens to final incomes and hence to inequality, however, is not a given. Between 1990 and 2010, a period of rapid globalization, inequality (measured by the Gini index) increased in the United States from 43 to 47 but fell in Denmark from 31 to 26.
Consider why. US workers concentrated in communities which face high volumes of Chinese imports have experienced fewer jobs and falling wages. And yet, the US Trade Adjustment Assistance (TAA) program falls short of the challenge of helping people get back on their feet. The US spends just 0.1% of GDP on all its active labor market polices while the OECD average is 0.6%. Second, the TAA is designed to help only workers suffering direct trade-related job losses but wages losses are not limited to workers who are employed in import competing sectors. Third, the TAA requires active participation of eligible workers in retraining programs but many less educated and older workers, who are worst affected, fail to qualify because they have often already withdrawn from the labor force.
In Denmark, trade liberalization and offshoring also contributed to a decrease in low skill wages, and increase in high skill wages, thus potentially widening inequality. However, the Danish labor assistance system (called Flexicurity) may have helped to avoid any significant increase in inequality. The system targets all workers suffering from job losses, not just workers in sectors exposed to trade and offshoring shocks, and deals with any negative labor market shock, not just relating to trade. The system is based on: a flexible labor market allowing employers to hire and fire relatively easily; a generous unemployment benefit system; and strong activation policies encouraging job search and enhancing workers’ employability.
In countries where trade has created losers, policies that redistribute some of the gains from winners to losers are needed to ensure the benefits of trade are widely shared. They also need policies to better equip workers to benefit from the opportunities offered by trade. Better and more generous safety nets and other social protection policies, and more investments in skill acquisition, are the answer. Not protectionist trade policies that will blunt the engine of growth that has delivered prosperity for millions around the world. This insight guides our work in a World Bank Group dedicated to ending extreme poverty and boosting shared prosperity for all.
Ana Revenga is the Deputy Chief Economist of the World Bank. Anabel Gonzalez is Senior Director of the World Bank Group Global Practice on Trade and Competitiveness.
[1] Artuc, Porto and Rijkers, “Trading-off the Income Gains and the Inequality Costs of Trade Policy,” mimeo: World Bank, 2017, in progress
Related News
Kenya, SA to form joint council, committee to negotiate trade
Kenya and South Africa are mulling over establishing a joint business council and joint technical committee to address issues related to migration and trade barriers.
The council will mainly bring business people on board, while the technical committee will be a government-to-government affair. The Kenya National Chamber of Commerce and Industry Mombasa chairman James Mureu said there have not been serious cooperation between the two countries, which makes them lose out on their business potential.
He spoke on Monday when South Africa envoy to Kenya Koleka Anita paid a courtesy call on Kilifi-based Milly Glass. a container glass and table ware manufacturer. Mureu and Anita said the council and the committee will replicate business from the two partners and enhance social cooperation.
They said the two units will ensure signed bilateral trade agreements between South Africa and Kenya are activated.
“There is no point of signing a bilateral agreements a country if we don’t breathe life into them and make sure that they are brought to realisation,” Mureu said.
President Uhuru Kenyatta and his South African counterpart Jacob Zuma signed four memoranda of understanding and two bilateral agreements, which could improve relations between the two countries, during Zuma’s visit to Kenya on October 2016.
They signed an agreement on defence cooperation, which the leaders said will help define their working relations in combating security threats in the region. Anita said if the South and East Africa community come together, the resulting market force will be felt across the entire continent.
Mureu said the two units will also focus on twinning Mombasa with Durban as tourism destinations and trade hubs. “We can do a lot of trade between the cities bearing in mind that we deal in shipment of goods,” he said.
Anita said Mombasa is a strategic location for South Africa. “We need to get to action in terms of areas of interest,” she said. A delegation to seal business deals between Mombasa and Durban will be led by Governor Hassan Joho, she said.
Imports to Kenya from South Africa were valued at Sh61.3 billion in 2015, the Kenya National Bureau of Statistics Economic survey 2016 shows. This is in favour of SA as Kenya’s exports were valued at a paltry Sh4.3 billion.
Anita said there is need to elevate relations to bi-national level, where the two heads of states will be leading trade talks. She said the two nations, with the guidance of the council and the committee, poverty levels will be reduced and business will improve.
“When people are poor, they are likely to be involved in crime. It’s a good thing that Milly Glass employs over 500 families – it is not enough, it has a potential to do more,” Anita said.
Related News
tralac’s Daily News Selection
PIDA Progress Report 2016 (NEPAD)
The lead implementing PIDA agency, the NEPAD Agency, with support from the AUC, AfDB, partners and stakeholders, continues to interact with the private sector. At the same time, it has provided technical support and capacity building to RECs to support PIDA implementation, while providing core administrative support to the programme to ensure its smooth implementation. There was a concerted effort to “crowd-in” private investors to invest in PIDA projects. This was undertaken via the CBN and aimed to de-risk PIDA infrastructure projects. The CBN Report on De-risking Infrastructure and PIDA Projects in Africa mirrors the agency’s drive to de-risk PIDA projects. It was presented at the CBN Dialogue with African pension and sovereign wealth funds, which was held in New York, where the report was also formally launched at Africa-NEPAD Week at the 71st UN General Assembly.
This complements NEPAD’s transport and logistics initiative, Move Africa, which wants to transform the African trans-boundary transport and logistics sector. NEPAD also launched the NEPAD RE endeavour, which aims to accelerate the development and implementation of African renewable energy projects. As part of the effort to address the lack of capacity for early stage project preparation at the national and regional level, the PIDA SDM and the NEPAD IPPF provided early stage project preparation and project feasibility support to PIDA programmes, in line with the tunnel-of-funds approach. [Virtual PIDA information Centre]
Africa Construction Trends Report 2016 (Deloitte)
Funding and ownership is defined as the country where the financier or owner of the project is domiciled. In line with ownership, Governments are increasing their funding of projects, funding a total of 81 projects (28.3%) in the period under review. Private domestic firms fund 40 projects and international Development Finance Institutions fund 39 projects, followed by China with 36 projects and African DFIs with 28 projects. The share of total projects that are being funded by International DFIs has decreased, while the share of funding provided by China has increased. Private Domestic companies are constructing 76 projects, while Chinese companies are busy with 64 projects. Italian firms are building 18 projects and French companies 14, while Portuguese and South African firms each are building 10.
Infrastructure Gas Projects Mozambique Summit 2017: linking local business with mega-projects
According to Paulo Fumane, Head of the Confederation of Economic Associations of Mozambique, those interactions should start at the very beginning, when foreign companies seek to position themselves in Mozambique. “It may mean retaining local legal advisors, for example,” the director of the Mozambican government’s official private sector dialogue partner explains. He also welcomes the US Embassy’s Maputo Trade Department initiative which will launch a series of oil and gas workshops later this month drawing local businesses’ attention to potential partnerships.
Global Investment Trends Monitor: African trends (UNCTAD)
FDI flows to Africa also registered a decline (-5% to $51bn), with the region sharing similar external vulnerabilities with Latin America. The low level of commodity prices continues to have an impact on resource-seeking FDI. Flows to Angola more than halved after surging in 2015. Mozambique saw its FDI fall 11%, but the level was still significant at an estimated $3bn. However, there was some uptick in flows to parts of Africa, centred on traditional FDI recipients such as Egypt (from $6.9bn to $7.5bn) and Nigeria (from $3.1bn to $4bn). Similarly South Africa saw a 38% increase in FDI inflows, though they remained at a relatively low level of US$2.4bn. [Access the complete report (pdf)]
Johnnie Carson on Trump’s Africa policy: ‘unclear and uncertain’ (African Arguments)
It is possible that Trump’s term in office will surprise us on Africa. Republican administrations have outperformed on this front before. President Bush certainly did, and his two landmark development initiatives – PEPFAR and MCC – remain extremely popular. But given the absence of any serious White House interest in Africa, Secretary Tillerson may become the key American player on Africa. He could put Africa policy on a solid footing by appointing an experienced Assistant Secretary of State for African Affairs; supporting key Bush- and Obama-era food, health and power development initiatives; and maintaining the business-focused policies of Obama. He could also throw his support behind USAID, the Overseas Private Investment Corporation and EXIM Bank, all of which strengthen US economic and development objectives in Africa.
A response by Stephen Lande: The absence of a Trump blueprint for Africa is a positive. Since it provides African governments and private sector leaders in Africa and in the US to draft and present a plan. Unlike other regions, with 55 countries, Africa must be treated as a group since individual countries are too small to support US based supply chains and distribution networks. Thus, Trump must engage African countries as a whole, not individually as is being done elsewhere.
In Accra: the 7th AGOA Technical Workshop was held this week
UNIDO’s Li Yong: ‘Africa’s Decade of Industrialization’ (Project Syndicate)
The recent UN General Assembly resolution declaring 2016-2025 the Third Industrial Development Decade for Africa is yet another push in this direction. The organization that I represent, the UN Industrial Development Organization, has been tasked with operationalizing and leading the implementation of the concomitant program, including mobilizing the needed resources. All of these declarations and commitments are an important first step. But they will mean little unless they are translated into concrete and effective action that advances African industrialization, creates jobs, and fosters inclusive and sustainable economic growth and development. The question is how. The short answer is money and action.
EPA meeting flops as member states fail to provide trade data (The EastAfrican)
The East African Community meeting that was to be held this weekend to discuss the Economic Partnership Agreement between the region and the EU was postponed after several member states failed to hand in key trade data, putting in doubt a subsequent meeting that would have set the agenda for the upcoming EAC Heads of States Summit in February. “Tanzania, Burundi and Uganda are yet to hand in their data to the Secretariat, while Kenya has already done so. We are not sure when they will, so upcoming meetings have been delayed indefinitely until the Secretariat receives all the data,” The EastAfrican was told. The delay has hampered an impact analysis on the trade sectors and tax revenues that was commissioned by the EAC Secretariat as the consultant lacks data to compete the task. The consultant was expected to hand in a report on the impact of the EAC-EU EPA and tax revenue streams on the region’s industrialisation drive.
The Great Lakes Trade Facilitation Project: implementation status review (World Bank)
The Great Lakes Trade Facilitation Project (GLTFP) was approved by the World Bank Board on 25 September 2015. The project became effective in Rwanda on 25 January 2016, for COMESA on 4 April 2016, and in the Democratic Republic of Congo on 15 September 2016. In Uganda the project still awaits Parliamentary approval. Approval has been delayed due to the February elections, swearing in of the new Parliament, and the constitution of a new Parliamentary Committee which must conduct a review prior to recommending the project for approval. The Parliamentary Committee met with Ministry officials on 5 December 2016 and approval is expected in January 2017, with the goal of reaching effectiveness shortly thereafter.
With the notable exception of Uganda, all other project partners, Rwanda, DRC and COMESA, have reached effectiveness and made progress in preparation of key activities over the reporting period. Key staff for project implementation units as defined in the legal covenants all have been hired in the DRC and COMESA, while in Rwanda all the required staff have been hired except for the project coordinator, whose appointment awaits approval by the PS and Minister of MINEACOM. Worked has focused on delivering comprehensive action plans, paving the way for more comprehensive implementation of project activities in 2017.The team assesses an overall rating for the project as Moderately Satisfactory, noting the considerable progress made over the period in COMESA, the DRC and Rwanda but also the need to now expedite activity implementation and the lack of approval/effectiveness in Uganda. [The author: Paul Brenton] [Further project documentation]
Christine Lagarde: Financial stability and pan-African banking (IMF)
The expansion of cross-border banking has been impressive. Ten African banks now have a presence in at least 10 countries on the continent, and one is present in more than 30 countries. This expansion inevitably has brought a host of new complexities. With varying regulatory regimes across countries at different stages of financial sector development, it should not be surprising that effective oversight of cross-border banking presents immense challenges. Unified accounting and reporting standards are absent. Data weaknesses abound. National secrecy laws and constraints on information flows impair cooperation among supervisors in home and host countries. The key is to ensure that supervision takes place on a consolidated basis.
African Universal Internet Alliance expands to 17 nations (KT Press)
“Our Alliance started with 7 member countries, and now has 17 countries on board representing a market of about 360 million people,” said President Paul Kagame at the Smart Africa board meeting on the sidelines of the 28th AU Summit in Addis Ababa. Membership includes war-torn nations like South Sudan – whose government is still struggling to restore security in the vast nation. Others include Egypt, Kenya, Mali, Senegal, Ivory Coast and Benin. Tanzania and Burundi – both neighbors to Rwanda and belonging to the same bloc – East African Community.
SADC: Consultancy to develop a Regional Disaster Risk Reduction Strategic Plan 2016-2030
The overall objective of this consultancy is to develop a 2016-2030 Regional Disaster Risk Reduction Strategic Plan for the SADC Region, taking into account the lessons drawn from implementing the 2010 - 2015 DRR Strategic Plan, the international and regional instruments and/or frameworks for disaster risk reduction and humanitarian assistance. In order to accomplish the above objective, the Consultant will carry out the following tasks:
Namibia, Germany signs new merchant shipping agreement (Namibia Economist)
In a statement announcing the agreement, the two teams stated: “Shipping is the most cost-effective way to transport the vast majority of goods in international trade and will be central for global sustainable development and growth. Germany ranks first in the World Bank’s global Logistics Performance Index 2016. Short turn-around times, the interlinking of different modes of transport and advanced logistics strategies help make this possible. Under the agreement and the envisaged cooperation projects, German companies can provide this know-how to make a major contribution to more trade and growth in and with Africa.”
Namibia reduces poverty levels despite economic challenges (New Era)
According to the preliminary results for the 2015/16 financial year (pdf), Namibia’s Gini coefficient now stands at 0.572. This is a 25 points decrease in the index from the 0.597 recorded in the 2009/10 financial year. “In spite of the challenging economic environment we should take pride in the fact that we are one of the few economies which have brought about a consistent reduction in income inequalities and poverty through growth and targeted policy interventions,” finance minister Calle Schlettwein said in his first meet with the media last week.
India: What the Economic Survey tells us about interstate trade – and what it means for GST (Scroll)
The interstate trade data estimates are really new. It suggests that there is a lot more in the way of trade between states than was previously assumed. Interstate trade is estimated to generate close to 54% of GDP. In fact, in many cases, inter-state trade between contiguous states exceeds the intra-state trade. The data are surprising because one of the major roadblocks when it comes to the ease of doing business is the friction caused by differentials in state taxes and laws. There are permanent 5 km long jams caused by trucks being held up at every state border and every business operating in India alleges endemic corruption in every state excise department. In fact, the GST is supposed to ease this situation. The Survey suggests that the surprisingly high levels of interstate trade despite the frictions is because the current system of taxation creates distortions where inter-state trade is more profitable than intra-state trade due to Value Added Tax offsets. Hence, goods are moved across borders (or shown to be moved across borders) since that is more tax-efficient. [The analyst: Devangshu Datta]
- - -
Related News
PIDA Progress Report 2016
Foreword by Dr Ibrahim Assane Mayaki, NEPAD Agency CEO
Africa is a young and vibrant continent. This is considering its rapidly growing young population. According to the UN, 226 million people between the age of 15 and 24 resided in Africa in 2015, accounting for 19% of the global youth population. Africa’s young population is expected to continue to grow throughout the remainder of the 21st century to the point where it is more than double existing levels in 2055. It is projected that the number of youth in Africa will grow by 42% by 2030. If Africa is going to harness this potential to help achieve the desired economic growth envisioned by the Agenda 2063, it will have to provide employment opportunities for its growing young population.
PIDA’s investments into infrastructure will create direct jobs during the construction phases and indirectly via opportunities that arise from the availability of the infrastructure, including an increased demand for goods and services. Spin-offs from economic growth due to an increase in trade and regional integration will provide more employment opportunities, considering improved economic performance as a result of investment into infrastructure. For this reason, PIDA acts as an important catalyst for job creation and youth empowerment through its engendered approach.
The strengthening of capacity at the NEPAD Agency and in the RECs, through the PIDA CAP has led to significant progress in implementing PIDA projects. Milestones include projects on the BDC and NSC where governance framework MoUs between the respective member states have been finalised and an acceleration methodology implemented to identify, select and package priority projects. This is complemented by the significant progress made in implementing the ZTK Power Interconnector.
Meanwhile, the prioritisation and showcasing of projects from the CC, EAC and ECOWAS are evidence that, with technical support from the NEPAD Agency, the AUC, RECs and, importantly, commitment from member states, it is possible to achieve significant progress in PIDA projects. PIDA, Africa’s largest infrastructure development programme, will lead to the success of Agenda 2063.
Through the CBN, we succeeded in engaging the private sector to participate in and contribute to the PIDA. This was achieved by focusing on understanding the real, as opposed to the perceived risks of associated with the projects. This led to recommendations being made on de-risking them, while garnering significant interest from private sector participants on PIDA infrastructure investment opportunities. The CBN Report on De-risking Infrastructure and PIDA Projects in Africa provides a deeper understanding and context of a de-risked PIDA project. We therefore envisage that this will lead to increased investment from domestic and international investors, including pension and sovereign-wealth funds, as well as other long-term investors. We will, therefore, continue our interaction with the private sector to ensure that its interest in PIDA infrastructure investment opportunities grows significantly.
Importantly, the report also details the so-called “soft” issues and programmes, while supplying a breakdown on PIDA project progress by the RECs where data is available. In addition, it provides highlights of a preliminary review of the PIDA PAP, which is the guiding framework for the first phase of implementation of the programme. The report also highlights progress made with the 16 priority PIDA projects that reached consensus at the 2014 Dakar Financing Summit. It presents a candid review of the challenges and lessons learnt to ensure continued and accelerated implementation of projects.
Key lessons learned and recommendations
Given the complexity of PIDA, it is pertinent that we draw from collective lessons across thematic, geographic and specific project experiences to improve implementation of the programme. Lessons learned provide their greatest value when they are disseminated to the broad range of stakeholders.
The following are lessons learned from RECs, partners and project implementers on PIDA implementation:
-
Capacity building and human-resource development are essential for the faster implementation of PIDA.
-
Corridor development should be done together with capacity building on the maintenance aspects. This is considering the need for maintenance over the entire lifecycle of the infrastructure.
-
Strong commitments between bordering countries are essential for successful implementation of OSBPs.
-
Political commitment is a prerequisite for advancement of PIDA projects with many stakeholders. This is considering that there are different national stakeholders and ministries, privatesector players, continental and regional organisations as well as investors and financiers, to name a few.
-
Sharing of important information on PIDA projects remain a challenge and is still a bottleneck.
-
The designation of a champion president or minister helps to engender high-level commitment for the programme.
-
Regional priorities may not necessary coincide with national priorities. There is, therefore, a need to stay abreast of national priorities and provide an opportunity to update the project lists.
-
All regional priority projects need to be brought to the attention of the implementing ministry as early as possible. It is not a given that the participation of the key ministers in the formulation will result in a project receiving priority status.
-
There is a need to co-ordinate engagement with the private sector, considering that more entities are being established to attract private sector involvement in infrastructure delivery. A different approach is required to ensure business working groups are well coordinated and that any of their proposals are adopted at CBN level.
-
Systematic evaluation of performance is critical to assess PIDA project processes and take corrective action.
The following are key recommendations:
-
Effective implementation of PIDA requires partners to increase resource commitments to the agency and AU to support programme implementation, invest in capacity building and support core operational activities.
-
There is a need for enhanced coordination of the various institutions involved in PIDA to avoid duplication, while ensuring greater synergies and more effective deployment of scarce resources.
-
As country priorities change, there needs to be an intermittent window where the priority project lists can be updated. This will ensure PIDA is updated on sociopolitical development and member state priorities.
The PIDA Implementation Progress Report 2016 is the outcome of collaboration between all PIDA stakeholders who shared information on projects and interventions on the ground and on progress being made. The core team comprised staff of the NEPAD Agency, with input provided by the AUC Department of Infrastructure and Energy.
Related News
EPA meeting flops as member states fail to provide trade data
The East African Community meeting that was to be held this weekend to discuss the Economic Partnership Agreement between the region and the European Union was postponed after several member states failed to hand in key trade data, putting in doubt a subsequent meeting that would have set the agenda for the upcoming EAC Heads of States Summit in February.
“Tanzania, Burundi and Uganda are yet to hand in their data to the Secretariat, while Kenya has already done so. We are not sure when they will, so upcoming meetings have been delayed indefinitely until the Secretariat receives all the data,” The EastAfrican was told.
Last week, the EAC Secretariat wrote to the Tanzania, Burundi and Uganda tax authorities and statistic agencies, through the ministries responsible for EAC affairs, asking them to provide the latest tax and trade input data.
In a letter dated January 13 from the EAC Deputy Secretary-General Jessica Eriyo, the member states were asked to provide data showing the products they are trading in, value of imports, source of the products (exporting country) and the tax rates.
“We request you to liaise with your respective revenue authorities and bureaus of statistics to urgently provide the EAC Secretariat with the trade input data for the past 10 years to 2015 by January 18,” the letter reads.
It has since emerged that the lack of data has cast doubt over subsequent meetings.
“We have postponed the meeting that was scheduled to take place in Nairobi at the end of last week as the analysis of the trade data by the technical committee and its findings would have formed the basis of the meeting,” Kenya’s Principal Secretary for East African Affairs Betty Maina told The EastAfrican.
Data access and analysis was agreed on by member states at their last meeting in December 2016 in Nairobi as a compromise, as Tanzania has pushed for it before it ratifies the trade deal.
The delay has hampered an impact analysis on the trade sectors and tax revenues that was commissioned by the EAC Secretariat as the consultant lacks data to compete the task. The consultant was expected to hand in a report on the impact of the EAC-EU EPA and tax revenue streams on the region’s industrialisation drive.
Kenya and Rwanda have signed and ratified the EPA deal but being a Single Customs Territory, the other EAC members – Tanzania, Uganda and Burundi – must sign the pact to make it enforceable.
Tanzania has been arguing that signing the trade deal in its current form will have negative implications for the country’s industrialisation strategy, while Burundi had cited the resumption of EU aid to Bujumbura as a precondition for its signature.
At the September 8, 2016 extraordinary summit, Tanzania’s President John Magufuli alluded to an agreement at the beginning of this year, after extensive consultations and discussions between the partner states.
“We have agreed on further discussions on EPAs over the next three months,” said President Magufuli.
Kenya was banking on the Council of Ministers meeting to push the other member states to finalise discussions on the ratification of the EPA even as the February 2 deadline approaches.
Related News
Global foreign direct investment fell 13% in 2016, but modest recovery expected in 2017 – new figures
Global flows of foreign direct investment (FDI) fell 13% in 2016 to an estimated $1.52 trillion as global economic growth remained weak and world trade volumes posted anemic gains, according to the latest UNCTAD Global Investment Trends Monitor.
“FDI recovery continues along a bumpy road. Particularly of concern is the sharp drop-off in manufacturing investment projects, which play such an important role in generating badly needed productivity improvements in developing economies,” UNCTAD Secretary-General Mukhisa Kituyi said.
“Looking ahead, economic fundamentals point to a potential increase in FDI flows by around 10% in 2017,” Dr. Kituyi said. “However, significant uncertainties about the shape of future economic policy developments could hamper FDI in the short-term.”
The decline of FDI in 2016 was not equally shared across regions, reflecting the heterogeneous impact of the current economic environment on countries worldwide. Falling FDI flows to Developing Asia and Oceania (-22%), Latin America and the Caribbean (-19%) and Africa (-5%) reduced the global total.
FDI flows to Europe fell 29% to an estimated $385 billion, with a number of countries experiencing strong volatility in their inflows. This decline was tempered by modest growth in flows to North America (6%) and a sizeable increase in investment in other developed economies, principally Australia and Japan.
Slowing economic growth and falling commodities prices weighed on FDI flows to developing economies. Inflows to these economies fell 20% (to an estimated $600 billion) due to significant decreases in developing Asia and in Latin America. Nevertheless, developing economies continue to comprise half of the top 10 host economies. FDI flows to transition economies rose by 38% to an estimated $52 billion.
The wave of cross-border mergers and acquisitions shows signs of ebbing. A 13% increase in the value of net sales, which rose to $831 billion, pales when compared to the 67% and 68% increases registered in 2014 and 2015. Greenfield FDI project announcements value rose by 5%, but this was largely due to a handful of very large projects in a few countries. The vast majority of countries, in contrast, registered declines.
FDI flows to Africa
Slowing economic growth and falling commodities prices weighed on FDI flows to developing economies in 2016. FDI flows to Africa registered a decline (-5% to US$51 billion), with the region sharing similar external vulnerabilities with Latin America. The low level of commodity prices continues to have an impact on resource-seeking FDI. Flows to Angola more than halved after surging in 2015. Mozambique saw its FDI fall 11%, but the level was still significant at an estimated US$3 billion. However, there was some uptick in flows to parts of Africa, centred on traditional FDI recipients such as Egypt (from US$6.9 billion to US$7.5 billion) and Nigeria (from US$3.1 billion to US$4 billion). Similarly South Africa saw a 38% increase in FDI inflows, though they remained at a relatively low level of US$2.4 billion
(Billions of US dollars)
(Billions of US dollars)
Related News
Linking local business with mega-projects in Mozambique
The Infra-Gas Projects 2017 summit highlighted the need to intensify interactions between multinationals and local operators.
It has become trite to say that Mozambique is emerging as a global gas giant. It is less evident, though, to what extent Mozambicans will participate in the country’s energy-driven growth. Interestingly, the second edition of the Infrastructure Gas Projects Mozambique Summit 2017 (the Infra-Gas Summit), held last Tuesday in Maputo, focused on the various potential interactions that could arise between foreign multinational companies and local Mozambican businesses.
According to Paulo Fumane, Head of the Confederation of Economic Associations of Mozambique (CTA), those interactions should start at the very beginning, when foreign companies seek to position themselves in Mozambique. “It may mean retaining local legal advisors, for example,” the director of the Mozambican government’s official private sector dialogue partner explains.
He also welcomes the US Embassy’s Maputo Trade Department initiative which will launch a series of oil and gas workshops later this month drawing local businesses’ attention to potential partnerships. The gas sector alone presents huge opportunities for logistics operators in construction, transport, storage, and in some parts of processing and distribution, accommodation, personal services and so on.
For its part, ENI East Africa, which also attended the summit, has launched an online application platform for Mozambican businesses. The platform requires exhaustive information about operations, financial situation, work ethics and experience, as well as legal documents. ENI wants to ensure that it contracts with the right local partner, while keeping records of their selection process for reasons of transparency.
For example, its Mamba project foresees, in the initial stage, the construction of two onshore LNG trains with a combined capacity of 10 million tons a year. It also plans to drill 16 sub-sea wells from 2022 on, producing some 340 billion cubic meters of gas. Non gas-related activities from which local businesses can benefit include catering, accommodation, import-export services, medical facilities, customs-related services and car-rental and maintenance.
What, though, is a “local business”? A Mozambican-registered company which hires the bulk of its workforce outside of the country? Or a foreign company employing a predominantly Mozambican workforce? So far, the first category seems to predominate. But a few players are making some attempts to reverse the trend – like the logistics giant Agility Africa.
This global efficient supply chain provider aims to build local capacity through skills transfer and the optimization of local contractors. Active in Africa for about 60 years and with annual revenues of more than US$4 billion, Agility Africa now offers internship training programs in logistics, management and leadership in Mozambique. Nearly a hundred percent of its employees in sub-Saharan Africa are actually Africans.
“At Agility, we’d rather put our dollars in Africa rather than anywhere else,” CEO Geoffrey White says. Speaking at the Infra-Gas Summit, White stressed the strategic importance of maximizing Mozambican-based facilities as well, so as to offer in-country end-to-end solutions to customers. “In quality and on time,” his slogan goes.
The group currently delivers logistics solutions such as freight and material management systems to the Afungi LNG projects in Cabo Delgado province in northern Mozambique. But the scope of its activities goes far beyond the energy sector, and includes chemicals, defense and government, automotive and retail components.
Organized by African Influence Exchange, the Infra-Gas Summit has indirectly touched the core issue related to energy-driven economies, especially in the developing world: productivity. Local contractors, wherever they are, will participate in the growth of their respective economies only to the extent to which they are capable of offering efficiencies to their larger business partners. This, in turn, depends on the quality of training and skills of their own employees, from management to staff workers.
According to British Petroleum, in a separate report, while Africa will account for almost half of the increase in world population over the next 20 years, it will contribute less than 10 percent of the expected increase in gross domestic product. This may well be the case unless productivity in the African continent finally starts to converge with best practice.
tralac’s Daily News Selection
Starting today, in Mauritius: ‘Cross-border banking and regulatory reforms: implications for Africa from international experience’
Call for papers: ‘Public economics for development’ (WIDER Development Conference, 5-6 July 2017 in Maputo)
Profiled, key decisions of the AU Summit (Désiré Assogbavi Blog)
Focus on key priorities with continental scope: (i) The AU should focus on a fewer number of priority areas, which are by nature continental in scope, such as political affairs, peace and security, economic integration (including the Continental Free Trade Area), and Africa’s global representation and voice, (ii) There should be a clear division of labour and effective collaboration between the African Union, the Regional Economic Communities (RECs), the Regional Mechanisms (RMs), the Member States, and other continental institutions, in line with the principle of subsidiarity.
Political management of the Union: (i) The African Union Assembly shall handle an agenda of no more than three strategic items at each Summit, in line with the Me’kelle Ministerial Retreat recommendations. Other appropriate business should be delegated to the Executive Council, (ii) The Assembly shall hold one Ordinary Summit per year, and shall hold extraordinary sessions as the need arise, (iii) In place of the June/July Summit, the Bureau of the African Union Assembly should hold a coordination meeting with Regional Economic Communities, with the participation of the Chairpersons of the Regional Economic Communities, the AU Commission and Regional Mechanisms. Ahead of this meeting, the AU Commission shall play a more active coordination and harmonisation role with the Regional Economic Communities, in line with the Abuja Treaty;
Justin Yifu Lin: ‘Africa’s path for industrialization’ (DIE Blog)
Mauritius shows the path ahead. In the 1970s, the government set up industrial parks to process textiles and garments for export. At the time, most of the owners were from Taiwan or Hong Kong; today, more than 70% of the island’s industrial companies are locally owned. A carefully focused export strategy is crucial. The international development community and many African governments want to work toward regional integration, linking the markets of 54 African countries. This might have its advantages, but it should not be a priority. Africa today accounts for just 1.9% of global GDP, compared to 21% for the United States and 23% for Europe. Developing countries must use their limited resources in the most effective way, and there is no question where the most attractive opportunities in Africa are to be found. For example, instead of investing heavily in the infrastructure needed for regional integration, a country like Ethiopia would be better off building industrial parks and linking them by road to ports in Djibouti. [Léonce Ndikumana: A global agenda for achieving sustainable development in Africa]
Botswana: Bureau of Standards tightens imports pre-shipment inspection (Mmegi)
As part of this move, the standards watchdog stopped accepting letters of authority and certificates of conformity from importers issued by National Regulators for Compulsory Specifications. Speaking to BusinessWeek this week, BOBS public relations officer, Kagisano Makonyela said the bureau does not have any recognition agreement with NRCS hence it does not accept or recognise the NCRS letters of authority and certificate of conformity. “However, in the past BOBS accepted these documents from NRCS mainly through memorandum of understanding between BOBS and the South African Bureau of Standards as NRCS was initially part of the SABS,” she said.
Botswana: Sefalana enters South African market (Mmegi)
Plans for the fast-moving consumer goods giant, Sefalana Holdings Limited to follow its competitor, Choppies into the South African market are taking shape with the retailer expected to open its first store in May. At the announcement of the financials for the half-year ended October 31, 2016, the group stated that it will use a large part of the P351 million raised recently through a rights offer to support its expansion plans into South Africa. Recently, the group used part of the proceeds from the rights issue to enter the Lesotho market through the takeover of that country’s largest cash and carry outlet, TFS Wholesalers.
China to finance and build Angola’s first deepwater port (Bloomberg)
The Export Import Bank of China and Angola’s sovereign wealth fund have announced plans to invest in the development of the country’s first deepwater port. José Filomeno dos Santos, the chairman of the Angolan fund, said China would make a loan of up to $600m and that his fund would provide about $180m for the construction of the port, which would have a total cost of $1.1bn. The port will be located in Cabinda.
Rwanda Governance Scorecard 2016
The RGS 2016 has retained the eight aggregated indicators of governance, namely: (1) Rule of law, (2) Political rights and civil liberties, (3) Participation and inclusiveness, (4) Safety and security, (5) Investing in human and social development, (6) Control of corruption, transparency and accountability, (7) Quality of service delivery, (8) Economic and corporate governance. Most improving sub-indicator: Compared to previous scores, out of 37 sub-indicators, 10 have improved their score by + 5%. The best improving sub-indicator is SMEs development and Cross-Border Trade of Economic and Corporate governance indicator, which has improved by +13.78 % in the RGS 2016.
Rwanda: Govt seeks to expedite cross-border services agreements (New Times)
The Permanent Secretary in the Ministry of Trade, Industry and East African Community Affairs, Innocent Safari, has called on professionals, professional associations and regulatory bodies (ministries, departments and agencies) to suggest solutions that will bring about legal environment for cross-border movement of services and service suppliers. Addressing stakeholders at the 2nd National Consultative Forum on Professional Services, Safari said that the government attaches a lot of importance to the services sector, since it contributes 48% of Rwanda’s GDP. The forum aimed to discuss the regulation of non-regulated professions in the country and to assess the implementation of the already-concluded EAC Mutual Recognition Agreements (MRAs).
Uganda comes to the rescue as East Africa faces maize shortage (The EastAfrican)
In the past three months, Uganda has exported more than 28,000 tonnes of maize worth $14m to the region, as countries such as Burundi struggle with the highest maize prices recorded in recent times. This year, Uganda has sold 13,312 tonnes of maize to its neighbours with the bulk going to Tanzania (7,240 tonnes), followed by Rwanda (3,566 tonnes), then Kenya (2,506 tonnes) as food insecurity reaches alarming levels across various parts of the region. [Rising South African wheat crop will weigh on imports]
Uganda: Is the collapse of the Economic Partnership Agreement looming? (Daily Monitor)
As it stands now, the Economic Partnership Agreement seems to have hit a dead end, Daily Monitor has learnt. The ministry of Trade under the express directive of President Museveni will not proceed with the signing of the EPA until all the East African Community (EAC) partner states are in agreement with the details contained in the deal as well as its repercussions on each of the member’s economy. [EU tightens border controls on Uganda’s vegetable exports]
Nigeria: FG orders 48-hour visa issuance to foreign investors (This Day)
Okechukwu Enelamah, the minister of industry, trade and investment, said the federal government had issued a directive to this effect, noting that it was important to make it easy for potential investors to do business in Nigeria. He said President Muhammadu Buhari had already launched the Presidential Enabling Business Environment Council (PEBEC) whose purpose was to identify and reduce bureaucratic processes and regulations that impede the private sector. He added that the federal government, through PEBEC, had been working on three priority reforms areas with 17 quick wins to reposition the investment to climate.
New UK trade deals can’t soften blow from Brexit, Niesr says (Bloomberg)
Based on the structure of existing deals between 42 countries, the benefits of an agreement with the US, Canada, Australia and New Zealand, or with Brazil, Russia, India, Indonesia, China and South Africa, would be “very small compared with the costs from leaving the EU single market,” London-based Niesr said in a report. While the institute predicts that leaving the single market could lead to a long-term reduction in total U.K. trade of 22-30 percent, it sees the increased trade resulting from new deals equaling just 2.2 percent and 2.6 percent. The findings, which were initially published in a Jan. 27 blog, forecast no upswing at all in services trade -- which accounts for the majority of the U.K.’s economic activity. [DFID’s first Economic Development Strategy was released yesterday: download (pdf)]
The Principles for Positive Impact Finance: Banks, UN set standards on channelling investments for sustainable development (UNEP)
Nearly 20 leading global banks and investors, totalling $6.6 trillion in assets, have launched a United Nations-backed global framework aimed at channelling the money they manage towards clean, low carbon and inclusive projects. The Principles for Positive Impact Finance (pdf) - a first of its kind set of criteria for investments to be considered sustainable - provide financiers and investors with a global framework applicable across their different business lines, including retail and wholesale lending, corporate and investment lending and asset management.
South Africa and EU spar over chicken meat ‘dumping’
Nile Basin Initiative should be mandated to conflict resolution
GE’s Immelt talks up global ties as Trump pivots away from trade
Japan rejects Trump accusation of devaluing yen in currency war
India: Economic Survey 2016-17
- - -
Related News
Is the collapse of the Economic Partnership Agreement looming?
As it stands now, the Economic Partnership Agreement (EPA) seems to have hit a dead end, Daily Monitor has learnt.
Simply put, EPA is an initiative by the European Union (EU) to secure free market access in the region and reciprocate in equal measure. Should the deal remain frozen as it appears to be the case presently, regional products to the EU market and vice versa would eventually be trading on different terms and not necessarily the preferential treatment that the embattled deal seeks to institute.
The ministry of Trade under the express directive of President Museveni will not proceed with the signing of the EPA until all the East African Community (EAC) partner states are in agreement with the details contained in the deal as well as its repercussions on each of the member’s economy.
Speaking at a public policy dialogue on reversing Uganda’s declining trade balances and value of exports recently at the Uganda Management Institute in Kampala, the minister of Trade, Ms Amelia Kyambadde disclosed that the deal has been temporarily put on hold pending further consultations and consensus.
She said: “Uganda will not sign the EPA until everybody is on board. We have to wait for the other EAC countries and once that is done then we can proceed. Tanzania has some few issues that need to be dealt with and once that is done we shall proceed.”
“The President has said we should first all reach a way forward so that we can sign it (EPA) together as a bloc. He (President Museveni) doesn’t want the repeat of the so-called coalition of the willing. But for our part we are ready but we cannot do it alone.”
Coalition of the willing
The tripartite arrangement, also known as the “coalition of the willing”, involving Uganda, Kenya and Rwanda, emerged as one of the sticky issues in 2013 when the Council of EAC ministers was considering the Monetary Union Protocol.
The coalition of the willing agreements entered by the said countries sought to construct grand infrastructural projects such as rail lines and an oil pipeline that would stimulate and open up the regional economies.
Tanzania was particularly unhappy with this arrangement, describing it as a recipe for disaster. In its recommendation to the heads of state, Tanzania indicated that the tripartite arrangement poses the risk to disintegrate the community rather than integrate it.
And for that, Tanzania, among other things, recommended that all the plans and infrastructural projects that the three countries endorsed in mid that year should be revised and given a regional appeal, rather than it appearing as an initiative of the “coalition of the willing”. Tanzania also recommended that all such tripartite arrangements must be sanctioned by the EAC Secretariat as opposed to individual partner states.
Fears of some members
Tanzania, an important member of the Community is unwilling to sign the agreement until she is certain that the treaty reflects her aspirations as well as provide a window to get out should it turn out to be a raw deal.
As the largest member of the Community, Tanzania also wants to further understand how the exit of Britain from the EU bloc will impact on the agreement, and not until that is certain, she is not prepared to sign the deal.
Burundi that looked to be on the fence has now sided with Tanzania on grounds that it shares the same fears and aspirations.
However, Mr Patrick Gomes, the Secretary General of African Caribbean and Pacific Countries (ACP), in his submission during the 32nd conference between ACP and EU held in Nairobi in December last year, said that Uganda, Tanzania and Burundi’s slowness in signing the EPA may see them lose development aid from the EU.
He said: “EPA comes not only with trade opportunities with Europe, but development aid as well. As it is, Tanzania, Uganda and Burundi, which have been dragging their feet in signing the trade pact, could end up losing important development aid from the EU.”
Related News
Key Decisions of the 28th AU Summit
The 28th African Union (AU) summit held in Addis Ababa on 30-31st January was a historical one given the landmark decisions adopted, including the admission of Morocco into the Union and a deep reform of the continental body.
The summit also renewed the leadership of the AUC and took steps towards financial independence of the Union. Albeit the lack of strong country/context related decisions on Peace and Security issues, the Assembly adopted the Master Plan towards Silencing the Guns by 2020.
Finally, the summit adopted the so called ‘collective withdrawal strategy’, a misnomer of a document which provides member states with a roadmap for eventual individual withdrawal from the ICC in case AU’s claims and proposals regarding the court and some of its on-going operations are not taken in consideration.
Institutional Reform
The Summit;
-
Took note of the recommendations for the proposed reforms to further strengthen the African Union, in the following five areas: a) Focus on key priorities with continental scope; b) Realign African Union institutions in order to deliver against those priorities; c) Connect the African Union to its citizens; d) Manage the business of the African Union efficiently and effectively at both the political and operational levels; e) Finance the African Union sustainably and with the full ownership of the Member States.
-
Decided to adopt the recommendations in the Report as amended by Member States during the Retreat’s deliberations (see below)
-
Mandated President Paul Kagame, in his capacity as the lead on the institutional reform of the Union, in collaboration with President Idriss Deby Itno, of Chad in his capacity as the outgoing Chairperson and President Alpha Conde, of the Republic of Guinea in his capacity as the current Chairperson, to supervise the implementation process;
-
The Incoming Commission elected at the January 2017 Summit shall put in place a Reform Implementation Unit at the AU Commission, within the Bureau of the Chairperson, responsible for the day-to-day coordination and implementation of this decision;
-
The Incoming Commission shall also make recommendations on a mechanism to ensure that legally binding decisions and commitments are implemented by Member States;
-
President Paul Kagame shall report at each Ordinary Session of the Assembly on progress made with the implementation of this decision.
Focus on key priorities with continental scope:
-
The African Union should focus on a fewer number of priority areas, which are by nature continental in scope, such as political affairs, peace and security, economic integration (including the Continental Free Trade Area), and Africa’s global representation and voice;
-
There should be a clear division of labour and effective collaboration between the African Union, the Regional Economic Communities (RECs), the Regional Mechanisms (RMs), the Member States, and other continental institutions, in line with the principle of subsidiarity.
Realigning African Union institutions in order to deliver against those priorities
-
The Commission should initiate, without delay, a professional audit of bureaucratic bottlenecks and inefficiencies that impede service delivery and the recommendations therein;
-
The Commission’s structures should be re-evaluated to ensure that they have the right size and capabilities to deliver on the agreed priorities;
-
The Commission’s senior leadership team should be lean and performance-oriented;
-
NEPAD should be fully integrated into the Commission as the African Union’s development agency, aligned with the agreed priorities and underpinned by an enhanced results-monitoring framework;
-
The African Peer Review Mechanism (APRM) should be strengthened to track implementation and oversee monitoring and evaluation in key governance areas of the continent;
-
The roles and functions of the African Union judicial organs and the Pan-African Parliament should be reviewed and clarified, and their progress to date assessed;
-
The Peace and Security Council (PSC) should be reformed to ensure that it meets the ambition foreseen in its Protocol, by strengthening its working methods and its role in conflict prevention and crisis management;
-
The Permanent Representatives Committee’s (PRC) Rules of Procedures should be reviewed and be in line with the mandate provided for in the Constitutive Act of the African Union. The PRC should facilitate communication between the African Union and national capitals, and act as an advisory body to the Executive Council, and not as a supervisory body of the Commission.
Connecting the African Union to its citizens
-
The Commission should establish women and youth quotas across its institutions and identify appropriate ways and means to ensure the private sector’s participation;
-
The Commission should establish an African Youth Corps, as well as develop programs to facilitate cultural and sports exchange among Member States;
-
Member States should make the African passport available to all eligible citizens as quickly as possible, in line with the Assembly decision Assembly/AU/Dec.607 (XXVII) adopted in Kigali, Rwanda in July 2016
-
The Commission should identify and provide a set of new capabilities or ‘assets’ in the form of common continent-wide public goods and services valued by Member States and citizens. Such services could include the provision of neutral arbitration and competition services, or a common technical platform for the data and analysis needed to assess Africa’s progress toward its development goals;
-
Member States should engage their Parliaments and citizens, including civil society, on the African Union reform process.
Managing the business of the African Union efficiently and Effectively, at both political and operational levels
Political management of the Union
-
The African Union Assembly shall handle an agenda of no more than three (3) strategic items at each Summit, in line with the Me’kelle Ministerial Retreat recommendations. Other appropriate business should be delegated to the Executive Council
-
The Assembly shall hold one Ordinary Summit per year, and shall hold extraordinary sessions as the need arise
-
In place of the June/July Summit, the Bureau of the African Union Assembly should hold a coordination meeting with Regional Economic Communities, with the participation of the Chairpersons of the Regional Economic Communities, the AU Commission and Regional Mechanisms. Ahead of this meeting, the AU Commission shall play a more active coordination and harmonisation role with the Regional Economic Communities, in line with the Abuja Treaty;
-
External parties shall only be invited to Summits on an exceptional basis and for a specific purpose determined by in the interests of the African Union;
-
Partnership Summits convened by external parties should be reviewed with a view to providing an effective framework for African Union Africa should be represented by the Troika, namely the current, incoming and outgoing Chairpersons of the African Union, the Chairperson of the AU Commission, and the Chairpersons of the Regional Economic Communities;
-
To ensure continuity and effective implementation of Assembly decisions, a troika arrangement between the outgoing, the current, and the incoming African Union Chairpersons should be established. In this regard, the incoming chairperson shall be selected one year in advance;
-
Heads of State shall be represented at Summits by officials not lower than the level of Vice President, Prime Minister or equivalent;
-
The current sanctions mechanism should be strengthened and enforced. This would include consideration of making participation in the African Union deliberations contingent on adherence to Summit decisions.
Operational management of the Union
-
The election of the Chairperson of the AU Commission should be enhanced by a robust, merit-based, and transparent selection process;
-
The Deputy Chairperson and Commissioners should be competitively recruited in line with best practice and appointed by the Chairperson of the Commission, to whom they should be directly accountable, taking into account gender and regional diversity, amongst other relevant considerations;
-
The Deputy Chairperson role should be reframed to be responsible for the efficient and effective functioning of the Commission’s administration;
-
The title of Chairperson and Deputy Chairperson may also be reconsidered;
-
A fundamental review of the structure and staffing needs of the organisation, as well as conditions of service, should be undertaken to ensure alignment with agreed priority areas.
International Criminal Court (ICC)
The Summit;
-
Adopted the ICC Withdrawal Strategy and called on member states to consider implementing its recommendations
-
Requested the Group of African States Parties in New York in collaboration with AU Commission to actively participate in the deliberations of the Working Group on Amendments to ensure that African proposals are adequately considered and addressed;
Admission of Morocco
The Summit;
-
Welcomed the request from the Kingdom of Morocco as it provides the opportunity to reunite the African community of states around the Pan-African core values of the Founders of solidarity, unity, freedom and equality, in accordance with the Principles and Objectives of the Constitutive Act. This will strengthen the ability of the African Union to find African solutions to African problems;
-
Decided to admit the Kingdom of Morocco as a new Member State of the African Union in conformity with Article 9(c) and Article 29 of the Constitutive Act of the African Union;
-
Requested Morocco to deposit their instrument of accession to the Constitutive Act of the African Union.
Western Sahara
The Summit;
-
Noted with deep concerns the continued impasse in the search for a solution to the conflict in and underlined the urgent need for renewed international efforts to facilitate an early resolution of the conflict. In this respect, the Assembly called again to the UN General Assembly to determine a date for the holding of the self-determination referendum for the people of Western Sahara and protect the integrity of the Western Sahara as a non-self-governing territory from any act which may undermine it.
-
Urged the UN Security Council to fully assume its responsibilities in restoring the full functionality of United Nations Mission for the Referendum in Western Sahara (MINURSO), as it is indispensable for overseeing the ceasefire and organizing the self-determination referendum in Western Sahara, as well as in addressing the issues of the respect of human rights and the illegal exploration and exploitation of the Territory’s natural resources, particularly in line with the important judgment of the Court of Justice of the European Union issued on 21 December 2016, on the arrangement between the EU and Morocco signed in 2012, on the mutual liberalization of the trade in agricultural and fishing products.
Peace & Security
The Summit;
-
Emphasized the need for all AU Member States, in particular the PSC, to give more focus on conflict prevention, early warning and early response, in order to prevent, for future, occurrence of full blown conflicts in the continent.
-
Endorsed the African Union Master Roadmap of Practical Steps to Silence the Guns in Africa by year 2020, as a guideline for Africa’s efforts to this end.
-
Directed the PSC to establish a monitoring and evaluation mechanism on the basis of which the Assembly will periodically review progress in the implementation of the Master Roadmap;
Financing the African Union
The Summit;
-
The Committee of Ten Finance Ministers should assume responsibility for oversight of the African Union budget and Reserve Fund and develop a set of ‘golden rules’, establishing clear financial management and accountability principles;
-
After funding of the budget of the African Union and the Peace Fund, the balance of the proceeds of the 0.2% AU levy on eligible imports, the Committee of Ten Finance Ministers should look into placing surplus in a Reserve Fund for continental priorities as decided by the Assembly;
-
The current scale of contributions should be revised based on the principles of ability to pay, solidarity, and equitable burden-sharing, to avoid risk concentration.
New leadership of the Union elected
AU Chairperson for 2017: President Alpha Conde – Guinea
1. AUC Chairperson: Mr. Moussa Faki Mahamat – Chad (Central Africa, Male)
2. AUC Deputy Chairperson: Mr. Thomas Kwesi Quartey – Ghana (West Africa, Male)
Commissioners
3. Peace & Security: Mr. Chergi, Smail – Algeria (North Africa)
4. Political Affairs: Mrs. Samate, Cessouma – Burkina-Faso (West Africa, Female)
5. Infrastructure & Energy: Mrs. Abou-Zeid, Amani – Egypt (North Africa, Female)
6. Social Affairs: Mrs. Elfadil, Amira Elfadil Mohammed – Sudan (East Africa, Female)
7. Trade & Industry: Mr. Muchanga, Albert – Zambia (Southern Africa, Male)
8. Rural Economy & Agriculture: Mrs. Sacko, Josefa – Angola (Southern Africa, Female)
9. Human Resource, Science and Technology: Election Suspended
10. Economic Affairs: Election Suspended
Note: The last 2 commissioners must be from East Africa (Male) and Central Africa (Female) in order to respect the geographical and gender balance among the 10 positions of the AUC across the 5 geographical regions of Africa. Because the current list of candidates does not have candidates to make this (for the 2 vacant posts: HRST and Economic Affairs), the AU will have to reopen the process for those 2 positions an election may happen during the next summit.
Related News
Financial institutions worth $6.6 trillion set standards for financing sustainable development
Nearly 20 leading global banks and investors, totaling $6.6 trillion in assets, launched the Principles for Positive Impact Finance on 30 January 2017 – a first of its kind set of criteria for investments to be considered sustainable.
“The Principles are a timely initiative from the finance sector. They demonstrate the willingness of financial institutions to go beyond current practices and to contribute to foster a more sustainable development,” said French Finance Minister Michel Sapin. “They should provide strengthened foundations for a positive cooperation between public and private actors in this area.”
“Achieving the Sustainable Development Goals – the global action plan to end poverty, combat climate change and protect the environment – is expected to cost $5 to 7 trillion every year through 2030,” said Eric Usher, head of the UN Environment Finance Initiative.
“The Positive Impact Principles are a game changer, which will help to channel the hundreds of trillions of dollars managed by banks and investors towards clean, low carbon and inclusive projects.”
The Principles provide financiers and investors with a global framework applicable across their different business lines, including retail and wholesale lending, corporate and investment lending and asset management.
“With global challenges such as climate change, population growth and resource scarcity accelerating, there is an increased urgency for the finance sector both to adapt and to help bring about the necessary changes in our economic and business models. The Principles for Positive Impact Finance provide an ambitious yet practical framework by which we can take the broader angle view we need to meet the deeply complex and interconnected challenges of our time,” said Séverin Cabannes, Deputy CEO of Société Générale, a founding member of the group.
The four Positive Impact Principles provide guidance for financiers and investors to analyse, monitor and disclose the social, environmental and economic impacts of the financial products and services they deliver.
The innovation of the Principles lies in the requirement for a holistic appraisal of positive and negative impacts on economic development, human well-being and the environment.
The Principles do not prescribe a single method for achieving positive impact, but they require that appraisal processes and methodologies be transparent.
The Principles are part of a broader process under the Positive Impact Manifesto, launched in 2015 to call for a new, impact-based financing paradigm to bridge the gap in financing for sustainable development.
“We welcome the launch of UN Environment Finance Initiative’s Principles for Positive Impact Finance because we believe that the purpose of investment goes beyond the simple quest for accumulation of wealth. We can make sustainable development happen through targeted resource allocation and effective stewardship and advocacy, leading to truly impactful and sustainable businesses which deliver goods and services, which savers value and can afford and in a social environment they want to live in,” said Saker Nusseibeh, CEO of Hermes Investment Management.
“The Principles are the tool that is needed to enable the business and finance community to work and innovate together, and to address the challenge of the UN Sustainable Development Goals. The financial sector has already moved forward in that direction and we hope that the Principles as well as the Paris Green and Sustainable Finance Initiative we launched last year will help marking a new stage,” said Gérard Mestrallet, Chairman of Paris EUROPLACE and Chairman of the Board of ENGIE.
“In many ways this is the beginning rather than the conclusion of a process,” said Hervé Guez, Head of SRI Research at Mirova. “The Principles build on existing frameworks, such as the UN Global Compact, the Equator Principles, the Principles for Responsible Investment and the Green Bond Principles. The group will be collaborating with a wide range of stakeholders and partners to further the implementation of the Principles,” he added.
Further Quotes
“As financial institution we support our clients in their transition to a sustainable economy. By integrating environmental and social considerations and actively supporting sustainable business opportunities to grow we can realize change. By placing positive impact at the heart of business strategy, the Principles for Positive Impact Finance are an ambitious and necessary new milestone on the road to a greener and more inclusive economy,” said Paul-Emmanuel Aaerts, Head of ING Wholesale Banking France.
“In addition to our commitments as individual financial institutions, deeper cooperation between financiers, governments, technology providers and investors is needed to effectively deliver on the Sustainable Development Goals,” said Séverin Cabannes, Deputy CEO of Société Générale, a founding member of the group.
“The Principles are an inspiring step forward. BMCE Bank of Africa is expanding across the continent and it is clear to us that we must be an integral part of delivering the solutions to the many needs that prevail in the countries we operate in. The Principles provide a good framework for this,” said Brahim Benjelloun-Touimi, Group Executive Managing Director, BMCE Bank of Africa and Chairman of BOA Group.
“Investment managers are exploring new frontiers in ESG investing, looking for links between business opportunities and environmental and social impacts. The UN Environment Finance Initiative Principles for Positive Impact Finance put sustainability issues on the agenda for a new generation of investors and companies alike,” said Michael Jantzi, CEO, Sustainalytics.
“The Principles for Positive Impact Finance build on the sound values promoted by the UN Global Compact, providing a holistic approach to the financing of the 17 Sustainable Development Goals”, said Gavin Power, Deputy Director of the UN Global Compact. “We are committed to help promote these Principles with our constituencies and partners, as part of our Action Platform on Catalyzing Financial Innovation for the SDGs.”
“The need to align capital markets to a 2 degree world is urgent and necessary,” said Fiona Reynolds, Managing Director of the Principles for Responsible Investment. “The UN Environment Finance Initiative Principles for Positive Impact Finance are an important tool for investors to frame their positive contribution to the environment, the society and the economy.”
About The Principles For Positive Impact Finance
The Principles were developed by the Positive Impact Working Group, a group of UN Environment Finance Initiative banking and investment members, as part of the implementation of the roadmap outlined in the Positive Impact Manifesto released in October 2015.
Currently, the Positive Impact Working Group includes: Australian Ethical, Banco Itaú, BNP Paribas, BMCE Bank of Africa, Caisse des Dépôts Group, Desjardins Group, First Rand, Hermes Investment Management, ING, Mirova, NedBank, Pax World, Piraeus Bank, SEB, Société Générale, Standard Bank, Triodos Bank, Westpac and YES Bank.
About Un Environment Finance Initiative
The UN Environment Finance Initiative is a partnership between UN Environment and the global financial sector created in the wake of the 1992 Earth Summit with a mission to promote sustainable finance. Over 200 financial institutions, including banks, insurers and fund managers, work with UN Environment to under-stand today’s environmental challenges, why they matter to finance, and how to actively participate in addressing them.
Related News
New U.K. trade deals can’t soften blow from Brexit, Niesr says
New U.K. free trade agreements with non-European Union nations won’t come close to offsetting the impact of leaving the EU, according to the National Institute of Economic and Social Research.
Based on the structure of existing deals between 42 countries, the benefits of an agreement with the U.S., Canada, Australia and New Zealand, or with Brazil, Russia, India, Indonesia, China and South Africa, would be “very small compared with the costs from leaving the EU single market,” London-based Niesr said in a report.
While the institute predicts that leaving the single market could lead to a long-term reduction in total U.K. trade of 22-30 percent, it sees the increased trade resulting from new deals equaling just 2.2 percent and 2.6 percent. The findings, which were initially published in a Jan. 27 blog, forecast no upswing at all in services trade – which accounts for the majority of the U.K.’s economic activity.
“This stark difference mainly reflects the fact that the single market is a very deep and comprehensive trade agreement aimed at reducing non-tariff barriers, while most non-EU free-trade agreements seem to be quite ineffective” at doing so, economists Monique Ebell and James Warren wrote. “If the U.K. is to replace the lost trade from leaving the single market, it will need to negotiate trade deals that are much more effective,” especially for services.
U.K. Forecasts
In its report published on Wednesday, Niesr also raised its 2017 U.K. growth projection to 1.7 percent from 1.4 percent and cut its 2018 forecast to 1.9 percent from 2.2 percent. It kept its 2016 estimate at 2 percent. It sees consumer-price inflation accelerating to 3.3 percent this year, with a peak of 3.7 percent toward the end of 2017.
The Bank of England will probably lift its own near-term growth and inflation estimates on Thursday, which will be published alongside its interest-rate announcement. At the same time, policy makers may highlight potential longer-term threats from Brexit that could damp any speculation about tighter policy as prices climb through the central bank’s 2 percent target.
Niesr said it sees the BOE looking through the “temporary spike” in inflation and keeping interest rates at a record-low 0.25 percent until the second half of 2019.
The squeeze from inflation alongside other factors could also widen inequality, according to a report by the Resolution Foundation published Wednesday. The issue has played an important role in the political debate after Brexit, which highlighted wealth disparity as a problem in a divided country where many people feel left behind.
Disposable income of poorer households in the U.K. is set to fall over the coming years, the think-tank said. Rising price growth, stagnation in wages and welfare cuts will mean that income growth for the bottom half of households will fall by 2 percent while the richest half are set to enjoy gains of around 7 percent in the same period.
If these predictions materialize, the resulting rise in inequality under the current U.K. government would be the worst since Margaret Thatcher was prime minister in the 1980s, the report said.