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Disaster Risk Reduction: Africa backs action on Sendai
Government Ministers, heads of delegation and national disaster management agencies from 47 African countries on 25 November 2016 agreed on a strategic plan to align disaster risk reduction with the priorities and targets of the global plan to reduce disaster losses, the Sendai Framework for Disaster Risk Reduction.
They also agreed to forward the Mauritius Declaration, a statement of strong political commitment, for adoption at the African Union Summit in January 2017. The Declaration calls for implementation of the Programme of Action and the allocation of budgetary support to disaster risk reduction.
The Programme of Action contains specific commitments to the seven targets of the Sendai Framework including the achievement of substantial reductions in disaster-related mortality, numbers of people affected by disasters, economic losses and damage to critical infrastructure.
Africa has also adopted five additional targets of its own to augment action on disaster risk reduction including integration of DRR in school curricula, making DRR part of sustainable development planning, increasing domestic spending on DRR, expanding the number of countries testing their preparedness plans, and increasing the number of partnerships for knowledge management.
Opening Africa’s 5th High Level Meeting on Disaster Risk Reduction on 25 November, the acting Prime Minister of the host country Mauritius, Mr. Xavier-Luc Duval, said that this week’s consultations needed to culminate in a strong Programme of Action for reducing disaster losses and a common African position for next year’s Global Platform on Disaster Risk Reduction in Mexico.
Mr. Duval said: “It is time for the region to join its forces to protect the lives and livelihoods of the country, our infrastructure and our economies. I strongly believe that the time has come to set up a regional mechanism for cooperation within regional agencies like SADC, COMESA, IOC in order to react with greater efficiency.”
He listed several measures undertaken by Mauritius to invest in resilience and to strengthen disaster risk governance. These included the National Disaster Risk Reduction and Management Act 2016, and the setting up of the National Disaster Risk Reduction and Management Council and committees at local government level.
Speaking on behalf of the Chair of the Southern Africa Development Community (SADC), King Swati III of Swaziland, South African Government Minister and SADC Deputy Chair, Mr. David Van Rooyen, said the importance of the week’s discussions were underlined by the current humanitarian emergency across the region.
Mr. Van Rooyen said: “The severity of the El Niño induced crisis has resulted in a severe drought and overwhelmed the disaster preparedness capacity in all affected Member States.” SADC has launched an appeal for US$2.9 billion to meet the needs of about 40 million vulnerable people out of a total population of 257 million people. SADC has established a regional DRR unit and programme.
Minister Van Rooyen concluded: “It is encouraging that the proposed way forward from this meeting will enable us to give adequate policy guidance to our member States towards building resilience and sustainable development for the region.”
African Union Commissioner, Ms. Tumusiime Rhoda Peace, Commissioner for Rural Economy and Agriculture, speaking at what she said would be her last such meeting, said she was satisfied to see the great progress now being made in disaster risk reduction with an increased level of interest at government level.
Ms. Peace reaffirmed the commitment of the African Union Commission to support countries in the implementation of the Sendai Framework. “Our political leadership remains committed. We look forward to continuing with the excellent collaboration we have been having with Member States, the Regional Economic Communities and all our partners in advancing the disaster risk reduction agenda in our continent,” she said.
Mr. Alain Wong, Minister for the Environment welcomed the unanimous adoption of both the Programme of Action and the Mauritius Declaration which he said amounted to an ambitious agenda of shared commitments which need to translated into concrete actions.
Mexican Ambassador to Mauritius, Mr. Mauricio Escanero, congratulated the meeting on the successful outcome and looked forward to the region’s full participation in the Global Platform for Disaster Risk Reduction in Cancun, Mexico in May 2017.
EAC at the 6th Africa Regional Platform and 5th High Level Ministerial Meeting on Disaster Risk Reduction in Mauritius
The 6th Africa Regional Platform (AfRP) on Disaster Risk Reduction (DRR) concluded over the weekend in Mauritius. It was organized by the African Union and United Nations International Strategy for Disaster Risk Reduction and co-hosted by the SADC and the Government of Mauritius. The East African Community was represented both at the Experts segment and in the High Level Ministerial Session by Mr. Jean Baptiste Havugimana, the Director for Productive Sectors.
The AfRP is a biennial forum that brings together African Member States, intergovernmental organizations and development partners to review progress in the implementation of the continental and global disaster risk reduction frameworks.
The 6th AfRP on DRR is the first continental meeting on DRR organized after the adoption of the Sendai framework on DRR by UN member states in Sendai, Japan in March 2015. The Framework provides a critical strategy for building resilience and addressing the impact of disasters representing a serious threat to millions of people in Africa and across the world. The 6th AfRP was a concrete opportunity for Africa to set up a functional path to alleviate the suffering of the most vulnerable communities in Africa. The Platform also enabled delegates sharing of good practices, success stories and lessons learnt with a view to enhancing coordination, increasing awareness, and mobilizing commitments to disaster risk reduction across Africa.
The outcome of the 6th Africa Platform on DRR is an Africa Statement of DRR, the Mauritius Declaration on continental commitment and a revised Programme of Action on DRR for Africa.
During the Experts segment, Mr. Jean Baptiste Havugimana was a panelist under the theme: “Risk governance to showcase the status of EAC in implementing the Sendai Framework and the role of the DRR Act in achieving priority two of the Sendai Framework – Enhancing Risk governance”. Mr. Havugimana further presented during the Ministerial Session the EAC Position Paper and Commitment in the implementation of the Sendai Framework. The Statement was a summary of discussions held by all EAC delegations during their session as a REC. Below is the East African Community Statement:
Statement of the East African Community
Preamble
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The East African Community Secretariat wishes to congratulate the Government and the People of the Republic of Mauritius for the excellent hosting and the reception accorded to all delegates during the 6th Africa Regional Platform on Disaster Risk Reduction and management here in Mauritius.
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East Africa Community also wishes the African Union Commission and the United Nations Office for Disaster Reduction and Partners success in the on-going preparations for the forthcoming World Forum on Disaster Risk Reduction Scheduled for May 2017 in Cancun, Mexico.
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East African Community also wishes to recognize with appreciation the continued support on implementing Disaster Risk Reduction Programme at the sub-regional level provided to the Regional Economic Communities through the Africa Regional Office, in particular the extension of Technical Assistance in form of Technical Advisor to the East African Community Risk Reduction and Management Unit.
Where are we? What are the challenges? And what are our future plans?
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EAC has made significant progress in strengthening the Disaster Risk Management capacities and made some milestone achievements, key among of them being the East African Community Disaster Risk Reduction Act, 2016 and the Climate Change Vulnerability Impact Assessment Study.
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I am pleased to inform you that the aforesaid Act was passed by the 4th Session of the 5th Assembly held in Arusha on 10th March, 2016, paving the way for the region to take necessary disaster preparedness, management, and protection and mitigation measures as well as in handling disasters in a more co-ordinated manner.
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The Act is currently under consideration by Partner States officials and will be assented to during the 18th Ordinary Heads of State Summit scheduled to take place early next year.
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Under the Impact Vulnerability Assessment study, Climate Hot spots maps have been prepared and the EAC Sectoral Council on Environment and Natural Resources Management adopted the results.
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East African Community is in the process of Building a Climate Information Network and User Interface to respond to the needs of priority stakeholders. Four thematic areas have been identified a) Agriculture & food security; b) water resources & hydro climatic disasters; c) weather and climate; d) land cover, land use change and ecosystems.
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We have started the process by designing a regional climate information network through collaborative partnerships with other regional organizations such as FEWS NET, RCMRD/SERVIR, and ICPAC with support from USAID.
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Last but not least, EAC has established a dedicated Disaster Risk Reduction and Management Unit under its structure at the EAC Secretariat under the Direct Supervision of the Secretary General. The Unit reports to the Council of Ministers through the Secretary General.
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The unit will play a key role in the implementation of the East African Community Disaster Risk Reduction Act and the implementation of the Sendai Framework in the Region
However, besides the achievements, there are still Challenges, which include the following:
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Partner States are at different levels in Disaster Risk Reduction Legislation, which complicates the harmonisation process.
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Lack of resources to support: (i) the integration of Disaster Risk Reduction into education curriculum; (ii) Development of regional emergency response plans; (iii) Development of web portal for depositing Disaster Risk Reduction and other related emergencies; (iv) the operationalization of the established Disaster Risk Reduction Unit at the EAC Secretariat; and (v) strengthening and harmonizing existing regional early warning systems. Other challenges include:
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Limited budget allocation to Disaster Risk Reduction and Management Programme at both regional and national levels.
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Out-dated disaster maps
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Lack of harmonised mechanisms and coordination in addressing transboundary disasters.
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Climate variability, which is impacting key sectors including water, agriculture, health, wildlife and tourism, Energy and infrastructure.
What are our futures plans?
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The East African Community commits to implement its Disaster Risk Reduction Law as soon as it is assented to and in line with the Sendai Framework on Disaster Risk Reduction. In this regard, the EAC priorities will be the following:
i. Strengthen existing institutional capacities and set up new institutions established under the Act by 2018.
ii. Review the EAC DRR and Management Strategy 2012-2016 and plan of action in accordance with the aligned African Programme of Action by 2017.
iii. Update disaster maps and map out disasters evacuation centres by 2018.
iv. Ensure DRR Programmes are people-centred.
v. Adopt best practice such as the “Ecosystem-based Disaster Risk Reduction (EcoDRR) Management approach” for reducing disaster risks, and
vi. Harmonising mechanisms and coordination for transboundary hazards.
In conclusion
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EAC further reiterates its commitment to create the necessary conducive and enabling environment to strengthen resilience of communities to disasters to ensure sustainable development and poverty eradication, and to integrate, as appropriate both disaster risk reduction and building of resilience into policies, plans and programmes.
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Therefore, the East African Community calls upon the African Union Commission, the African Development Bank, the United Nations Office for disaster Reduction, the World Bank and all our partners, to join EAC in walking the talk in order to have more actions to support the communities that have entrusted us to serve them.
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Rwanda looks to boost exports for new central Africa bloc
As Rwanda looks to exploit the market opportunities in the Economic Community of Central African States (ECCAS) countries, a bloc it rejoined last year, getting the right quantities of products to serve and sustain this market remains a problem.
The government has lobbied for external markets for Rwandan products as part of big market blocs like the Common Market for Eastern and Southern Africa (Comesa), the East African Community (EAC), CPGL, Agoa and other European markets. However, the low quantities taken have left the markets largely unexploited by Rwandan traders.
Studies into the ECCAS market have shown that Rwanda traders can export horticultural products, meat, fruits and other agro-processed products into the bloc.
“Our biggest problems are low quantities and high transport charges. Our quantities are still not sufficient for the markets, and the government and other parties are doing what they can, but we still need to raise quantities to sustain these markets,” said Jeffrey Kamanzi, the director of trade and business development at PSF.
“We are ready to exploit the ECCAS market. The central African countries are okay with our products. We can take horticulture products, meat, fruits and other products. The exporters are ready, what is left is to the regulators,” he added.
He said much as Rwanda is already a member of the bloc, which includes Angola, Burundi, Cameroon, Central African Republic, and Congo, among others, regulations like preferential agreements, rules of origin, and common external tariffs have not yet been finalised.
Mr Kamanzi also said that even though the quantities are low, Rwanda’s products have significantly improved in quality and will not have any issues competing in ECCAS.
“The product competitiveness is growing, for example Inyange products. The other difficulty is that we have limited warehouses,” he added.
He noted that exporters have also faced the challenge of not having reliable distribution channels in the member countries. PSF and the government are working to establish service centres which will work like one-stop shops for all Rwandan products.
Rwanda was a founding member of ECCAS in 1983; however, it pulled out of the bloc in 2008 to concentrate on its membership to the EAC and Comesa.
The Minister of Trade Industry and East African Community Affairs, Francois Kanimba, said Rwanda joining ECCAS presents big opportunities for local traders and producers since it comes with an expanded market reach for their products.
The ECCAS commission was recently in the country to discuss issues around the free trade area accorded to member states, which is scheduled to start in January 2017.
Member states are required to provide a list of products that they would like to export in order to receive a tax waiver. The bloc presently offers duty-free reductions to the member states’ business community.
Some member states have expressed discomfort on the removal of taxes on certain products, which are their key sources of revenue.
The ECCAS bloc resolved that member states will adopt an external common Customs tariff to be imposed on the third countries; 50 per cent will be used to fill any revenue loss within the member countries, and other 50 per cent will be used for the operations cost of the bloc secretariat.
The central African region is rich in mineral resources, but its agricultural sector is not well developed and it needs much effort because they still import much of their food from other countries. Many goods are imported from Europe, hence presenting great potential for Rwandan exporters.
The country faces the task of stemming its growing trade deficit; data from the central bank shows that it rose by 5.1 per cent in the first half of 2016, from $858.98 million to $ 902.69 million, as formal imports grew by 3.3 per cent in value and formal exports value dropped by 2.4 per cent.
In the third quarter of 2015, Rwanda exported goods worth $96.14 million, imports totalled $481.10 million and re-exports were at $46.01 million. Experts have said that if the trend is not reversed, it is likely to hamper the country from achieving the 28 per cent export growth target by 2018.
Banks have expressed concern about low credit appetite from exporters, who have shunned growth facilities, and other credit products designed to spur exports.
The ECCAS market has the potential to significantly turn around Rwanda’s export fortunes, but this will only be possible if the country reverses its agricultural production deficits that have stagnated for the past few years.
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A way forward for the GPEDC in Nairobi
The second High-Level Meeting (HLM2) of the Global Partnership for Effective Development Cooperation (GPEDC) comes at a critical juncture: a moment in which to review the evidence and lessons learned from a decade’s attempts to implement the aid and development effectiveness agendas, and to look ahead to the role of effectiveness in the new era of sustainable development anchored in Agenda 2030. But there is a real risk of failure in Nairobi unless it charts a clear way forward for the GPEDC.
We interrogated this challenge at ODI’s recent conference, ‘Where next for development effectiveness?’, a few weeks ahead of HLM2. The conference gathered senior government officials, leading development strategists, and representatives of civil society and the private sector to debate how the GPEDC could remain fit for purpose in the era of the SDGs.
Participants at the conference seemed largely to agree that the core offer of the development effectiveness process is the setting of norms and standards (the principles) and measuring and tracking these over time (using the indicators of the monitoring framework). But if this exercise is to have continued relevance, the framework must better reflect major shifts in the global development landscape that have taken place since the 2005 Paris Declaration on Aid Effectiveness and the 2011 Busan Partnership Agreement.
In ODI’s new briefing, we set out a series of specific actions that the GPEDC should take to update the effectiveness principles and indicators, given four fundamental shifts we have identified:
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A new financing landscape, with changing priorities for developing countries. We recommend adding new indicators on speed of delivery and embedded capacity-building, which are consistently prioritised by governments in developing countries in the new ‘age of choice’.
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New delivery models such as investing public development finance in private enterprises. We recommend adapting some elements of the effectiveness framework to better monitor aid being channelled to the private sector, with more stringent commitments needed in transparency, in particular.
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A new commitment to leave no one behind. We recommend integrating the ‘leave no one behind’ agenda throughout the existing principles, including through more inclusive country ownership, more representative partnerships, and better disaggregated data.
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New evidence about effective development practice. We recommend taking inspiration from emerging adaptive and politically-smart approaches such as ‘doing development differently’ to improve the traction and impact of the GPEDC.
Updating the technical framework is the first key step to charting a new way forward for the effectiveness process. But, by itself, this will not be enough. The GPEDC must also use the opportunity of Nairobi to address two major challenges that it now faces: waning political engagement, and the nature of its role within the global architecture in support of Agenda 2030. On the former, given that major development actors such as China and India have been notably absent from the process, even traditional donors have made glacial progress on many of their original commitments, the targets are voluntary in nature, and there is a lack of consequential attention to the results, the GPEDC’s ability to bring about real change is at risk. On the latter, the GPEDC must articulate how it will contribute to the implementation of the SDGs without duplicating the mandate or efforts of other platforms, including the UN Development Cooperation Forum, for example.
Addressing these two challenges will need a clear articulation of the GPEDC’s theory of change and its role within the global architecture in support of Agenda 2030, as one that contributes something useful, unique and politically attractive. It will also need a strong voice from developing countries about their needs and priorities for effective development cooperation, and a frank reality check: why has progress been slow or even reversing, and what could feasibly be achieved in the future?
So how could the GPEDC maintain its usefulness and credibility, whilst improving political traction? Here are three ideas we hope can be taken forward at HLM2:
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Making it relevant in developing countries: The GPEDC could extend its work on national monitoring profiles by supporting or feeding into country-level analyses (such as the UNDP-led Development Finance Assessments) to analyse how external development cooperation can be most effective and have the greatest impact in achieving the SDGs. This process could look at the capabilities, responsibilities and comparative advantage among the constellation of different actors, financing flows and partnerships in each specific national and sub-national context. The results of these country analyses could be distilled and shared for peer learning.
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Making it relevant to development cooperation providers: Many donors have slashed their aid budgets in recent years and are pursuing a value for money agenda. The GPEDC could raise its political salience by producing compelling evidence demonstrating how the effectiveness framework helps improve value for money, especially in fragile and challenging contexts.
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Making it relevant to all stakeholders: The GPEDC could position itself as the knowledge repository and peer learning platform for development cooperation. This might be especially useful for newer providers or long-standing donors taking up new objectives (such as the ‘leave no-one behind’ commitment). Second, and relatedly, the inclusiveness of the platform – while it may have weakened focus and accountability – provides an opportunity to foster higher-quality dialogue between different kinds of stakeholders. Bringing very diverse actors together towards shared norms, language and understanding of effective cooperation will likely be crucial to realising the ambition of the SDGs.
Catherine Blampied and Maria Ana Jalles d’Orey are Senior Research Officers at the Overseas Development Institute.
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EAC revenue bodies raise red flag over fraud cases
Revenue collection from the East African Community (EAC) is under threat from increased fraudulent practices, commissioner-generals from the regional bloc have said.
The fraudulent practices witnessed across the region differ from country to country.
During a meeting of EAC Revenue Authorities Commissioner Generals in Kigali, last week, officials observed that fraudulent practices took various forms and changed depending on the mitigations set up.
The two-day meet was attended by Kenya, Uganda, South Sudan, Tanzania and Rwanda.
In Tanzania, the common fraudulent practices, according to Mary Maganga, the director for planning, policy and research at Tanzania Revenue Authority, include smuggling of goods into the country with the aim of tax evasion.
Uganda also reported that smuggling was the biggest threat to collection of revenue.
Kenya Revenue Authority commissioner-general john Njiraini said the most rampant fraudulent practices in his country was mis-declaration of imports as well as concealment of goods and container cargo with the aim of tax evasion.
In September, Rwanda Revenue Authority (RRA) reported that it had intercepted attempts by fraudsters to swindle funds using electronic billing machine invoices to claim Value Added Tax inputs on fictitious sales.
The intercepted operations by fraudsters would have swindled the revenue body about Rwf6.8 billion. RRA said it was also battling attempts by a section of taxpayers to evade taxes paid by underestimating the values of items on the EBM receipts.
Richard Tusabe, the RRA commissioner-general, said that tax fraud was not unique to the region and is always changing depending on control mechanisms put in place.
“It is a shared problem across the region. Some of the imports that come through customs come underdeclared, others undeclared. We are trying to consolidate our efforts to check these frauds. We want to own some of the regional initiatives where we can pool resources to be able to mitigate some of the risks together at regional level,” Tusabe, who chaired the meeting, said.
He said the revenue authorities from across the bloc have since learnt that national approaches do not yield much to address such challenges and that interventions need not be extensive.
“The moment you try to do it at the national level only, the gains are not sustainable. Some of our borders are porous,” he said.
He added that they were looking to share more information as well as jointly deploy resources to tackle the vices.
“We also realised that if we can improve our cooperation without incurring any extra costs, we can still check fraud,” Tusabe said.
The tax commissioners also reported a decline in revenue from import duty in recent months, which could affect their ability to meet their targets in the current fiscal year.
Dip in revenue collection
However, they are still yet to establish the reasons behind the drop in revenue.
Experts attribute the drop in revenue to increased consumption of products from within the region or the global economic slowdown, which has reduced the capacity of importers in the region.
Dickson Kateshumbwa, the Uganda Revenue Authority customs commissioner, said the changes could also be as a result of non-dutiable imports in the region.
Tusabe said it could be a combination of issues, including the global status of the economy.
He said the changes were likely an impact of the global economic challenges that have affected the imports and how much foreign currency is available as well as the appetite of banks to lend to importers.
“East Africa is not an island and whatever is happening globally has some effect on the region. We are going to conduct an evidence-based review to determine the cause,” he said.
“If it is because of increased local capacity, we should celebrate because it means its creating employment, protecting the local currency and has macro-economic benefits that outweigh the tax benefits that we would get from imports.”
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Participants endorse ‘Ashgabat Statement’ as first-ever UN conference on sustainable transport ends
The first-ever United Nations Global Sustainable Transport Conference concluded yesterday in the Turkmen capital, with more than 50 countries endorsing the ‘Ashgabat Statement on Commitments and Policy Recommendations,’ with a view to supporting cleaner, greener transportation – from local transit systems to worldwide multimodal networks.
“The Conference has reinforced the importance of sustainable transport and has shown it is a shared global task,” said Wu Hongbo, UN Under-Secretary-General for Economic and Social Affairs, at the closing ceremony.
“Sustainable transport solutions are key to leaving no one behind, securing prosperity, enabling access to services and protecting the environment,” concluded Mr. Wu, noting that “without sustainable transport, there will be no lasting progress on climate action and the Sustainable Development Goals (SDGs).”
Noting the many encouraging success stories delegates had shared at the two-day conference, Mr. Wu said more needed to be done, including mobilizing trillions of dollars in investments and implementing legal, regulatory and governance frameworks. He also underlined the need to continue and strengthen capacity-building to developing countries.
“We have identified areas for regional and international cooperation and shared far-reaching policy recommendations,” he said. “We have, collectively and individually, identified concrete actions to move the world towards the new and essential paradigm of sustainable transport. Looking ahead, we must use our shared understanding to advance sustainable transport for all, by delivering on our commitments, forging new alliances and transforming our policies.”
He added that policy decisions needed to meet the needs of all in a low-carbon manner, requiring integrating transport modes and tapping into technological opportunities to bring the fundamental, transformative changes.
Stakeholders endorse ‘Ashgabat Statement’
Concluding the two-day conference with the so-called ‘Ashgabat Statement,’ participants stressed the need to promote the integration of science, technology and innovation into sustainable transport systems by tapping into technological opportunities in the decades to come, in order to bring about fundamental, transformative changes to transport systems.
This, they said, can be achieved through the use of energy-efficient technology, as well as information and communications technology, as they called for strengthening capacity-building support to developing countries.
They also welcomed stakeholders who had developed and launched sustainable transport initiatives, and called on all stakeholders to continue to seek collaborative partnerships for new, innovative, sustainable transport paradigms.
Also during the closing ceremony, Igor Runov, UN Under-Secretary-General and Head of the International Road Transport Union, presented the summary of the Transport Business Forum, which had been held earlier in the day.
Three other events held on Sunday focused on transport safety, the needs of countries in special situations – mostly least developed countries – and avenues for financing sustainable transport.
“Sustainable transport is a challenge for all countries, but countries in special situations, including least developed countries, landlocked developing countries, and small island developing states, face particular obstacles,” said Gyan Chandra Acharya, UN Under-Secretary-General and High Representative dealing with the needs of those countries (UN-OHRLLS), in his opening remarks to an event focused on sustainable transport and transit solutions in countries in special situations.
Developing countries face challenges in financing sustainable transport systems
Among the challenges highlighted by the panelists, and which, they acknowledged, must be addressed in order to achieve sustainable development in these countries, include high transport cost, restricted access to the sea, limited air service for passengers and cargo, and difficulties securing investments and partnerships.
“There are, altogether, about 1.1 billion people in these countries, so when we look at the global programmes, global solutions, as well as global development frameworks, we have to look at those countries if we want to leave no one behind, and make it inclusive of all,” noted Mr. Acharya, referring to the rallying call of the UN Sustainable Development Goals (SDGs).
The Conference, which opened on 26 November 2016, brought together key stakeholders from Governments, the UN system and other international organizations, the private sector, and civil society to engage in a dialogue that emphasizes the integrated and cross-cutting nature of sustainable transport and its multiple roles in supporting the achievement of the SDGs. All modes of transport – road, rail, aviation, ferry and maritime – were addressed.
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CUTS International Conference on ‘Regional integration in Africa’
On 26 October 2016, CUTS International, Lusaka collaborated with Caritas Zambia to host a trade conference on ‘Regional integration in Africa’. The discussions focused mainly on the Tripartite Free Trade Area (TFTA) and the Continental Free Trade Area (CFTA) and their implications on regional integration in Zambia.
The motivation behind this conference was that on 17 June 2016, Zambia became the 17th country to sign the TFTA Agreement. The launch of the TFTA will build on the efforts being made to arrive at a Continental Free Trade Area (CFTA) by 2017. The CFTA is one of the key flagship initiatives under the African Union‘s Agenda 2063 designed to boost intra-African trade, consolidate African markets and reinforce regional integration.
Party to SADC and COMESA FTAs, Zambia is a strong supporter of regional and multilateral trade reforms. It has committed to the COMESA and SADC Trade Protocols and the liberalisation schedules. Zambia is also host to COMESA and the TFTA Taskforce exemplifying its strong political commitment to the integration process.
The conference therefore: i) sought to identify common positions on the CFTA between the government, private sector and civil society, as the discussions on the CFTA gain momentum; and ii) contributed to the required analytical work of understanding Zambia positions and their implications in order to seek ways for maximising gains for Zambia from the trade initiative. Furthermore, the conference will enhance Zambia’s participation in the CFTA/TFTA framework.
The conference therefore sought to:
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Determine the impact of increased regional integration on Zambia’s GDP, employment and other macroeconomic indicators
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Identify which sectors will likely lose and which sectors will gain in the FTA
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Assess the welfare implications for Zambia from the FTAs
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Determine how the formation of FTAs affect trade expansion through the trade creation and trade diversion effects
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Know the fiscal implications of the FTAs
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tralac’s Daily News Selection
The selection: Friday, 25 November 2016
Featured tweet, @TradeMarkEastA: Happening now – launch of the Tanzania Freight & Logistics Platform, which is expected to increase efficiency of logistic services in TZ
Please note this Addis event has been postponed: First Ordinary Session of the AU’s STC on Transport, Inter-continental and Inter-regional Infrastructures, Energy and Tourism
The AfDB has announced the senior appointments (Director General and Country Manager) for its new regional structure: Southern Africa: Dr Tonia Kandiero, Dr Josephine Waithira; East Africa: Mr Gabriel Negatu, Mrs Nnenna Nwabufo; West Africa: Mr Janvier Litse, Ms Marie-Laure Akin-Olugbade; Central Africa: Dr Ousmane Dore, Ms Leila Mokaddem; North Africa: Mr Mohamed El Azizi, Ms Yacine Fal. In addition, Mr Ebrima Faal has been appointed Director, Nigeria Country Office.
AGOA benefited Chinese entrepreneurs more than Africans, says Mboweni (African Business)
“Chinese entrepreneurs benefited from AGOA […] very few African entrepreneurs benefited,” said Mboweni, speaking at the Global Expo conference in Gaborone, Botswana on Thursday 24 November. “Why is that the case? They say it’s not a nice thing to say […] but we have to tackle that question of supporting our African entrepreneurs when an opportunity like this arises,” he said. “And for our governments to build many shell factories and literally hand them over to Chinese entrepreneurs is actually an embarrassment for all of us,” Mboweni added. [Response by @JustinSandefur: He’s not (totally) wrong]
Kenya asks EAC court to throw out bid to block trade deal with Europe (The East African)
Attorney-General Githu Muigai says the regional court lacks jurisdiction to hear the case since the treaty making process is based on mutual consent of sovereign states. Prof Muigai argues in his preliminary objection that the EACJ cannot halt the signing of the Economic Partnership Agreement since it results from a treaty making process that has been approved by the region’s presidents.
Botswana trade policy updates:
Troubled textile industry appeals for export incentives (Mmegi): After last week’s meeting between the Ministry of Investment, Trade and Industry and top business heads, the textile and clothing industry is expecting government to take swift action to alleviate the sector’s mounting problems. The measures hoped for include action on export incentives, tendering system and release of permits for skilled foreign workers, amongst others. Botswana Textile and Clothing Association president, Mohammad Shahid Ghafoor pleaded with government to re-introduce production based incentives, which he said will help the industry become competitive as it faces high utility costs, low productivity, lack of skilled labour and extra logistical expenses which increase the cost of their finished goods. “We understand that direct subsidy to operational cost is against the World Trade Organisation (WTO) rules but we are sure that the ministry can work out some production and performance-based incentives,” he said.
Bolux calls for protection of domestic market (Mmegi): Ramotswa-based milling company, Bolux Group has expressed fears of competition from the influx of wheat products from South Africa that it says are dumped in the country. “Unfortunately, the threat of big brother next door, with a mature milling industry and years ahead of the Botswana industry with regard to investment in efficiencies and downstream facilities, like bakeries, frozen dough, pastries, pies, and pasta is real,” Bolux Group managing director Christo Ellis said. “We are confident that the Ministry of Investment, Trade and Industry in our corner, will overcome these challenges and create more and more jobs through growth of local industries.”
Rwanda’s second National Exporters Conference: Government, exporters pledge to revitalise exports (New Times)
François Kanimba (Minister for Trade, Industry and EAC Affairs) said from 2010 to 2013 Rwanda’s exports grew at a rate of 20% and that there was hope to attain the 28% target by 2018. But Rwanda’s export sector registered a slow growth of 1% in 2015. This year, Kanimba said, exports went up by 10%, explaining that even that growth was registered through re-exports. “Rwanda’s products, such as minerals, coffee and tea, did not perform well as prices on the international market went down,” he said, noting that focus will be on value-addition to maximise benefits. During the conference, 19 export companies in various areas such as textiles, mining, tea and coffee signed a memorandum of understanding with MINEACOM on targets the companies need to achieve in line with stimulating exports.
East Africa trade report, January–September 2016 (Maersk)
In the East Africa region, containerized trade volumes contracted by 3% in the first three quarters of 2016, according East Africa weathers tough conditions to return a mixed bag of trade growth to the first ever East Africa Trade Report (pdf) issued by the Maersk Group. East Africa is split into two core trade corridors – the Northern Corridor (serving Kenya, Uganda, South Sudan & parts of Rwanda) and the Central Corridor (serving Tanzania, parts of Rwanda, Burundi, Zambia, Malawi & DRC). “The silver lining in the overall tepid containerized trade performance is the Northern Corridor that grew by 2% in the first nine months of 2016, with imports growing 2% and exports growing 3%. Countries in the Central Corridor are facing some macro-economic headwinds, resulting in a contraction, especially in imports, which showed a year-on-year decline of 8%,” says Steve Felder, Managing Director, Maersk Line Eastern Africa, a member of Maersk Group. [Related: New duties and levies slow down trade flows in East Africa, Fruits and tea exports from Kenya on the rise as trade volumes shrink by 3%]
Transport infrastructure and trade in West Africa: Dakar workshop update (UNECA)
Professor Dimitri Sanga moreover deplored the fact that infrastructure shortage in West Africa generates an annual loss of 2 percentage points of growth and severely impedes the productivity of businesses. Indeed, the sub-region has a road network density of only 2.8 Km/100Km² and ranks last among the five sub-regions of the continent, far behind Southern Africa which has 13.5 Km/100Km² against an African average of 7.6 Km/100Km². Moreover, the rate of access to a road in West Africa is only 34%, against an average of 50% developing countries. On the whole, the statistics available reveal that West Africa lags way behind in terms of infrastructure, in general and transport infrastructure, in particular. The density of the railway network is only 1.9 km/1000 km² against a continental average of 2.5 km/1000 km². As regards maritime transport, the sub-region represents less than 1% of the world container traffic and just over 2% of the entire African traffic. Besides, even though the domestic air transport market is the second largest in Africa after that of Southern Africa, it conceals a relatively weak intra-West African market.
Heads of ECOWAS National Offices adopt tools for strengthening implementation of ECOWAS programmes in member states
The monitoring and evaluation of ECOWAS programmes is imperative for the tracking and effective implementation integration endevours in the region. Also adopted is the framework for the reporting of funds remitted by the Commission to Member States for ECOWAS programmes. The interface between leading Officials of the Commission and Heads of ECOWAS National Offices provides a valuable platform for the sharing of experiences including the robust discussions of ECOWAS regional programmes that are being implemented in Member States. Among others, the Officials also appraised the level of ownership and implementation of the Operational Manual launched in April 2015 by Member States in Accra, Ghana. [ECOWAS member States to re-engage in AU’s peer-review mechanism]
Zimbabwe digs $2,7bn fiscal hole (Zimbabwe Independent)
The $2,7bn Beitbridge–Chirundu road construction project will plunge Zimbabwe into a deep financial hole from which it could take decades to come out due to its endless cost escalations and unaffordability, it has emerged. Information obtained this week from construction experts, financial analysts and transport engineers indicates the project is not viable given the economic crisis which Zimbabwe is currently going through. Even a government-commissioned report seen by the Zimbabwe Independent, titled The Transport Master Plan, which looked at a holistic picture of the transport sector, reveals that although the project is economically desirable, it is however uneconomic and unaffordable. [Stalled reforms sticky point in Zim’s new funding hunt]
South Africa: Annual Financial Statistics, 2015 (Stats SA)
The total annual turnover of private sector businesses operating in the South African economy increased by 5,5% between 2014 and 2015, from a revised R7,8 trillion in 2014 to an estimated R8,3 trillion in 2015, according to the latest Annual financial statistics, 2015 report released by Statistics South Africa today. Turnover increased across all industries covered by the survey between 2014 and 2015, with the largest percentage increase in turnover recorded for forestry and fishing at 13,7%. [Export and import unit value indices, September 2016 (pdf)]
60% of money in Tanzania kept outside banks - BoT (IPPMedia)
Most of the money in Tanzania is being kept outside the country’s formal banking system, Bank of Tanzania governor Benno Ndulu has confirmed amid recent assertions by President John Magufuli that some unscrupulous businessmen are hoarding huge amounts of cash away from official scrutiny. Finance and Planning Minister Philip Mpango, speaking at the same banking conference in Arusha yesterday, also called for increased lending to agriculture by commercial banks. "I have been informed that only 10.3% of total domestic lending by banks over the past five years went to agriculture. Not only that, I am told that over 90% of the credit that did go to agriculture, was actually used for trade and less than 105 was used in actual agricultural production activities," Dr Mpango said. "How are the financial institutions positioned to help the country leapfrog from an agrarian economy to industrial-based one?" he queried.
Why I sacked the TRA board - JPM (IPPMedia)
President John Magufuli yesterday said he fired the entire Tanzania Revenue Authority board of directors for endorsing the irregular depositing of TRA collections amounting to billions of shillings in fixed deposit accounts at three local commercial banks.
Dar, Lusaka ponder ‘super pacts’ as Lungu due in Dar (Daily News)
Tanzania and Zambia plan to sign several ambitious agreements that aim at strengthening bilateral diplomatic ties as well as trade and investment cooperation between the two countries during the visit by President Edgar Lungu. The envisaged agreements include the opening of a new route between Dar es Salaam and Lusaka by Air Tanzania. Mr Lungu is expected to arrive in the country on Sunday for a two-day state visit on an invitation by President John Magufuli.
Trade and investments between MENA and Sub-Saharan Africa (Thomson Reuters)
Selected countries have been the key drivers behind the development of trade between SSA and MENA. Geographies such as UAE, Saudi Arabia, South Africa, Kenya, Nigeria and Ethiopia account for the lion’s share of the flow of goods between both directions. From the Arab region side, UAE was the major trade partner in 2015 with around $8.9bn, followed by Saudi Arabia with $6.9bn and Morocco $1.8bn. Together these countries account for 2/3 of the trade with SSA.
US gas exports worrisome to Africa: Tanzanian energy minister (New Era)
Tanzanian Minister of Energy and Minerals, Prof Sospeter Muhongo, has expressed concern at the possible impact the recent commencement of US exports of gas to China and the United Kingdom could have on the global price of the commodity. Exchanging views with his visiting Namibian counterpart, Minister Obeth Kandjoze, Muhongo noted that the emergence of the US as a net exporter of gas could have a severe impact on global gas prices. Briefing Muhongo on energy developments at home, Mines and Energy Minister Kandjoze said Namibia has put the Kudu gas-to-power project on hold until economic conditions and the US dollar/South African rand exchange rates become favourable. He noted that currency fluctuations and competing national projects made it a challenge for the Namibian Government to fast-track exploitation of the resource. Supporting him, Muhongo explained that a combination of “economic dynamics” and “contemporary issues” prompted investments in Tanzania’s oil resources in 2014, despite them having been discovered in 1969 for the first time. Muhongo said gas resources currently account for 60% of Tanzania’s power.
Today’s Quick Links:
Ominous start to Trump era as US-Africa investment conference cancelled (The East African)
Tanzania-Sweden trade volumes ‘awfully low’ despite decades of ties (IPPMedia)
Zim mineral revenue remains flat in 9 months (The Herald)
We’ll not flood market with bond notes: RBZ (The Herald)
Industry captains want local currency (The Chronicle)
Why tolling is the way to go in Kenya infrastructure modernisation plan (Business Daily)
Kenya bans use of twisted steel bars in construction (The East African)
Africa-European Climate Change Research Platform: Ghana hosts workshop (Business Ghana)
Related News
Kenya asks EAC court to throw out bid to block trade deal with Europe
Kenya has asked the East African Court of Justice (EACJ) to throw out an application seeking to stop the conclusion of a free trade pact with Europe.
Attorney-General Githu Muigai says the regional court lacks jurisdiction to hear the case since the treaty making process is based on mutual consent of sovereign states.
Prof Muigai argues in his preliminary objection that the EACJ cannot halt the signing of the Economic Partnership Agreement (EPA) since it results from a treaty making process that has been approved by the region’s presidents.
“The second respondent (Kenya) shall raise preliminary objections on the grounds that the court lacks jurisdiction to hear the matter since negotiation, conclusion and ratification of EPA is within the country’s sovereign mandate and in fulfilment of its obligation under international law,” Prof Muigai argues.
A Tanzanian lawyer, Castro Pius Shirima, has filed a case at the Arusha-based EACJ, seeking to block Tanzania, Burundi, Uganda and South Sudan from signing the EPA.
Kenya and Rwanda signed the contentious trade deal with the European Union (EU) in September.
In his application set for hearing on November 28, Mr Shirima has asked the EACJ for orders stopping conclusion of the deal until the perceived risks to the region’s agriculture and industrialisation are addressed by negotiators.
The trade deal with the European Union gives EAC member states duty and quota-free access for their goods to the EU as long as they meet set health and safety standards.
Kenya and Rwanda signed the trade deal in September, but it needs approval by all East African Community members to take full effect.
Burundi and Uganda have indicated they are willing to sign the deal but Tanzania has declined to ratify it citing adverse effects on its industrial ambitions.
Mr Shirima has also asked the regional court to order the EAC secretary-general, Liberat Mfumukeko, to suspend further trade negotiations with the EU until the case is determined.
The petitioner, who teaches law at Iringa University, maintains that his suit has been filed in his individual capacity as an EAC citizen who will suffer “irreparable economic loss and violation of my rights” if Kenya lobbies other member-states to conclude the EPA before the economic risks to the region are addressed.
Prof Muigai however says the regional court does not have jurisdiction over the matter as its role is limited to interpretation of the bloc’s treaty “and does not extend to a treaty making process that is based on mutual consent between a state and third parties.”
He argues that the bloc’s common market protocol allows it to promote trade relations with third parties with instruments such as EPA.
According to him the heads of state summit, which is the apex decision making body, has also not resolved to halt the signing and ratification of EPA.
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AGOA benefited Chinese entrepreneurs more than Africans, says Mboweni
Former South African Reserve Bank governor Tito Mboweni has slammed the African Growth and Opportunity Act (AGOA), claiming that the US trade pact has benefited Chinese business owners and stymied African manufacturing capacity.
“Chinese entrepreneurs benefited from AGOA […] very few African entrepreneurs benefited,” said Mboweni, speaking at the Global Expo conference in Gaborone, Botswana on Thursday 24 November. AGOA, first introduced by the administration of former US president Bill Clinton and later signed by George HW Bush, gives African manufacturers tariff-free access to the US market.
Supporters of the act have credited it with creating some 350,000 direct jobs on the continent in industries as diverse as vehicles, garments and metalwork. Yet Mboweni, now a board member of the Shanghai-headquartered BRICS Development Bank, believes that the act simply handed control of African manufacturing to Chinese owners while doing little to assist home-grown industries.
“Why is that the case? They say it’s not a nice thing to say […] but we have to tackle that question of supporting our African entrepreneurs when an opportunity like this arises,” he said. “And for our governments to build many shell factories and literally hand them over to Chinese entrepreneurs is actually an embarrassment for all of us,” Mboweni added.
AGOA is currently facing an uncertain future following the election of Donald Trump, the protectionist US president-elect who has threatened to tear up international trade deals. Yet criticism of the act in African quarters has been rare, while countries recently threatened with suspension from the programme – including South Africa in a March dispute over US farm imports – have been keen to avoid losing their benefits.
Meanwhile, speaking to African Business Magazine, Witney Schneidman, senior international advisor for Africa international law firm Covington & Burling, and a key player in the passage and reauthorisation of AGOA, said that the act was under threat by the unpredictable Trump.
“Not only does Trump reject free trade but AGOA is a unilateral preference agreement that gives African countries duty-free access to the US in return for making progress on economic and political reform,” she said. “It is hard to see how AGOA is sustained in a Trump administration.”
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African Continental Free Trade Area: Advancing pan-African integration
African countries have declared their paramount interest in attaining deep economic integration at the continental scale since emancipation from colonial control dominated their political agendas half a century ago.
In the new century that resolution has gained momentum through successive African Union decisions to expedite regional economic integration with a view to forming a continental free trade area (CFTA) by 2017 and an economic union by 2019. ‘The ultimate goal of the African Union is full political and economic integration leading to the United States of Africa’.
It is acknowledged that the path to get there will not be easy but a number of studies suggest that it is not only feasible but also important for Africa’s economic development. What rests ahead, therefore, is to make decisions on how to speed up the process and clear the obstacles to address the inevitable challenges so as to realize the ambition of an integrated African continent politically, economically, socially and culturally with the resulting development gains. The CFTA is a key driver for Africa to realize the structural transformation and industrialization of Africa as envisaged in the AU Agenda 2063, as well as to promote implementation of the United Nations 2030 Agenda for Sustainable Development.
The path towards an accelerated pan-African economic integration presents formidable political, economic, legal and functional/institutional challenges that need to be tackled efficiently. It requires an approach that economizes scarce resources, avoidable errors, unintended delays, and predictable frustrations. High on the list of challenges is the conflicting disciplines and benefits of different African Regional Economic Communities (RECs) already in place, most countries being parties to more than one. Convergence between RECs will be of the essence for progress, as agreed upon in the African Union Minimum Integration Programme of 2009 (MIP) that sets priorities for enhanced inter-sub regional cooperation, independently of the priorities of each REC and of individual countries.
The impact of the CFTA on trade flows could be significant rather rapidly, according to many projections, and the loss of export income from the rest of the world being more than offset by intraregional trade growth. However, to multiply the benefits of the CFTA – expanded markets for goods and services, unobstructed factor movement, new investment opportunities, and the like – an ample vision of trade, investment and business facilitation needs to prevail. Hence other important challenges and opportunities come to the fore, like the free movement of people across borders, with the social, economic and security dilemmas it implies, or the insufficient financing of badly-needed infrastructure projects. Relinquishing national priorities in favour of regional ones requires firm, intertemporal determination and coordination, a philosophy leading to the adoption of directive principles of state policy, beyond the national plane.
A phased approach has been agreed upon, concentrating on the liberalization of trade in goods first, and that of services as well in a first phase, followed with the straightening up of intellectual property rights, competition and investment protection in a second phase. Several queries arise, as detailed planning requires definition on the sources of finance and investment, in an environment of scarcity of means of payment. This also means that financial development cannot wait for integration to fructify but rather that it is a condition for it, and that neither governments nor private operators can make progress without reasonable concertation. There is financing available for trade development that can be mobilized. Also, foreign investment by sovereign funds and multinational enterprises, including African ones, as well as cross-border financing are on the rise in terms of size, reach and complexity.
This report provides an overview of the opportunities and challenges for African continental economic integration through the Continental Free Trade Area (CFTA) initiative. This is discussed in chapter 1. It then discusses complementary building blocks for intra-African trade to flourish within Africa when it is stimulated by the adoption and implementation of the CFTA. This is provided in chapter 2. Some guiding principles for approaching the CFTA and priority policy measures for adoption by African countries to ensure sustained trade growth and economic integration following the CFTA are discussed in chapter 3. The report concludes with some remarks on African visionary approach to be taken in building the CFTA, and not just as a stand-alone free trade agreement.
This study was prepared for UNCTAD by Mr. Osvaldo Agatiello under the framework of a Development Account Project on “Strengthening Capacities of African Countries in Boosting Intra-African Trade”. The views expressed in this publication reflect solely the views of the author.
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IFAD calls for policies to empower rural youth, encourage private investment, increase access to land and finance to end poverty in West and Central Africa
Youth unemployment, insecure land tenure and weak value chains are the main obstacles in the way of ending poverty and inequality in West and Central Africa, says a new report to be presented on 23 November 2016 in Abidjan by the International Fund for Agricultural Development (IFAD), in collaboration with the African Development Bank (AfDB).
Youth under the age of 35 account for 75 per cent of the population of the region which also has the highest number of rural youth than any other region in the world. Empowering youth is the first step towards achieving prosperity in the region, says the report.
“The lack of social and economic opportunities for the large number of young people in the region is the principal driver of migration, says Michel Mordasini, Vice-President of IFAD. “However, by making the right investments – to improve infrastructure, secure land tenure and facilitate their access to finance and training – we can capture the labour and energy of the young generation to transform rural areas into vibrant places to live and work,” he adds.
The Rural Development Report 2016: Fostering Inclusive Rural Transformation is a rallying call for policymakers and development practitioners to win the global war against poverty. This systematic and rigorous analysis of the rural sector gives a greater understanding of what key investments and policy reforms should be prioritized to transform rural areas in developing countries so that people and nations can benefit.
Attracting private investment into agriculture and the rural non-farm economy is vital, states the report, adding that many agricultural regulations in Africa, actually serve to deter rather than encourage such investment. “Reforming the regulations that limit private entry and investment in value chains that serve smallholder farmers must be a priority,” the report emphasizes.
According to the report, food systems are changing rapidly to meet the rising demand and shifting diets of middle-class urban consumers from grains to dairy, fish, meat and vegetables. In addition, continued rapid growth of imports shows that there is space for local farmers to grow their businesses if they can produce competitively.
“Rural transformation is a powerful way to overcome poverty,” says Ides de Willebois, Regional Director, West and Central Africa Division, IFAD. “We need to develop rural areas in Africa where people are willing to invest, which then will enable them to produce more, to attain a marketable surplus that can be sold at a profit and provide them with the resources to improve their livelihoods and reinvest. First and foremost, this requires infrastructure to make the rural areas easily accessible, not only physical infrastructure, but also IT and banking infrastructure. Rural transformation will provide hope and opportunity to rural youth, young women and men to build their future lives. We have no other choice.”
Downloads
Rural Development Report 2016: Fostering inclusive rural transformation (5.89 MB)
Chapter 3: Structural and rural transformation in Africa (486 KB)
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Ominous start to Trump era as US-Africa investment conference cancelled
The association representing most US businesses operating in Africa has cancelled a conference on investing in Africa's infrastructure due to lack of interest in the planned three-day event.
The December 4-6 conference sponsored by the Corporate Council on Africa was to have taken place in the southern US city of New Orleans at a time of widespread uneasiness regarding President-elect Donald Trump's intentions toward Africa.
“Despite a stellar program with top-notch speakers, registration for the conference has not reached a minimum that we believe is necessary to justify the time and effort of our speakers,” council head Stephen Hayes announced earlier this week.
Mr Hayes did not suggest a reason for the poor response to an event planned long in advance of the November 8 US presidential election.
Carla Battle, director of special events at the Corporate Council on Africa, did not respond directly to a follow-up question from the Nation Media Group as to whether Mr Trump's victory might have discouraged participation in the conference.
Ms Battle was specifically asked if the cancellation reflected suspicion that the Trump administration will not pay much attention to Africa.
“We are surprised and unsure of why we did not get the minimum required” to hold the conference, Ms Battle responded by email.
Scheduling and venue
She suggested that the poor rate of registration may have reflected the event's scheduling and venue.
The planned eighth annual US-Africa Infrastructure Conference was set to take place later in the year than any of the previous events, Ms Battle noted.
“This is the first time that it’s been outside of the Washington, DC area,” she wrote.
“Whether these reasons apply or not, and whether there are additional reasons, we don’t know yet,” Ms Battle added.
The council had said on November 16 that it expected “more than 400 business executives, investors and government leaders” to take part in what it billed as “the first and only conference in the United States focused solely on US-Africa Infrastructure.”
The gathering would consider “how to unleash the continent’s Next Wave of Growth,” a council brochure stated.
Among the advertised topics was a review of the Obama administration's Africa performance and “challenges for the next administration.”
The Power Africa programme, intended to bring electricity to millions of homes in countries including Kenya, was also on the conference agenda, along with sessions on investment opportunities in transportation, clean water and the implications of “Africa's offshore and boundary disputes.”
Retired Gen William Ward, former head of the US Africa Command, was to have moderated a session on “safety and security for large cities.”
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Government, exporters pledge to revitalise exports
The Government and exporters have committed to build a strong partnership in a bid to widen exports base.
The pledge was made, yesterday, during the second National Exporters Conference to promote exports and exporters, in Kigali.
The meeting was organised by the Ministry of Trade, Industry and EAC Affairs (MINEACOM) in collaboration with the Private Sector Federation (PSF).
Under the second Economic Development and Poverty Reduction Strategy (EDPRS II), the government targets to grow exports by 28 per cent.
But achieving the goal has been threatened by the decline in exports since 2014 mainly due to the falling of prices on international markets resulting in some companies reducing the amount of exports, said the Minister for Trade, Industry and EAC Affairs, François Kanimba.
From 2010 to 2013, the minister said, Rwanda’s exports were growing at a rate of 20 per cent that there was hope to attain the 28 per cent target by 2018.
But Rwanda’s export sector registered a slow growth of 1 per cent in 2015. This year, Kanimba said, exports went up by 10 per cent, explaining that even that growth was registered through re-exports.
“Rwanda’s products, such as minerals, coffee and tea, did not perform well as prices on the international market went down,” he said, noting that focus will be on value-addition to maximise benefits.
During the conference, 19 export companies in various areas such as textiles, mining, tea and coffee signed a memorandum of understanding with MINEACOM on targets the companies need to achieve in line with stimulating exports.
“We have hope that we will achieve the targets and make improvements where necessary,” said Félicien Mutalikanwa, chairperson of Rwanda Association of Manufacturers.
Kanimba said there were officials at institutions in charge of promoting exports who would monitor the implementation of the agreement for better results.
Tapping into Exports Growth Fund
The Exports Growth Fund (EGF) has so far got about Rwf10 billion, according to Dr Livingston Byamungu, the chief investment officer at Development Bank of Rwanda (BRD).
BRD is the manager of the Fund, which also works with other banks on the facility project so as to benefit more business people.
The facility has three interventions in line with promoting exports, including interest subsidy whereby it covers 6.5 per cent of the interest required by a given bank on a given loan.
Before the move, businesses would get loans at interest rates ranging from 17 per cent to 19 per cent, and 16 per cent in the case of BRD.
The second intervention is a matching grant that goes up to $100,000 (about Rwf82 million). This, according to Byamungu, is intended to help exporters penetrate the market through products marketing and addressing difficulties to finding market for their products.
The third support is the guarantee facility whereby EGF will guarantee the bank to give the beneficiary exporter between 65 and 70 per cent of their goods’ worth as they wait for the payment of their goods.
This facility covers pre-shipment and post-shipment and is aimed at enabling exporters carry on their business even when they have not yet been paid for their goods.
Kanimba noted that this guarantee covers a period of nine months, adding that the Government was ready to channel more money into the Fund as there was a lot of interest from development partners.
However, he expressed disappointment with the performance of the Fund because it had low demand, noting that business people should take advantage of the opportunities it brings to boost the country’s exports.
Sina Gerald, the proprietor of Entreprise Urwibutso, that processes agricultural produce, said EGF was a big boost to growing exports.
“Having an interest rate subsidy, the grant to ease market access and covering between 65 per cent and 70 per cent of the shipment cost for us to continue business is a great support. Before, we had been struggling to cover all the costs,” Gerald said.
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tralac’s Daily News Selection
The selection: Thursday, 24 November 2016
Profiled trade and development event listings:
Today, in Kigali: The second National Exporters Conference on the theme Enhanced public private dialogue key for increasing exports
Today/tomorrow, in Johannesburg: Meeting of Senior Officials on the SADC Industrialization Strategy Draft Costed Action Plan
Tomorrow, in Lusaka: COMESA Business Council’s 10th Annual General Meeting
The First Ordinary Session of the AU STC on Transport, Inter-continental and Inter-regional infrastructures, energy, tourism: The STC sessions (28 Nov - 2 Dec, Addis Ababa) will focus on the following theme: Financing infrastructure in Africa. The overall objective of the STC meeting is to assess progress and to achieve concrete advances in the financing of major infrastructure, notably those in the Priority Action Plan of the Programme for Infrastructure Development in Africa (PIDA/PAP), through decisions and consensus on investing in the preparation, structuring, implementation and risks mitigation of climate resilient infrastructure projects. Profiled STC papers: Maritime transport: increasing African ports capacity and efficiency for economic growth (pdf), Report of the Second Ministerial Working Group: establishment of a Single African Air Transport Market (pdf), Enhancing Africa’s tourism competitiveness (pdf)
5th Forum of the African Union Commission on International Law: the role of Africa in developing international law (5-6 December 2016, Accra): Although treaties and customs are the traditional methods of creating international law, they are certainly not the only form of international law making as outlined above. Evidenced by the vast number of publications by African legal scholars spanning new themes and expanding on the traditional contributions, it will be important for the Forum to analyse how new teaching, research and practice of international law portends in Africa. The African Regional Courts ushered a new generation of international tribunals. Against the above, there are wide ranges of topics to be considered under the current theme by the Forum, sub-themes have been proposed to guide and to ensure rich extensive coverage of this topic in the discussions. Profiled themes: (i) The role of African regional institutions in particular the RECs and regional courts are playing in developing international law (ii) The contribution of Africa to the development of international trade and investment.
Court to rule on whether the EAC EPA should be signed: what lessons for REC integration efforts? (tralac)
Gerhard Erasmus, tralac Associate, comments on the lodgement of a civil suit by a Tanzanian national in the EAC Court of Justice opposing the signing of the EAC Economic Partnership Agreement: "Will the Court entertain his application? One can only speculate about how the Court will respond, whether it will indeed grant the necessary standing to the Applicant, and find that the issue is ripe for adjudication. Several technical issues arise. Can it be said that there has been a violation of a treaty obligation if the negotiations are not yet completed? The case commences barely one month before the region’s leadership meets again in Arusha at the start of next year to decide the fate of the EPA. It is obvious that the EAC Members are divided as to whether to conclude the EAC EPA at all. Signature does not lead to a binding agreement. The EPAs need ratification by all Parties in order to enter into force. Sensitive “separation of powers” concerns are also at stake."
EALA: National laws in need of speedy approximation to Regional Legislation
Regional legislators now want Partner States to speedily undertake harmonization and approximation of laws in line with those of the Community saying that delays affect the speed with which the Community is moving. EALA thus says, additional resources should be provided to support the harmonization of laws and to aid implementation of Council of Ministers, decisions that have arisen over the last financial years, but are yet to be undertaken. The recommendations are contained in a report of the Committee on Rules and Privileges of the Oversight activity on approximation of national laws in Partner States, presented and adopted by the Assembly. [Downloads: Report on Harmonisation of National Laws by EALA Committee on Legal, Rules and Privileges (pdf), Consolidated Schedule on Approximation of Laws (pdf)]
COMESA, Development Partners launch a coordination forum
“The institutionalization of this forum will go a long way in ensuring adherence to the principles of cooperation for effective development through ownership, focusing on results, inclusive development and transparency and accountability,” Assistant Secretary General in Charge of Programmes Dr Kipyego Cheluget said when he opened the forum. He said the Development Partners’ forum should be regular and frequent where future development partners’ support and programmes will be presented, discussed and agreed upon.
AfDB, World Bank bolster aid transparency data
The AfDB took a step toward increased transparency with the release of AfDB data on AidFlows (www.aidflows.org), a website that visualizes global development aid. The new data provides information on AfDB funds committed and disbursed to beneficiaries, including South Africa, South Sudan, Guinea, and Sierra Leone. The addition of AfDB data expands the AidFlows partnership and brings greater detail to development flows to Africa. AidFlows is a partnership between the OECD, the World Bank, AfDB, the Asian Development Bank, the Inter-American Development Bank and the Islamic Development Bank.
UNCTAD’s Kituyi defends international trade deals (UNCTAD)
UNCTAD Secretary-General Mukhisa Kituyi has defended international trade as the best means for developing countries to create jobs and tackle inequality in an article published in The Guardian newspaper on 23 November: “ As an ex-politician myself, I know that politicians must do a better, more honest job of discussing the costs and benefits of trade," said Dr. Kituyi, who before becoming UNCTAD Secretary-General served as trade minister in Kenya. "Too often in the global north, leaders, dictated by electoral needs, talk down trade, storing up problems for the future. To blame trade for job losses is to use a convenient scapegoat, but it ignores both the benefits of trade and the disruptive nature of technology," he said. "Trade does not explain the relative decline in labour productivity. Nor does it account for the erosion in social protection."
What trade does do, Dr. Kituyi said, is provide the jobs required by rising populations in developing countries. That is why developing countries are backing new, internationally integrative projects like Africa’s Continental Free Trade Area and China’s One Belt, One Road initiative. However, Dr Kituyi said, changing trade patterns are disruptive. He said policymakers must address the effects of change to protect the ultimate benefits of trade.
Rwanda: Govt launches Rwf7.5bn fund to support exporters (New Times)
The government, the Development Bank of Rwanda, and Germany Development Bank (KfW) have launched a €8.5m (about Rwf7.5bn) Export Growth Facility to support export-oriented firms. According to Alex Kanyankole, the BRD chief executive officer, the funding will facilitate SME firms in horticulture, agro-processing, artisanal mining and manufacturing. Export Growth Facility consists of three different components – the matching grant fund, the export guarantee facility, and the investment catalyst fund. KfW’s support will focus on the funding component, according to officials.
Rwanda: AfDB board approves 2017-2021 country strategy paper (AfDB)
The CSP is articulated around two complementary pillars: Investing in energy and water infrastructure to enable inclusive and green growth; and Developing skills to promote high value added economic activities and economic transformation. Under the first pillar, the Bank’s assistance will focus on reducing the cost of doing to further enhance the enabling environment for private investment and economic transformation through improved access to affordable and reliable energy and water supply and sanitation. The Bank’s assistance under the second pillar will support Rwanda in accelerating economic transformation through the development of skills that promote high value added economic activities. The CSP provides for a cumulative 2017-2021 indicative resource envelope of US $939.4m. Additional resources will be mobilized from the Bank’s non-concessional window, Africa Growing Together Fund, Trust Funds, Climate Funds and co-financing with other partners.
TradeMark East Africa in renewed efforts to enhance regional trade (New Times)
To address such challenges, Trademark East Africa is set to launch the second phase of its intervention which is expected to take an investment of about $700m for the next six years. The new strategy, that kicks-off next year, seeks to have an impact of $11.9 billion of additional trade in the region which will turn around $116bn to the region’s GDP. With that, the organisation is projecting creating and sustaining about 5 million jobs across the region and lifting about 3 million people out of poverty, according to Frank Matsaert, the TradeMark East Africa Chief Executive. He was speaking at the launch of Rwanda Trade Programme Evaluation Report by TradeMark East Africa, in Kigali, on Monday evening. [Further details, via TMEA]
Lesotho’s participation in apparel value chains: an opportunity for sustainable development? (Bridges Africa)
The apparel industry has been central to Lesotho’s economy. It accounts for around one third of the country’s gross domestic product and employs 80% of its manufacturing workforce. The possibility of Lesotho embarking on an industrialisation path depends on the sectors prospects. This country case study examines the interplay between two different sets of FDI driving two very different value chains: the one global, with FDI from Asia and production based on preferential access to the US market under the African Growth and Opportunity Act; the other regionally based, with FDI from South African firms relocating production in Lesotho. The analysis of the differential impacts of these value chains makes the Lesotho case particularly interesting, revealing different paths to sustainable development. [The analysts: Mike Morris, Justin Barnes, Moshe Kao]
Ethiopia’s apparel export sector (pdf, Bridges Africa)
The apparel sector has traditionally been a gateway to structural transformation, industrialisation, export diversification, and sustainable development for low-income countries. The Ethiopian government regards this sector as a key priority in driving the country’s industrial development strategy. Ethiopia is an exporting latecomer compared to other sub-Saharan African apparel exporters. But recent export growth has been impressive with Ethiopia being hyped as a “rising star” for apparel sourcing. This country case study, based on a methodology developed by ICTSD, assesses the achievements and challenges manifested in growing the Ethiopian apparel sector, the government’s active industrial policy strategy to develop the sector, and its implications for industrial and sustainable development. [The analysts: Cornelia Staritz, Leonhard Plank, Mike Morris]
Mauritius: Validation workshop on 10-year master plan for SME sector (GoM)
The Ministry of Business, Enterprise and Cooperatives organised a validation workshop on a 10-year Master plan for the development of globally competitive Small and Medium Enterprises (SMEs) at Hennessey Park Hotel in Ebene this morning. The Master plan, elaborated by a local private consultancy firm, is expected to position Mauritius as a high-income economy by 2030.
Mozambique: Parliament unanimously passes bill paving the way for the ban on export of logs
Ever since he was appointed minister in early 2015, Celso Correia (Minister of Land, Environment and Rural Development) has been working for a total ban on the export of logs, and he has now won that battle. The most important article in the government bill simply revokes the clause in the 2010 law that permitted the export of logs. The legal export of logs rose from 22,846 cubic metres in 2010, to 148,093 cubic metres in 2015. There was also an increase in illegal logging and illegal exports, Correia added. The destination of most of this wood, whether legally or illegally logged, was China. The new bill, Correia promised, paves the way for an outright ban on the export of logs from any tree species, and will “guarantee the industrialisation of the forestry sector”. It would encourage the export of finished goods with greater added value, and would thus create more jobs.
Thirteen projects are underway worldwide, in Botswana, Costa Rica, Ethiopia, Georgia, Ghana, Jamaica, Lesotho, Liberia, Malawi, Nigeria, Uganda, Zambia and Zimbabwe. Eight pilot projects – in countries spanning the globe from Africa to Asia and Latin America – have resulted in more than $260 million in additional tax revenues to date. This includes more than $100 million in new tax revenues generated through TIWB audits in Zimbabwe, demonstrating the tremendous potential for future projects. A range of new programmes will launch in the coming year – including new deployments of auditors to Republic of Congo, Egypt, Uganda, Cameroon and Vietnam – toward the goal of 100+ deployments by 2020. This will also include the first South-South co-operation project under the TIWB initiative, which will see Kenyan auditors deployed to Botswana in 2017. [Further information on TIWB is available from a new website: www.tiwb.org]
World Intellectual Property Indicators (WIPO)
Global innovation is soaring as a UN agency on intellectual property report reveals that 2.9 million patent applications lodged worldwide – a 7.8% increase over the previous year. Trademark applications, too rose 15.3% to about six million in and worldwide industrial design applications grew by 2.3% to 872,000, according to the UN World Intellectual Property Organization.
Today’s Quick Links:
SADC Agromet Update: 2016-2017 season
Africa50 appoints four infrastructure advisors to its investment committee (AfDB)
African banks urged to adopt risk-sharing and distribution to accelerate structural transformation (Afreximbank)
John Page on Africa Industrialization Day: moving from rhetoric to reality (Brookings)
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Lesotho’s participation in apparel value chains: An opportunity for sustainable development?
What have been the impacts of Lesotho’s participation in apparel value chains? This article explores the development potential of two different value chains – the one global, the other regional.
Global production lines have multiplied tremendously in the last three decades. At the same time, the production of apparel and textiles has contributed to the economic development of a handful of African countries, including Lesotho. This sector is a major contributor to Lesotho’s economy, and accounted for around one-third of the country’s GDP and 60 percent of its total exports at its peak in 2007. It is also the largest formal employer, employing nearly half of the formally employed workforce and 80 percent of Lesotho’s manufacturing workforce.[1]
The Lesotho textile and apparel industry is well established and mainly driven by global exports, primarily to the US under the Africa Growth and Opportunities Act (AGOA). While the sector has faced a number of challenges, including the end of Multi-Fibre Arrangement (MFA) in 2004 and the fallout from the financial crisis in 2008-9, new opportunities have arisen in the last five years. Developments such as the entry of South African clothing manufacturers exporting primarily to the regional market have created a regional value chain that takes advantage of the Southern African Customs Union (SACU). Figure 1 illustrates the percentage of exports of apparel products to the US market, driven by AGOA, compared with exports to South Africa – which reflect regional trade, as the items are not only exported to South Africa but to the Southern African region through retail value chains. From 2007 to 2010, exports to the US market declined from 95 percent to 74 percent, while exports of textiles to the South African market increased from 3 percent to 17 percent. In 2014, exports to the US through AGOA accounted for 78 percent, while exports to the regional market were at 17 percent.
Figure 1: Apparel exports to South Africa and the United States as percentages of Lesotho’s total apparel exports
Source: UNCTADstat.
Participation in the textile and apparel value chains has had a positive impact on Lesotho’s socio-economic development, shown in the positive correlation between increased exports and economic growth and improvements in the well-being of workers. This article addresses three crucial aspects of Lesotho’s participation in the textile and apparel value chains, looking first at the economic impact, then at the social impact, and finally at the sustainability of the industry and the potential for upgrading. It concludes by offering policy recommendations.
Economic impact
At the national level, global value chains enable countries to specialise in areas of comparative advantage, thus enhancing productivity growth and supporting wages and incomes, as well as increasing the interdependency and interconnectedness of economies. In 1995, the US was the predominant market for Lesotho, accounting for 76 percent of total exports to the world, while Africa accounted for only 17 percent. As a result of AGOA in 2000 and ensuing investment by Taiwanese apparel companies, Lesotho’s apparel industry grew substantially and exports to the US jumped threefold, from US$140 million in 2000 to US$456 million in 2004. The number of apparel firms increased dramatically in the same period, from 21 firms employing 9,847 workers in 1999 to 49 firms employing 53,087 workers. However, as a result of the expiration of the MFA in 2004 the economic crisis of 2008, and the slow economic recovery that followed, the number of employees and firms had dropped to fewer than 39,000 workers and 39 firms by 2015.[2] The uncertainty surrounding the future of AGOA after 2025 could also pose new challenges for Lesotho’s apparel industry.
To grow and sustain Lesotho’s apparel industry, the country has sought to diversify its export markets in the past 20 years. Lesotho’s economic diversification strategy is also intended to buffer against any losses arising from the apparel industry. It includes greater participation in South African value chains that are labour intensive in the sectors of agro-processing, light assembly, manufacturing, and business process outsourcing. This has resulted, for example, in the automobile sector investing in Lesotho, fostering the participation of local companies in the value chain of brands like BMW, Nissan, and Ford to produce car seats,[3] as well as in diversification into consumer electrical and electronic appliances produced by companies like Philips. The mining sector has also contributed significantly to the decline of apparel exports’ share in total exports.
This has translated into a massive erosion of the US market, from 76 percent in 1995 to 38 percent in 2015, largely due to Lesotho’s increased focus on regional trade integration. The US is no longer Lesotho’s only major exporting market, with Africa now accounting for 36 percent of total goods exports (Figure 3). Figure 2 illustrates the evolution of Lesotho’s total exports as compared to apparel exports over the past 20 years.
Figure 2: Lesotho’s exports of apparel products and total exports to the world (in million US$)
Source: UNCTADstat.
Figure 3: Lesotho’s exports to main markets as a percentage of total exports (2015)
Source: UNCTADstat.
Investment
Productive activities in the apparel and textile sectors can be both labour and capital intensive, with apparel generally being very labour intensive, and textiles usually requiring important physical capital. In 2015, new factory shells were opened, with construction financed by government and development partners to the value of US$28.4 million. The shells are to be occupied by 10 new companies, eight of which are managed by local Lesotho nationals (Basotho), and they are expected to create more than 5,000 direct jobs. In addition to the construction of factory shells, the government, through its investment promotion agency, is using incentives to attract investors. An example is the local denim mill, which has invested over US$100 million, signalling long-term commitment to the industry.
South African manufacturers have also shown increased interest in investment in Lesotho through the addition of higher value activities in the country. For example, the largest South African owned firm has undertaken skills development, not only for its low-skilled workers but also for its local managers through leadership training. The proximity of Lesotho to the head offices of many of the South African manufacturers is also apt for transferring higher value services to Lesotho. One South African manufacturer intends to invest in integrated manufacturing shells that enable both backward and forward linkages, with research, design and marketing functions relocating to Lesotho.
Services
The major service components within the Lesotho textile and apparel value chains are transport and logistics, from the sourcing of raw materials to the shipping of products to the market. High-value service components such as product development, research and design, or branding and marketing, are primarily performed at factory head offices in Taiwan or South Africa. Conducting these higher value services remotely is detrimental to the transfer of skills to the Basotho workers, including management and leadership skills. The government and the World Bank have established two skills development centres in the two economic zones in Maseru and Maputsoe that provide basic skills for the textile sector. However, the South African manufacturers require advanced skills for their complicated products and they are currently supporting the local skills centre to enhance their training to contribute to the transfer of these skills.
Social impact
The formal employment of women in the textile sector can contribute significantly to their economic empowerment, the reduction of poverty, and national economic growth. Young women with low levels of education and skills comprise the majority (80 percent) of employees in the textile sector and also head more than half of all households in Lesotho. South Africa oriented manufacturers, through social development projects, are starting to train and empower women to rise to senior management positions.
Basotho women employed in the textile sector have been economically empowered. The wages earned by textile workers have given them increased options and choices in their lives and also increased their role in decision-making both within and outside the household. However, these wages do not fully cover their basic needs and are not high enough for savings, limiting the possibility of financial assistance from financial institutions. To circumvent this, workers have created their own work-based social investment groups that allow them to have a certain amount of financial assistance and a certain amount of savings.
Through employment in the industry, the workers have access to workplace health programmes that provide them with health education and free health services. Lesotho does not provide social security but health services are highly subsidised, with HIV and tuberculosis treatment provided free at health facilities. The HIV prevalence rate for Lesotho is 23 percent nationally and 45 percent in the industry. In addition, almost 60 percent (23 out of 39) of Lesotho’s textile factories participate in the Better Work Programme of the International Labour Organization. This programme has contributed to improvements in occupational safety and health conditions within the participating factories and has also supported worker empowerment through the promotion of factory compliance with national labour laws and regulations. These and other programmes have increased awareness of workers’ rights, especially for women. A recent example was the introduction of paid maternity leave for female workers in the labour code. Starting in February 2016, a mobile reproductive health clinic – operated by the Seventh Day Adventist health facility, with support from United Nations Population Fund – has been providing important health services in the industrial area, five days a week, free of charge. The mobile clinic provides family planning counselling and supplies, offers antenatal check-ups for pregnant women, and provides HIV counselling, testing, and treatment.
Sustainability
The main driver for Lesotho’s textile and apparel exports has been the duty-free market access offered by AGOA and SACU. Predictable, stable, and sustainable preferential market schemes play a critical role in the economy of Lesotho. According to Joshua Setipa, Lesotho’s Minister of Trade and Industry, any loss of AGOA privileges would directly impact upon South Africa and other southern African countries. Lesotho’s only textile mill buys cotton lint from a number of southern African countries, including Malawi, Mozambique, South Africa, Zambia, and Zimbabwe. In 2015, it bought 105,393 cotton bales. However, it is highly likely that should AGOA cease to exist, the mostly Asian-owned firms would not relocate to other parts of Africa, which would thus have a significant negative impact both for Lesotho and other southern African countries. To improve the sustainability of the sector, the government of Lesotho has embarked on a public-private partnership approach using a strategic set of industrial policy interventions aimed at upgrading the institutional fabric of training and infrastructure. It is also campaigning to increase national ownership by providing Basotho-owned companies that want to participate in the textile and apparel value chain with subsidised factory shells.
There are significant differences between the regional value chain mainly driven by South African producers and the US/Asian value chain in respect of opportunities to upgrade. The regional market orientation offers added opportunities for social and economic upgrading through empowerment, skills development, and local embedding through regional sourcing, including investing in the development of firms directly in Lesotho – where the relative stability of both labour relations and electricity and water suppliers have helped attract South African investors. However, the number of workers in firms oriented to the South African market are not in a position to replace US-oriented firms, as each South African firm employs less than half of the workers employed in the firms targeting the US market. Moreover, the firms exporting to the South African market could not replace the revenue generated from US exports, as the volumes of goods produced for the regional market represent only a small percentage of those produced for the US market. The South African firms produce small but complicated products with higher margins, while the US-targeted firms focus on mass production of simple products with low margins requiring low skills.
Conclusion
The two apparel product value chains in Lesotho have positively contributed to addressing some of the economic and social challenges faced by the country, including alleviating poverty, by generating employment as well as promoting gender equality, as 80 percent of employees in the sector are women.
Preferential market access, especially to the US, has been the main driver and incentive for foreign direct investment from Asia. However, the transfer of skills or technology has remained limited over the last two decades, as most of the high-value and management functions are based abroad. In addition, local linkages to the industry are limited to the transport, logistics, and banking sectors. The regional value chain, on the other hand, has demonstrated a greater potential for upgrading, especially through workers’ skills development, and sustaining the industry on a long-term basis.
The Lesotho experience has demonstrated elements that are required for successfully engaging in both global and regional value chains. For policymakers, a responsive trade and industrial policy that promotes diversification and reduces dependence on preferential market access is key to benefiting from participating in value chains since it promotes opportunities for backward and forward integration. Diverse trade and trade-related policy interventions give an opportunity to expand into new markets, integrate the private sector, and upgrade along the value chain. The transfer of skills and technology plays a critical role in enhancing competitiveness within the industry and increasing the diversity of workers’ skills.
Moshe Kao, Independent trade and development consultant and former minister counsellor at the permanent mission of the Kingdom of Lesotho in Geneva.
This article is published under Bridges Africa, Volume 5 - Number 9, by the ICTSD.
[1] ComMark, “ComMark’s Lesotho Textile and Apparel Sector Programme: Impact Assessment,” Powerpoint presentation, 11 June 2009; Lesotho Government and International Labour Organization (ILO), “Lesotho Decent Work Country Programme: Phase II: 2012-2017”; ILO, “Lesotho: Baseline Report: Worker Perspectives from the Factory and Beyond,” August 2012.
[2] Mike Morris, Justin Barnes, and Moshe Kao, “Global Value Chains, Sustainable Development, and the Apparel Industry in Lesotho,” ICTSD, 2016.
[3] Joshua Setipa, “Integration into Global and Regional Value Chains – How Is It Done? The Experience of Lesotho in the Textiles and Apparel Sector,” in African Perspectives on Trade and the WTO: Domestic Reforms, Structural Transformation and Global Economic Integration, edited by Patrick Low, Chiedu Osakwe, and Maika Oshikawa (Cambridge: Cambridge University Press, 2016).
Country Case Studies
Global Value Chains, Sustainable Development, and the Apparel Industry in Lesotho
The apparel industry has been central to Lesotho’s economy. It accounts for around one third of the country’s gross domestic product and employs 80 percent of its manufacturing workforce. The possibility of Lesotho embarking on an industrialisation path depends on the sectors prospects. This country case study examines the interplay between two different sets of foreign direct investment (FDI) driving two very different value chains: the one global, with FDI from Asia and production based on preferential access to the US market under the African Growth and Opportunity Act (AGOA); the other regionally based, with FDI from South African firms relocating production in Lesotho. The analysis of the differential impacts of these value chains makes the Lesotho case particularly interesting, revealing different paths to sustainable development.
Global Value Chains, Industrial Policy, and Sustainable Development – Ethiopia’s Apparel Export Sector
The apparel sector has traditionally been a gateway to structural transformation, industrialisation, export diversification, and sustainable development for low-income countries. The Ethiopian government regards this sector as a key priority in driving the country’s industrial development strategy. Ethiopia is an exporting latecomer compared to other sub-Saharan African apparel exporters. But recent export growth has been impressive with Ethiopia being hyped as a “rising star” for apparel sourcing. This country case study, based on a methodology developed by ICTSD, assesses the achievements and challenges manifested in growing the Ethiopian apparel sector, the government’s active industrial policy strategy to develop the sector, and its implications for industrial and sustainable development.
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Regional before global: A value chain approach to industrialisation in West Africa
Sustainable Development Goal 9 calls for a commitment to “build resilient infrastructure, promote sustainable industrialization and foster innovation.” Are regional value chains a relevant industrialisation pathway to achieve this goal in West Africa?
Integration into global value chains (GVCs) is often hailed as a key pathway to sustainable industrialisation in Africa, driving private sector development and modernisation, and so fostering job creation and greater participation in the global economy. This is promoted for West Africa, where the share of manufacturing industry in the regional GDP was only around 9 percent in 2015. In order to achieve Sustainable Development Goal 9, which prioritises industrialisation in the battle against poverty and exclusion, the region needs to scale up its industrialisation in an effort to increase employment and social inclusion, particularly among youth.
Although the GVC strategy is relevant, especially at a time when labour costs in Africa are becoming more and more competitive in relation to new industrialised countries in Asia, it has at least three downsides in the short term. First, the fragmentation of potential participant countries into GVCs exposes them to the opportunism of multinational companies in location choice, because new entrants lack bargaining power. Second, linking to GVCs requires quality parameters which are not easy to reach for countries experiencing the infrastructure deficiencies and high levels of informality in the private sector that are seen in Africa. Given that it is impossible to leapfrog the constituent stages of non-price competitiveness in the industrialisation process, the development promise behind integration into GVCs can only be contemplated in the long term. Third, while African countries can look to GVCs to yield higher returns in exports of manufactured intermediate goods, this only partially addresses their trade balance challenges, since consumption goods remain imported, rather than produced locally.
These challenges must not lead West African countries to opt out of GVC strategies, but rather to gradually prepare for them. An alternative approach to value chain development that focuses on regional value chains (RVCs) contains transitional solutions to trigger competitive export-led industrialisation in the region. By focusing on the nature of RVCs and the opportunities they offer to West Africa, this article highlights RVCs as a pragmatic stepping stone for the region in order to more sustainably link to GVCs in the future.
The relevance of RVCs in West Africa
The RVC strategy envisages a production system which is comparable to the global-scaled one of the GVCs, but differs in that it is regionally aggregated and results in end products exported by a country within the region. The idea is to leverage the growing local demand for finished goods to shape regional production chains that are not constrained by the demanding norms required in GVCs, and that centre on the specificities of local demand and consumption practices. While less dynamic than linkages to GVCs due to the smaller size of the end-markets, RVCs could trigger sustainable industrialisation by enhancing integration, productivity, and division of labour in the region and incorporate indigenous firms into a region-wide logistical system that will be gradually optimised. Once the RVCs are established, the end products can also be exported globally, particularly to other developing markets, and this lays foundations for consolidating and upgrading the process so as to link it, as a next step, to GVCs.
This approach is appropriate in the West African context for a number of reasons. First, West Africa reports a low level of trade and productive integration, with one of the lowest regional intra-industry trade scores in the world,[1] and the second lowest score in trade and productive integration in Africa.[2] This situation indicates little participation in RVCs and weak bargaining power for the region, where countries act more as competitors than complementary allies. Implementing RVCs can therefore be seen as a catalyst to regional integration and cooperation.
Moreover, it is generally agreed that to prove successful, RVCs need to revolve around sizeable growth poles, from which the regional chains develop themselves through various channels of transmission from core to periphery. In West Africa, Nigeria represents a typical growth pole, characterised by intense trade activity (export and import) and a large market and population size, attracting capital flows, migrants, and technology.[3] In addition to Nigeria, the region is host to two other promising growth poles, namely Ghana and Côte d’Ivoire, which have recorded strong annual GDP growth rates in the last five years. These countries could assume leadership in the emergence of RVCs involving their periphery, in particular with the landlocked countries of the Sahel.
The level of development and the regulatory context are other sound justifications for the region to focus on RVCs before GVCs. Indeed, 72 percent of West African goods for further exportation are directed to Europe and North America,[4] where non-tariff restrictions, including highly demanding norms to be complied with, undermine their access to the market. As a result, the scope for competing, upgrading, and climbing up the value chain is very restricted for West African firms linked, for example, to a Europe-headquartered GVC. By contrast, dealing with the regional regulations in which they are embedded offers them far more opportunities to grow, with the ability to navigate local institutions, including informal ones, giving them a major competitive advantage over extra-regional competitors. Likewise, the cultural dimension of manufacturing production is a key determinant of RVCs’ relevance in West Africa, since one major aspect is the focus on the regional consumption markets. This gives regionally based manufacturers the opportunity to design and produce differentiated products adapted to the cultural preferences of regional consumers and the needs created by their environment, which provides significant added value in terms of market capture.
Lastly, RVCs can initiate sustainable industrialisation in the region through quantitative spillovers resulting from industrial development, such as jobs and enterprise creation, and increased exports and government revenues. In addition, qualitative spillovers are expected, as greater inter-firm linkages throughout the RVCs (trade and investment) can result in technology and knowledge transfers, enterprise formalisation, and business professionalisation. Eventually, this can lead to a transformation and upgrading of the private sector, entailing higher value-added activities and the creation of higher skilled jobs.
Featuring RVC opportunities in West Africa
In summary, the RVCs pursue two objectives: exploiting complementarities between countries and actors in the region; and leveraging the growing demand for finished goods within the region. In regard to the first objective, it is the purpose of any value chain, whatever the level of aggregation, to make optimal use of the resources and endowments available in the ecosystem it covers, so as to increase efficiency in the production process. In the case of RVCs in West Africa, the need to exploit complementarities can be easily featured through geography, citing for instance de facto complementarities between landlocked and coastal countries of the region. Along with geographic factors, strong complementarities could be harnessed depending on national/subregional specialisations, based on the regional division of factors of production, including natural resources, labour, and capital.
The second objective is determined by the size and pace of growth of household consumption in the region. The McKinsey Institute recently estimated that household consumption should grow by 22 percent in Nigeria by 2025, and by 77 percent in Francophone countries of Central and West Africa, reaching about US$450 billion and US$230 billion respectively.[5] This dynamic, which reflects the region’s growing population and rising household incomes, can provide economies of scale to producers focusing on these local markets, especially if they endeavour to develop an industry not only “made in West Africa”, but also “made for West Africa.”
Several sectoral examples illustrate the relevance to meeting the distinctive needs of regional consumers, such as in pharmaceuticals (drug manufacturing, with a focus on endogenous health issues), textiles (African fabric), construction (local materials), or cosmetics (local products). The food sector best exemplifies this model, however, since nutrition-related behaviours are highly determined by cultural habits. In West Africa, dietary patterns are evolving with urban lifestyles. One major change is the increasing demand for processed products, which account on average for 39 percent of household food consumption in the region – and remarkably for 36 percent in the poorest households.[6] While demand for processed food in the region comes with the expansion of global products, cultural habits remain, with preference for traditional products such as tropical tubers (yam, cassava) and local fish and meat, which are increasingly converted into higher value-added processed products (attieke, garri, smoked or dried fish/meat, etc.). This evolution justifies the development of food and beverage processing activities specialising in West Africans’ needs. As a second step, these products could be exported towards other African regions and developed countries, through the existing ethnic-based commercial networks of the diaspora.
How can RVCs be initiated in West Africa?
Policy recommendations in favour of RVCs do not differ significantly from those that are usually formulated to promote integration into GVCs. The latter, which focus on industrial policies at the national level, and on regional integration at the supranational level, are well known and their application to RVCs can be summarised as follows. First, to foster industrialisation domestically, West African countries need to build strategic infrastructure, improve logistics, encourage private sector development, and invest in human capital. Second, they need to regionally enhance their integration with developing cross-border infrastructures, removing tariff and non-tariff barriers, and implementing the harmonisation of regulations and technical standards, which could make the exchanges within the RVCs more fluid. More specifically, RVC strategies could emphasise the role played by growth poles in the region. These poles, which already benefit from economies of agglomeration and concentrate most of the financial capital, could “headquarter” the RVCs and take the lead in their deployment, primarily by channelling extra- and intra-regional productive investments into the region. Accordingly, an incentivising intra-regional investment framework is a critical tool with which to equip the region.
The second, more original area of intervention focuses on the actors. As explained, regionally based firms have competitive advantages when it comes to capturing local markets. The Boston Consulting Group recently found that African companies, including in West Africa, face down large multinationals in several areas.[7] The reasons for their success lie in four competitive advantages: focus on the local market, where they concentrate their development and branding strategies; mastery of the industrial environment (logistics, suppliers); flexibility, particularly in terms of standards adaptation; and knowledge of the expectations and behaviour of consumers, thanks to the data gathered since they were set up. In other words, with tariff conditions similar to those of foreign multinationals, these local champions find their advantage in their ability to manage non-tariff costs.[8]
This opens a path for RVC policies, already taken up by some institutions. In 2011, the International Finance Corporation invested €11 million to support the expansion of Patisen, a food-processing company in Senegal specialising in the production and distribution of bouillon cubes and chocolate. The purpose of the partnership, which also included technical assistance in areas such as strategic advice and corporate governance, was to accompany Patisen in its regional expansion, while ensuring the company would in turn transfer know-how and sustainability to local suppliers and wholesalers. By demonstrating that local players can be at the heart of an industrial learning process across RVCs, this experience could inspire governments, investors, and development institutions and help them to expand regionally. These local champions could therefore be the interface between the global economy and the regional network of production, initiating technology and knowledge spillovers within the region, and preparing the region’s industrial base for upgrading.
Conclusion: RVCs and sustainability
Promoting RVCs is a relevant pathway to trigger manufacturing development in West Africa and pave the way to greater linkages to GVCs, since this model can be built not against but in tune with the local regulatory and development context. Like any systematic value chain, RVCs can channel knowledge and technology transfers within the region, allowing regional producers to progressively upgrade their production process, climb up the value chain, and reap competitiveness gains so as to further compete in GVCs. Local champions, as key orchestrators of this model, may also be focal points in working towards sustainable industrialisation. In this regard, a possible lever for the development community is to help them appropriate innovation and good practices available elsewhere, in such areas as green industrialisation and corporate social responsibility, as a source of value chain efficiency and inclusive development.
Maxime Weigert is a Development Economist, Consultant at the Strategy and Policy Department of the African Development Bank. The views expressed in this article are those of the author and do not in any way represent those of the institution with which he is affiliated.
This article is published under Bridges Africa, Volume 5 - Number 9, by the ICTSD.
[1] United Nations Industrial Development Organization. Industrialization in Africa and Least Developed Countries: Boosting Growth, Creating Jobs, Promoting Inclusiveness and Sustainability. Report to the G20 Development Working Group. New York: UNIDO, 2016.
[2] African Union Commission, African Development Bank, and United Nations Economic Commission for Africa. Africa Regional Integration Index: 2016 Report. Addis Ababa and Abidjan: AUC, AfDB, and UNECA, 2016.
[3] Ogunleyhe, Eric Kehinde. “Structural Transformation in Sub-Saharan Africa: The Regional Growth Poles Strategy.” Paper presented at the 2011 African Economic Conference, Addis Ababa, 25-28 October 2011.
[4] African Development Bank, Organisation for Economic Co-operation and Development, and United Nations Development Programme. African Economic Outlook 2014. Paris: OECD, 2014.
[5] McKinsey Global Institute. “Lions on the Move II: Realizing the Potential of Africa’s Economy.” McKinsey & Co., 2016. Computations of the author.
[6] Allen, Thomas and Philipp Heinrigs. “Emerging Opportunities in the West African Food Economy.” West African Paper No. 1, Sahel and West Africa Club Secretariat, Organisation for Economic Co-operation and Development, Paris, 2016.
[7] Dupoux, Patrick et al. “Dueling with Lions: Playing the New Game of Business Success in Africa.” Boston Consulting Group, November 2015.
[8] Weigert, Maxime. “Industrialization in West Africa (3): Giving rise to a “Made in Africa” regional industry?” Blog post, African Development Bank, 2016.
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National laws in need of speedy approximation to regional legislation – EALA says
Regional legislators now want Partner States to speedily undertake harmonization and approximation of laws in line with those of the Community saying that delays affect the speed with which the Community is moving. EALA thus says, additional resources should be provided to support the harmonization of laws and to aid implementation of Council of Ministers, decisions that have arisen over the last Financial Years, but are yet to be undertaken.
The recommendations are contained in a report of the Committee on Rules and Privileges of the Oversight activity on approximation of national laws in Partner States, presented and adopted by the Assembly this afternoon. The Report presented to the House by the Chair of the Committee on Legal Rules and Privileges, Hon Peter Mathuki, follows activities of oversight work undertaken by the Committee in the Partner States earlier on in the year.
In a bid to operationalise the implementation of the provisions Article 126 (2) (b) of the EAC Treaty, the Council of Ministers established a Sub-Committee to spearhead the process of harmonisation and approximation of national laws in the EAC context. The Sub-Committee is headed by the Law Reform Commissions of Partner States and it works under the Sectoral Council on Legal and Judicial Affairs. In undertaking its activities, the Sub- Committee considers/analyses national laws to ascertain their convergences and divergences from one Partner State to another. Also, the Sub- Committee determines whether national laws are in line with the Treaty for the Establishment of the East African Community and its Protocols.
The report avers that National Parliaments have play a critical role in the process of harmonization of laws in the Partner States. However, their representation at the various national task forces on harmonization of laws is less visible. At the same time, it states there are coordination challenges among the various Government Ministries, Departments and Agencies (MDAs) responsible for harmonization and approximation of laws.
However, all Partner States have amended certain laws thereby approximating them to some of the Acts of the Community. The Republic of Burundi has revised the Immigration Act in 2012 to provide for a six-months pass for EAC citizens; the Law no 1/07 of 26 April 2010 of Code of Commerce and the law governing Public and Private Partnerships.
Republic of Rwanda has amended 10 legislations. They are Law relating to Immigration and Emigration in Rwanda, Law Regulating Labour in Rwanda; Law of Contracts; Law on sale of goods; Companies law and Laws relating to Commercial Recovery and Settling of Issues Arising from Insolvency. Other pieces of legislation are the Laws on the Protection of Intellectual Property; Private and Public Partnerships; Competition and Consumer Protection; and Law relating to Investment Promotion and Facilitation.
In Kenya, the harmonized pieces include; the Insolvency Act, 2015; Partnership Act and the Limited Liability Partnership Act, Kenya citizens and Foreign Nationals Management Act and the Kenya Citizenship and immigration Act as well as the Labour Institutions Act, the Labour Relations Act and the Work Injury Benefits Act.
The United Republic of Tanzania is reported to have made amendment/enacted the following pieces of laws: Amended the Immigration Regulation and the Immigration (Visa) Regulations; enacted the law on employment of non-citizens; enacted a new Companies law; and enacted the Business Names and Registration Act. United Republic of Tanzania has further gone ahead to amend the Forex Exchange Act, 2008; and the Capital Market and Securities Act.
In Uganda, another ten pieces of legislation have been amended. They include the Companies Act; Insolvency Act; Partnership Act; Business Names and Registration Act and the Accountancy Regulation Act. Others are the Trade Licensing Act; Airport Service Charges Act; Civil Aviation (Air Operator Certification and Administration) Regulations No. 26 of 2012; The Civil Aviation (Air Craft Regulation and Marking) Regulations; and the Financial Institutions Act, No. 2 of 2007.
Contributing to the debate in the House, Hon Maryam Ussi called on Partner States to go the extra mile in harmonization of their laws to that of the EAC and stressed the need for sensitization on the importance of EAC laws.
Hon. Martin Ngoga stressed the need to strengthen national policy networks to ensure effective harmonization processes that enable efficient uptake of Community Laws.
Hon. Mwinyi on his part, urged the Council of Ministers to implore Partner States to inculcate strong policy on Integration that will boost the Community and faster the harmonization of the laws.
Hon. Abubakar Zein stated that in order for the integration process to succeed, East Africans need to adhere to the EAC Treaty.
Hon Mike Sebalu remarked that Partner States who delay to approximate or amend their national laws affect the Partner States that have adjusted theirs in particular and EAC in general.
On her part, Hon Shyrose Bhanji congratulated the Republics of Rwanda and Uganda for being ahead in the approximation and harmonization of their respective laws and advised Council of Ministers to play a lead role towards strengthening the integration process.
Hon Joseph Kiangoi also rooted for speedy harmonization saying it would bring the Community together. He recommended for amendment of the Treaty for the Establishment of the EAC to enable Ministers responsible for the EAC Affairs to reside in Arusha to push the integration process even further.
Hon Susan Nakawuki, Hon Nancy Abisai, Hon Adam Kimbisa, Hon Dora Byamukama and Hon Leonce Ndarubagiye also supported the Report.
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UNCTAD’s Kituyi defends international trade deals
UNCTAD Secretary-General Mukhisa Kituyi has defended international trade as the best means for developing countries to create jobs and tackle inequality in an article published in The Guardian newspaper on 23 November.
Trade deals became a hot topic in the United States presidential election earlier in the month with president-elect Donald Trump vowing to withdraw from the Trans Pacific Partnership on the first day of his presidency.
Earlier in 2016 the United Kingdom voted to withdraw from the European Union on as-yet unclear trade terms.
Dr. Kituyi said that while politicians in the global north may be “getting cold feet” on trade, poorer countries have no choice but to deepen trade relationships.
“As an ex-politician myself, I know that politicians must do a better, more honest job of discussing the costs and benefits of trade,” said Dr. Kituyi, who before becoming UNCTAD Secretary-General served as trade minister in Kenya. “Too often in the global north, leaders, dictated by electoral needs, talk down trade, storing up problems for the future.”
“To blame trade for job losses is to use a convenient scapegoat, but it ignores both the benefits of trade and the disruptive nature of technology,” he said. “Trade does not explain the relative decline in labour productivity. Nor does it account for the erosion in social protection.”
What trade does do, Dr. Kituyi said, is provide the jobs required by rising populations in developing countries. That is why developing countries are backing new, internationally integrative projects like Africa’s Continental Free Trade Area and China’s One Belt, One Road initiative.
However, Dr. Kituyi said, changing trade patterns are disruptive. He said policymakers must address the effects of change to protect the ultimate benefits of trade.
“At the international level, trade deals need social and environmental safeguards,” he said. “Competition policy and consumer protection can help to defend small businesses against the excesses of corporate power.”
Dr. Kituyi concluded: “The nature of trade is changing, shifting to services, to developing countries, and to more being done online. But it is always going to generate jobs. And this is an urgent priority for any sensible politician”.
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World Bank and African Development Bank bolster aid transparency data
The African Development Bank (AfDB) took a step toward increased transparency on Wednesday, November 23, 2016 with the release of AfDB data on AidFlows, a website that visualizes global development aid. The new data provides information on AfDB funds committed and disbursed to beneficiaries, including South Africa, South Sudan, Guinea, and Sierra Leone.
“Transparency keeps us accountable and engaged with our partners and stakeholders,” said Frannie Léautier, AfDB’s Senior Vice-President. “Through greater transparency, stakeholders are able to monitor the outcomes of AfDB’s operations and therefore it will help assure that benefits reach the intended beneficiaries.’’
AidFlows is a unique platform that houses comprehensive and easy-to-read aid data from a range of multilateral development banks and the OECD. Launched in 2010, it was the first platform of its kind to show global data on aid funding. AidFlows provides public access to dataw on the flow of aggregate development funds from development partners to beneficiaries. The expansion of AidFlows has been made possible by open data initiatives within various governments, public and private institutions around the world.
“We applaud AfDB’s efforts to increase aid transparency and openness and welcome them to the AidFlows family,” said Axel van Trotsenburg, the World Bank’s Vice President of Development Finance. “This addition helps AidFlows provide a more comprehensive picture of where development assistance is being spent and helps inform and support policy decisions.”
The addition of AfDB data expands the AidFlows partnership and brings greater detail to development flows to Africa. AidFlows is a partnership between the OECD, the World Bank, AfDB, the Asian Development Bank, the Inter-American Development Bank and the Islamic Development Bank.
For more information, please visit: http://www.aidflows.org
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tralac’s Daily News Selection
Featured tweet, @kofiandah: ‘David Ashiagbor: Africa invests 4% of its GDP in infrastructure compared to 14% by China’
Featured GIF: The Chinese-funded railways linking East Africa (CNN)
2016 PIDA Week: Creating jobs through regional infrastructure development (23-24 November, Abidjan)
The 2nd PIDA Week will be a combination of plenary sessions on the theme, sector seminars, including exhibitions which aim among other things, to provide project owners and project sponsors from both public and private institutions an opportunity to interact and leverage financing for key projects. Additionally, statutory closed meetings under the Institutional Architecture for Infrastructure Development will be held during the PIDA Week. The Infrastructure Consortium for Africa, the NEPAD IPPF and the Continental Business Network Council meetings will also be held during the Week. PIDA Week 2016 builds on the achievement of the inaugural PIDA Week of 2015.
The 2016 ICA Annual Meeting took place in Abidjan earlier this week. Download the background paper: Building quality infrastructure for Africa’s development (pdf)
Infrastructure Financing Trends in Africa – 2015 (ICA)
The 2015 Infrastructure Financing Trends in Africa report (pdf) shows that $83.4bn was committed to Africa’s infrastructure development in 2015, a 12% increase on the 2014 total of $74.5bn. The report details that this comprises nearly $28.4bn of identified African national budget allocations, while commitments from ICA members totalled $19.8bn. Commitments from non-ICA bilateral and multilateral financiers totalled $27.7bn and private sector investment of $7.4bn was also identified. Key findings from the 2015 report include: (i) Of the $27.7bn of non-ICA bilateral and multilateral finance, $20.9bn is from announcements of funding from China. This compares with $3bn in the previous year, but an average of $13.9bn for the three previous years; (ii) 2015 saw reduced identifiable infrastructure allocations of $28.4bn by 44 African national governments, compared with $34.5bn (based on 42 countries) in 2014; (iii) Private sector commitments increased by $4.6bn in 2015 to $7.4bn, of which $7.2bn went to the energy sector (with South Africa the main beneficiary receiving investments of $3.8bn); (iv) Commitments to the water sector have shown a declining trend since 2013.
SAVCA: Private equity playing growing role in funding Africa’s infrastructure gap
Latest figures from the SAVCA 2016 Private Equity Industry Performance Survey reveal that the private equity industry is playing an increasingly critical role in funding the infrastructure deficit in Africa. The survey indicates that of the R165.3bn in assets under management (committed capital plus investments) in Southern African private equity in 2015, around R23.8bn – or 14.5% – are from funds with a dedicated infrastructure mandate. This proportion is up from 7.6% in 2014. Nearly one fifth (23.2%) of the industry’s unrealised investment portfolio in 2015 was in infrastructure. Of the transactions concluded by Southern African private equity managers in 2015, 14.2% were in the infrastructure sector.
Africa’s infrastructure spending drops (Deloitte)
Africa’s infrastructure investment spending decreased in 2016 compared 2015, according to Deloitte 2016 African construction trends report. In 2016, 286 projects worth 50m and more were being built in Africa, down from 301 in 2015. The fall in overall capital value was $51bn — from a total of $375bn in 2015 to a total of 324bn in 2016. The report said there were 109 projects worth a total of $140bn in Southern Africa in 2015. For 2016, project numbers had fallen to 85, worth $93bn. The report identified gross fixed capital formation on a continental and regional level, and compared data collected over the last four years. Regionally, West Africa had 92 projects — the largest number and worth the most at 120bn. SA had the largest number of projects at 41 for a single country, followed by Nigeria with 38. The focus of this year’s report was the water sector.
Sustainable development: EU sets out its priorities (European Commission)
On Tuesday (22 November), the European Commission set out a strategic approach for achieving sustainable development in Europe and around the world. It also set out how it plans to align its policies with the Agenda 2030 and its Sustainable Development Goals. A first Communication on the next steps for a sustainable European future explains how the Commission’s 10 political priorities contribute to implementing the UN 2030 Agenda for Sustainable Development and how the EU will meet the Sustainable Development Goals in the future. The main elements of the Commission’s new, strategic approach, presented on Tuesday are: [Various downloads available]
Regional before global: a value chain approach to industrialisation in West Africa (ICTSD Bridges News)
These challenges must not lead West African countries to opt out of GVC strategies, but rather to gradually prepare for them. An alternative approach to value chain development that focuses on regional value chains contains transitional solutions to trigger competitive export-led industrialisation in the region. By focusing on the nature of RVCs and the opportunities they offer to West Africa, this article highlights RVCs as a pragmatic stepping stone for the region in order to more sustainably link to GVCs in the future. [The author, Maxime Weigert, is attached to Policy Department of the AfDB]
Afreximbank announces export development fund
The African Export-Import Bank is establishing a “Fund for Africa Export Development” to help African countries respond to the recurrent adverse economic shocks that have affected the continent, participants in the Bank’s Annual Structured Trade Finance Seminar and Workshop taking place in Port Louis in Mauritius have heard. Dr Hippolyte Fofack, Chief Economist of the Bank, making one of the presentations at the four-day seminar and workshop series which opened on 21 November, said that the new fund would have both debt and equity options in order to promote industrialization and export diversification and, ultimately, reduce recurrent exposures to adverse commodity price and terrorism-induced shocks. In the presentation titled “Commodity Price and Terrorism-Induced Shocks: Implications for African Trade and Trade Finance”, Dr. Fofack said that the Bank was also working on a mobile payment platform to enhance intra-African trade. That platform would incorporate a clearing mechanism that would reduce the trade costs associated with the scarcity of foreign currency.
WCO supports Sierra Leone Customs to complete a Time Release Study
Following an invitation from the National Revenue Authority of Sierra Leone, WCO successfully completed a Time Release Study workshop in Freetown, 24-28 October 2016. This workshop was facilitated by two experts from the WCO Secretariat and Kenya Customs who shared their knowledge of the TRS and their experience on developing process mapping and the use of WCO TRS software. The core objective of the mission was to support the NRA in building capacities to conduct a TRS in line with Sierra Leone’s commitments under the WTO Agreement on Trade Facilitation.
WCO declares 2017 to be the year of Data Analysis: The Secretary General of the WCO, Kunio Mikuriya, announced today that 2017 will be dedicated to promoting data analysis under the slogan “Data Analysis for Effective Border Management.” WCO Members will thus be called upon to further promote their efforts and initiatives in a sector that is becoming a key element in Customs modernization process: collecting and analysing data. “Data analysis and related challenges will be thoroughly discussed within the WCO during 2017, and at events such as the Information and Technology Conference, the Global Conference on Transit, and the Technology and Innovation Forum”, Dr. Mikuriya added.
Malawi: Government bemoans low value of regional intra trade (Malawi News Agency)
Joseph Mwanamvekha (Minister of Industry, Trade and Tourism) called on the region take into account innovative ways of financing industrialization saying inadequate capital investment was one of the challenges that has retarded the implementation of the existing programs on industrialization. "This includes urgently formalizing and operationalizing regional development fund, promoting public- private partnerships and ensuring that private sector plays a pivotal role in the implementation of the industrialization programs," he said.
Poultry production and trade in South Africa: a look at alternative trade policy scenarios (USDA)
What is likely to happen to the South African poultry industry now that US poultry is once again entering the country? The industry faces a number of internal constraints to expansion, including high feed costs, labor costs, labor regulations, infrastructure weaknesses, limited electricity and water supplies, and a lack of a supportive environment for productivity-enhancing investments. A severe drought has hampered South Africa’s poultry market by reducing the corn crop by 40% and increasing feed prices. USDA baseline projections (presented below) suggest that throughout the next decade, under normal weather conditions, South Africa’s industry will continue to be unable to meet demand through domestic production. As in the past, trade policies can shift the source, but not the existence, of poultry imports.
WTO’s Trade Dialogues Lecture Series: Findings on the effectiveness of trade-specific and general labour market adjustment policies. Download the presentations from Monday’s seminar: Lucian Cernat (Chief Economist, DG Trade European Commission), Professor Torben Andersen (Aarhus University, Denmark).
IMF Working Paper: ‘A tale of two sectors: why is misallocation higher in services than in manufacturing?’
Building online commerce to its maximum potential requires more trust in the markets (UNCTAD)
E-markets which are growing rapidly - from $16 trillion in 2013 to $22 trillion in 2015 - holds opportunities to generate jobs and incomes in developing countries, connecting both individuals and markets, even in remote locations. But concerns have been raised about the numbers of people who still do not access this opportunity. More than half of the world’s population still has no access to internet, and in Africa that share is about 75%. "We are concerned about the 4 billion people in the developing world who are still not connecting to this enormous and growing global market", the UNCTAD Deputy Secretary General, Joakim Reiter said. "Clearly the lack of infrastructure and access will need to be corrected. Looking to the future, however, consumers will need coordinated international protection from both cybercrime and market power so that they feel safe to buy online," he added, ahead of a meeting in Geneva on internet governance.
Preview of the inaugural Global Conference on Sustainable Transport: what is at stake? (World Bank)
On 26 November, 2016, UN Secretary-General Ban-Ki Moon will convene the first-ever Global Conference on Sustainable Transport, in Ashgabat, Turkmenistan. What is at stake in this capstone two-day event? What fresh developments might it yield, and how might it change the dynamics for transport?
Yesterday’s UNSC hydro-diplomacy debate UN)
Others briefing the Council were Danilo Turk (Chair of the Global High-level Panel on Water and Peace), Christine Beerli (Vice-President of the International Committee of the Red Cross), and Sundeep Waslekar (President of the Strategic Foresight Group). Mr Turk described the transboundary management of the Senegal River Basin — involving Senegal, Guinea, Mali and Mauritania — as an inspiration for the founding of the High-level Panel. Unfortunately, such cooperation was relatively rare, he said, noting that of the 236 shared river basins, only 84 had joint water-management bodies. Some African countries called for intensifying initiatives to manage the shrinking resources of the Lake Chad Basin, which they cited as a factor in the poverty and conflict afflicting that region. Angola’s representative said that amid the scarcity of safe drinking water, people in some countries took water for granted and turned it into a lucrative business. The Lake Chad Basin was a dramatic case in which the link between water and peace was at centre stage, he said, noting that the situation there had led to youth radicalization, terrorism and a huge humanitarian crisis.
Today’s Quick Links:
AfDB scoping study: ‘Women, infrastructure and leadership’
World Bank board approves action plan for Uganda inspection panel case
Mauritius hosts 6th Africa Regional Platform on Disaster Risk Reduction
Europe and Central Asia Economic Update: polarization and populism