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Sustainable development: EU sets out its priorities
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 (SDGs) in the future. A second Communication on a new European Consensus on Development proposes a shared vision and framework for development cooperation for the EU and its Member States, aligned with the 2030 Agenda. A third Communication on a renewed partnership with African, Caribbean and Pacific (ACP) countries proposes building blocks for a new, sustainable phase in EU-ACP relations after the Cotonou Partnership Agreement expires in 2020.
First Vice-President Frans Timmermans said: “To build a future for our children and our planet to the benefit of everyone we are making the SDGs and sustainability a guiding principle in all our work. Implementing the UN 2030 Agenda is a shared commitment and needs everyone’s contribution and cooperation, including Member States and civil society at large.”
High Representative/Vice President Federica Mogherini said: “In our times we are more interconnected than ever before, so investing in people beyond our borders is also an investment for Europe. Today’s proposals have the common aim of strengthening the impact of our cooperation with our partners across the world, whilst promoting sustainability at home and abroad. This is at the heart of the EU’s Global Strategy published in June. The EU will keep leading an external action that supports peace, democracy and good governance, that reinforces resilience at all levels and promotes shared and sustainable prosperity for all.”
Commissioner for International Cooperation and Development, Neven Mimica added: “The proposal for a new European Consensus on Development is the EU’s response to an increasingly interconnected and challenging world. I aim for a genuine consensus, under the shared ownership of EU Institutions and all Member States that will help us spearhead global action to implement the Sustainable Development Goals. Together with our proposals for our future partnership with the African, Caribbean and Pacific countries, it unequivocally confirms the EU’s readiness to engage with our partners across the world to build a better common future”.
Sustainability is a European brand. The EU has a strong starting position and track record, with a high level of economic development, social cohesion, democratic societies and a commitment to sustainable development which is firmly anchored in the European Treaties. Yet, to preserve the future, the right policy choices have to be made today.
The main elements of the Commission’s new, strategic approach, presented on Tuesday are:
Next steps for a sustainable European future
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The EU’s answer to the 2030 Agenda will include two work streams: the first is to mainstream the Sustainable Development Goals in the European policy framework and current Commission priorities; the second is to launch reflection on further developing our longer term vision and the focus of sectoral policies after 2020.
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The Commission will use all the instruments at its disposal, including its better regulation tools to ensure that existing and new policies take into account the three pillars of sustainable development: social, environmental and economic.
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To create a dynamic space bringing together the different stakeholders of the public and the private sphere, the Commission will launch a multi-stakeholder Platform with a role in the follow-up and exchange of best practices on SDG implementation across sectors.
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The Commission will provide regular reporting of the EU’s progress towards the implementation of the 2030 Agenda as of 2017, and will launch reflection work on developing further a longer term vision with a post-2020 perspective.
A new European Consensus on development
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The proposal for a new European Consensus on Development reflects a paradigm-shift in development cooperation under the 2030 Agenda, responding to the more complex and interconnected challenges the world faces today.
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The proposal puts forward shared vision and framework for action for all EU Institutions and all Member States, with particular emphasis on cross-cutting drivers of development, such as gender equality, youth, sustainable energy and climate action, investment, migration and mobility.
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The aim is to increase the credibility, effectiveness and impact of EU development policy, based on shared analysis, common strategies, joint programming, joint action and improved reporting.
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The new Consensus should frame all development policy activities of the EU and its Member States. An example of this approach is the proposed European External Investment Plan which will use Official Development Assistance to leverage funding from other sources to generate sustainable growth for the benefit of the poorest.
Towards a renewed partnership with African, Caribbean and Pacific countries after 2020
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A new partnership should help build peaceful, stable, well-governed, prosperous and resilient states and societies at our borders and beyond and deliver on our objective of a multilateral rules-based order addressing global challenges.
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The aim is to agree with the ACP partner countries on an umbrella agreement which would go together with regional tailored partnerships for Africa, the Caribbean and the Pacific, which address the specific regional opportunities and challenges faced.
Background
The 2030 Agenda for Sustainable Development, adopted by the international community in September 2015, represents an ambitious new blueprint to respond to global trends and challenges. The core of the 2030 Agenda are the 17 Sustainable Development Goals (SDGs) and associated targets, which run to 2030. Along with the other international summits and conferences held in 2015 in Addis Ababa and in Paris, the international community has an ambitious new frame for all countries to work together on shared challenges. For the first time, the Sustainable Development Goals are universally applicable to all countries and the EU is committed to be a frontrunner in implementing them.
Since 2000, the Cotonou Partnership Agreement has been the framework for EU’s relations with 78 countries from Africa, the Caribbean and the Pacific (ACP). The relationship focuses on the eradication of poverty, sustainable development and the gradual integration of ACP countries in the world economy. It seeks to increase peace and security, and to strengthen the democratic political environment. The agreement is reviewed every five years, and the proposal adopted today is a further step in preparing negotiations for a new partnership beyond 2020.
Fact Sheet
Towards a renewed partnership with African, Caribbean and Pacific countries after 2020
The Joint Communication Towards a renewed partnership with African, Caribbean and Pacific (ACP) countries builds on the longstanding relationship with the ACP countries, which provides a good starting point to build a strong and modern alliance that is apt for the challenges of a more interdependent, complex and contested world. It should help building peaceful, stable, well-governed, prosperous and resilient states and societies at our borders and beyond and deliver on our objective of a multilateral rules-based order addressing global challenges. High Representative/Vice-President Federica Mogherini and Commissioner for International Cooperation and Development, Neven Mimica, proposed significant changes with the aim of setting out with partner countries on an umbrella agreement with common values and interests and facilitating increased cooperation at international level. This would be combined with regional tailored partnerships for Africa, the Caribbean and the Pacific. Furthermore, future relations should also link up ACP countries with neighbouring regions, which are not part of the ACP group of states, but play a key role in relation to achieving EU objectives.
What is the Cotonou Partnership Agreement between the EU and African, Caribbean and Pacific countries?
Since 2000, the Cotonou Partnership Agreement has been the framework for EU's relations with 78 countries from Africa, the Caribbean and the Pacific (ACP). The relationship focusses on the eradication of poverty, sustainable development and the gradual integration of ACP countries in the world economy. It seeks to increase peace and security, and to strengthen the democratic political environment. The Agreement entered into force in April 2003 and has been revised in 2005 and 2010 in accordance with the revision clause to re-examine the Agreement every five years.
In 2010, ACP-EU cooperation has been revised to be adapted to new challenges such as climate change, food security, regional integration, State fragility and aid effectiveness.
What are the key elements for a revised EU-ACP Partnership Agreement?
The Joint Communication presented on 22 November 2016 sets out the ideas and proposed building blocks for a political partnership with the African, Caribbean and Pacific (ACP) countries. It builds on the internationally agreed UN 2030 Agenda, which provides a universal set of common objectives and on the Global Strategy for the EU's Foreign and Security Policy, which provides strategic guidance on the EU's external interests and ambitions. The Communication is also coherent with the Commission proposal to revise the European Consensus on Development.
The longstanding relationship with the ACP countries provides a good starting point to build a renewed political partnership. Partners on both sides will need to undertake significant changes in order to make their future relationship right for the task in today's world and to forge a powerful alliance delivering on key priorities.
The EU considers that decision-making and implementation of the new partnership will require an important shift towards the regional levels. Furthermore, future relations should link up ACP countries and neighbouring regions, which are not part of the current CPA, but play a key role in relation to key objectives as peace and security or better managed migration.
What do we want to achieve together after 2020?
Europe and the ACP countries share principles which should remain the foundations of our societies: peace, democracy, good governance, the rule of law and the respect for human rights. In view of creating sustainable development, our common objectives should be to foster sustainable growth and decent jobs for all, ensure human development, tackling climate change, turn migration and mobility into opportunities as well as speak with one voice on key global and common challenges on the international scene. On top of that, a renewed partnership would strengthen the political dialogue and consolidate our trade agreements.
What should this partnership look like?
The preferred scenario, laid out in the Joint Communication by the Commission and the High Representative, would be to agree with the ACP partner countries on an umbrella agreement with common values and interests and facilitating increased cooperation at international level. It should go together with regional tailored partnerships for Africa, the Caribbean and the Pacific, to allow better addressing specific regional opportunities and challenges faced.
What are the priorities proposed towards the African region?
Africa is a continent of huge opportunities, but still faces a number of conflict situations and challenges, as poverty, unemployment and inequality remain high. The priorities proposed by the European Commission and the High Representative for the EU Africa partnership are to focus on achieving peace and stability, consolidating democracy and good governance, unleashing economic opportunities, managing migration and mobility as well as reaching human development standards.
What are the priorities proposed for the Caribbean region?
Caribbean countries face a number of challenges which the EU has an interest in addressing: climate change, vulnerability, citizen security, good governance and human rights, environmental preservation and energy sustainability. Deepening regional integration, fostering inclusive sustainable growth, trade and job creation, fighting inequalities and reducing natural disasters effects are also high on the agenda.
What are the priorities proposed for the EU-Pacific region?
The large number of island nations and their huge maritime territories make the Pacific countries an important player for the EU in tackling global challenges, particularly with respect to their vulnerability to natural disasters and climate change. Other priorities should focus on good governance, human rights, gender issues and inclusive sustainable growth.
This is only a proposal by the EU. What are the next steps towards a new Partnership Agreement after 2020?
The adoption of this Communication is an important milestone that will foster the debate with all stakeholders. The intention of the European Commission and the High Representative (HR) is to use this input for the establishment of a Recommendation including negotiating directives addressed to the Council in the course of 2017. Following agreement with the Council on the negotiating directives, this will allow to launch the negotiations for a new partnership with the partner countries.
Steps already carried out
Public consultation: In order to launch a broad reflection on the future relations with ACP countries, the Commission and the High Representative initiated a public consultation. Many discussions were held in parallel with key stakeholders.
Evaluation carried out in 2016: An evaluation of the first 15 years of the Cotonou Agreement was released by the European Commission and the HR in July 2016. It was used to draw lessons from the past and to provide inputs to the reflection process on how to govern relations with ACP countries after 2020.
Joint Communication: This Joint Communication sets out the ideas and proposed building blocks for a political partnership with the ACP countries. It builds on the internationally agreed UN 2030 Agenda, which provides a universal set of common objectives and on the Global Strategy for the EU's Foreign and Security Policy, which provides strategic guidance on the EU's external interests and ambitions. The Communication is also coherent with the Commission proposal to revise the European Consensus on Development. The Impact Assessment accompanying this Communication details and assesses the different options ahead.
Upcoming steps
Outreach: A period of outreach activities which will run likely till mid-2017 where exchanges will take place with all stakeholders to best define our upcoming proposal for negotiating directives. Stakeholders to be consulted will comprise: Member States, European Parliament, ACP countries, non-State actors (civil society, economic and social partners and private sector), regional organisations, local authorities, non-ACP countries.
Beginning of the negotiations between ACP countries and the EU: As foreseen in the Cotonou Partnership Agreement (article 95), negotiations between the parties of the Agreement should enter into negotiation in order to examine what provisions shall subsequently govern their relations' post 2020. These negotiations are mandated to start eighteen months before the end of the total period of the agreement. They are expected to start earlier, in order to secure sufficient time for the conclusion of a new partnership.
Discussions regarding the future of the partnership after 2020 are therefore ongoing, both on the European and the ACP side.
What has been achieved so far under the existing Cotonou Partnership Agreement?
Political dialogue has fostered better mutual understanding of views as a sound and flexible process for continuous, comprehensive and broad engagement at all levels on all issues of common interest Mutually agreed commitments have contributed to progress in rule of law and governance. The CPA has contributed to increased peace and security on the African continent. The set-up of the African Peace Facility has played an important part in this.
Development cooperation has made a significant contribution to the eradication of poverty, improved food security and provided more equitable access to basic services for the most vulnerable communities, and has been key in raising awareness on environment and climate issues.
Trade policies have influenced the increase in trade flows to and from ACP countries. The increase in World Trade Organisation membership accompanied with the groups' increasing role in international trade negotiations, and the conclusion of several Economic Partnership Agreements between the EU and ACP countries has supported the integration of ACP States into the world economy.
What is the History of the Cotonou Partnership Agreement?
The European Union's relationship with the African, Caribbean and Pacific Group of States (ACP) has been governed by a number of agreements, dating back to the Lomé convention signed in 1975, aiming to support the ACP States' efforts to move towards self-sustained development.
At the end of the Lomé Conventions (Lomé I - Lomé IV) important developments on the international stage, as well as socio-economic and political changes in the ACP countries highlighted the need for a re-thinking of ACP-EU cooperation.
Following an intensive public debate, negotiations started in 1998 for a revision of the ACP-EU relations. They were successfully achieved in early 2000 and led to the conclusion of the Cotonou Agreement.
The Cotonou Partnership Agreement (CPA) was signed in 2000 for a 20-year period and will expire on 29 February 2020. It is a wide-ranging agreement with underlying values and principles that covers many policy areas under three pillars: the political dimension, economic and trade cooperation, and development cooperation.
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Infrastructure Financing Trends in Africa – 2015
The 2015 Infrastructure Financing Trends in Africa report shows that $83.4 billion was committed to Africa’s infrastructure development in 2015, a 12% increase on the 2014 total of $74.5 billion.
Published by the Infrastructure Consortium for Africa (ICA), the report details that this comprises nearly $28.4bn of identified African national budget allocations, while commitments from ICA members totalled $19.8 billion. Commitments from non-ICA bilateral and multilateral financiers totalled $27.7bn and private sector investment of $7.4bn was also identified.
The ICA’s annual publication about infrastructure financing trends (the seventh in the series) identifies how resources are being mobilised to make an impact on Africa’s infrastructure development. Key findings from the 2015 report include:
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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.
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2015 saw reduced identifiable infrastructure allocations of $28.4bn by 44 African national governments, compared with $34.5bn (based on 42 countries) in 2014.
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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.)
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Commitments to the water sector have shown a declining trend since 2013. Ninety-five percent (95%) of 2015 commitments are from national governments, ICA members and other development partners. China rarely invests in water projects and the private sector provided just 1.4%.
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There has been a sustained, but not entirely even, increase in commitments to the energy sector over the last five-years. Both public and private capital have been attracted, though the increase is centred on North Africa and Southern Africa.
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Central Africa saw a substantial fall of 41% in anticipated infrastructure spending, from $8.3bn in 2014 to $4.9bn in 2015, attributed mainly to declining African national government budget allocations and ICA members’ commitments.
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ICA members reported infrastructure financing commitments of $19.8bn in 2015, representing 5.6% or $1bn more than reported in 2014. This includes additional data from the US (Power Africa, $307m) and the UK (CDC, $139m).
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Disbursements by ICA members in 2015 totalled $12.6bn, a small decline of 2.9% compared with the $13bn reported in 2014. Despite this marginal decline, these disbursements have remained reasonably consistent over the past few years (2012 to 2015) averaging around US$12.5 bn.
This year’s report include more detailed analysis of the processes and dynamics that drive (or restrain) the continent’s infrastructure financing trends. The report includes views from a wide range of stakeholders on these forces and how strategies are emerging and developing to address the challenges of infrastructure financing in Africa.
As well as perspectives from ICA members, the report includes views from private sector stakeholders in Africa’s infrastructure development, including private equity investors, debt financiers, developers and major contractors.
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PIDA Week 2016: Creating jobs through regional infrastructure development
The 2nd PIDA Week is being held from 21-24 November 2016 in Abidjan, Cote d’Ivoire, under the theme Creating Jobs through Regional Infrastructure Development.
Organized by the NEPAD Agency, African Union, African Development Bank and the African Development Fund, PIDA Week 2016 intends to build on the achievements of the inaugural event in 2015 to increase the visibility of PIDA projects, gather and reach out to the global infrastructure investor community, development finance institutions, export credit agencies, project sponsors (public and private) and governments. It also aims to discuss and evaluate progress made within the sector programmes/projects and facilitate sharing of knowledge and experiences.
PIDA Week 2016 will showcase the importance of regional infrastructure (PIDA) projects and the impact thereof on the socio-economic development of Africa and particularly on job creation for the youth. The PIDA 2016 Report will be released and distributed during PIDA Week.
In bringing together key stakeholders, PIDA Week will lead to the following outcomes:
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Sustaining and accelerating PIDA implementation
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Facilitating a conducive and enabling environment through recommendations and decisions of the PIDA governance structures
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Enhancing private sector engagement in PIDA
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Increasing the visibility of PIDA’s impact on Africa’s transformation
The 2nd PIDA Week will include 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 (IAIDA) will be held during the PIDA Week. The Infrastructure Consortium for Africa (ICA), the NEPAD IPPF and the Continental Business Network Council meetings will also be held during the Week.
Background
The Programme for Infrastructure Development in Africa (PIDA) is an African Union (AU) initiative implemented through a partnership between the AU Commission (AUC), the NEPAD Planning and Coordinating Agency (NPCA) and the African Development Bank (AfDB).
The AU Assembly approved PIDA during the 18th Ordinary Session of the African Union (AU) held in Addis Ababa, Ethiopia, 29th – 30th January 2012.
As a continental initiative, PIDA aims to address the infrastructure deficit that severely hampers Africa’s competitiveness in the world market. It provides a common framework for African stakeholders to build the infrastructure necessary to create jobs for the growing population, to increase intra-African trade and thus to boost socio-economic development on the continent.
Since its adoption in January 2012, progress has been made towards the implementation and development of the 51 PIDA Priority Action Plan (PIDA PAP) programmes (around 430 individual projects) at the country as well as regional levels.
To complement the project-level progress, several other activities and initiatives have been undertaken in the areas of creating an enabling environment, human capacitybuilding and advocacy towards high-level decision makers in support of regional infrastructure development.
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Africa Construction Trends Report 2016: Africa’s changing infrastructure landscape
This edition of Deloitte’s Africa Construction Trends Report cumulates and compares data from the last four years, delivering insights on both a continental and regional level. The latest edition includes a special feature on water projects in Africa.
The report examines the driving forces behind infrastructure and capital projects on the continent, looking at both external and internal drivers that are shaping the new macroeconomic and financial realities that a number of countries are facing. The data within this annual research by the firm pinpoints the trends around ownership, funding and construction of large-scale projects while also identifying the trends in the sectoral spread of projects.
Africa has seen a downturn in both the number and value of projects included this year, in contrast to previous years. Global economic headwinds, low growth and lower commodity prices have all contributed to this.
The ‘Africa rising’ story has been under pressure and the result is an uneven focus on infrastructure and capital project development. The benefits of infrastructure investment are well known and unpacked further in this report with an analysis of gross fixed capital formation. However, many governments and the low number of projects highlighted that the private sector is struggling to maintain their spending on infrastructure and capital projects. New pressure or factors such as drought, security concerns and rapid urbanisation coupled with falling government revenues is making it difficult to maintain the spending in infrastructure required by many countries.
In keeping with Deloitte’s trend of focusing on an issue believed to be important, this year’s report looks at the water sector. Water plays an important role, which cuts across a number of sectors in an economy. An example of this is the water-food-energy nexus briefly addressed in this report. This is especially relevant as the need for investment in this sector is far outstripping the actual investment in this sector and is a growing cause for concern in the light of the growth of mega cities in the continent and the political and social pressure that this will potentially place on governments.
African Construction in Focus
The 2016 edition of our Africa Construction Trends Report includes 286 construction projects in Africa that had broken ground by 1 June 2016 and are valued at US$50m or above.
Collectively, these projects are worth US$324bn. The number of projects qualifying for inclusion fell by 5% year-on-year, while the value of included projects decreased by 14%, due in large part to the headwinds that countries are experiencing on account of a weak global macroeconomic environment and low commodity prices across the board.
As a region, West Africa had the most number of projects with 92 projects and also the most in terms of value at US$120bn. However, South Africa was the single country with the largest number of projects (41) followed by Nigeria (38). North Africa saw a significant jump in the number of projects.
The number of projects in North Africa increased by 44.8% while the value of projects increased by 195%, signifying an increase of confidence in the region as much of the turmoil following the Arab Spring in 2011 has calmed down and the political situation in a number of countries like Egypt and Algeria has stabilised.
The number and value of projects in East and Southern Africa decreased. Although the number of projects in West Africa increased, the value of projects only increased marginally. The value of projects in Central Africa decreased by 80%, due to the suspension of the two largest projects in the region, the MbalamNadeba Iron Ore Project in Cameroon and the Zanaga Iron Ore Project in the Republic of the Congo.
Similar to last year, the greatest number of projects fall into the Transport sector (33.6%), followed by Real Estate (22.4%), Energy & Power (21%) and Shipping & Ports (8.4%). Not surprisingly, the share of Mining projects more than halved to 2.8% while Oil & Gas decreased to 4.5%.
Despite the share of projects decreasing, Oil & Gas remains a valuable sector, accounting for more than a quarter of total project value.
Worryingly, there remains very little large-scale investment in the Water sector (1.3% of total investment) and even less in Healthcare (0.3%), Education (0.1%) and Social Development (0.1%).
Governments continue to own the largest share of projects, with 209 projects (73.1%), followed by Private Domestic companies (33 projects) and the United Kingdom (6 projects).
Funding and ownership is defined as the country where the financier or owner of the project is domiciled. In line with ownership, Governments are increasing their funding of projects, funding a total of 81 projects (28.3%) in the period under review.
Private Domestic firms fund 40 projects and international Development Finance Institutions (DFIs) fund 39 projects, followed by China with 36 projects and African DFIs with 28 projects.
The share of total projects that are being funded by International DFIs has decreased, while the share of funding provided by China has increased.
Private Domestic companies are constructing 76 projects, while Chinese companies are busy with 64 projects. Italian firms are building 18 projects and French companies 14, while Portuguese and South African firms each are building 10.
The unprecedented magnitude of current African infrastructure development plans and private sector growth initiatives require significant capital management skills. With a presence in 34 countries and service to 51 countries, Deloitte is well positioned and understands the nuances of doing business in Africa. Their pan-African infrastructure and capital projects (I&CP) team functions as an integrated team with dedicated professionals based in South Africa, Zimbabwe, Kenya, Tanzania, Uganda, Ghana, Côte d’Ivoire, France, the United Arab Emirates and Nigeria, serving governments and private sector clients across the continent.
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A tale of two sectors: Why is misallocation higher in services than in manufacturing?
Recent empirical studies document that the level of resource misallocation in the service sector is significantly higher than in the manufacturing sector. A new IMF Working Paper quantifies the importance of this difference and studies its sources.
Conservative estimates for Portugal (2008) show that closing this gap, by reducing misallocation in the service sector to manufacturing levels, would boost aggregate gross output by around 12 percent and aggregate value added by around 31 percent. Differences in the effect and size of productivity shocks explain most of the gap in misallocation between manufacturing and services, while the remainder is explained by differences in firm productivity and age distribution. We interpret these results as stemming mainly from higher output-price rigidity, greater labor adjustment costs and more informality in the service sector.
Introduction
In the current economic environment, many advanced economies are struggling with low productivity and potential growth, coupled with high debt and limited fiscal and monetary policy space. This has led to renewed interest in the study of productivity and a search for policies to boost output. A number of theories have been put forth trying to explain the productivity slowdown as well as differences across countries. A now well-accepted result in the growth literature is that differences in the degree of allocative efficiency is one reason why countries differ in terms of aggregate total factor productivity (TFP). Most of the empirical studies linking resource misallocation to differences in TFP, however, have been based on data from the manufacturing or agricultural sectors. Only recently have estimates of misallocation in the service sector become available, despite services being the largest sector for most countries either in terms of value added or total employment.
One new result common to these economy-wide studies is that the level of estimated efficiency gains in the service sector is significantly higher than in the manufacturing sector. Estimates obtained in Dias et al. (2016) for Portugal, for the 2004-2011 period, show that resource misallocation is, on average 24 percentage points (p.p.) higher in services than in manufacturing when evaluated in terms of gross output, or around 40 p.p. higher when evaluated in terms of value added. Similarly, estimates in Garcia-Santana et al. (2015) for Spain, for the 2001-2007 period, suggest that efficiency gains are around 22 p.p. higher in services than in manufacturing, while estimates in Benkovskis (2015) for Latvia, for the 2007-2013 period, allow us to compute an average misallocation gap of around 32 p.p. between the two sectors. While not strictly comparable (methodologies and sectoral definitions vary across papers), these numbers show that the level of resource misallocation in the service sector is significantly higher than in the manufacturing sector. This raises three questions: (1) how costly is the ”excess misallocation” in the service sector?; (2) what are the drivers of ”excess misallocation”?; and (3) to what extent does this reflect structural differences between the manufacturing and service sectors?
Using the theoretical framework developed in Hsieh and Klenow (2009), with the three-factor extension presented in Dias et al. (2016), and firm-level data for the Portuguese economy, we quantify the extent of misallocation between the manufacturing and service sectors and its implications for aggregate TFP and GDP. We estimate that if the misallocation gap between services and manufacturing were closed (by making the level of misallocation in the service sector be the same as in manufacturing), aggregate gross output (our aggregate TFP) would increase by about 12 percent, while aggregate value added (GDP) would increase by about 31 percent. This result is not due to a small number of industries with abnormal levels of misallocation, but a strong regularity: the majority of manufacturing sector industries rank among the industries with the lowest misallocation.
To identify the drivers of excess misallocation in the service sector we use regression analysis. We find that structural differences between the two sectors can fully explain the higher levels of allocative inefficiency in the service sector. Idiosyncratic productivity shocks, which impact allocative efficiency in the presence of capital/labor adjustment costs and/or output-price rigidity, is the most important factor contributing to the misallocation differences between the two sectors. However, the contribution of productivity shocks stems more from different impacts than from the difference in the magnitude of the shocks between the two sectors. The sectoral firm-size structure, proxied by the skewness of the productivity distribution, is the second most important factor explaining the misallocation differences. A higher proportion of low productivity firms in the service sector makes the productivity distribution more right-skewed, contributing to a higher level of misallocation in the service sector due to the prevalence of size-dependent policies. Lastly, our empirical model suggests that the proportion of young firms also has a bearing on misallocation differences between the two sectors. Young firms emerge as facing higher rental costs of capital than older firms, which we take to be evidence of the presence of credit constraints imposed by financial institutions on young firms due to a lack of credit history or insufficient guarantees. However, the net contribution of this factor is negative, meaning that in the absence of this effect the difference in misallocation between service and manufacturing sectors would be even larger.
Our findings have important consequences for developing countries and economies undergoing structural transformation. Duarte and Restuccia (2010) demonstrate that differences in productivity in the service and agriculture sectors across countries are one of the main factors behind overall productivity differences between countries. In particular, low productivity in the service sector and lack of catch-up can explain the experiences of productivity slowdown, stagnation, and decline observed across economies. Hsieh and Klenow (2009) show that differences in misallocation in the manufacturing sector are important to understanding the differences of total factor productivity between developed and developing countries. Using data for the manufacturing sector in China and India, the authors conclude that reducing the level of misallocation in these economies to the levels observed in the U.S. economy would increase productivity by 30-50 percent in China and 40-60 percent in India. However, if a significant difference of allocative efficiency between manufacturing and the service sector, similar to that documented for Portugal, Spain or Latvia, are present in other countries, the importance of resource misallocation to explaining productivity differences between developed and developing countries may even be higher than what the empirical evidence based on data from the manufacturing sector alone would suggest.
By shedding light on the reasons behind the higher level of misallocation in the service sector relative to the manufacturing sector this paper also contributes to the understanding of the policies that may contribute to increasing productivity growth, particularly in advanced economies. Our analysis suggests that boosting competition so as to reduce output price rigidity in the service sector, avoiding size-contingent laws that may contribute to the survival of unproductive firms and reducing barriers to growth by eliminating credit constraints imposed by financial institutions on young firms, are measures that can contribute to reducing within-industry misallocation, especially in the service sector, and thus to increase aggregate TFP and aggregate value added (GDP).
The views expressed in this IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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‘Tax Inspectors Without Borders’ makes significant progress in bolstering domestic revenue collection
Significant progress has been made by an international programme Tax Inspectors Without Borders (TIWB), which was designed to enhance the ability of developing countries to bolster domestic revenue collection through strengthening of tax audit capacities.
The TIWB project was launched in July 2015 by the Organisation for Economic Cooperation and Development (OECD) and the United Nations Development Programme (UNDP) as an innovative attempt to address widespread tax avoidance by multinational enterprises in developing countries and as a contribution towards financing the Sustainable Development Goals.
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.
“Tax Inspectors Without Borders offers practical hands-on assistance in the area of tax audits to enable developing countries to strengthen domestic resource mobilization capacities in support of the SDGs. UNDP is pleased to partner with the OECD in this exciting project,” said Magdy Martínez-Solimán, UN Assistant Secretary General and Director of UNDP’s Bureau for Policy and Programme Support.
“Developing countries face serious challenges in raising domestic resources to fund basic government services, and tax avoidance by multinational enterprises is a complicating factor,” said James Karanja, head of the TIWB Secretariat. “The Tax Inspectors Without Borders programme is demonstrating how effective capacity building can make a difference toward the goal of ensuring that all companies pay their fair share of tax.”
TIWB organises deployment of highly qualified tax experts to countries that request assistance with ongoing audits of multinational companies. The projects focus on revenue recovery and improving local audit capacity while sending a strong message on the need for tax compliance.
TIWB projects are currently being supported by a range of organisations, including revenue authorities in the Netherlands, Spain and the United Kingdom, the African Tax Administration Forum and the Paris-based TIWB Secretariat, which facilitates full-time or periodic deployment of experts for all programmes.
To better fulfil its clearinghouse role – matching demands for auditing assistance with appropriate experts – and to meet growing demand for TIWB projects, the Secretariat is expanding its roster of available experts. Information on candidacies is available here.
Further information on TIWB is available from a new website launched on 22 November 2016: www.tiwb.org
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New rule on marine insurance attracts shipping firm to East Africa
A regional shipping agency has now focused on East and Southern African countries to make shippers buy marine insurance in their respective countries.
Kenya has already set the pace, with the Insurance Act requiring that all imports are insured by Kenyan underwriters.
Last week, permanent secretaries of the Ministries of Transport and Trade in Kenya, Tanzania, Uganda and Zambia met in Mombasa where they directed that Intergovernmental Standing Committee on Shipping (ISCOS), where they serve as the co-ordination committee, spearhead the Marine Cargo Insurance initiative in all the member states.
ISCOS was formed by the four states in 1967 to perform various functions on their behalf such as negotiation on freight rates, fighting against unjustifiable surcharge and other charges on seaborne cargo.
ISCOS has already held meetings with the Pensions and Insurance Authority of Zambia, the Insurance Association of Zambia (IAZ), the Uganda Insurance Association, the Zambia Shippers Council (ZSC), the Uganda Shippers Council (USC) and the Tanzania Shippers Council (TSC), said Kenneth Mwige ISCOS secretary general.
“The policy directive from ISCOS’ coordination committee gives it impetus to drive to on-shore MCI in the region. The projected savings and retention of hard currency in ISCOS member states’ economies runs into several hundred million dollars every year for the region,” Mr Mwige said.
A meeting between ISCOS and Zambia’s stakeholders is scheduled for early December in Lusaka, and is expected that action will be taken by the government of Zambia, which is a major exporter of raw materials as well as being a major importer of finished goods.
According to ISCOS, Burundi, Congo, Kenya, Rwanda, Tanzania, Uganda, Malawi and Zambia, exported insurance premiums on marine worth $ 4.89 billion between 2009 and 2013.
“Almost $5 billion in only one electoral cycle donated by warm, kind and generous Africans to appreciative, graceful and eternally friendly foreigners,” said Mr Mwige.
Uganda has also complained of huge premium revenue ceded to foreign marine underwriters. Data compiled by Uganda Insurers Association last year showed that the latter have received an estimated $335 million in the past four years.
According to the Insurance Act 2011, all exporters and importers are required to procure marine insurance with local companies, but various agencies particularly the Insurance Regulatory Authority and Uganda Revenue Authority have not been aggressive in enforcing this law, according to Mr Mwige.
There is no restriction on a country to enact laws to protect its domestic insurance industry.
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tralac’s Daily News Selection
The selection: Tuesday, 22 November 2016
African trade finance: African bankers urged to counter challenge of withdrawal of international banks (Afreximbank)
With international banks once again withdrawing from African trade finance and with the continent’s trade finance gap estimated at more than $120bn, African banks, have an opportunity to step in, through structured trade finance, to ensure that Africa, never again descends into economic chaos because of a sudden withdrawal of international banks, Dr Benedict Oramah, President of the African Export-Import Bank said. In an address in Port Louis, during the opening of the Afreximbank Annual Structured Trade Finance Seminar and Workshop, Dr Oramah said that unlike in the 1990s, structured trade finance had emerged a well-proven ammunition to deal with the risks presented by the environment, including the tightening of credit conditions, worsening of trade finance conditions and decline in the willingness to supply international trade finance in Africa despite increasing demand.
Roman Grynberg: EU seeks to eliminate aid to Angola, Namibia, Botswana, South Africa after 2020 (The Namibian)
On 22 November, the European Commission was scheduled to issue a communication which, according to normally well-informed sources in both Berlin and Brussels, would bring to an end half a century of aid for the richest 21 ACP countries by 2020, when the current Cotonou Agreement comes to an end. All of Namibia’s neighbours, with the exception of Zambia, will have their aid terminated from 2020 under the 12th European Development Fund. This elimination of aid applies to Angola, Botswana, Namibia and South Africa. The official reason for the cut in aid is that the EU wishes to focus its efforts on the poorest of the ACP states. In the rest of Africa, the countries which will no longer receive national allocations are said to include Equatorial Guinea, Gabon, Mauritius, and the richest country in Africa, Seychelles. Other low-income countries like Zimbabwe will continue to receive EU aid. [Anti-aid Dutch minister set to attend Nairobi donors forum]
Economic Partnership Agreements: In the balance (D+C)
The Economic Partnership Agreements (EPAs) between the EU and three of Africa’s Regional Economic Communities are facing challenges. The EPAs are not only supposed to foster intercontinental trade, but regional integration within Africa too. Critics, however, fear that agreements will hurt regional integration, and ratification has stalled. A new strategic initiative is urgently needed. [The analyst: Helmut Asche]
Kenya’s AG digs in for European trade deal battle at the East African Court (Daily Nation)
Attorney-General Githu Muigai, who is named as the second respondent in the case seeking to block four EAC member countries from signing the EPA, says Nairobi will prepare a solid defence. The case is set for hearing in Arusha on Thursday this week. “We shall seek to persuade the court that Kenya has acted and will continue to act in her sovereign best interest and within the EAC law,” said Prof Muigai in an interview.
Comparing safeguard measures in recent regional and bilateral trade agreements (ICTSD)
This paper, which builds on a previous ICTSD study, provides policy-makers and others with an evidence-based analysis of the implications of recent bilateral and regional trade negotiations for developing countries’ ability to use safeguard measures to protect domestic producers from sudden surges in the volume of imports or price depressions. The study examined 26 agreements which were selected based on various criteria. The sample of agreements is geographically diverse, includes countries from all continents and includes a mix of older and more recently concluded ones in order to evaluate the development of safeguard provisions over time. Furthermore, the sample also includes a mix of North-North, North-South and South-South trade agreements. [The author: tralac’s Willemien Viljoen]
Boost Africa Initiative: a new integrated approach to promote young innovative entrepreneurs (AfDB)
Boost Africa Initiative, a unique partnership in support of innovation and entrepreneurship across Africa was launched yesterday in Abidjan by the EIB and the AfDB in partnership with the European Commission. Boost Africa will contribute to fostering the development of an efficient entrepreneurial ecosystem in Africa by supporting the earliest and riskier stages of the venture value chain, in an economically viable and sustainable way. As a result of an initial combined investment of up to €150m, the Initiative is expected to leverage up to €1bn in additional investments in a high growth sector, and support over 1,500 start-ups and SMEs across the continent. Pan-African in scope, the Boost Africa Initiative has three integrated pillars:
ECA and partners scale-up efforts to tackle illicit financial flows from Africa (UNECA)
A two-day workshop aimed at stakeholders working to confront the challenge of stemming illicit financial flows from Africa yesterday in Nairobi, with the Economic Commission for Africa’s Head of Special Initiatives in the Office of the Executive Secretary, Aida Opoku-Mensah calling for a coherent and coordinated approach on this agenda. “Given the mosaic of actors and ongoing and prospective initiatives on the different dimensions of IFFs at national, regional and global levels, there is need for coherence, coordination and complementary partnerships,” said Ms. Opoku-Mensah at the opening session.
African Union Sub-Committee of Directors General of Customs: WCO input (WCO)
Dr Mikuriya, WCO Secretary General, noted the encouraging developments to ensure trade facilitation and economic competitiveness through the WTO TFA and reiterated the WCO’s active involvement through the Mercator Programme providing tailor-made support to Customs administrations, especially in Africa. Referring to the WCO’s 2016 theme, “Digital Customs: progressive engagement”, he pointed to the critical role played by technology in improving Customs procedures. In this regard, he informed the audience that the WCO would further explore this focus in 2017 with the theme of “Data Analysis for Effective Border Management”. The second day of the meeting included a panel discussion session on OSBP comprising WCO Secretary General Mikuriya and representatives from Cote d’Ivoire, Zimbabwe, the Pan African Parliament, AfDB, and the EAC. [From barriers to bridges: implementing OSBPs for improved trade facilitation]
EALA: press briefing by Daniel F. Kidega, EALA Speaker
We expect some of these key pieces of legislation to be moved within the next few months before we wind down our tenure in June 2017.We are indeed looking forward to January next year when the next Summit of EAC Heads of State will re-convene to conclude the matters around the Economic Partnership Agreements. As an Assembly, we want the EPAs matter handled with utmost care and a suitable decision best for the region arrived at. We appeal to Partner States to speed up implementation of the agreed upon areas. A major challenge the EAC faces today is funding. The matter is so critical that the Assembly and a number of Institutions and Organs literally cancelled or reduced their activities. The remission by the Partner States up to date paints a less than positive picture. [Funding crisis clouds Nairobi session of East African Parliament] [Climate change: EAC six sign Paris Agreement]
Zimbabwe: Up your game, reduce prices, says Bimha (The Chronicle)
Industry and Commerce Minister Dr Mike Bimha says the private sector should take advantage of Statutory Instrument 64 of 2016 to improve production efficiency and reduce prices of their products to achieve competitiveness. Some unscrupulous businesses have started increasing prices of goods and services despite the strengthening of the United States dollar thereby giving room for more imports and smuggling. Minister Bimha told a business gathering during the commissioning of Turnall Holding’s new Eco-sheet product in Bulawayo last Thursday that protectionist measures such as Statutory Instrument (SI) 64 were not sustainable in the long term. [Don’t increase prices: Mnangagwa urges manufacturers]
South Africa: annual report on competition policy developments (OECD)
The 2015/2016 financial year brought significant developments for the South African competition agencies: the Competition Commission of South Africa and the Competition Tribunal of South Africa. On the legislation and policy front, law makers introduced personal criminal liability for directors or managers who knew about or participated in cartel conduct. The new law became effective in May 2016, which was soon after the financial year end, but because of the far reaching implications of this development in South African law we highlighted it in our 2015/2016 annual report, as we do in the pages that follow. The move was not without controversy but the CCSA is working with relevant agencies to bring about a smooth transition into the new criminal dispensation.
Mauritius to sign bilateral trade agreement with Tanzania (GoM)
The Minister of Foreign Affairs, Regional Integration and International Trade, Mr Seetanah Lutchmeenaraidoo, will sign a Bilateral Trade Agreement with the Republic of Tanzania during the forthcoming visit of the Minister for Industry and Trade, Dr Charles John Mwijage, and the Minister for Agriculture, Livestock and Fisheries, Dr Charles Tizeba, of the Republic of Tanzania. The agreement provides for a better coordination in the promotion of trade and commercial transactions and the establishment of a Joint Trade Committee to discuss cooperation in key sectors, such as Investment, Fisheries and Sugar. [Mauritian firm set for Kenya entry with acquisition of Fidelity Bank] [Mauritius: Migrant workers driving manufacturing]
Tanzania: Govt, ATI in $4bn talks (IPPMedia)
As political risk insurance is increasingly gaining importance in the East African region, African Trade Insurance Agency is in talks with the government to pay $4m (900bn/-) in political risk claims by investors. According to ATI’s Chief Executive Officer George Otieno, the ATI will contribute to Tanzania’s current efforts to reduce the cost of doing business by making political risk and credit insurance, as well as non-payment and FDI cover readily available to exporters, importers and investors. He said with a well-established working relationship with the Dar government, the perceived risk on Tanesco will be reduced, banks will be willing to lend to Independent Power Producers, contractors and Tanesco without asking for government guarantees.
Tanzania: Over 2tri/- collected from mining sector (Daily News)
The government has successfully managed to collect 2.12tri/- as income and withholding tax from mining sector in the country from 1998 to 2015, the Acting Commissioner for Minerals in the Ministry of Energy and Minerals, Mr Ally Samaje, has said. Also in the same period, at least 875.9bn/- have been paid to the government by various mining companies as loyalties.
Zambia vies for two positions at AU (Lusaka Times)
Dr Austin Sichinga, a scientist, is vying for the position of Commissioner for Agriculture and Rural Development and Ambassador Albert Muchanga is eyeing the post of Commissioner for Trade and Industry. Ambassador Sikaneta said it is important for Zambia to have representation at such a high level decision making positions of the AU because this helps influence policy decisions of the continental body. Zambia has never had representation at the level of commissioners in the African Union.
UNSC debate on UN, AU cost-sharing proposals
Following a debate on modalities of stronger cooperation on peace and security between the UN and the AU, the Security Council welcomed the regional organization’s efforts to create a predictable cost-sharing structure for the funding of peace-support operations authorized by the Council. Unanimously adopting resolution 2320 (2016), the Council expressed its readiness to consider options in response to the African Union’s proposal to finance 25% of the cost of such operations by 2020. The Council emphasized that consultative analysis and joint planning with the United Nations was critical to developing common joint recommendations on the scope and resource implications of the missions. By that text, the Council also expressed support for the principles of cooperation set out by the High-Level Independent Panel on Peace Operations for the strategic partnership with the African Union. Donald Kaberuka, High Representative of the African Union Peace Fund, noted that previous speakers had highlighted three important facts:
4th Africa-Arab Summit: update
The Joint Council, which included Ministers of Economy, Trade, Finance, and Foreign Affairs, outlined resolutions on the implementation of the Africa-Arab Partnership Strategy, the implementation of the Joint Africa-Arab Action Plan 2014-2016, and the outcome of the resolutions of the III Africa-Arab Summit. The Council also drafted resolution on the coordination for financing future Africa-Arab projects, the implementation of the Joint Action Plan on Agricultural Development and Food Security, and the promotion of the Africa-Arab Cultural Centre. A resolution for the drafting of the Joint Africa-Africa Action Plan 2017-2021 was also presented and will be reviewed over the coming days with an emphasis on bilateral as well as regional relations. The Council proposed the V Africa-Arab World Summit be held in Riyadh, the capital of the Kingdom of Saudi Arabia.
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Launch of Boost Africa Initiative, a new integrated approach to boost young innovative entrepreneurs across Africa
Over 1,500 start-ups and high-growth SMEs to be supported across the continent
Boost Africa Initiative, a unique partnership in support of innovation and entrepreneurship across Africa has been launched on Monday, November 21 in Abidjan by the European Investment Bank (EIB) and the African Development Bank (AfDB) in partnership with the European Commission. The launch ceremony took place at the Headquarters of the AfDB in Abidjan in the presence of EIB President Werner Hoyer, AfDB President Akinwumi Adesina, EIB Vice-President Ambroise Fayolle and Stefano Manservisi, Director-General for International Cooperation and Development at the European Commission.
Boost Africa will contribute to fostering the development of an efficient entrepreneurial ecosystem in Africa by supporting the earliest and riskier stages of the venture value chain, in an economically viable and sustainable way. Boost Africa aims to spur the entrepreneurial potential of the African youth to create innovative and compelling businesses with the capacity to compete regionally and globally, to attract domestic and foreign direct investment, to create new and quality jobs, and contribute to inclusive and sustainable economic growth.
As a result of an initial combined investment of up to €150 million, the Initiative is expected to leverage up to €1 billion in additional investments in a high growth sector, and support over 1,500 start-ups and SMEs across the continent.
Pan-African in scope, the Boost Africa Initiative has three integrated pillars:
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Firstly, Investment Program: equity investments in seed funds, business angels co-investment funds, accelerators’ follow-on funds, venture capital funds, etc. that invest in innovative start-ups and high-growth small and medium enterprises (SMEs);
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Secondly, Technical Assistance Facility: a pool of grant resources to provide capacity building and disseminate best practices for the investment readiness of intermediaries, the business and technical assistance, training of investee companies and entrepreneurs, and the creation of local investors’ networks;
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Thirdly, Innovation and Information Lab: a platform for supporting the entrepreneurship ecosystem by fostering innovation, knowledge development and partnerships, and incubating and piloting promising new ideas, as well as assessing and disseminating best practices.
“Boost Africa will help Africa’s young population to gain hope and confidence that they can succeed in realising their dreams and aspirations,” said AfDB President Akinwumi Adesina. “Africa’s future will be determined by the current youth and it is crucial that we create and support entrepreneurship opportunities for youth, generate success stories and show these as examples for other young people.”
EIB President Werner Hoyer said, “Boost Africa is a truly great initiative which will support African entrepreneurship and innovation, and nurture the continent’s new talent. It is thus a concrete way of tackling the long-term factors fuelling poverty, instability and brain drain – many of which are at the origin of the migration crisis we all currently face – and therefore make the Sustainable Development Goals a reality.I am proud that the EU and its Bank, the EIB, are operating in such effective partnership with the African Development Bank and other DFIs to tackle the world’s pressing challenges.”
President Hoyer added, “What’s more, Boost Africa will hit the ground running, as the first start-ups and high-growth SMEs are expected to be supported very soon. These small businesses and the young men and women behind them are truly an inspiration, as are their dynamism and determination.”
Director-General for International Cooperation and Development at the European Commission Stefano Manservisi said, “Boost Africa will give a concrete push to innovation and spur the creation of new instruments which support financial inclusion, such as venture capital and impact investing which is in line with the European External Investment Plan approach. Thanks to a smart use of blended finance, Boost Africa aims at leveraging the full strength of two major financial institutions to venture into new areas of support for the new generation of African entrepreneurs and we want to give a particular focus on fragile and risky situations where financial services are not provided by the market. Boost Africa is a concrete example of actions that reflect EU's determination to create conditions for job creation for youth.”
Through Boost Africa, the EIB and AfDB are widening their investment scope to projects that are usually deemed too small, too risky and too time consuming, but which are key to foster entrepreneurship and high impact innovation. Boost Africa is also unique in the emphasis it is putting on a sizeable technical assistance envelope, alongside financing, as well as on its Innovation and Information Lab to strengthen the investment program’s investments.
Boost Africa leverages business and financial expertise from AfDB and EIB, as well as from a broad network of partners and stakeholders, to accelerate the growth and development of start-ups in Africa, and will attract, make strategic use of and nurture a network of venture intermediaries for both financing and business development to boost African entrepreneurship. The comprehensive intervention approach is expected to contribute to the success and growth of start-ups in order to become significant businesses within their local environments.
“Africa is currently home to a boom in small businesses experimenting with innovative products, services or business models, often leveraging technology,” said Adesina. “This is the right time to support these enterprises with financial and technical resources to enable them to commercialise their innovations. Boost Africa will demonstrate to all Africans that they can and should take charge of their future. Boost Africa is a key initiative within the AfDB’s Jobs for Youth in Africa initiative, one of the Bank’s High 5 priorities.”
Deploying a blended finance approach, the investment program expects to invest up to 25-30 smaller-sized equity investments into angel, venture capital and seed funds, which in turn fund start-ups and early stage businesses with high-growth and job creation potential in Africa. Boost Africa’s first investment is expected to be in Telecom Tide Africa Fund, an ICT fund investing in tech start-ups in West and East Africa. Africa Technology Ventures supporting innovative start-ups in East Africa and helping them to expand globally is also under appraisal.
The European Commission’s support is sought by partners and is being currently appraised by the Commission along with its conditions and amount, to enable senior tranche investments to be made by the EIB, AfDB and potential other investors and leverage private investment. The EIB contribution of €50 million will come from the Impact Finance Envelope of the ACP Investment Facility (a revolving fund established under the Cotonou Agreement, which is managed by EIB and is funded out of contributions by EU Member States through the European Development Fund). The AfDB will commit €50 million equity risk capital for investments. The Investment Program is expected to provide investors with adequate financial returns coupled with a superior developmental impact. The technical assistance envelope for Boost Africa will amount to €20 million while the Lab will receive approximately €10 million.
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African bankers urged to counter challenge of withdrawal of international banks with structured trade finance
With international banks once again withdrawing from African trade finance and with the continent’s trade finance gap estimated at more than $120 billion, African banks, have an opportunity to step in, through structured trade finance, to ensure that Africa, never again descends into economic chaos because of a sudden withdrawal of international banks, Dr. Benedict Oramah, President of the African Export-Import Bank (Afreximbank), said on Monday.
In an address in Port Louis, Mauritius, during the opening of the Afreximbank Annual Structured Trade Finance Seminar and Workshop, Dr. Oramah said that unlike in the 1990s, structured trade finance had emerged a well-proven ammunition to deal with the risks presented by the environment, including the tightening of credit conditions, worsening of trade finance conditions and decline in the willingness to supply international trade finance in Africa despite increasing demand.
He noted that unlike in the 1980s when there were no pan-African banks, today, pan-African banking had taken root with the likes of Ecobank, UBA, Bank of Africa, and State Bank of Mauritius (SBM), among others.
Dr. Oramah said that understanding structured trade finance would empower African trade finance professionals to deal effectively and decisively with the challenges confronting the continent.
He commended Mauritius for having successfully built its foundations on trade and for emerging a global export success, having jettisoned timidity and chosen openness.
In Mauritius, the four pillars of agriculture, tourism, financial services and manufacturing had combined to form a solid and diversified foundation for the economy, he noted, saying that the country reminded Africans from commodity dependent economies of “the folly of captivity by commodity illusion”.
The President announced that in the 16 years since its introduction, the Structured Trade Finance Seminar series had provided training to more than 1,600 African trade finance professionals, including bankers, traders, academics, regulators and others
In his contribution, Kee Chong Li Kwong Wing, Chairman of SBM, predicted a significant rise in African trade in the coming years and urged African banks to step up efforts to play key roles in that rise.
African banks need to take their destiny in their own hands by working to fill the financing gaps left as a result of the exit of international banks from the continent, he urged, stressing that all hands should be on deck for the achievement of that objective.
Declaring the seminar open, Rameswurlall Basant Roi, Governor of the Central Bank of Mauritius, urged African banks to give heightened attention to financing small and medium-sized enterprises (SMEs), given the important role they played in economic development.
According to the Governor, closing Africa’s trade finance gap required focusing attention on the neglected areas, particularly the SMEs,
The seminar is featuring speakers from some of the world’s top financial institutions, academic institutions and firms, as well as representatives from Afreximbank, the Central Bank of Mauritius, SBM, the Central Bank of Seychelles, Standard Chartered Bank, Mauritius Banker’s Association and the Loan Market Association.
The close to 200 participants from 22 countries include senior executives from African banks and financial institutions, regulatory institutions, hedge funds, Africa country funds and venture capital institutions, corporate entities engaged in trade, manufacturing and privatized infrastructure projects, Afreximbank’s trade finance and project finance intermediaries, African law firms and insurance firms are among participants expected at this year’s seminar.
The four-day training started on Monday with the Structured Trade Finance Seminar November, to be followed on 23 November by a workshop on agency and syndications, focusing on the role of the Loan Market Association. A second workshop, titled “Making factoring work for Africa,” will take place on 24 November, with the objective of raising awareness of factoring as an alternative trade finance tool in Africa.
The holding of the Trade Finance Seminar and Workshop is part of Afreximbank’s effort to prepare African banks and financial institutions to meet the trade finance needs of the continent and is being organised in co-operation with the Central Bank of Mauritius and SBM.
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EU seeks to eliminate aid to Angola, Namibia, Botswana and South Africa after 2020
At the time of decolonisation in the 1960’s and 1970’s, the then EEC brought together a strange collection of former European colonies in Africa, the Caribbean and the Pacific islands (called the ACP group).
It was just at the time that the UK was joining the EEC, and so the group included all the former British, French, Dutch, Belgian and eventually Portuguese ex-colonies. Oddly, it did not include any of the former Spanish colonies. The ACP group was formed in 1975, and since then, the EU has paid substantial amounts of aid through the European development fund, which is replenished by its members every seven years.
For Europeans, the payments of aid were essentially ‘guilt money’ for centuries of slavery and then colonialism, and while they had some real innovations at first, they degenerated, and by the turn of this century, the EU signalled its desire to bring this to an end. But there was always a deeper objective. The Lome Convention and the subsequent Cotonou Agreement were focused on assuring continual access to African raw materials, and trade preferences were offered unilaterally to assure that the sugar and beef and metals kept coming.
On 22 November, the European Commission was scheduled to issue a communication which, according to normally well-informed sources in both Berlin and Brussels, would bring to an end half a century of aid for the richest 21 ACP countries by 2020, when the current Cotonou Agreement comes to an end.
All of Namibia’s neighbours, with the exception of Zambia, will have their aid terminated from 2020 under the 12th European Development Fund. This elimination of aid applies to Angola, Botswana, Namibia and South Africa. The official reason for the cut in aid is that the EU wishes to focus its efforts on the poorest of the ACP states.
In the rest of Africa, the countries which will no longer receive national allocations are said to include Equatorial Guinea, Gabon, Mauritius, and the richest country in Africa, Seychelles. Other low-income countries like Zimbabwe will continue to receive EU aid.
For Namibia, the loss of aid is very important because of late, EU assistance has been principally focused on education and skills development. Under the 10th EDF (2008-2013), a total of 104,9 million euro was budgeted for Namibia, which dropped to 68 million euro under the 11th EDF (2014-2020).
If the proposal goes ahead as planned, then after 2020 the figure will be zero, and while Namibia and Botswana will lose important funding for the education sector, which has been central to still have access regional funds. These are programmed with SADC secretariat and may somewhat compensate in part for the loss of national aid, but Namibia has less of a direct say over these regional funds. Much of the regional funds are used for funding of SADC activities and this too has been questioned by both SADC and EU members alike. There are real questions being asked as to whether funding of the SADC secretariat in Gaborone really constitutes value for money.
What is certainly positive from an African perspective is that there is every indication that the EU is very likely to propose a legally binding agreement with the ACP in the post-2020 era, which means that they will continue the relationship with the ACP group. Whereas the creation of the ACP was done for strategic purposes in light of the widening of the then EEC, the dismantling of this relationship that appears to have either an economic, trade or clear developmental objective is proving far more difficult to achieve.
In the last few weeks the European commission has also proposed the development of a new 3,5 billion euro investment fund. This is meant to help foster investment in large part in those countries which are Europe’s ‘near abroad’ i.e. in North and West Africa from where many of the illegal migrants come. Europe aid policy appears once again to be responding to its own immediate need but its effectiveness and usefulness will depend very largely upon how well it works with its own private sector to actually create employment in Africa. Unfortunately for the countries of southern Africa, like Botswana and Namibia who are going to lose their national programmes, they do not send large number of refugees and illegal migrants to Europe and so they are unlikely to benefit substantially from the new investment fund even though they can in principle have access to the investment facility.
In its early days the European Commission behaved very much the way China does today. It used its considerable aid in ways that directly helped African countries develop their commercial and export sectors through European investment. The European Commission also worked closely with the commercial arms of EU member states like the UK’s Commonwealth Development Corporation, which undertook so many important commercial investments throughout sub-Saharan Africa.
Since the 1970’s and 1980’s the EU’s development policy has focused less and less on commercial matters and helping European firms invest profitably in Africa and more on whatever happens to be important to European politicians that year, whether it is human rights, conservancies, global warming or gay rights.
This complete lack of consistency and focus of EU development policy has meant that China, which is far more single-minded in its approach with aid there to help Chinese exports and promote Chinese investment and its economic development, has played an ever more important role in the economic transformation of Africa while Europe has become progressively less relevant.
These are the views of professor Roman Grynberg, and not necessarily those of Unam where he is employed.
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ECA and partners scale-up efforts to tackle illicit financial flows from Africa
A two-day workshop aimed at Stakeholders working to confront the challenge of stemming illicit financial flows (IFFs) from Africa opened in Nairobi Monday, with the Economic Commission for Africa’s Head of Special Initiatives in the Office of the Executive Secretary, Aida Opoku-Mensah calling for a coherent and coordinated approach on this agenda.
“Given the mosaic of actors and ongoing and prospective initiatives on the different dimensions of IFFs at national, regional and global levels, there is need for coherence, coordination and complementary partnerships,” said Ms. Opoku-Mensah at the opening session.
The stakeholders attending the workshop comprise members of the Consortium to stem IIFs whose task will be to oversee the implementation of the recommendations of the report of the High Level Panel on IFFs, which was chaired by former South African President Thabo Mbeki.
Ms. Opoku-Mensah stressed that while the continent is taking tangible steps towards a coherent approach to curb IFFs more still needs to be done.
“Agreeing upon the functions and applicability of the Consortium as well as the actionable implementation plan to counter IFFs will move this consortium into its immediate next step of implementation,” she added
She said implementing the recommendations of the Report of the High Level Panel has “always been underpinned by a big tent approach, thus widening the scope for complementary partnerships between leading institutions and actors.”
This, she added, is why the Consortium has been established, to not only leverage partnerships but also provide a platform for experience sharing and most importantly, to guide and engage in the concrete implementation efforts to stem IFFs from Africa.
Presenting the terms of reference for the Consortium, Advocate Monjaku Gumbi, Senior Advisor at the Thabo Mbeki Foundation, said Africa was a net exporter of capital, adding the continent will not apologize to anyone for its fight against IFFs.
She said there’s need for organizations working on stemming IFF on the continent to collaborate with one another on related activities at national and continental levels.
This, she said, includes collaboration in the generation and dissemination of knowledge on IFFs; strengthening of institutional, regulatory and human capacity to counter IFFs; resource mobilization; and monitoring of the implementation process.
The workshop seeks to, among other things, review and endorse the draft terms of reference of the Consortium; provide strategic oversight on the interventions to counter IFFs; build coherence in efforts to stem IFFs; and agree on joint work programmes and joint delivery of activities. Further, the Consortium will contribute to the annual report on curbing IFFs which would be submitted to the African Union Heads of States and Government (AU Summit).
Illicit financial flows out of Africa have become a matter of major concern because of the scale and negative impact of such flows on Africa’s development and governance agenda.
By some estimates, illicit flows from Africa could be as much as US $50 billion per annum. This is approximately double the official development assistance (ODA) that Africa receives.
The workshop is being attended by representatives from the African Union Commission (AUC), the ECA, the African Development Bank (AfDB), the African Capacity Building Foundation, Pan African Lawyers Union, the Thabo Mbeki Foundation, Open Society Foundation and the Tax Justice Network, among others.
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Comparing safeguard measures in recent regional and bilateral trade agreements
As negotiators pursue talks on a workable agricultural safeguard mechanism at the World Trade Organization, it is critical that they have access to up-to-date and reliable information on the extent to which recent bilateral and regional trade deals include clauses on safeguards.
This paper, which builds on a previous ICTSD study[1], provides policy-makers and others with an evidence-based analysis of the implications of recent bilateral and regional trade negotiations for developing countries’ ability to use safeguard measures to protect domestic producers from sudden surges in the volume of imports or price depressions.
Foreword
Global market prices for a number of commodities have continued a steady decline from peaks in 2011, after a period of pronounced volatility and recurrent high prices that prevailed from 2006 onward. Slowing demand for commodities in major economies such as China, coupled with falling oil prices and a robust supply-side response to recent high price episodes, have contributed to the recent slide. The new market environment has also prompted concerns that “counter-cyclical” domestic support payments in some major producing countries may exacerbate the fall in prices by shielding producers from market signals and contributing to surplus farm production at the global level.
At the same time, recurrent extreme weather events and changing patterns of temperature and precipitation are having increasingly significant consequences for agriculture in developing countries, especially in areas reliant on rain-fed production systems. Analysts anticipate that these challenges will become more acute as a result of climate change in the years ahead – posing new obstacles to the international community as it seeks to achieve the ambitious Agenda 2030 target of ending hunger and malnutrition. In particular, increased weather-related volatility on global markets is likely to affect the “stability” component of food security in developing countries.
At the World Trade Organization (WTO), developing country negotiators from the G-33 coalition have highlighted their desire to be able to make use of a simple and effective safeguard mechanism to help protect domestic producers from sudden volume surges or price depressions. A decision at the WTO ministerial conference in Nairobi determined that the trade body’s members would pursue negotiations on this topic in dedicated sessions of the Committee on Agriculture.
At the same time, farm exporting countries from both developed and developing countries have argued that this issue should be addressed as part of broader talks on market access at the WTO. Negotiating dynamics in this area have been affected by market integration efforts in bilateral and regional trade negotiations, including the twelve-member Trans-Pacific Partnership (TPP) that was concluded in 2015.
As both importing and exporting country negotiators pursue talks on a workable safeguard mechanism that could be agreed upon at the WTO, it will be critical for them to have access to up-to-date and reliable information on the extent to which recent bilateral and regional trade deals include clauses on safeguards, as well as analysis on the potential significance of these provisions for ongoing efforts to craft an international instrument in this area.
This paper, by Willemien Viljoen, provides policymakers, negotiators and other stakeholders with an impartial, evidence-based analysis of the implications of recent bilateral and regional trade negotiations for developing countries’ ability to use safeguard measures to protect domestic producers from sudden surges in the volume of imports or price depressions. As such, it builds on and updates previous ICTSD analysis on this same topic by addressing developments in preferential negotiations on trade.
Executive Summary
The use of safeguard measures is regulated in multilateral trade agreements and regional and bilateral agreements. The applicable multilateral agreements are the General Agreement on Tariffs and Trade Article XIX, the World Trade Organization (WTO) Agreement on Safeguards and Article 5 of the WTO Agreement on Agriculture. The WTO Agreement on Safeguards provides clear guidelines and strict procedural obligations to which governments must adhere. Global safeguard measures are product specific and need to be applied on a most favoured nation basis, thus without discrimination against other WTO member countries. However, safeguard provisions provide for discriminatory treatment in two instances: 1) when excluding partner countries from global safeguard actions and 2) when excluding third countries and only imposing bilateral or regional safeguard actions on partner countries. These two exclusions were found in a number of the examined trade agreements[1].
Bilateral and regional safeguard mechanisms are an integral part of most regional trade agreements to address the effects of trade liberalisation initiatives under the applicable agreement. However, there are still recently concluded agreements which are silent on the issue of bilateral or regional safeguards. Most free trade agreements concluded in recent years provide special and different safeguard mechanisms which share the same or similar grounds for the invocation of trade-restrictive measures such as the global safeguard mechanism, but only address the effects of certain bilateral or regional free trade agreements, and are thus only applicable between the contracting parties of such bilateral or regional agreements. Although there are some systematic differences between the global and general bilateral or regional safeguards, similar provisions to those found under WTO law are included in the trade agreements. Many of the agreements include exactly the provisions of the WTO Agreement on Safeguards, while several others make direct reference to the procedure and obligations contained in WTO rules.
The study examined 26 agreements which were selected based on various criteria. The sample of agreements is geographically diverse, includes countries from all continents and includes a mix of older and more recently concluded ones in order to evaluate the development of safeguard provisions over time. Furthermore, the sample also includes a mix of North-North, North-South and South-South trade agreements.
Of the 26 chosen agreements, 23 have been notified to the WTO as being in force, while two are yet to be notified (the SADC-EU Economic Partnership Agreement and the Trans-Pacific Partnership Agreement), while one (the Tripartite Free Trade Agreement) is yet to be concluded. The agreements are divided into categories, based on the following characteristics:
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No bilateral or regional safeguard provisions;
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Bilateral or regional safeguards without special conditions; and
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Bilateral or regional safeguards with special conditions.
Furthermore, those agreements containing specific bilateral or regional safeguard provisions (mainly agricultural safeguards) are also highlighted and the provisions assessed.
Subsequent to the evaluation, the following determinations were made for the agreements examined.
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The only agreements without any reference to a bilateral safeguard measure are the Australia-Chile FTA, the New Zealand-Hong Kong Closer Economic Partnership Agreement and the New Zealand-Chinese Taipei Economic Cooperation Agreement.
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The only instance in which bilateral or regional safeguards do not specify additional conditions for implementation is in the case of the investigation procedures and the determination of serious injury or the threat of serious injury.
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The majority of agreements contain specific conditions for the implementation of general bilateral or regional safeguards. These specific provisions vary from agreement to agreement but mostly relate to the type of measures which can be applied, the period of application, notification, compensation and dispute settlement.
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The specific safeguards mostly apply to safeguard measures applicable to agricultural products. However, other specific provisions include safeguards specific to trade in textiles, forestry products and certain industrial products.
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Indications are that in recent years the use of specific safeguard measures in bilateral and regional trade agreements has gained in popularity; where previous analysis (reference) found limited utilisation of specific safeguards, six of the agreements included in this analysis contain different types of specific safeguard measures. In some of the most recent agreements there are specific safeguard provisions for various products and member countries included within detailed and complex frameworks.
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Some of the recently concluded agreements are not only comprehensive in terms of coverage provided for in the agreement, but also contain the most comprehensive provisions regarding bilateral and regional safeguard measures, especially in the case of allowances for special safeguard provisions.
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The examination shows that there has been an evolution not only of safeguard provisions in trade agreements, but also the coverage, scope and structure of these trade agreements.
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Regional and bilateral agricultural safeguards can inform the multilateral negotiations to ensure a special safeguard mechanism which is transparent, predictable, accessible, manageable and effective, allowing for limited product coverage and asymmetry in application.
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However, this approach can be cumbersome and will require careful negotiation and drafting, industry and capacity needs-based assessments and preparedness by all parties concerned.
» Download: Comparing Safeguard Measures in Recent Regional and Bilateral Trade Agreements (PDF, 5.13 MB)
[1] Kruger, P., W. Denner, and J.B. Cronje. 2009. Comparing Safeguard Measures in Regional and Bilateral Agreements. ICTSD Programme on Agricultural Trade and Sustainable Development. Geneva: International Centre for Trade and Sustainable Development.
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Tanzania’s conditional cash transfer program helps reduce extreme poverty
A new World Bank evaluation shows that a conditional cash transfer program has successfully helped reduce extreme poverty, especially among female-headed households. The cash transfer program is part of the World Bank-supported Tanzania Productive Social Safety Net Project, which aims to increase food security among vulnerable groups.
In 2012, Beata Masigazwa enrolled in the country’s conditional cash transfer program and began to receive a small amount of money each month to buy proteins, fruits and vegetables for her family. Less than a year later, she had saved enough money from her stipend to buy her own sheep, goats, pigs, ducks and chickens, which she now rears on her homestead in Nkwenda village in Chamwino and sells to her neighbors.
“We have been empowered by this program,” said Masigazwa, a single mother of seven children. “We were behind but we have made good progress.”
Masigazwa’s family is just one of more than one million families, the majority of them headed by women, who exemplify the success of the conditional cash transfer program (CCT). According to a recent impact evaluation using 7,400 randomly-selected households in Tanzania and Zanzibar, the program has contributed to the reduction of extreme poverty, especially among female-headed households who constitute 54% of beneficiaries. It has also contributed to the improved consumption of food and access to health and education services, enhancing and protecting the human capital investment in children.
“The program’s achievements to date have been remarkable,” said Bella Bird, the World Bank Country Director for Tanzania. “To sustain such impressive progress and in order to achieve the required impact at scale, we encourage the government to ensure sustainable financing and to continue investing in the implementation capacity at different levels.”
The CCT program is part of the World Bank-supported Tanzania Productive Social Safety Net Project, which aims to increase income and food consumption for vulnerable groups, and strengthen their ability to cope with shocks. Despite respectable economic growth rates averaging 7% over the past decade, the poverty rate remains at 28%, with about 9% of the population (four million citizens) affected by food poverty. Funded in part by IDA, the Bank’s fund for the poorest, the Tanzanian government piloted the conditional cash transfer program in 2010 in support of its broader social protection strategy.
Families enrolled in the program received a small amount of cash (approx. $13 each month) as incentive to increase household consumption of food, particularly proteins, as well as health and education services which they would otherwise have had to forego.
Building on the pilot’s successes as well as the lessons learned, the government embarked on the implementation of a wider Productive Social Safety Nets (PSSN) program in 2012. In August 2015, the program achieved a massive scale up to reach 1.1 million households across 10,000 villages nationwide, making it the second largest government-run CCT program in Africa, after Ethiopia’s.
The evaluation set out to provide an in-depth profile of PSSN beneficiaries and to assess the program’s targeting performance. The findings confirm several of the critical premises; for instance, among target beneficiaries, literacy and school attainment are low. Households have low food security and are vulnerable to shocks, and routine health checks for children under-fives are rare. These premises have informed the program’s implementation thus far, particularly in regard to targeting and expected outcomes.
Key findings of the evaluation and beneficiary profile information include:
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PSSN households are poorer than non-targeted households with PSSN communities
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Lower literacy levels among PSSN households: 42% PSSN beneficiaries ages 15 and above in PSSN households cannot read simple text in any language, compared to about one-third among the national poor. The highest illiteracy rates are among women at 48% compared to 32% for men.
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School enrollment rates are low, especially among the youngest and oldest children: Compared to the national enrollment, 57% of all children ages five to 19 among PSSN households are enrolled in school, with financial constraints as the most significant barrier to school enrollment.
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PSSN members tend to be sicker (31%) than the national poor (22%) and have lower health care use, driven primarily by cost constraints and social norms.
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More than half (51%) of PSSN households are headed by women, compared to less than one-third among the national poor. Women-led households tend to have lower incomes than male-headed ones in the Tanzanian population.
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The share of food in total consumption among PSSN households is very high, suggesting they are among the poorest in the country. Their median and average monthly consumption – both below TZS 30,000 (equivalent to roughly $15) – are lower than the national food poverty line, showing that 69% of PSSN households live below the basic needs poverty line.
PSSN is a multi-donor financed from multiple sources including the government, several development partners including the World Bank.
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Nations take forward global climate action at 2016 UN Climate Conference
World leaders issue Marrakech Action Proclamation underlining ‘irreversible’ momentum
Countries accelerated global climate action across a broad range of areas at the 2016 UN climate change conference as they fast-tracked the political and practical aims of the historic Paris Climate Change Agreement.
Multi-billion and multi-million dollar packages of support for clean technologies; building capacity to report on climate action plans, and initiatives for boosting water and food security in developing countries were also among the many new announcements and initiatives launched.
Meanwhile governments set a rapid deadline of 2018 to complete the rule book for operationalizing the Paris Agreement to ensure confidence, cooperation and its success over the years and decades to come.
Businesses, investors, cities and local governments also issued new climate change commitments, adding to the thousands announced in the run up to the Paris climate conference last year.
For example, a club of subnational governments, the Under2 Coalition, who have committed to reduce their emissions by at least 80 percent by 2050, announced their membership has grown to 165.
The combined GDP of these 165 members is close to $26 trillion – a third of the global economy – and cover a population of around one billion people living in North America, Europe, Latin America, Africa and Asia.
The Climate Vulnerable Forum a group of more than 40 vulnerable nations, released a declaration that strengthens the call to limit global temperature rise to as close to 1.5 degrees Celsius as possible.
Their Marrakech Vision commits these countries to various ambitious aims, including achieving 100% renewable energy between 2030 and 2050.
Several countries – Canada, Germany, Mexico and the United States – announced ambitious climate strategies out to 2050, reflecting the long-term goal of the Paris Agreement to achieve climate neutrality and a low-emission world in the second half of the century.
Patricia Espinosa, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), said, “The landmark Paris Agreement set the course and the destination for global climate action. Here in Marrakech, governments underlined that this shift is now urgent, irreversible and unstoppable”.
This new era of implementation and action for climate and for sustainable development was captured in the Marrakech Action Proclamation.
“I would like to pay tribute to the Government of Morocco and the President of the Conference, Mr. Salaheddine Mezouar, for their remarkable success. COP 22 has been what it needed to be, a COP of action that has accelerated progress under the Paris Agreement across finance, new initiatives, ambition and solidarity between nations and across continents,” she said.
Mr. Mezouar, President of the 22nd Conference of the Parties (COP 22), said, “The Kingdom of Morocco is fully engaged in the success of this COP and will energetically carry out its role as President. At the outcome of the last fifteen days, our vision has been consolidated and we are working to make concrete progress and to carry out breakthrough actions from now until the end of 2017”.
“It will be necessary to respect the commitment of $100 billion dollars from now until 2020. Faced with the magnitude of what is required for dealing with the impacts of climate change, turning billions into trillions is indispensable. 2017 must be the year of large scale projects, of mobilizing finance, and accessing financial facilities that will be necessary for adaptation,” he added.
Ms. Espinosa added, “During COP 22, the strength, the support for and the robustness of the Paris Agreement was furthered underlined, with nine more ratifications received at the UN in New York and the promise of many more to come. Nations reaffirmed that the agreement is in their national interests and a key catalyst to a better, more prosperous future for their citizens”.
COP 22, hosted by Morocco’s King Mohammed VI, saw almost 500 Heads of State or Government and Ministers attend. It also witnessed the first meeting of the Paris Agreement’s top governing body following early entry into force of the Paris Agreement on 4 November.
At the close Fiji was announced as the incoming President of the 2017 UN climate conference (COP23) which will be hosted by the UNFCCC in Bonn.
Key Outcomes and Initiatives
Rule Book
A crucial outcome of the Marrakech climate conference was to move forward on writing the rule book, or operational manual, of the Paris Agreement.
The agreement calls for a significant boost of transparency of action, including for measuring and accounting emissions reductions, the provision of climate finance, and technology development and transfer.
It also includes work to design the adaptation communications, which is the primary vehicle under the Paris Agreement to share individual adaptation efforts and support needs.
Countries pressed forward on this and set a fast track date of 2018 for completion. Countries have already built the foundation for this by peer assessing each other’s actions to cut emissions through a transparent process that began in 2014.
Multilateral Assessment
At COP 22, seven developing countries presented updates and opened themselves to examination by their peers on how they are moving to a low-carbon economy.
This fits into delivering a system for monitoring, verifying and reporting actions and opens the door to greater ambition under their climate action plans, called Nationally Determined Contributions (NDCs).
Capacity-building Initiative for Transparency
During COP 22, the Global Environment Facility (GEF), a multilateral funding arm, announced a Capacity-building Initiative for Transparency backed by 11 developed country donors providing $50 million-worth of funding.
NDC Partnership
Implementation of climate action plans also received a boost from the launch of the NDC Partnership – a coalition of developing and developed countries and international institutions working together to ensure countries receive the technical and financial support they need to speedily meet their climate and sustainable development goals.
Progress by Governments
Governments made progress across key areas of climate action, including climate finance, adaptation, capacity building, technology and gender-responsiveness. This is an overview:
Climate finance
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Countries pledged more than $81 million to the Adaptation Fund, surpassing its target for the year.
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Countries pledged over $23 million to the Climate Technology Centre and Network, which supports developing countries with climate technology development and transfer. As the implementation arm of the Technology Mechanism, the CTCN is a key institution to enable nations realize their commitments under the Paris Agreement.
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The Green Climate Fund (GCF) announced the approval of the first two proposals for the formulation of National Adaptation Plans: Liberia for $2.2 million and Nepal for $2.9 million. Another 20 countries are expected to have their proposals approved soon with up to $3 million each.
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Overall, the GCF is on track to approve $2.5 billion worth of projects.
Adaptation
- The Adaptation of African Agriculture initiative, which includes 27 participating countries, showcased how water, soil, climate risk management, funding of small farmers and the Sustainable Development Goals (SDGs) are being addressed with an overall aim of advancing adaptation.
Loss and Damage
- A new five-year framework under the Warsaw International Mechanism on Loss and Damage (WIM) will deal with impacts that are not addressed through planned adaptation, including displacement, migration and human mobility and comprehensive risk management.
Capacity Building
- In another show of accelerated climate action, countries operationalized the Paris Agreement’s Paris Committee on Capacity Building. It will help build capacity for climate action in developing countries. The members have been elected and the committee will take up its work in May 2017.
Technology
- During COP 22, governments learned that in 2016 over 30 projects for cutting emissions with technology transfer objectives were approved by the Global Environment Facility (GEF), with $188.7 million in GEF funding and $5.9 billion in co-financing.
Gender
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Fifteen years after the first decision on women and gender under the UNFCCC at COP 7 in Marrakech, governments took another important step towards achieving their goals on gender balance and gender-responsive climate policy by agreeing an extended work programme that includes civil society, businesses and others.
Indigenous Peoples
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COP 22 took first steps in making the local communities and indigenous peoples platform operational which was established last year in Paris. This marks a new era of addressing the concerns and needs of indigenous peoples in the climate process. Once operational the platform will allow for an exchange of experiences and sharing of best practices on mitigation and adaptation and ultimately lead to more climate actions.
Others Initiatives Launched
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The UN Environment Programme (UNEP) launched a new global initiative, the Global Peatlands Initiative, which aims to reduce global greenhouse gas emissions and save thousands of lives by protecting peatlands, the world’s largest terrestrial organic soil carbon stock. The initiative will mobilize governments, international organizations and academia in a targeted effort to protect peatlands, which contain almost 100 times more carbon than tropical forests.
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The Solar Impulse Foundation launched the World Alliance for Clean Technologies as a legacy to the first ever solar flight around the world. Its goal is to federate the main actors in the field of clean technologies to create synergies, give advice to governments, and promote profitable solutions to the world’s most pressing environmental and health challenges.
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The first ever private adaptation and resilience investment vehicle, the Marrakech Investment Committee for Adaptation Fund is a $500 million fund launched in partnership with The Lightsmith Group, based in the United States, BeyA Capital, based in Africa, and the Global Environment Facility.
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Over the next four years, the MENA Climate Action Plan aims to nearly double the portion of World Bank financing dedicated to climate action, taking it to around $1.5 billion per year by 2020.
Further impressive announcements were made by cities and sub-national governments to investors and business as part of the Global Climate Action (CGA) spearheaded by Climate Champions Laurence Tubiana and Hakima El Haité.
“Through our mandate as Champions, we have enhanced the participation of non-state actors, encouraging a range of initiatives, both individual and cooperative. The shift to a low-carbon future and a resilient civilization is something that is irreversible,” said Climate Champion Laurence Tubiana.
The High-Level Climate Champions launched the Marrakech Partnership for Global Climate Action to provide a strong roadmap for how the UNFCCC process will catalyse and support climate action by Parties and non-Party stakeholders in the period 2017 to 2020.
Announcements linked to GCA events at COP 22 include:
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19 African Capital Markets Authorities and Exchanges, accounting for 26 African countries, have signed and endorsed the Marrakech Pledge for Fostering Green Capital Markets in Africa.
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The European Union Commission launched the European Fund for Sustainable Development to encourage investment in Africa and the EU Neighbourhood countries, strengthen partnerships, and achieve the Sustainable Development Goals. The plan involves:
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Value of up to EUR4.1 billion, triggering regional public and private investment of up to EUR44 billion to 2020.
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Technical assistance to help local authorities and companies to develop bankable projects and to improve regulatory environments in partner countries.
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Improvement of the general business environment by supporting reforms in economic governance.
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The number of companies making climate commitments through the We Mean Business coalition has more than doubled since COP 21.
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We Mean Business announced that in total, 471 companies with over $8 trillion in market capitalization have undertaken well over a thousand ambitious commitments to climate action. These companies represent every sector and geography globally.
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The Science Based Targets initiative continues to see tremendous momentum since Paris. To date, almost 200 companies have joined the initiative, and in the past year, growth has been at a rate of more than two new companies per week.
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At COP 22, the Indian company Dalmia Cement and Helvetia insurance group committed to use 100% renewable power across their operations and join RE100; the global, collaborative initiative with more than 80 of the world’s most influential companies.
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Swiss Re committed to double its energy productivity and join EP100, a global campaign that works with companies to maximize the economic benefits of every unit of energy it consumes.
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A new private sector-led initiative, the Renewable Energy Buyers Alliance (REBA), was announced. REBA builds connections between corporate electricity demand and renewable energy supply.
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Cities, towns and regions are making big impacts in implementing their climate commitments by acting locally and partnering globally.
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A new assessment tool presented during the Resilience Showcase will allow standardized qualitative reporting of adaptation commitments to the Global Covenant of Mayors.
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The Government of Indonesia announced it is implementing a moratorium on clearing super high-carbon, intact peatland. The action builds on Indonesian President Joko Widodo’s announcement at last year’s Forest Action Day in Paris, to end new and review existing peat concessions.
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Colombia has announced plans to close the forest frontier as a key component of a post-conflict future. Efforts include focusing development on non-forest lands, implementing strong tenure reform, and placing very large areas of forest under indigenous peoples’ control.
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A new partnership between FAO and Google has created Collect Earth, an open-source tool that provides access to large collections of free, high-resolution satellite imagery and cloud computing.
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The Water for Africa initiative, established by the Kingdom of Morocco and supported by the African Development Bank was launched at COP 22, aiming to render justice to Africa through the adoption of a specific action plan that will mobilize different international political, financial and institutional partners.
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The three alliances for basins, megacities and businesses, created at COP 21, which today represent more than 450 organizations worldwide, signed a common commitment to mobilize jointly their partners, identify and disseminate good practices and support the development of new projects.
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The Global Fuel Economy Initiative (GFEI) is supporting an additional 40 countries to realize the financial benefits and CO2 benefits of improved vehicle fuel economy.
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Airport Carbon Accreditation scheme now has 173 certified airports worldwide, including 26 carbon-neutral airports – 36% of air passengers now travel through an Airport Carbon Accredited airport.
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The MobiliseYourCity initiative secured EUR35 million in funding over the last 12 months and launched development of Sustainable Urban Mobility plans in Morocco and Cameroon.
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The Kingdom of Morocco has announced its Blue Belt Initiative aimed at building the resilience of coastal communities and promoting sustainable fisheries and aquaculture in keeping with SDG14 expectations.
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FAO, World Bank and the African Development Bank announced the African Package for Climate-Resilient Ocean Economies, an ambitious package of technical and financial assistance to support ocean economies in Africa and build greater resilience to climate change in coastal areas.
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COP 22 Ocean Action partners released the Strategic Action Roadmap on Oceans and Climate: 2016 to 2021, which provides a vision for action on oceans and climate in the next five years, addressing six oceans.
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Launch of the Adaptation for African Agriculture initiative aims to build the resilience of farmers in Africa by promoting sustainable soil management, better water management and risk management linked with tailored capacity development, policies and funding mechanisms.
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Launch of the Global Framework on Water Scarcity supports countries to integrate climate change and sustainable water use into agricultural sectors policies and cross-sectoral dialogue.
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130 mayors from cities across the world signed the Milan Urban Food Policy Pact (MUFPP), which calls for sustainable food systems that foster the accessibility of healthy food for urban citizens, biodiversity protection and food waste reduction.
Momentum for Change at COP 22
The UNFCCC secretariat’s Momentum for Change initiative hosted a series of special events at COP 22 from 12 to 17 November. These events celebrated the 2016 Momentum for Change Lighthouse Activities with inspiring videos, photography, roundtable discussions, an exhibition space and an evening award ceremony.
The Momentum for Change Lighthouse Activities are some of the most innovative, scalable and replicable examples of what people are doing to address climate change – these events celebrated these solutions. Learn more about this year’s winning activities here: www.bit.ly/m4c-award.
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Annual report on competition policy developments in South Africa, 2015
The following report is submitted by South Africa to the OECD Competition Committee for discussion at its forthcoming meeting to be held on 29-30 November 2016.
Submission by the Competition Commission of South Africa
The 2015/16 financial year brought significant developments for the South African competition agencies: the Competition Commission of South Africa (CCSA) and the Competition Tribunal of South Africa (CTSA). On the legislation and policy front, law makers introduced personal criminal liability for directors or managers who knew about or participated in cartel conduct. The new law became effective in May 2016, which was soon after the financial year end, but because of the far reaching implications of this development in South African law we highlighted it in our 2015/2016 annual report, as we do in the pages that follow. The move was not without controversy but the CCSA is working with relevant agencies to bring about a smooth transition into the new criminal dispensation. The CCSA also published final guidelines on two subjects: (1) its approach to assessing public interest concerns in mergers and (2) its approach to calculating administrative penalties for anti-competitive conduct.
The CCSA and CTSA continued their enforcement action against cartels, restrictive vertical agreements and abuse of dominance. The agencies tackled cartels in several industries including construction, car parts, foreign exchange, waste removal and furniture removal. The CTSA handed down its first predatory pricing decision, finding that the CCSA had successfully made out a case against Media24, a multimedia firm, for pushing a rival out of the market for community newspapers. However the Constitutional Court of South Africa dealt the CCSA a blow when it found that the CCSA could not appeal a decision handed down by the Competition Appeal Court (CAC) – effectively finding that Sasol Chemical Industries had not contravened the Competition Act as previously alleged by the CCSA.
The retail sector came under the spotlight this year with the launch of a new market inquiry focusing on all levels of the retail chain. The market inquiry derives its powers from a 2013 amendment to the Competition Act which gave the CCSA the power to conduct broad studies into the state of competition in a selected industry.
Three major transactions were notified in the telecommunications industry this year. These transactions involved some of the largest telecommunications networks in the country all bidding to take advantage of the next frontier in communication technology. Only one merger, the Telkom/BCX deal, went all the way to a hearing before the CTSA. The other two mergers were abandoned before reaching that point. After a hearing the CTSA approved the Telkom/BCX merger with conditions.
Finally the Commission carried out or took part in several studies which assessed the impact of the CCSA and CTSA’s interventions after the fact. We have selected some for discussion in this annual report. Included in these were assessments of the local cement industry, the fertiliser industry and the fruit and vegetable industry. For the most part the industries assessed display positive competition developments since the interventions of the competition agencies.
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Fourth Africa-Arab Summit kicks off with the Senior Official Meeting
Ahead of the 4th Africa-Arab Summit, to open on November 23 under the theme of “Together for Sustainable Development and Economic Cooperation”, Senior Officials from Member States of the Africa Union (AU) and League of Arab States, met on Saturday 19 November, 2016 at the SIPOPO Conference Center, Malabo.
In her opening remarks, H. E. Mrs. Fatima Haram Acyl, AU Commissioner for Trade and Industry, welcomed the Senior Officials on behalf of the Chairperson of the African union Commission, H.E. Nkosazana Dlamini Zuma and highlighted the objectives of the Senior Officials meeting, which is to review the draft Africa-Arab Summit documents namely the Malabo Declaration, Declaration on the Situation of Palestine and Resolutions. She recalled that the African Union has adopted Agenda 2063 as Africa’s blue print towards economic and structural transformation of the continent during the next five decades and beyond and in this regard underlined the need to develop an action plan for Africa-Arab Partnership which takes into account the Agenda 2063 and corresponding strategies of the Arab world,
Speaking earlier, H.E. Mr. Cherif Mahamat Zene, Chairperson of the Permanent Representatives Committee of the African Union (PRC) and Ambassador of the Republic of Chad to Ethiopia pointed out the fact that the Africa-Arab partnership is not fully taking advantage of its utmost potentials and therefore suggested that the existing joint implementation and follow up mechanisms should be revisited in order to help the realization of concrete programs and projects.
H.E. Ahmed Ben Helli, Deputy Secretary General of the League of Arab States, on his part stated the actions that have been taken to finalize the draft outcome documents of the Summit and noted that the meeting will consider and finalize those documents, hoping that this Summit would give greater impetus to the realization of more concrete deliverables.
H.E. Mr. Rashid Al-Hajiri, Ambassador of the Kuwait to Ethiopia, Chairperson of the Arab side of the Africa-Arab Partnership Coordination Committee and Co-Chair of the Meeting, recalled the rich history, culture and aspirations of the partnership. He recalled that, during the 3rd Africa-Arab Summit held in Kuwait in November 2013, the Amir of Kuwait launched important initiatives for the next five years, including the concessional loan of US$1b, which will be used to finance agricultural, infrastructure, and educational projects in Africa, among others.
Representing the Host Country, H.E. Mr. Simeon Oyono Esono, Ambassador of the Republic of Equatorial Guinea to Ethiopia and Permanent Representative to the UNECA, recalled the theme of the 4th Africa-Arab Summit entitled “Together for Sustainable Development”, and encouraged the participants to initiate actions and projects that would accentuate the partnership to the desired objective for the mutual benefits of the two sides.
During their meeting, the Senior Officials will consider various reports including: the Progress Report on the Implementation of the Initiatives of H.H. the Emir of Kuwait on Investment and Development announced during the 3rd Africa-Arab Summit, Kuwait November 2013, Administrative and Financial Report of the Director General of the Africa-Arab Cultural Institute and
The Meeting will also consider draft outcome documents of the Summit, namely: the Malabo Declaration, Declaration on Palestine and various resolutions of the 4th Africa-Arab Summit. It will also consider the draft Agenda of the Joint Council of Ministers and the Summit, to be held on 21 and 23 Nov respectively.
The report and recommendations of the Meeting will be submitted to the Joint Council of African and Arab Ministers of Foreign Affairs.
The Africa Arab partnership is one of the Strategic partnerships that the AU Commission is coordinating on behalf of the African Union. Other partnerships at continental level include Africa-China; (FOCAC), Africa-Europe; Africa-India; Africa-Turkey; Africa-Japan (TICAD), Africa-South America; Africa-Korea. The African Union, through its Commission, also has partnerships or relationships with institutions and bodies similar to the African Union. These include: the League of Arab States (LAS); the Organization of American States (OAS); the Organization of Islamic Cooperation; the Commonwealth; and La Francophonie.
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tralac’s Daily News Selection
The selection: Monday, 21 November 2016
Profiled African trade and development events starting today:
In Addis: the 4th CFTA Negotiating Forum
In New York: Africa Industrialization Day, on the theme Financing industrialization in Africa - challenges and winning strategies. [UN SG’s Message for 2016]
In Johannesburg: Public-Private engagement on soft border issues and the SADC Industrialisation Costed Action Plan (21-22 November, Southern Africa Business Forum)
In Nairobi: EALA sitting, until 1 December. The two key Bills on the agenda are the EAC Gender Equality and Development Bill and the EAC Polythene Materials Control Bill.
In Abuja: Annual meeting of the Heads of ECOWAS National Offices
In Abidjan: PIDA WEEK 2016 on the theme Creating jobs through Regional Infrastructure Development. The PIDA 2016 Report will be released and distributed during PIDA Week.
In Port-Louis: Afreximbank’s 2016 Annual Structured Trade Finance Seminar
Other event previews: On Thursday, in Nairobi: the 8th African Private Sector Forum; Next week, in Johannesburg: the AfDB’s dialogue with Southern Africa CSOs
Featured trade policy commentary, by Stephen Lande, Dennis Matanda: How Africa should optimally benefit from a Trump Administration
Seminally, in line with a push towards developmental integration under Agenda 2063 priorities such as industrialization, Africa’s blueprint proposal to the United States ought to be underwritten by (i) the continent’s capacity and viability at reducing America’s over-reliance on Far East light manufacturing inputs and outputs, and (ii) launching a continental free trade area (CFTA); essentially attain economies of scale necessary for American firms to invest in operating supply chains and distribution networks on African soil. An even rosier scenario should materialize if Africa can demonstrate that these duo-goals are attainable by 2020; that through the CFTA, intra-Africa trade will double between 2012 and 2022, and that agricultural trade will triple by 2025. he following ideas to include in a trade policy blueprint should only serve to strengthen the continent’s leverage with the Trump White House and Republican-led U.S. Congress: [Note: this paper was presented at last week’s tralac discussion on CFTA issues]
Abdalla Hamdok: Data Portal will unleash Africa’s democratising power (Daily Maverick)
Last, we must improve access to data, and here the Mo Ibrahim Foundation’s IIAG Data Portal provides a model to follow. Launched on African Statistics Day (18 November), the portal will serve as the digital home to the IIAG’s extensive governance data. For the first time, the portal enables analysis of its 95 indicators across Africa’s 54 countries. It allows analysis, comparison and interaction with rank, score and also trends at country, regional and continent level. We need African governments to support this drive to develop high-quality, accessible and independent statistics on their countries. At an international level, we hope to see increased funding to support this work. Ultimately, all will benefit, as we will be able to paint a far more accurate picture of Africa.
Stockholm Statement: Towards a consensus on the principles of policymaking for the contemporary world (pdf, SIDA)
Thirteen economists, which included four former Chief Economists of the World Bank, met over two days in Stockholm to discuss the challenges faced by today’s economic policymakers. The group consisted of Professor Sabina Alkire (Oxford), Professor Pranab Bardhan (Berkeley), Professor and former Chief Economist of the World Bank Kaushik Basu (New York), Professor Haroon Bhorat (Cape Town), Professor and former Chief Economist of the World Bank Francois Bourguignon (Paris), Professor Ashwini Deshpande (Delhi), Professor Ravi Kanbur (Ithaca), Professor and former Chief Economist of the World Bank Justin Yifu Lin (Beijing), Professor Kalle Moene (Oslo), Professor Jean-Philippe Platteau (Namur), Professor Jaime Saavedra (Lima), Nobel Laureate Professor and former Chief Economist of the World Bank Joseph Stiglitz (New York), and Professor Finn Tarp (Helsinki and Copenhagen).
IGAD to adopt a treaty, organizational structure (IGAD)
During a three-day technical meeting last week in Djibouti, the IGAD Secretariat successfully submitted a draft treaty, a draft organizational structure, and a draft budget 2017 to its Member States Ministries of Foreign Affairs and Ministries of Finance for review in view of forwarding them to the next IGAD Council of Ministers for endorsement. The Executive Secretary of IGAD, Ambassador Mahboub Maalim, highlighted that the IGAD Treaty and the IGAD Organization Structure have been in the making during the last eight years.
Magufuli sacks TRA board of directors in major shake-up (IPPMedia)
In a somewhat unexpected move, President John Magufuli yesterday fired the chairman of the Tanzania Revenue Authority’s (TRA) board of directors, Bernard Mchomvu, and the entire board, while also appointing a new deputy commissioner general for the government’s tax body. No reasons were given for the changes, although they come amid growing calls for more reforms in the government’s taxation system from members of the private sector in Tanzania and both Bretton Woods Institutions - the World Bank and IMF. The president’s office said in a terse statement that Magufuli had “annulled the appointment of the TRA board chairman … and dissolved the board." A new board chairman and members will be appointed at a later date, it added.
Rwandan govt invests in more cross-border markets to enhance regional trade (New Times)
Construction of cross-border markets along key borders linking Rwanda with its neighbours will be accomplished in the next five years and, once completed, will enhance regional trade, Francois Kanimba, Rwanda’s Minister for Trade, Industry and East African Community Affairs, says. According to the ministry, records currently indicate that the five border posts through which the highest percentage of goods in transit are: Gatuna (30.6% of the tota; flow of goods), Rusumo (16.6), Kagitumba (15.2%), Kigali International Airport (15%) and Cyanika (3.7%).
Tanzanian sues to stop Kenya from concluding trade deal with Europe (Daily Nation)
Kenya’s quest to close an EPA with the EU ahead of next year’s deadline has run into fresh head winds after a Tanzanian lodged a civil suit in the East African Court of Justice, seeking to stop it. Castro Pius Shirima, a law lecturer at Iringa University, wants the regional court to stop the remaining signatories of the pact from penning the agreement that Kenya needs to protect a third of its export market. Kenya and Rwanda signed the contentious deal in September. Mr Shirima argues in the case, which comes up for hearing this week, that the remaining members of the EAC – Tanzania, Burundi, Uganda and South Sudan – should be prevented from signing the EPA because of the many risks it poses to the region’s economy. He further argues that “signing such an agreement by the second and third respondents (Kenya and Rwanda) has violated the letter and spirit of the EAC Treaty.”
EAC mooting plan for uniform laws on cross-border insolvency (New Times)
The EAC bloc is mooting a plan to harmonise laws that will regulate cross border insolvency. Speaking to journalists during the launch of the insolvency week in Kampala, Bemanya Twebaze, the registrar general Uganda Registration Services Bureau, said the move is timely as countries shift towards borderless trade.
US government, EAC sign $194m partnership agreement to strengthen regional development (EAC)
Under the agreement, the EAC and the United States will work together to (i) advance regional economic integration, (ii) increase trade and investment between member states and with the United States, (iii) improve the sustainable management of natural resources in the Lake Victoria Basin and Mara River ecosystems, (iv) improve access to integrated health services in border areas and (iv) strengthen the EAC’s organizational leadership. About $30m will fund institutional strengthening within the EAC Secretariat, while the remainder will support other development partners in their efforts to contribute to the EAC regional integration agenda.
USAID strategy session for SADC Ambassadors (Atlantic Council)
Following a welcome by Africa Center Deputy Director Bronwyn Bruton, FEWSNET analysts presented a briefing on the severity of food insecurity and market constraints in Southern Africa. Subsequent discussion focused on the FEWSNET team’s analysis and highlighted the importance of anticipating environmental shocks ahead of time. Particular mention was made of SADC’s strong leadership role in managing the crisis and participants noted the importance of timely “state of disaster” declarations to trigger humanitarian responses from partner countries. The discussion also addressed avenues for improved knowledge sharing between SADC member states and US government data experts.
SADC, Germany identify areas of focus in their co-operation (SADC)
Among other things, the two parties agreed to focus on trade and industrialisation, transboundary water management, transboundary use and protection of natural resources, resilience to climate change, and national and regional linkages in their cooperation. Other areas discussed included peace, security and good governance. These consultations were conducted in preparation for the next Bilateral Negotiations between the SADC Secretariat and the Government of the Federal Republic of German due to take place in mid-2017.
Cross-border co-operation and policy networks in West Africa (SWAC Secretariat)
The report then analyses a range of regional indicators of co-operation potential, visually demonstrating that borders can also affect the ability of sub-regions within West Africa to develop cross-border initiatives in a number of ways. Combining these two analyses with the perceptions of regional policy makers as to which sub-regions they consider as priorities for cross-border co-operation, the publication concludes with the identification of areas that are most pertinent for regional integration. The report thus provides the analytical foundations for local and regional actors to develop more effective, tailored initiatives that can enhance cross-border co-operation in West Africa. [West Africa Gateway: latest NewsBrief]
Mauritius-Turkey: First meeting of the Joint Committee under the Free Trade Agreement (GoM)
The objective of the first meeting (held last week) was to assess trade trends following the implementation of the agreement, address trade barriers encountered by Mauritian operators on the Turkish market, consider the possibility to enhance market access to include products not covered by the FTA as well as consider the cooperation between the two sides within the ambit of the FTA. Turkey provides duty free access on all industrial exports from Mauritius. On agricultural products, Turkey is providing preferential access on 46 products including fresh and chilled fish, cut flowers, pineapples, guavas, pasta, biscuits, flavoured water, pickles, Beer and rum among others.
International commitment to tackle illegal wildlife trade: over $1.3bn since 2010 (World Bank)
The Global Wildlife Program has released the first-ever review of international donor funding for combatting illegal wildlife trade in Africa and Asia, which shows that over $1.3bn was committed by 24 international donors since 2010, or approximately $190m per year. Key findings of the report include: (i) 63% of the funds went toward efforts in Africa ($833m), 29% to Asia ($381m), 6% to global programs and initiatives ($81m), and 2% to projects covering both Africa and Asia ($35 million); (ii) The top five recipient countries were Tanzania (8%), DRC (5%), Mozambique (5%), Gabon (3%), Bangladesh (3%).
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On Africa Industrialization Day, Ban urges financing ‘engines of development’ to realize continent’s potential
In his message on Africa Industrialization Day, United Nations Secretary-General has called on African countries to adopt policies that encourage growth of the private sector and foster entrepreneurship in order to advance economic competitiveness and prosperity in the continent.
This year, the Day focuses on how to raise awareness about the importance of mobilizing finance to generate inclusive and sustainable industrialization. Both the African Union’s Agenda 2063 of “a prosperous Africa based on inclusive growth the sustainable development” and the 2030 Agenda and its Sustainable Development Goals (SDGs) – particularly Goal 9 – strongly support the creation of millions of new, high productivity jobs each year on the continent.
In a message on the day, Secretary-General Ban Ki-moon said: “To accomplish this, African nations need to embrace transformative policies that will encourage the growth of the private sector, facilitate entrepreneurial initiatives, increase investment and generate durable partnerships.”
“Investors need to see the benefits of financing the region’s programmes, projects, businesses, and human resources,” he added.
Mr. Ban underscored that in order to advance African economic competitiveness and create shared prosperity while protecting the environment, a strong and stable business environment based on good governance principles and the rule of law is necessary to support domestic and foreign investments.
He also called for greater regional integration and full integration into the global economy through fair and open trade.
“On this year’s Africa Industrialization Day, let us focus on financing for the engines of development as a way of realizing the full potential of all the continent’s people, especially women and youth, so they may look forward to a future of peace, dignity, and prosperity on a healthy planet,” said the Secretary-General.
In 1989, the UN General Assembly, through its resolution 44/237, proclaimed 20 November Africa Industrialization Day to mobilize the commitment of the international community to the industrialization of Africa.
Observance of Africa Industrialization Day, 21 November 2016
“Financing Industrialization in Africa: Challenges and Winning Strategies”
The theme of this year’s Africa Industrialization Day celebration is “Financing Industrialization in Africa: Challenges and Winning Strategies”. The objective is to raise awareness on the challenges and opportunities in financing for industrialization, taking into consideration recent success stories and elaborating on how to further galvanize support for promoting Africa’s industrialization.
In observance of the 2016 Africa Industrialization Day, the United Nations Industrial Development Organization (UNIDO), the Office of the Special Adviser on Africa (OSAA) and the African Union are partnering with the Permanent Mission of the Arab Republic of Egypt in co-organizing a reception on Monday, 21 November 2016, 6-8 pm, at the Permanent Mission of the Arab Republic of Egypt to the United Nations. This event will provide an opportunity for key stakeholders and development partners to address the topic.
Why does industrialization matter?
More than ever in the past, the necessity for Africa to industrialize is being stressed at various international forums, ranging from TICAD VI to the G20 Summit, which put industrialization in Africa and Least Developed Countries (LDCs) in its programme for the first time. The 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs), in particular Goal 9, the Addis Ababa Action Agenda and the Third Industrial Development Decade for Africa (IDDA III) resolution, also mark a transition to a new development paradigm with the recognition that Africa has to restructure and diversify its economies to be on a sustained growth path. Africa can more than double its overall GDP per capita by increasing its industrial GDP in the next ten years, however Africa needs to leverage the full strength of a wide range of strategies to finance its industrialization.
The challenges of financing industrialization in Africa are multiple. These include: inadequate flow of Foreign Direct Investment (FDI) into the manufacturing sector, as FDI is mostly directed towards natural resource exploitation; Poor domestic mobilization and allocation of resources; Inability to finance infrastructure that is critical for industrial development; Poor continental industrial development funds and regional investment funds; Lack of quality of investment flows into productive sectors and lack of an attractive competitive growth environment; Non-conducive business environments; and weak public policies that leverage African remittances for industrialization. Moreover, Official Development Assistance (ODA) falls short of the 0.7% promises.
However, the following five key enablers are examples of some opportunities to finance industrialization: Catalyze funding into infrastructure and industry projects that attract further FDI by increasing and channelling funding into GDP catalytic programmes; Improve access to market finance for African enterprises, advising governments, stock exchanges and regulators on development of liquid capital markets; Foster partnerships; Increase firm capabilities and generate important productivity spillovers (through technology and know-how transfers, FDI can lead to higher productivity jobs and high-value added industry niches); Access to markets, in particular small domestic markets; Drive enterprise development and scale-up investments and financing to SMEs and establish linkages of SMEs to domestic projects/companies; Foster successful industrial policies that facilitate spillovers and backward linkages, and incentivize key PPP projects.
These enablers will require vision and commitment from political leaders but also from Financing Institutions, private sector and the broader development community, to provide support through technical assistance, capacity building, continuous dialogue, partnership and advisory services.
Overall, commitments to support Africa’s economic structural transformation have never been stronger with regard to the adopted SDG 9. These commitments put world leaders and partners at a center stage for operationalizing Africa’s industrialization. The time has come to transform these good intentions into tangible actions.
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Data Portal will unleash Africa’s democratising power
A revolution is under way in Africa and it is not one that involves crowds taking to the streets. Instead it is a revolution in the way the continent is generating and using data to help shape its future.
In the past decade narratives about Africa have moved from one extreme to another. Ten years ago, the continent was written off as a “basket case”. Then there were signs of macroeconomic growth, and analysts talked of “Africa rising”. Now, this new stance could already be shifting.
Economic and political fortunes dictate these drastic shifts in narrative to an extent. Much of this rhetorical transformation is down to what data and statistics tell us. Economists and analysts in Africa and internationally look at numbers to reveal important trends, but on our continent doing so is not as straightforward or reliable as it could be.
Africa has long suffered from a lack of high-quality, transparent and reliable statistics. This type of data is essential to support policy formulation and decision-making, as well as to monitor progress and evaluate the outcomes of development programmes. For instance, it is estimated that more than half of births in Africa are not recorded, and 22 countries have failed to take a census in over a decade. If this is true, how can we reasonably talk about poverty reduction, sound fiscal policies or land ownership issues?
So there is a need for more robust and sound information. But, crucially, the data collected should also be more accessible and better utilised. More open data from African governments means that civil society can engage with data and hold their governments to account. This also applies to businesses that benefit from the insights such data provides when making tough business decisions, and ultimately investing in the economy.
The Mo Ibrahim Foundation has worked to advance governance in African countries for 10 years. Through the Ibrahim Index of African Governance (IIAG), the foundation measures and monitors governance performance in African countries, assesses its progress over time and supports the development of effective policy solutions.
Looking at the evolution of the Index it is possible to see the great progress made to increase the volume and quality of the data and statistics in the last 10 years. In 2007 the first IIAG included only 28 sources of data, of which only one was Africa-based. Today, the Index includes 34 data sources with four African sources contributing about 17% of the total data. This reflects a big step forward.
Enhancing the availability and use of data has been one of the foundation’s core goals since it was established 10 years ago. Our partnership to support research network Afrobarometer in the collection of public attitude surveys throughout the continent has been one of our largest commitments. Thanks to this collaboration the IIAG now includes public perceptions from 37 countries in Africa.
The foundation has also been working with Global Integrity since 2012 to generate the Africa Integrity Indicators (AII), assessing social, economic, political and anti-corruption mechanisms across the continent. Thanks to these projects we have been collecting data on the ground that improves measures of governance and the everyday lives of African citizens, especially around issues of democracy, poverty and participation.
But there is still a long way to go, and we need to see national statistics strategies being introduced. More governments need to develop comprehensive programmes to increase the availability of high-quality, accessible and reliable statistics in their countries.
We also need to see innovation. Innovative measures are being adopted to address the gap in statistics. For instance, at least 30 countries are expected to use mobile technology to register births in the next decade.
We also must encourage capability building throughout the continent. UNECA, together with partners including the African Union, African Development Bank, World Bank and others, has been addressing the shortage of qualified statisticians by providing training on the collection and use of data to several African administrations.
Last, we must improve access to data, and here the Mo Ibrahim Foundation’s IIAG Data Portal provides a model to follow. Launched today (November 18), on African Statistics Day, the portal will serve as the digital home to the IIAG’s extensive governance data. For the first time, the portal enables analysis of its 95 indicators across Africa’s 54 countries. It allows analysis, comparison and interaction with rank, score and also trends at country, regional and continent level.
By making access to data easier and more transparent, we can unleash its democratising power, and help countries to understand the real status quo.
We need African governments to support this drive to develop high-quality, accessible and independent statistics on their countries. At an international level, we hope to see increased funding to support this work. Ultimately, all will benefit, as we will be able to paint a far more accurate picture of Africa.
Dr Abdalla Hamdok was designated as Acting Executive Secretary of the United Nations Economic Commission for Africa (UNECA) by United Nations Secretary-General Ban Ki-moon in October 2016 and currently serves as the Chair of the Mo Ibrahim Foundation’s Ibrahim Index of African Governance (IIAG) Advisory Council.