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World Trade Outlook Indicator suggests modest pick-up in trade during fourth quarter
The WTO’s latest World Trade Outlook Indicator (WTOI) suggests that global trade will pick up slightly in the fourth quarter of 2016. Air freight in particular has shown quite strong recent growth, while export orders and container shipping have recorded more modest gains.
The WTOI is a leading indicator of world trade, designed to provide “real time” information on the trajectory of merchandise trade three to four months ahead of trade volume statistics.
Combining several trade-related indices into a single composite indicator, the WTOI measures short run performance against medium-run trends. A reading of 100 indicates trade growth in line with trend, while readings greater or less than 100 suggest above or below trend growth.
With a current reading of 100.9 for the month of August, the WTOI has risen above trend, signalling accelerating trade growth in November-December. This is the first update of the WTOI since its initial release in July, when the indicator stood at 99.0.
The current WTOI reading is broadly consistent with the latest WTO trade forecast issued on 27 September, which foresaw world merchandise trade volume growth of 1.7% for 2016. The forecast noted flat trade growth in the first half of the year, which would have to be offset by stronger growth in the second half, which the WTOI reading captures.
The indicator remains above the quarterly merchandise trade volume index after a weak first quarter and a still sluggish second quarter. This suggests that actual trade data for the third and fourth quarters should begin to show signs of stabilization and recovery toward trend.
Component indices of the WTOI are more positive than in July. Export orders remain above trend but have levelled off. Air freight data from the International Air Transport Association (IATA) are up more sharply while container throughput of major seaports registered a more modest improvement. The index of automobile sales has stabilized while those for electronics and agricultural raw materials are gaining momentum. In light of more recent data, April 2016 appears to have been a trough in the WTOI index, which suggests that growth in trade volumes probably bottomed out in the July-August period.
The WTOI is not intended as a short-term forecast, although it does provide an indication of trade growth in the near future. Its main contribution is to identify turning points and gauge momentum in global trade growth. As such, it complements trade statistics and forecasts from the WTO and other organizations.
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Africa Climate Business Plan: Delivering on climate plan promises
Less than a year after the World Bank unveiled and began supporting implementation of its ambitious Africa Climate Business Plan (ACBP) during COP21 in Paris, African countries are beginning to show progress.
A new progress report on ACBP implementation, ‘Accelerating Climate-Resilient and Low-Carbon Development’, highlights the success African countries have had since the launch of the ACBP. As of November 7, 2016, 19 countries in Sub-Saharan Africa have ratified the Paris Agreement for carbon offsetting and 45 countries have committed to implement their Intended Nationally Determined Contributions (INDCs). The ACBP had identified various sources of potential financing for the implementation of activities aligned with the INDCs.
The report comes as country leaders, development organization representatives and climate change specialists gather in Marrakech this week for the start of the COP22 climate conference.
“It was fortunate that we launched the ACBP at COP21, where Africa was front and center. Morocco is now taking the baton from France to ensure continuity and renewed attention to the African continent at COP22. This is the time to scale up efforts to accelerate Africa’s climate-resilient, low-carbon development,” said Makhtar Diop, World Bank Vice President for Africa.
The Bank is doing its part to help securing financing for the plan, which outlines actions required to increase climate resilience and low carbon development. Implementation estimates that near-to-medium term implementation will cost about $19.3 billion to be raised by 2020.
“We have mobilized $3.6 billion from IDA to implement the Business Plan, including projects already approved by our Board since Paris, and projects to be approved by the end of 2016,” said Benoit Bosquet, Practice Manager for West Africa Environment and Natural Resources Group.
“The Business Plan is an ambitious and comprehensive plan,” he added. “Although the Plan’s full-scale rollout and implementation will take a few years to be completed, some achievements are already visible in resource mobilization and action on the ground.”
The Bank has been working with client countries, development partners, and the private sector to prepare programs and mobilize resources. Through a partnership with the African Group of Negotiators has helped countries sharpen Africa’s negotiating positions and spur climate action. The partnership resulted in strengthened capacity of the group to advocate in favor of climate action in Africa, and also in stronger country ownership of the ACBP.
Bank experts, African leaders and development partners recently met to discuss the success of the plan’s advancement during the IMF/World Bank Annual Meetings in October. Ministers from Côte d'Ivoire and Nigeria shared progress from their countries and showcased specific and ongoing and planned initiatives.
Daniel Kablan Duncan, Prime Minister and Minister of Economy and Finance for Cote d’Ivoire, reiterated his country’s commitment to reduce greenhouse gas emissions to 28% by 2030, increase the country’s share of renewable energy and minimize deforestation and forest degradation through the implementation of a “zero deforestation agriculture.” He appealed to bilateral and multilateral partners to support Cote d’Ivoire in her efforts to implement the Paris Agreement. “I hope to see this historic Agreement come into force as early as possible in order to preserve our invaluable common good; the earth,” Duncan said.
Hon. Amina J. Mohammed, Nigeria’s Minister of Environment, spoke of Nigeria’s plans on how to turn their Intended Nationally Determined Contributions (INDC) from words to actions. “I think the fact that we are underscoring Africa and that individual countries are in the driving seat is really important,” she said. She further emphasized the importance of long-term partnerships and investments to address the challenges of climate change.
The ACBP progress report notes that with support from the Bank and development partners, African governments have made progress in many key areas of the plan, including the ocean economy, coastal protection, forests, landscapes, agriculture, migration, transport, water, and energy.
On the Ocean Economy, the Bank teamed up with the Government of Mauritius and organized an African Ministerial Conference on Ocean Economies and Climate Change, where 20 countries attended and endorsed the Mauritius Communiqué. This led to a financial and technical package with the African Development Bank and Food and Agriculture Organization, which will be submitted during COP22.
Agriculture is a major economic driver in Africa. Climate-smart agriculture (CSA) practices, such as agroforestry or livestock and pasture management, can reduce greenhouse gas emissions intensity of agricultural production, as well as remove carbon from the atmosphere and store it in trees and soils. The Bank Board approved 11 projects, totaling $1.4 billion in IDA commitments, reaching more than 1.6 million farmers.
The Bank also remains committed to installing 1 GW of solar capacity by 2020. Bank teams are preparing a $200 million regional project to expand electricity access to households and communities through modern off-grid electricity services in nine target countries. Another $71 million is supporting an additional 280 MW in the Olkaria plants in Kenya for geothermal energy.
As part of their INDCs, countries such as DRC, Ethiopia, Burundi and others are receiving Bank support to achieve the goals of the African Forest Landscape Restoration Initiative, which will bring 100 million hectares of degraded and deforested land under restoration by 2030.
Main Messages
Since the launch of the Africa Climate Business Plan (ACBP) in 2015, the World Bank has been working with client countries, development partners, and the private sector, to flesh out the ACBP’s program of work. An extra area of focus, namely climate-smart development of the transport sector has been added to the plan with investment in the order of US$3.2 billion, of which US$2.8 billion is expected from the International Development Association (IDA).
The World Bank has continued to facilitate country access to a menu of internal and external concessional and climate finance sources. The results of these efforts are already apparent and remain on target. So far, US$3.6 billion, representing some 60 projects in 33 countries, has been mobilized from IDA to implement the ACBP, including projects already approved by the Bank’s Board of Executive Directors since COP21, and projects to be approved by the end of 2016.
The Bank entered an important partnership with the African Group of Negotiators (AGN), supporting the group to sharpen Africa’s negotiating position toward the next stages of implementation of the Paris Agreement, and working together to spur climate action on the ground. The partnership resulted in stronger country ownership of the ACBP and a strengthened capacity of the AGN to advocate support for climate action in Africa, particularly in the areas of focus of the business plan.
Progress has been made in many key areas of the ACBP, including the ocean economy, coastal protection, forests, landscapes, migration, transport, water, and energy.
On the ocean economy, the African Ministerial Conference on Ocean Economies and Climate Change, organized by the Government of Mauritius and the World Bank Group, brought in renewed political push for a stronger and faster implementation drive. A US$150 million program is being prepared to reduce coastal vulnerability in West Africa.
On climate-smart agriculture (CSA), The World Bank Board approved 11 projects, totaling US$1.4 billion in International Development Association commitments, reaching more than 1.6 million farmers, and improving about 725,000 hectares of land with CSA practices.
Access to energy is of utmost importance to people in Africa. In the ACBP, the Bank is committed to installing 1 gigawatt of solar capacity by 2020. A regional project worth US$200 million is being prepared to expand electricity access to households and communities through modern off-grid electricity services in nine target countries. There is also progress toward the ACBP’s targets on hydropower and geothermal energy.
One of the key measures for adaptation in Africa is hydro-meteorological services. With US$23 million from the Green Climate Fund, a hydro-meteorological services and warning services project is being implemented in Mali, a country that is highly vulnerable to climate change.
On forests and landscapes, the World Bank is supporting several countries (such as Burundi, the Democratic Republic of Congo, Ethiopia, and others) in achieving, as part of their Nationally Determined Contributions, the goal of the African Forest Landscape Restoration Initiative to bring 100 million hectares of degraded and deforested land under restoration by 2030.
The World Bank Group remains committed to working with governments and other stakeholders on the ground in African countries, mobilizing international financing for investments for effective and efficient implementation of the ACBP.
Many countries have committed to step up mitigation and adaptation efforts under recent international agreements, such as the Sendai Framework, the Sustainable Development Goals (SDGs), and the Paris Agreement on climate change. These efforts will require a corresponding increase in resource mobilization.
Forty-five African countries have committed to implement their Intended Nationally Determined Contributions (INDCs) as part of the Paris Agreement. The ACBP had identified various sources of potential financing for the implementation of activities aligned with the INDCs.
Although, considerable progress has been made in the first year of ACBP implementation, more work remains to be done, both to achieve the financial targets as well as to leverage the additional resources needed to close Africa’s climate finance gap.
Context: Climate Challenges in Africa
In Sub-Saharan Africa, resilience to climate variability and future change is vital to the region’s ability to overcome poverty and protect the hard-earned development progress made in recent decades. Climate drivers are involved in most of the shocks that keep or push African households into poverty. The drivers include natural disasters (such as loss of assets and disability after floods), health shocks (such as health expenditures and lost labor income as a result of malaria), crop losses (as a result of drought or crop disease), and food price shocks. At the same time, Africa needs rapid improvement of its access to modern energy, tapping as much as possible its vast repository of low-carbon sources.
The funding needs to address climate change effectively, in particular for adaptation, are high in the region, and will increase as climate change unfolds in the coming years. The World Bank and United Nations Environment Programme estimate that the annual funding needs for Africa’s adaptation are about US$5 billion to US$10 billion for a warming of 2°C, but this may increase to US$20 billion to US$100 billion by mid-century, if warming approaches 4°C. The importance of adaptation financing in the region is exemplified by the relatively high percentage of countries that have estimated their financing needs for adaptation in their Nationally Determined Contributions: 63 percent of the countries in the region have an estimate, compared with 27 percent in the rest of the world. And yet, adaptation financing for Africa remains grossly inadequate. This was documented recently by the joint Multilateral Development Banks’ Climate Finance report 2015, which finds that in 2015 multilateral financing for adaptation for the region (figure O.1) was only US$0.9 billion.
The ACBP aims to contribute to filling the climate financing gap in the region. Including the transport component added after the Paris launch, the plan’s goal is to raise US$19.3 billion by 2020, for investments that will strengthen, power, and enable resilience in the region. The plan focuses on more than a dozen priority areas, clustered in three groups, where the World Bank expects to help achieve results in the near future.
The first cluster of the plan (“strengthening resilience”) includes selected initiatives aimed at boosting the resilience of the continent’s assets, including its natural capital (landscapes, forests, agricultural land, inland bodies of water, and oceans), physical capital (roads, cities, and physical assets in coastal areas), as well as human and social capital.
The second cluster (“powering resilience”) relates to opportunities for scaling up low-carbon energy sources in Africa, thereby contributing at the same time to improving access to energy (a key ingredient for resilience) and mitigating climate change.
The third cluster (“enabling resilience”) provides data, information, and decision-making tools for promoting climate-resilient development across sectors, by strengthening the region’s hydrometeorological systems at the regional and country levels and building the capacity to plan and design climate-resilient investments.
» Download: Accelerating Climate-Resilient and Low-Carbon Development: Progress Report on the Implementation of the Africa Climate Business Plan (PDF, 8.52 MB)
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Manufacturing for the 21st century
At a time when the global manufacturing sector is undergoing a structural transformation, India must retool its factories for a digitally-driven future if it wants to fulfil its ambition of becoming a manufacturing powerhouse.
India lost out during the manufacturing revolution of the late 20th century. This period saw the emergence of global supply chains and witnessed the rise of China as the ‘factory to the world’, generating jobs for hundreds of millions of its people. The transformation of global supply chains was driven by better information flows and greater visibility enabled by the growth of the Internet. Consequently, large pools of low-cost labour in developing countries became productively deployed on factory floors, making products for the world. In September 2014, the National Democratic Alliance government launched Make in India as a landmark policy to turbocharge the manufacturing sector and seize back the lost opportunity.
Make in India is underpinned by three key thrust areas: (1) procedural simplification to ensure ease of doing business; (2) infrastructure development including fast forwarding the delivery of industrial corridors; and (3) opening up new sectors for growth, for instance, allowing foreign direct investment (FDI) in defence and railways. The project also focuses on growth in labour-intensive sectors such as textiles with a competent incentive package to attract production capacity moving from China. Since Make in India was launched, a lot of progress has been made. India has moved up on the ease of doing business rankings, with individual states becoming more aware and competitive in the wake of rankings being made transparent. Infrastructure build-out has gathered momentum, the productivity of clogged, government-owned ports has improved impressively, and FDI in manufacturing has increased considerably.
These ‘foundational elements’ are critical to the growth of the sector. Without them, India is not even in the game, and faces ‘missing the manufacturing and job creation bus’ once again. However, these thrust areas represent the late 20th century manufacturing paradigm. A new paradigm that is in tune with the digital 21st century is fast emerging, driven by Industry 4.0 (I 4.0), which is a collection of nine cyber-physical and data technologies.
I 4.0 is the fourth manufacturing revolution since the maiden one triggered by the development of the steam engine. The second revolution, driven by electricity, led to rapid mass production in the second half of the 19th century, once again transforming the industry. Subsequently, the third revolution began in the 1970s and 1980s with the growth of the Internet. This phase saw the deconstruction of value chains and outsourcing of production, with low labour cost destinations like China and Thailand emerging as manufacturing powerhouses.
What does I 4.0 stand for? Simply put, it is a set of key digital and technological mega-trends transforming the manufacturing workplace the world over. There are nine sub-parts to I 4.0.
The fourth manufacturing revolution will redefine production in the digital 21st century. To be a part of the new revolution, manufacturing growth and creation of new jobs in India have to go beyond the industrial parks housing large-scale, labour-intensive plants from the 20th century. The challenge for India is daunting, as this new wave of the digitization of manufacturing is coinciding with a period of sluggish global economic growth, with little sign of revival in the near future. In fact, the global merchandise trade as a percentage of global GDP has been stagnant at 24% since 2010.
The new paradigm will be characterized by three key structural shifts in manufacturing.
First, I 4.0 is fundamentally altering the cost economics of manufacturing and competitiveness of countries. This shift erodes India’s big advantage of a large pool of low-cost labour, as the trade-off between labour and automation swings in the favour of the latter. BCG research indicates that the price of industrial robots is expected to come down by 25% over the next decade, with a 5% performance improvement year on year, accelerating the pace of adoption of robotic automation.
The changed economics of manufacturing also erodes the advantage of large-scale plants in low labour cost countries and makes low-scale plants that are closer to the market more competitive. For example, Adidas recently announced that it was bringing back some of its production from China to Germany as advances in robotics made it cost effective to do so. The company is also planning to build smaller plants in its major markets over the medium term, thereby cutting lengthy shipping times and enabling faster delivery to customers.
Robots in this new paradigm are not just the automatic welding bots that have been used for decades in the automobile assembly line. They are more trainable and have a very high artificial intelligence (AI) coefficient. Baxter is a cost-effective robot – available for $25,000 – that can be trained in no time by simply moving its arm through a work-cycle. And within a minute, the robot can be transformed to perform any desired activity.
The second structural shift is the growth of global digital services driven by I 4.0 technologies. These services are becoming growth and profit drivers for manufacturing companies. For example, the aeronautical industry detects and solves problems in aircraft engines flying all over the world through digital remote sensing technology. The technology enables them to harness massive amounts of real-time data collected from the millions of embedded sensors in the engines. In 2013, services constituted 23% of the total exports from the Organization for Economic Co-operation and Development (OECD) countries, up from just 17% in 1980, reflecting the growth of these revenue streams for global companies. GE is building a completely new business of digital services with the launch of Predix, the world’s first industrial operations system and platform. Predix connects industrial assets, and collects and analyses data to deliver real-time insights for optimizing industrial infrastructure and operations.
The major implication for India is that digital services render boundaries between countries and labour cost advantage irrelevant. The availability of skills and capabilities will be the key factors driving manufacturing location decisions going forward.
The third structural shift driving the new manufacturing paradigm is the growth of digital trading platforms. These platforms are transforming global supply chains, further blurring boundaries between countries and making traditional country-based business models redundant. Today, goods worth $700 billion are traded through Alibaba and Amazon. In effect, these global market platforms and their associated supply and delivery systems are replacing the complex supply chains that were a common feature of the first three phases of globalization. Even small companies, therefore, find it much easier to compete in a global market today. For example, a few years ago, a Chinese mobile phone company entered India by leveraging one such platform, and did so more quickly and with much less investment than one of its competitors. It is quite possible that Alibaba founder Jack Ma may in the future propose building a global e-commerce platform that enables small and medium enterprises (SMEs) to directly market to customers and source from suppliers all over the world. This would eliminate the need for businesses to set up independent supply chains.
These structural shifts will not just transform competitive rules and supply chain operations. They will impact entire industries such as logistics and even international banks that have built significant businesses funding global trade.
To be a part of the new paradigm, India needs a Make in India 2.0 policy framework that will allow it to build relevant capabilities and competitiveness, creating jobs for the 12 million young people that enter the job market every year. To deliver effective results, the policy framework must be based on a four-pronged strategy.
First, we must continue our increased focus on labour-intensive sectors to successfully create jobs. Between 2008 and 2013, 80% of production growth and 40% of export growth have been in non-labour intensive sectors such as metals, chemicals and plastics. We have a big window of opportunity in textiles as production capacity moves from manufacturing behemoth China as the wages there increase. The Indian government has already responded to this opportunity by introducing an innovative policy with many firsts, including allowing fixed-term employment. However, we can do more, including tying up market access with a free-trade agreement (FTA) with the European Union (EU).
In the textile industry, we could encourage manufacturers to build ‘future-ready’ facilities that combine the labour cost advantage with new-age digital technologies like robotics. To make this happen, the Technology Upgradation Fund, a policy for the textile industry aimed at incentivizing capital formation with a technology bias, could be revised with specific focus on I 4.0 investments.
Second, we need a renewed policy focus on the SME sector to be prepared for the growth of smaller plants in the new paradigm. India has had an SME policy for a long time and is perhaps one of the few countries with a specific ministry for the segment. Despite this, the fact remains that companies with annualized sales of over Rs1,000 crore are growing, while SMEs are not. Credit extended to SMEs as a proportion of total corporate lending is also shrinking. To drive positive change, we need to rethink our SME strategy for the new manufacturing paradigm, with a 21st century mindset. We can take inspiration from many countries that are doing so. For example, Singapore announced an industry transformation package of S$4.5 billion to help companies, especially SMEs, become ‘future-ready’ by building their I 4.0 technology capabilities.
The third effective Make in India 2.0 strategy should be to grow digital services. Globally, trade in digital-enabled services is growing faster than trade in goods and traditional services. Cheaper and smarter sensors are enabling the Internet of Things (IoT), while 3D printing is allowing remote production of spare parts. These advances are shifting the potential life cycle value from equipment manufacturers to service providers. Large software companies are well placed to provide these services across a range of industries. However, we need to build the requisite digital ecosystem and invest in newer technologies such as sensors, 3D printing and cloud networks.
Nasscom recently said that India is looking to capture 20% of the IoT market, which is projected to be $300 billion by 2020.This is just the starting point. As the value and ambit of digital services grows, we need to leverage the advantage we have built in IT eS globally. However, estimates suggest India is facing a critical talent shortfall in areas such as cybersecurity and Big Data analytics. Reorienting our skilling initiatives towards building the requisite skill sets to win a share of the global digital services pie will be critical.
Finally, large-scale sectors such as automotive that are further along the I 4.0 adoption curve have to be encouraged to make prominent investments in technology, and build capabilities to manage ‘robot workers’. As tasks involving humans become increasingly more complex, the capacity of workers to master new skills and the availability of programming talent will become key drivers of competitiveness.
One of the strategies under discussion in several countries is to build ‘I 4.0 Immersion Centers’ in a public-private partnership model to help companies accelerate their learning process. Immersion centres bring all the nine I 4.0 technologies in a working plant to demonstrate how the plant of the 21st century will look like. The industry also needs to take full ownership of leveraging I 4.0, learning from global leaders like Bosch which is already producing key parts in a semi-automated way. The engineering and electronics major produces disc valves at 30% lower production time and cost using I 4.0 technologies in its Hamburg factory.
The global manufacturing sector is undergoing a massive structural transformation. Make in India 2.0 must enable us to retool our manufacturing for the digitally driven future. India has time to get it right this time – every new manufacturing technology in the past took about several decades to mature. We missed the bus when low-cost manufacturing took off in 1990. Hopefully, we will emerge winners now, as the digital revolution takes off over the next few decades.
Arun Bruce is partner and director, and Arindam Bhattacharya is senior partner and director at BCG. The views expressed here are those of the authors.
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Economic transformation for social change: Speech by Deputy Finance Minister Mcebisi Jonas
Speech by Deputy Minister of Finance Mcebisi Jonas at the 2016 ABSIP Financial Services Sector Conference, 8 November 2016, Johannesburg
Before I begin with my opening remarks, I would like to acknowledge the sterling work that the Association of Black Securities and Investment Professionals (ABSIP) has been doing during the last four years under the strong leadership of Ms Tryphosa Ramona. I am told that her term of office as President is coming to an end this year. Thank you for providing guidance to the organisation during difficult and challenging times. The new leadership must protect the gains made during your term in office and continue to move the transformation agenda forward in the financial and asset management sector.
We hope that the transition and the process of electing a new President and the executive will be managed efficiently with outcomes consistent with the best and proud traditions of ABSIP, Well done Ms Ramona and good luck to ABSIP on its future endeavours.
Global growth slowed to a six-year low in 2015, and the outlook for 2016 and 2017 remains subdued. Economic pressures have been most hard-felt in emerging markets, especially Brazil, Russia, and South Africa. This is a result of slowing growth in China, weak commodity prices, lower and more volatile capital flows, higher interest rates in US, and less space for counter-cyclical fiscal policy and monetary policy support.
South Africa is often described as a fragile economy. Fragile economies are those that have become too dependent on unreliable sources of foreign investment to finance their own growth ambitions, and in South Africa’s case, even their infrastructure and social investments. What countries such as Brazil, Turkey, and South Africa have in common is their extreme vulnerability to external shocks, with susceptibility to large-scale financial crises caused by even relatively small economic shocks.
The reason for this has to do with the structure of the economy, and the failure to implement the necessary economic reforms. When one compares economies such as Brazil, Turkey and South Africa with more resilient economies such as South Korea, Malaysia, and even China, a number of core differences are evident.
Firstly, fragile economies have very low levels of gross domestic savings as a percentage of GDP (14% for Turkey, 16% for SA compared to 34% for South Korea and 35% for Malaysia). Both government and citizens in South Africa are heavily indebted, which makes us extremely vulnerable. Debt servicing has become the fastest growing budget item, again both of government and private households. To put it into perspective, we could fund the annual budget of an additional two provinces, or provide the additional costs for free higher education for the next five years, on what we spend on debt servicing in one year. Reigning in rampant government spending, addressing the contingent liability concerns in our SOEs, and terminating/deferring spending on unviable projects is non-negotiable.
Secondly, the more resilient economies have far higher levels of fixed capital investment. For example South Africa’s fixed capital investment as a percentage of GDP stands at 19%, Brazil at 18% and Turkey at 20%, compared to China at 47% and South Korea at 30%. We have to increase both public and private sector levels of investment in fixed capital.
Continued Government investment in infrastructure will not in itself enable us to escape our low growth trap. We need to urgently increase levels of private sector investment in our economy. To do this, we require economic policy certainty and more deliberate efforts to reduce the costs and ease of doing business in South Africa. I will pay more attention to this shortly.
The third area that sets fragile economies apart from more resilient ones, relates to the structure of the economy. Again the hard facts speak for themselves. Countries that are locked-in to global markets as primary commodity exporters find themselves extremely vulnerable in times of lower commodities demand and prices. This accounts for the poor performance of economies such as Russia, Brazil, Nigeria and of course South Africa.
Economies that have enjoyed higher and more equitable growth, and have proved far more resilient in the recent global downturn, are those with more diversified economies and higher levels of manufacturing value added. South Africa’s manufacturing value added as a percentage of GDP is around 12%, Turkey’s around 13% and Brazil’s 17%, compared to China (32%), South Korea (31%) and Thailand (33%). It is especially in the high technology exports that the real differences are exposed. As a percentage of manufactured exports, high technology goods make up only 4.5% in SA and 2% in Turkey, compared to 43% in Malaysia, and 26% in both China and South Korea. This is directly attributed to government support in areas of R&D, technology development, industrial policy, export incentives and logistics efficiencies.
Many economists describe the South African economy as being caught in a low growth trap since the 1970s. Growth in South Africa has been slowing since 2011, and despite the 3.3% growth recorded in the second quarter, we remain in a downward phase of the business cycle. Growth in the primary (extractive) sector has been volatile. A rebound in mining in 2015 following normalisation of strike affected PGM output was offset by a contracting agricultural sector beset by the worst drought in decades. The manufacturing sector has also remained flat since 2014, and even the services sector has been slowing since 2011. And our bad politics is not helping.
As the Finance Minister noted in the MTBPS, the country is at cross-roads. Continuation of our existing growth model, with its low growth and inherent structured inequalities, will increase spending pressures on welfare, social security and debt servicing. This is a scenario we cannot entertain.
Since 1994 we have reduced the number of people living in extreme poverty from 41.1 per cent to 21.5 per cent. This is a huge achievement, this was the cornerstone of our “post-94 social bargain” – what we could call “redistribution through welfare” – this however is on a dangerous path of becoming unviable and is unravelling, due to low rates of economic growth, particularly since 2008 and limits to fiscal income that can be redistributed.
There is no doubt that the social bargain –especially the welfare spending component - brought significant social returns in reducing extreme poverty and vulnerability, and extending access to basic services. School enrolment and access to services such as sanitation and electricity have increased dramatically.
Another major transformational outcome has been the creation of a black middle class, but this was mostly through state employment and we have been less successful in creating an entrepreneurial black middle class.
But social inequality has not reduced. We have not deracialised ownership of the economy, and our ambitious project of creating a developmental state has been hamstrung by patronage and corruption. Higher social returns have accrued to those already endowed with capital and skills. Our poor education and training outcomes have not helped.
According to the Department of Labour’s Commission for Employment Equity (CEE) Annual Report for 2015-2016, the white population group comprise 68.9 per cent of top management and 58.1 per cent of senior management in 2015, compared to their share of the economically active population of just under 10 per cent. By comparison, the black African population group comprise 14.3 per cent of top management and 21.2 per cent of senior management in 2015, despite comprising 77.4 per cent of the economically active population.
It is increasingly evident that we need a new social bargain – a new consensus – to build a faster growing and more inclusive economy.
This new social bargain should build on the great strengths we have as a country. We have strong institutions and a robust legal framework; we have well developed and deep capital markets; our share of GDP spending on infrastructure exceeds that of most other economies; we still have a good environment for business compared to many of our peers; and we are witnessing a renewed vigor from government, business and civil society for economic reforms.
At the heart of this new consensus for inclusive growth, we need to cultivate three new national obsessions that will re-inforce each other:
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A national obsession with renewed growth and vigorous industrialisation, based on reducing growth constraints and fostering new technological capabilities that will grow employment, incomes and exports.
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A national obsession with constructing a government that is stronger, more capable and less corrupt.
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A national obsession with education and skills development, to achieve the first two.
Exceptional leadership within government, business, labour and civil society will be necessary to re-mobilise society as a whole behind this national project, and to extract the kind of concessions and compromises necessary. New institutional mechanisms for collective socio-economic governance and accountability will have to be developed as a matter of urgency.
The first and important task of this collective leadership is to unite to preserve our sovereign credit rating. We have no choice but to remain optimistic.
Secondly, we need deliberate and urgent actions among relevant ministries and SOEs to remove constraints to growth. Already many of these actions have commenced, including reducing high cross border costs (including port tariffs); addressing electricity supply issues; as well as addressing regulatory bottlenecks and labour market constraints, especially labour unrests. We are alleviating infrastructure constraints and bottle necks through allocating R865 billion over MTEF to improve infrastructure. We are also working with municipalities to improve the ease of doing business, and have established a one-stop-shop (Invest SA) to coordinate investment promotion, facilitation and after-care at the national level. Invest SA will also ease delays for investors in obtaining visas, licences, permits, registration and approvals. We are also easing certain immigration regulations, including business visa-waiver for India, China, Brazil, Russia and other countries.
Thirdly, we must address barriers to entry and deliberately enable increased black ownership of the economy. But this must be done through enhancing productivity and competitiveness, so that as we address anti-competitive behaviour among cartels, we do not negatively affect output, jobs and exports.
Key initiatives we are driving to enable black ownership includes using the PIC to inject R70bn into agriculture, mining, manufacturing, infrastructure and energy. We are also prioritising SME support through our Gazelles programme, and have also just established an SME public-private Venture Capital Fund.
Platforms such as ABSIP are critical for providing substance and leadership in our society.
ABSIP is a thought leader in the financial services industry – which is not only a critical element of the economy, given its size, but also in the role that it plays in directing investments – in other words, directing the course of the shape of our economy.
My thoughts are that we have made significant progress in transforming the financial sector, or at least putting the mechanisms for transformation in place, with regard to consumer protection, financial stability and BBBEE.
But I would want to challenge ABSIP to assess whether our financial sector is doing enough to grow a competitive economy. Are we directing sufficient financial resources into the productive economy and into economic infrastructure? Is the financial sector, to paraphrase my earlier remarks, obsessed with the country’s industrialisation? Is the financial sector contributing sufficiently to the country’s growth and development, and if not, what can be done to improve this? Is our financial services sector sufficiently patriotic? What role can our domestic financial sector play in making us less fragile?
I have no doubt that ABSIP is the correct organisation to take up these issues and be a central cog in the new growth coalition we need to build.
I thank you.
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Chicken farming is a ‘low-hanging fruit’, says trade forum analyst
Chicken farming is a “low-hanging fruit” for Namibia to create employment in the short and medium term.
“This is not the time to learn, this is the time to implement,” says Maria Lisa Immanuel, senior trade and investment policy analyst of the Namibia Trade Forum. Immanuel made this statement during the official launch of the multi-million Namboer Poultry initiative last week in Windhoek, saying hard times are not coming, they are with us.
In tough times like these, policymakers should focus and prioritise those “low-hanging fruit” initiatives, which make economic sense and have great potential to create employment. One such initiative is to stimulate poultry production in the country.
Poultry farming comes with untapped business opportunities carrying great potential to create employment across the entire value chain and consequently drive rural industrialisation. The poultry industry forms an integral part of the agro-processing sector in Namibia. This sector offers significant potential to increase value addition, to create jobs, income and export opportunities to enhance food security and reduce dependence on imports and hence, has been prioritised by government through various policy initiatives.
Poultry production is in its infancy in Namibia. Until 2012, Namibia imported all its poultry products. Government under the Ministry of Industrialisation, Trade and SME Development (MITSMED) decided to protect the industry through quantitative restriction measures using the Import and Export Act, No. 30 of 1994. The quantitative restriction gives room for new poultry production initiatives to set themselves up without major threats from imports. Namibia’s total demand for poultry products per month is estimated between 3 000 and 3 500 tonnes.
The Namib Poultry Industry (NPI), presently the only broiler company in Namibia, is able to supply the domestic market with about 1 800 tonnes per month, about 50% of domestic demand. The quantitative restriction measures allow maximum importation of 1 500 tonnes per month. The protection had a positive impact in the poultry industry in the sense that many people see great opportunities to stimulate production and supply the domestic market.
“Opportunities in this industry are at two levels. The first level is to enter into broiler production. This requires large investments as it is capital intensive. Bio-safety systems and advanced infrastructure are a must. Therefore, a highly skilled labour force is crucial to the successful operation of the business. Feed cost takes up to 60% of total production cost or more. Unfortunately, Namibia is a net importer of feed. Poultry feed production could therefore also be a positive spin-off in this industry. Water is also a big component of broiler production and due to shortage of water in and around Windhoek, future production is viable in areas like Otavi, ‘Ovamboland’, Rundu and Katima Mulilo. Large productions also have an advantage of producing for neighbouring markets such as Zambia, Zimbabwe, DR Congo, etc. Namibia has an advantage in the logistics hub connecting to all these markets,” says Immanuel.
“There is a high demand for indigenous chicken in Namibia. Small-scale poultry farming has the potential to lead rural industrialisation in the regions, especially at such times when the effects of drought have threatened food security at house and national level. Most of the rural households in Namibia have always traditionally kept chickens for own consumption. This ‘indigenous knowledge’ factor is the comparative advantage government should take advantage of by planning targeted programmes to make this a reality.
“Women and youth in rural areas stand to benefit most in indigenous poultry farming. A business model which allows the youth to take over the running of business systems while the women focus on production could be viable. Indigenous chicken farming is less capital intensive, with low rate of disease outbreak as the breed is adaptable to the environmental conditions. They also require flexible feeding ratios and feed is easily sourced as it can be anything from mahangu to rice, insects and maize by-products, etc. It requires less veterinary services and infrastructure is simple and cost effective. Support should be in the form of availing start-up inputs as well as training in poultry management and husbandry,” she notes.
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The global climate 2011-2015: Extreme weather increasingly linked to global warming
The World Meteorological Organization has published a detailed analysis of the global climate 2011-2015 – the hottest five-year period on record – and the increasingly visible human footprint on extreme weather and climate events with dangerous and costly impacts.
The record temperatures were accompanied by rising sea levels and declines in Arctic sea-ice extent, continental glaciers and northern hemisphere snow cover.
All these climate change indicators confirmed the long-term warming trend caused by greenhouse gases. Carbon dioxide reached the significant milestone of 400 parts per million in the atmosphere for the first time in 2015, according to the WMO report which was submitted to U.N. climate change conference.
The Global Climate in 2011-2015 also examines whether human-induced climate change was directly linked to individual extreme events. Of 79 studies published by the Bulletin of the American Meteorological Society between 2011 and 2014, more than half found that human-induced climate change contributed to the extreme event in question. Some studies found that the probability of extreme heat increased by 10 times or more.
“The Paris Agreement aims at limiting the global temperature increase to well below 2°Celsius and pursuing efforts towards 1.5°Celsius above pre-industrial levels. This report confirms that the average temperature in 2015 had already reached the 1°C mark. We just had the hottest five-year period on record, with 2015 claiming the title of hottest individual year. Even that record is likely to be beaten in 2016,” said WMO Secretary-General Petteri Taalas.
“The effects of climate change have been consistently visible on the global scale since the 1980s: rising global temperature, both over land and in the ocean; sea-level rise; and the widespread melting of ice. It has increased the risks of extreme events such as heatwaves, drought, record rainfall and damaging floods,” said Mr Taalas.
The report highlighted some of the high-impact events. These included the East African drought in 2010-2012 which caused an estimated 258,000 excess deaths and the 2013-2015 southern African drought; flooding in South-East Asia in 2011 which killed 800 people and caused more than US$40 billion in economic losses, 2015 heatwaves in India and Pakistan in 2015, which claimed more than 4,100 lives; Hurricane Sandy in 2012 which caused US$67 billion in economic losses in the United States of America, and Typhoon Haiyan which killed 7,800 people in the Philippines in 2013.
The report was submitted to the Conference of the Parties of the United Nations Framework Convention on Climate Change. The five-year timescale allows a better understanding of multi-year warming trends and extreme events such as prolonged droughts and recurrent heatwaves than an annual report.
WMO will release its provisional assessment of the state of the climate in 2016 on 14 November to inform the climate change negotiations in Marrakech, Morrocco.
Highlights
2011-2015 was the warmest five-year period on record globally and for all continents apart from Africa (second warmest). Temperatures for the period were 0.57°C (1.03°F) above the average for the standard 1961-1990 reference period. The warmest year on record to date was 2015, during which temperatures were 0.76°C (1.37°F) above the 1961-1990 average, followed by 2014. The year 2015 was also the first year in which global temperatures were more than 1°C above the pre-industrial era.
Global ocean temperatures were also at unprecedented levels. Globally averaged sea-surface temperatures for 2015 were the highest on record, with 2014 in second place. Sea-surface temperatures for the period were above average in most of the world, although they were below average in parts of the Southern Ocean and the eastern South Pacific.
A strong La Niña event (2011) and powerful El Niño (2015/2016) influenced the temperatures of individual years without changing the underlying warming trend.
Ice and snow
Arctic sea ice continued its decline. Averaged over 2011-2015, the mean Arctic sea-ice extent in September was 4.70 million km2, 28% below the 1981-2010 average. The minimum summer sea-ice extent of 3.39 million km2 in 2012 was the lowest on record.
By contrast, for much of the period 2011-2015, the Antarctic sea-ice extent was above the 1981-2010 mean value, particularly for the winter maximum.
Summer surface melting of the Greenland ice sheet continued at above-average levels, with the summer melt extent exceeding the 1981-2010 average in all five years from 2011 to 2015. Mountain glaciers also continued their decline.
Northern hemisphere snow cover extent was well below average in all five years and in all months from May to August, continuing a strong downward trend.
Sea level rise
As the oceans warm, they expand, resulting in both global and regional sea-level rise. Increased ocean heat content accounts for about 40% of the observed global sea-level increase over the past 60 years. A number of studies have concluded that the contribution of continental ice sheets, particularly Greenland and west Antarctica, to sea-level rise is accelerating.
During the satellite record from 1993 to present, sea levels have risen approximately 3 mm per year, compared to the average 1900-2010 trend (based on tide gauges) of 1.7 mm per year.
Climate change and extreme weather
Many individual extreme weather and climate events recorded during 2011-2015 were made more likely as a result of human-induced (anthropogenic) climate change. In the case of some extreme high temperatures, the probability increased by a factor of ten or more.
Examples include the record high seasonal and annual temperatures in the United States in 2012 and in Australia in 2013, hot summers in eastern Asia and western Europe in 2013, heatwaves in spring and autumn 2014 in Australia, record annual warmth in Europe in 2014, and a heatwave in Argentina in December 2013.
The direct signals were not as strong for precipitation extremes (both high and low). In numerous cases, including the 2011 flooding in South-East Asia, the 2013-2015 drought in southern Brazil, and the very wet winter of 2013-2014 in the United Kingdom, no clear evidence was found of an influence from anthropogenic climate change. However, in the case of the extreme rainfall in the United Kingdom in December 2015, it was found that climate change had made such an event about 40% more likely.
Some impacts were linked to increased vulnerability. A study of the 2014 drought in south-east Brazil found that similar rainfall deficits had occurred on three other occasions since 1940, but that the impacts were exacerbated by a substantial increase in the demand for water, due to population growth.
Some longer-term events, which have not yet been the subject of formal attribution studies, are consistent with projections of near- and long-term climate change. These include increased incidence of multi-year drought in the subtropics, as manifested in the 2011-2015 period in the southern United States, parts of southern Australia and, towards the end of the period, southern Africa.
There have also been events, such as the unusually prolonged, intense and hot dry seasons in the Amazon basin of Brazil in both 2014 and 2015, which are of concern as potential “tipping points” in the climate system.
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tralac’s Daily News Selection
The selection: Tuesday, 8 November 2016
The two-day Invest in Namibia conference began today in Windhoek: a preview
@Trade_Kenya: Meeting on validation of the National Trade Policy ongoing, chaired by Trade PS, @Kiptoock
@o_merk: The value of global goods flows - ten times bigger in 2014 than in 1980, by @McKinsey
@JohnAshbourne: Nigeria has a booming consumer economy, but - other than oil - it produces very little. 90% of containers arriving at Naija ports leave empty.
Seaborne shipping grows at slowest pace since 2009: future remains uncertain (UNCTAD)
Seaborne shipments passed 10 billion tons for the first time ever in 2015, up 2.1% from 9.8 billion tons the year before, the UNCTAD Review of Maritime Transport 2016 (pdf) says, noting that this is the slowest pace of growth in the industry since 2009 and that future growth looks uncertain. Shipping carried more than 80% of the world’s goods by volume in 2015, and its slow growth reflects sluggish global trade, albeit with variations in the different sectors. Shipping of oil recorded its best performance since 2008, thanks to low oil prices, ample supply and stable demand. But shipping’s overall growth was dragged down by the limited growth of dry bulk commodity trade, in particular coal and iron ore, and by the poor performance of container shipping, which carries about 95% of the world’s manufactured goods. Developing countries account for ever larger shares of international shipping. By volume, they accounted for 60% of the goods loaded onto ships in 2015. In the same year, their share of goods unloaded was 62%, up from 41% in 2006. With the exception of a few Asian countries such as China, most developing country ports lack the infrastructure for bigger ships. So unless they spend heavily on upgrading their ports, developing countries face fewer port calls, less competitive markets and higher shipping costs.
Africa, global air freight posts stronger September growth (IATA)
The International Air Transport Association has released data for global air freight markets in September 2016 showing that demand, measured in freight tonne kilometers, rose 6.1% year-on-year. This was the fastest pace of growth since the disruption caused by the US West Coast seaports strike in February 2015. African carriers saw freight demand increase by 12.7% in September 2016 compared to the same month last year – the fastest rate in nearly two years. Capacity surged year-on-year by 34% on the back of long-haul expansion in particular by Ethiopian Airlines and North African carriers. [IATA’s September passenger traffic results]
Tanzania: Import bill maintains declining trend (Daily News)
The value of imports of goods and services has in five consecutive months declined to $10,875.6 million in September 2016, from $11,967.4 million in May, due to shilling depreciation that made imports more expensive. According to the Bank of Tanzania monthly economic report for September (pdf), the substitution of oil for gas in power generation also contributed to the decline of imports of goods and services. During the period under review, all categories of imports declined, save for industrial raw materials. The value of oil imports, which is dominant in goods import, declined by 9.4% to $2,805.6 million due to a fall in prices in the world market, which more than offset the modest increase in volume. [Electronic transactions jump to 88trn/- in 2015]
Egypt: Deficit in trade balance down by 3.1% in August (Daily News)
In a statement issued on Monday, CAPMAS noted that the deceleration happened because the value of exports increased by 22.9% to reach EGP 16.7bn in August compared to EGP 13.6bn in August 2015, due to an increase in the value of crude oil by 16.6%, ready-made garments by 7.1%, food ingredients by 6.9%, and fertilisers by 87.9%. On the other hand, the value of imports increased by 3.6%, rising to EGP 54.4bn instead of EGP 52.5bn in August 2015.
Roman Grynberg: India the world’s biggest exporter of bovine meat (The Namibian)
Global trade produces some of the most intriguing and often unexpected results. But they are only strange if you do not understand the details of the particular commodity. For example, Germany is the world’s biggest exporter of green coffee, and it does so without a coffee plant for 5 000 kilometres in any direction from Frankfurt. Germany exports more green coffee than all of Africa put together. Botswana exports boats from Maun in the Kalahari Desert, and India regularly exports four times as much Darjeeling tea as its 87 registered plantations produces. But perhaps the oddest outcome I have seen in international trade is the fact that largely Hindu and vegetarian India is now the world’s biggest exporter of bovine meat, surpassing Australia, the USA and Brazil.
Namibia: Growth strategies identified for 10 local industries (New Era)
The Ministry of Industrialisation, Trade and SME Development, on Friday morning, launched ten Industry Growth Strategies and a new Micro, Small and Medium Enterprise Policy that are aimed at shaping a new business environment for local businesses. However, Minister Immanuel Ngatjizeko cautioned that policies and strategies alone do not help if they are not followed by implementation. Through the execution of the 10 Industry Growth Strategies as well as the MSME National Policy, the MITSMED, in close cooperation with other line ministries, will support local value addition, upgrading and economic diversification.
Dry port at Usakos could ease pressure on Walvis Bay (Southern Times)
If the town of Usakos, some 180 kilometres from Walvis Bay on the western coast of Namibia, were to establish a dry port, it could turn the area into a logistics and transport hub and boost investment that can support social and economic activity and bring in net income worth R1.3bn. This is according to John Sanders, a business entrepreneur and owner of Amir Consulting Services, which specialises in transport economics and logistics. According to Sanders, it takes five to six days for cargo to clear at the Walvis Bay due to capacity challenges, which is why Namport is busy expanding the harbour, but that situation can be turned around with the construction of the Usakos dry port, which could reduce the time by one or two days.
Tanzania: Stakeholder perspectives on local content requirements in the petroleum sector (CMI)
To complete this study, we interviewed 40 stakeholders who had direct interests in the development of an LCP in the country: government officials, civil society organizations, educational institutions, private sector companies, and international oil companies. We also interviewed main donors involved in the LCP process, all of which also have strong commercial interests in the natural gas sector in Tanzania: the USA, the EU, the UK, Germany, Denmark and Norway.
East and Southern African members discuss transit guidelines (WCO)
Transit experts from Customs administrations in the East and Southern Africa region discussed the WCO Transit Guidelines at a Workshop held in Lusaka (31 October - 4 November 2016). The workshop was run in cooperation with the Zambia Revenue Authority and JICA. The workshop focused on discussion of the possible content of the Transit Guidelines, which will offer clear guiding principles and recommended practices for the establishment of effective transit regimes and will incorporate Members’ existing practices relating to transit operations. Transit experts exchanged views on over 146 standards drafted on different aspects of transit operations, including information exchange, guarantee systems, fees and charges for transit, Customs seals and coordinated border management. The development of the Transit Guidelines will be completed next year and this new WCO tool will be launched at the WCO Global Conference on Transit to be held on 10-11 July 2017 at WCO headquarters in Brussels.
Establishing accreditation in developing economies: a guide to opening the door for global trade (UNIDO)
The significance of an accreditation system for trade and the economy, as well as practical advice for the establishment of accreditation bodies, are the focus of a newly released publication titled, Establishing accreditation in developing economies: a guide to opening the door for global trade (pdf). Prepared by UNIDO, in cooperation with the International Accreditation Forum and the International Laboratory Accreditation Cooperation, the publication was launched at the ILAC - IAF joint General Assembly. The guide aims to support the common goal of “tested, inspected or certified once and accepted everywhere”. It is comprised of two parts. The first part focuses on the need for accreditation and the benefits that an accreditation system can bring to good governance. It provides policymakers with a framework for establishing an accreditation body or partnering with neighbouring economies to form a shared system, which can bring an economy closer to its trading partners through mutually recognized arrangements of accreditation. The second part offers comprehensive practical advice and building blocks to those who are tasked with establishing an accreditation body.
UNCTAD’s latest Investment Policy Monitor
Some 36 countries took 53 investment policy measures between 1 May 2016 and 15 October 2016, according to UNCTAD’s latest Investment Policy Monitor (pdf). The share of liberalization, promotion and facilitation measures during this period was 74%, which is lower than the average in recent years. These policy measures show a continued move towards improving entry conditions, reducing restrictions and facilitating foreign investment. Most measures were taken by developing countries and transition countries. New investment restrictions for foreign investors were mainly based on concerns about the local producers’ competitiveness or other national interests.
Toby Orr: Brexit should be good for Africa, and Africa could be good for Brexit, too (The Telegraph)
Some critics of Brexit accept that the UK will now have the freedom to alter trade policy in favour of supporting African development but doubt the institutional bandwidth exists to develop a set of enlightened trade policies. They believe all our efforts will be expended instead on trying to agree trade deals with the world’s big economies. But if British policymakers require motivation, then they should take a sideward glance at Turkey. Ankara has developed a strategic partnership with Africa, establishing trade agreements with 38 African countries and growing its network of embassies from just 12 in 2009 to 39 today. As a result, bilateral trade volumes have enjoyed a threefold increase since 2003. [The author is a senior partner at Portland and a director of Trade Out of Poverty]
Mohammad Razzaque, Brendan Vickers: Post-Brexit UK-ACP trading arrangements - some reflections (Commonwealth Trade Hot Topics)
The EU and its ACP partners have negotiated seven regional EPAs that are at different stages of finalisation or implementation (see Table 1). During the withdrawal negotiations, once the UK has triggered Article 50 of the Lisbon Treaty, the UK will continue to implement the EU’s common commercial policy and all bilateral and regional trade agreements, such as the EPAs. Once the UK has formally exited the EU, however, all rights and obligations under these various agreements will cease to apply and the UK will devise its own trade policy. Because the EPAs provide ‘better-than-MFN’ market access, the immediate impact could be that ACP exporters face MFN conditions in the UK market. While there is debate on what these MFN conditions would look like in a post-Brexit UK, one dominant view is that the EU MFN regime would be the starting point. Although current EU-UK MFN duty rates tend to be low, certain product categories, including those where ACP countries have export interests, attract much higher rates, known as tariff peaks. In the absence of more favourable trading arrangements, ACP exports to the UK could face a double impact. First, certain products could face higher MFN tariffs. Second, this would expose them to greater competition in the UK market, particularly from non-ACP developing countries. The overall impact will, however, depend on the relative significance of the UK market for ACP exports.
Related commentaries, resources: Daniel Gros - Triangulating Brexit (Project Syndicate), Full text: Theresa May’s address at India-UK Tech Summit, Joint statement between the UK, India governments
USA: Elite, public views towards global economic engagement (Pew Research)
The stark contrast between elite and public views of global economic engagement speaks to a larger divide in American society regarding the consequences of globalization. Educational attainment matters a great deal in terms of how Americans assess the benefits and costs of global economic engagement. In the April survey, six-in-ten Americans with a postgraduate degree thought involvement in the global economy was a good thing. More than half of Americans with a college degree felt the same. But only 36% of those with a high school education or less agreed.
China’s October exports, imports fall more than expected (Reuters)
South Africa: Rand takes over mantle of world’s most political currency (Bloomberg)
Angola, UNIDO, sign new country programming framework (UNIDO)
Cold-rolled steel imports hurting South Africa’s steel industry - trade group (Reuters)
Transnet sets aside $1.5bn for deals to expand services (Bloomberg)
Canada promises assistance for Nigerian exporters (The Nation)
ECOWAS Youth Council calls for immediate intervention Nigeria, Ghana trade, integration dispute (The Point)
The crowd-sourcing movement to improve African maps (Quartz)
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Seaborne shipping grows at slowest pace since 2009, future remains uncertain
Seaborne shipments passed 10 billion tons for the first time ever in 2015, up 2.1 per cent from 9.8 billion tons the year before, the UNCTAD Review of Maritime Transport 2016 says, noting that this is the slowest pace of growth in the industry since 2009 and that future growth looks uncertain.
Shipping carried more than 80 per cent of the world’s goods by volume in 2015, and its slow growth reflects sluggish global trade, albeit with variations in the different sectors.
Shipping of oil recorded its best performance since 2008, thanks to low oil prices, ample supply and stable demand. But shipping’s overall growth was dragged down by the limited growth of dry bulk commodity trade, in particular coal and iron ore, and by the poor performance of container shipping, which carries about 95 per cent of the world’s manufactured goods.
Despite this slow growth, the industry’s carrying capacity continued to grow, jumping 3.5 per cent to 1.8 billion deadweight tons in 2015 and pushing freight rates down to record lows. In September 2016, the container market suffered its worst ever bankruptcy with the loss of Hanjin Shipping, the sector’s seventh biggest carrier.
“With global trade growing at its slowest pace since the financial crisis, the immediate outlook for the shipping industry remains uncertain and subject to downside risks,” UNCTAD Secretary-General Mukhisa Kituyi said, ahead of the report’s launch on 7 November.
“The push for ever larger ships is at the root of the industry’s problems,” he added. “There’s just not enough cargo right now to fill the newly acquired, bigger vessels.”
Falling demand from China, low commodity prices, over supply of ships and geopolitical uncertainties in some oil and gas producing countries all add to the current downside risks affecting shipping.
Shipping companies have sought to reduce their operating costs by building and buying ever larger ships. But this may prove costly for developing countries, where transport costs are already higher than in other regions. With larger ships, total system costs go up, and smaller trading nations are increasingly confronted with oligopolistic liner markets.
Developing countries account for ever larger shares of international shipping. By volume, they accounted for 60 per cent of the goods loaded onto ships in 2015. In the same year, their share of goods unloaded was 62 per cent, up from 41 per cent in 2006.
With the exception of a few Asian countries such as China, most developing country ports lack the infrastructure for bigger ships. So unless they spend heavily on upgrading their ports, developing countries face fewer port calls, less competitive markets and higher shipping costs.
But thanks to population growth, and the potential maritime trade and business opportunities that may be generated by new transport infrastructure projects such as the extension of the Panama Canal and Suez Canal, the long-term prospects for shipping remain positive, the report says. It urges developing countries to identify possible comparative advantages in sectors such as shipbuilding, registration and staffing, and to benefit from them.
“With all the bad news in the media about the state of the shipping industry, we forget that seaborne trade continues to grow, offering job and growth opportunities for developing countries,” says Shamika N. Sirimanne, Director of the UNCTAD Division on Technology and Logistics.
Developing countries can also cut their costs by keeping their ports competitive.
“Many industries and businesses in developing countries could be much more competitive if their ports were more efficient,” Ms. Sirimanne says, adding that delays in African ports add roughly 10 per cent to the cost of imported goods and even more to exports.
The UNCTAD port training programme currently works with some 200 ports in 29 countries in Africa, Asia and Latin America, helping them to improve performance through management training, research projects and keeping up to date with the latest port legislation.
Shipping accounts for almost 3 per cent of greenhouse gas emissions today, but as the industry grows its emissions could jump by 50-250 per cent by 2050. Despite this, it remains one of the few sectors not regulated under the United Nations Framework Convention on Climate Change. But with the Paris Agreement on climate change coming into force on 4 November, and this month’s twenty-second Conference of the Party – COP 22 – meeting, shipping will be increasingly in the spotlight.
Review of Maritime Transport 2016
The present edition of the Review of Maritime Transport takes the view that the long-term growth prospects for seaborne trade and maritime businesses are positive. There are ample opportunities for developing countries to generate income and employment and help promote foreign trade.
Seaborne trade
In 2015, estimated world seaborne trade volumes surpassed 10 billion tons – the first time in the records of UNCTAD. Shipments expanded by 2.1 per cent, a pace notably slower than the historical average. The tanker trade segment recorded its best performance since 2008, while growth in the dry cargo sector, including bulk commodities and containerized trade in commodities, fell short of expectations. While a slowdown in China is bad news for shipping, other countries have the potential to drive further growth. South-South trade is gaining momentum, and planned initiatives such as the One Belt, One Road Initiative and the Partnership for Quality Infrastructure, as well as the expanded Panama Canal and Suez Canal, all have the potential to affect seaborne trade, reshape world shipping networks and generate business opportunities. In parallel, trends such as the fourth industrial revolution, big data and electronic commerce are unfolding, and entail both challenges and opportunities for countries and maritime transport.
Maritime businesses
The world fleet grew by 3.5 per cent in the 12 months to 1 January 2016 (in terms of dead-weight tons (dwt)). This is the lowest growth rate since 2003, yet still higher than the 2.1 per cent growth in demand, leading to a continued situation of global overcapacity. Different countries participate in different sectors of the shipping business, seizing opportunities to generate income and employment. As at January 2016, the top five ship owning economies (in terms of dwt) were Greece, Japan, China, Germany and Singapore, while the top five economies by flag of registration were Panama, Liberia, the Marshall Islands, Hong Kong (China) and Singapore. The largest shipbuilding countries are China, Japan and the Republic of Korea, accounting for 91.4 per cent of gross tonnage constructed in 2015. Most demolitions take place in Asia; four countries – Bangladesh, India, Pakistan and China – accounted for 95 per cent of ship scrapping gross tonnage in 2015. The largest suppliers of seafarers are China, Indonesia and the Philippines.
Freight rates and maritime transport costs
In 2015, most shipping segments, except for tankers, suffered historic low levels of freight rates and weak earnings, triggered by weak demand and oversupply of new tonnage. The tanker market remained strong, mainly because of the continuing and exceptional fall in oil prices. In the container segment, freight rates declined steadily, reaching record low prices as the market continued to struggle with weakening demand and the presence of ever-larger container vessels that had entered the market throughout the year. In an effort to deal with low freight rate levels and reduce losses, carriers continued to consider measures to improve efficiency and optimize operations, as in previous years. Key measures included cascading, idling, slow steaming, and wider consolidation and integration, as well as the restructuring of new alliances.
Ports
The overall port industry, including the container sector, experienced significant declines in growth, with growth rates for the largest ports only just remaining positive. The 20 leading ports by volume experienced an 85 per cent decline in growth, from 6.3 per cent in 2014 to 0.9 per cent in 2015. Of the seven largest ports to have recorded declines in throughput, Singapore was the only one not located in China. Nonetheless, with 14 of the top 20 ports located in China, some ports posted impressive growth, and one (Suzhou) even grew by double digits. The top 20 container ports, which usually account for about half of the world’s container port throughput and provide a straightforward overview of the industry in any year, showed a 95 per cent decline in growth, from 5.6 per cent in 2014 to 0.5 per cent in 2015.
Legal issues and regulatory developments
During the period under review, important developments included the adoption of the 2030 Agenda for Sustainable Development in September 2015 and the Paris Agreement under the United Nations Framework Convention on Climate Change in December 2015. Their implementation, along with that of the Addis Ababa Action Agenda, adopted in July 2015, which provides a global framework for financing development post-2015, is expected to bring increased opportunities for developing countries.
Among regulatory initiatives, it is worth noting the entry into force on 1 July 2016 of the International Convention for the Safety of Life at Sea amendments related to the mandatory verification of the gross mass of containers, which will contribute to improving the stability and safety of ships and avoiding maritime accidents.
At the International Maritime Organization, discussions continued on the reduction of greenhouse gas emissions from international shipping and on technical cooperation and transfer of technology particularly to developing countries. Continued enhancements were made to regulatory measures in the field of maritime and supply chain security and their implementation.
Areas of progress included the implementation of authorized economic operator programmes and an increasing number of bilateral mutual recognition agreements that will, in due course, form the basis for the recognition of authorized economic operators at a multilateral level. As regards suppression of maritime piracy and armed robbery, in 2015, only a modest increase of 4.1 per cent was observed in the number of incidents reported to the International Maritime Organization, compared with 2014.
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2016: World Bank Group moves fast to support stepped up global climate ambition
Since the Paris Agreement was adopted at COP21 in December 2015, the world has seen increased ambition on climate change. Almost every country in the world has now set national climate targets, and the Agreement has gone into force much earlier than expected.
However, global climate action is still not happening at the scale or speed needed to meet the Paris goal of keeping global temperature rise to below 2 degrees Celsius.
It started with the bang of a gavel. Since the adoption of the Paris Agreement in December 2015, the world has seen a year of unparalleled ambition on climate change.
Almost every country on Earth – 190 in all – have now set national climate targets as part of the Paris process. Over the course of 2016, there have been important steps forward on aviation, on short-lived climate pollutants, and on putting a price on carbon pollution. Renewable energy surpassed coal to become the largest source of installed power capacity in the world. To date, 100 countries have ratified the Paris Agreement, bringing it into force on November 4 – much faster than anyone would have expected when it was adopted.
Despite these positive steps, global action on climate change is still far from the level needed to achieve the Paris goal of keeping the rise in global temperature to below 2 degrees Celsius by the end of the century.
Over the past year, the World Bank Group has moved quickly to build on the momentum and set the stage for a new level of ambition, committing billions to help countries meet their climate goals, delivering assistance across sectors, and pushing forward on global issues to reflect the growing international consensus that climate change must be tackled rapidly, systematically, and at scale.
The urgency is driven by the clear threat climate change poses to the achievement of the Bank Group’s overarching goals: ending poverty and boosting shared prosperity. One year ago, the Bank Group warned that without rapid action, climate change could push more than 100 million additional people into poverty by 2030.
In April, the Bank Group adopted a Climate Change Action Plan, based on growing demand for support from client countries. Under the Action Plan, the Bank Group is integrating climate change into all of its work, and expanding commitments in high-impact areas such as renewable energy, energy efficiency, disaster preparedness, and urban resilience.
“The Climate Action Plan is the World Bank Group’s own Paris commitment,” said John Roome, Senior Director for Climate Change at the World Bank. “It allows us to pool our resources from across different sectors and target them for the highest impact, providing countries systematic solutions that reduce emissions and increase climate resilience.”
Over the course of 2016, the Bank Group has stepped up its engagements on climate change and delivered support to countries across a wide spectrum of action, ranging from new financing for solar and wind power to increasing the resilience of urban dwellers, farmers and fishing communities; from helping countries manage their forest resources to facilitating billions of dollars in sustainable investments by the private sector; and from reducing vulnerability in small island states to pushing forward global action on carbon pricing.
As attention turns to COP22, being held in Marrakech, Morocco on November 7-18, the Bank Group is aligning its efforts around a few focus areas as recently laid out by President Jim Yong Kim. These include facilitating the transition to renewable and low-carbon forms of energy, greening the finance sector, and ramping up global action on energy efficiency.
At the center of these efforts is a push to help countries integrate climate change into their national planning and budgeting and deliver on their Paris climate pledges – the Nationally Determined Contributions, or NDCs.
At COP22, the Bank Group will be announcing progress on the Africa Climate Business Plan, which was launched in Paris. The Business Plan aims to raise $19 billion by 2020 for investments that will strengthen the resilience of the continent’s environment and people, and improve energy access via renewable energy. Much of the funding for the Business Plan will come through IDA, the Bank Group’s fund for the poorest countries.
A new Climate Action Plan for the Middle East and North Africa region will be launched at COP22. This will focus on fostering water and food security in one of the world’s most vulnerable regions, as well as supporting sustainable, resilient and connected cities; encouraging the energy transition; and protecting the most vulnerable communities from climate-related shocks.
“The NDCs are the building blocks of the Paris Agreement, but we know that the current NDCs won’t get us to the ultimate goal of keeping the rise in global temperatures to below 2 degrees,” said Laura Tuck. “That is why it is so important that we help countries to meet their targets quickly, and then to increase their ambitions in the years to come.”
‘Paris goals will define World Bank Group’s work’
Statement from World Bank President Jim Yong Kim on the eve of the Paris Climate Change Agreement going into force
“November 4, 2016, is a defining moment in human history. For the first time a global agreement to turn down the heat on our planet enters into force.
The Paris Climate Change Agreement – ratified in record time by over 90 countries to date – will now be the instrument around which our futures depend. However, even with the commitments made in Paris and encouraging action on the ground, we will not meet our aspiration of limiting warming to 1.5 degrees unless we move faster and at the scale that is needed.
As the world heads into COP22 in Marrakesh, we must regain the sense of urgency we felt a year ago. With each passing day, the climate challenge grows. If we are to have any chance of meeting the goals enshrined in the Agreement, we need to move quickly on at least four priorities for action.
Build climate ambition into the development plans of every country: Over the next 15 years, infrastructure investments around the world will amount to over $90 trillion. Most of this will be in developing countries. Making sure these investments are low-carbon and climate-resilient can promote sustainable economic growth, which is key to achieving our goals of ending extreme poverty and boosting shared prosperity. Countries can now use the Paris Agreement to drive climate-smart policy action, like carbon pricing, to attract the right infrastructure investments. In the post-Paris world, growth cannot come at any cost.
Accelerate the transition to cleaner energy: Last week, the International Energy Agency boosted its five-year growth forecast for renewables because of strong support in key countries and sharp cost reductions. In fact, renewables surpassed coal last year to become the largest source of installed power capacity in the world. Building on this momentum, we need to focus special attention and action on Asia, where energy demand is growing and some countries continue to look to coal as the solution. Shifting those countries toward low-carbon energy paths, combined with action on phasing down hydrofluorocarbons, could make all the difference. We need to help countries make the right choice between high-carbon energy sources and renewable alternatives. We must ‘follow the carbon.’ That means we have to direct concessional finance where it will make the greatest difference.
Help countries build resilience to climate shocks: As we said in Paris, without climate action at scale, more than 100 million people could fall back into extreme poverty by 2030. That’s why we need to build the resilience of communities, economies, and ecosystems. We have a good idea of what is needed – more efficient water supply, climate-smart agriculture, early warning systems, disaster risk reduction, and better social protection. We have a choice to make. Otherwise, the poverty reduction gains we’ve made together will be lost.
Green the finance sector: We need a global financial system that’s fit for purpose to factor in climate risks and opportunities. This is vital if we are to mobilize the trillions of dollars in private capital needed to address climate change. More and more, we are seeing major institutional investors incorporating climate considerations into their decision making. Still, many developing countries will continue to need significant amounts of concessional finance to make good on their climate plans. Donor countries made a strong commitment in Paris. And now we must turn those commitments into action.
What was agreed in Paris is now a defining principle of the World Bank Group’s work. Ending extreme poverty and fighting climate change are inextricably linked. We cannot do one without the other.
Today is a day to celebrate. Tomorrow, we get back to work with an even greater sense of urgency.”
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Why Rwanda improved in World Bank Doing Business ranking
Improvements in ease of starting a business, registering property, trading across borders and enforcing contracts saw Rwanda make significant improvement in the latest World Bank Doing Business Report.
The 14th issue of the report, released in October, ranked Rwanda second on the continent after Mauritius and first in the East African Community region.
Globally, Rwanda improved six places ranking 56th out of 190 countries.
The ranking also indicate that Rwanda reduced the gap with Mauritius from 30 places last year to only seven places.
The annual report focuses on ten main areas that affect business namely, the ease of starting a business, obtaining construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
Dr Rita Ramalho, the manager of the World Bank Doing Business Report, said Rwanda registered improvements in starting a business by reducing the number of procedures by two as well as reducing the number of days by two.
With the value added tax registration being done at the Rwanda Development Board, she noted that Rwanda was able to cut down the number of procedures and days in the process.
“In registering property,we had a reduction in the number of days and an increase in the efficiency and quality. There were a few points in the quality. The time was reduced by 20 days because of the one-day registration that Rwanda Natural Resource Authority introduced and an increase in the quality due to proving more information on statistics on property transfers and establishing service standards and transparency,” she told journalists at a news conference in Kigali yesterday.
Rwanda also registered progress by simplifying trading across borders consequently reducing the time taken to import. The development has been viewed by experts as significant considering that Rwanda is landlocked and aims at increasing exports to regional countries and beyond.
“The border compliance aspect had to do with the pre-shipment inspection which is no-longer mandatory. This reduced the time and cost significantly compared to other countries,” Dr Romalho said.
The World Bank official also observed that enforcing contracts had been improved largely due to the Integrated Electronic Case Management System that had impacted on the quality of Judicial Administration index and provided more information to the convenience of judges and lawyers.
The report also indicated areas, where the country ought to make improvements and adjustments for the interest of the business community to impact on the environment.
The lows
Among the areas where Rwanda fell back included dealing with construction permits as well as payment of taxes.
The Minister for Trade, Industry and EAC affairs, Francois Kanimba, said all government stakeholders involved in aspects that saw a decline in performance would be convening today to look into the causes and mull ways to progress.
The meeting will seek to understand the reasons for the decline and then lay strategies for improvement, Kanimba said.
The Mayor of the City of Kigali, Monique Mukaruliza, said the additional requirements that had caused Rwanda to drop from 37th to 159th position globally in dealing with construction permits had been designated to ensure quality of buildings across the city.
She, however, noted that, going forward, there would be efforts to ensure that as the authorities worked to improve quality, there was no hindrance to doing business and did not add unnecessary hold backs.
In regards to the indicator on paying taxes in which the country had slid down 11 steps, a new law requiring businesses to make monthly declarations as opposed to quarterly was found to be the biggest reason for the decline.
Rwanda Revenue Authority commissioner-general Richard Tusabe said they have plans to address the concerns and review the possibilities to having quarterly declarations as opposed to monthly.
Rwanda Development Board chief executive Francis Gatare said although the flow of foreign direct investment has in recent years increased with the improvement of Rwanda’s performance, the reforms were not discriminatory and also looked into the interests of the small and medium enterprises who are considered the bedrock of the economy.
In the last 14 years since the inception of the ranking, Rwanda has implemented a total of 47 reforms making it the most improved country in Africa and second globally after Georgia.
World Bank country manager Yasser El Gammal said the progress, which comes against the backdrop of global economic slowdown and a dull forecast in the economic growth of the continent, reflects efforts to strengthen the role of the private sector in economic development which in turns, leads to resilience.
» Download: Doing Business Economy Profile 2017: Rwanda (PDF, 1.88 MB)
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New guide on how accreditation in developing economies can facilitate trade and support sustainable development
The significance of an accreditation system for trade and the economy, as well as practical advice for the establishment of accreditation bodies, are the focus of a newly released publication titled, “Setting up accreditation bodies in developing economies – A guide to opening the door for global trade”.
Prepared by the United Nations Industrial Development Organization (UNIDO), in cooperation with the International Accreditation Forum (IAF) and the International Laboratory Accreditation Cooperation (ILAC), the publication was launched at the ILAC-IAF joint General Assembly. The guide aims to support the common goal of “tested, inspected or certified once and accepted everywhere”.
It is comprised of two parts. The first part focuses on the need for accreditation and the benefits that an accreditation system can bring to good governance. It provides policymakers with a framework for establishing an accreditation body or partnering with neighbouring economies to form a shared system, which can bring an economy closer to its trading partners through mutually recognized arrangements of accreditation.
The second part offers comprehensive practical advice and building blocks to those who are tasked with establishing an accreditation body. It presents information on the essential operational requirements for accreditation bodies, and outlines available resources, as well as potential challenges. Case studies then follow to offer an illustration of practical applications of the guidance provided in the publication.
The publication is an update of a 2003 UNIDO publication, “Laboratory accreditation in developing economies”.
“Not only does an accreditation system have benefits for improving trade flows, it also delivers many benefits internal to an economy. Examples include providing confidence in non-trade arenas, such as the monitoring and measurement of progress towards the achievement of Sustainable Development Goals and their associated targets,” said LI Yong, the Director General of UNIDO.
A recently released UNIDO-IAF-ILAC brochure highlights the contribution of accredited conformity assessment services to the implementation of the 2030 Agenda for Sustainable Development.
These joint publications also indicate the increasing collaboration among international agencies to help developing countries overcome barriers to trade.
Setting up accreditation bodies in developing economies: A guide to opening the door for global trade
Introduction
The world has become a global economy where trade is vital. While international trade has existed for centuries, it often consisted of lower valued commodities and products. Today all types of manufactured products or foods and beverages made in one economy are sold in another. Hence, the enhanced awareness and need for the safety and the quality of traded products and services is required. Nowadays, most large manufacturers which once were fully integrated, such as those in the automotive sector, have moved from being self-reliant organizations to ones that now focus on core activities and outsource much to others. Activities such as the assembly of components and systems, and the manufacture of parts such as wheels, jacks, exhausts, electronic devices and even dashboard assemblies are usually built by subcontractors, resulting in another need to ensure that outsourced products meet quality and performance standards. The increased outsourcing has provided many developing countries with lower labour costs an opportunity to respond to, and enter these markets.
Export is critical to the growth of any economy, be it fresh fruit, flowers, minerals or manufactured goods. As a developing economy takes advantage of new global opportunities, even neighbouring countries can enjoy some benefits by supplying services to the exporting economy such as electricity, water and telecommunications. To support and facilitate this trade a system is needed whereby importers can have confidence that the imported goods and services meet performance and quality expectations that are found in standards. Conformity Assessment is the term applied to the activities used to provide confidence in the conformity of products and services to standards. ISO/IEC 17000, “Conformity Assessment – Vocabulary and general principles”, provides the definition of conformity assessment as the demonstration that specified requirements relating to a product, including process and services, system, person or body are fulfilled.
To ensure that an accreditation and conformity assessment system is fair, efficient and cost-effective, it must not create new trade barriers whereby importing countries add requirements for repeat testing or certification which has already been carried out by the exporter. A key to lowering technical barriers to international trade is the existence of internationally recognised systems for the accreditation of bodies that perform conformity assessment such as testing, inspection and certification. As such, the global network of bodies that accredit laboratories, inspection bodies and certification bodies, is working to maintain and extend a system to support the World Trade Organization (WTO) agreements on Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS). Accredited Conformity Assessment Bodies (CABs) that are internationally recognized are key to the successful implementation of these agreements.
Accreditation creates confidence in the work carried out by CABs located anywhere in the world. Accreditation comes from the Latin word ‘accredo’ which means ‘give credit or acknowledgement’. In the past, with an absence of internationally recognised accredited facilities, tests and inspections carried out and certificates issued in the exporting country were often repeated by a recognised laboratory, inspection or certification body in the importing country. An adverse test or inspection report in the importing country could result in the rejection of an entire shipment of food or manufactured goods, which was very costly for the exporter, and represents a negative market impact for the importer.
Although accreditation is often thought of as a means to enhance the flow of exports, it also has a significant domestic role within an economy. The demand for consumer protection is growing as global trade results in large increases in the number of products and services available in a domestic marketplace. Governments can also use accreditation to support their regulatory efforts in health, safety, environmental protection, fraud prevention or market fairness, and therefore accreditation also serves as a risk management tool. In the past, regulators often performed their own inspections to determine if products and services were in compliance with legal requirements; this took place with limited resources. Today, new approaches are being sought to reduce demands on government staff and resources, which in turn lower costs. One such approach is for regulators to rely on accreditation bodies to provide assurance that services meet regulations, and on accredited bodies to test, inspect or certify that products and systems meet regulatory objectives. When regulators delegate compliance monitoring to accreditation bodies and accredited bodies, they can focus their own efforts on ensuring regulations reference the appropriate accreditation, testing, inspection and certification standards to mitigate risk.
Accreditation is an attestation of the competence and impartiality of laboratories, inspection and certification bodies that perform the conformity assessment work. Accreditation is an impartial and objective process carried out by third-parties; it thus offers the least duplicative, the most transparent, the most widely accepted and the least discriminatory route for the provision of credible and trustworthy conformity assessment results.
The international accreditation system is established worldwide by the International Accreditation Forum (IAF) and the International Laboratory Accreditation Cooperation (ILAC). IAF oversees the accreditation of certification bodies and verification/validation bodies while ILAC oversees the accreditation of laboratories, inspection bodies, proficiency testing providers and reference material producers. This system helps to make work carried out by accreditation bodies consistent across the globe, and maintains international standards from one accreditation body to the next. As a result, a product tested, inspected or certified once under the IAF and ILAC umbrella can be accepted everywhere with equal confidence.
It should however be noted that while conformity assessment results should be accepted in another country because of the application of equivalent competence and standards, there is no guarantee that each and every regulator or organization in the world will accept a given report or certificate. UNIDO, the IAF, ILAC, its members and associates continue to work towards the broader recognition of accredited test and inspection reports and certificates around the world so that tests, inspections and certificates applicable to a product made in one economy can be accepted with confidence in any other economy. Through various initiatives and projects such as this publication, UNIDO is working to facilitate the participation of developing economies into this global system that will in turn facilitate the export of goods and services from their economies, while minimising risks.
This document addresses many questions for policy decision makers and for the implementation of accreditation in developing economies including whether an economy should develop its own accreditation system, or access such services in cooperation with other economies. Although accreditation and conformity assessment do not have to be provided nationally, all countries should have access to these services either through international or regional organizations or through cooperative arrangements with neighbouring countries.
Whether the decision is made to establish a domestic accreditation system or to cooperatively use an existing extra-national one, the chosen system should address all requirements needed for international recognition. This document provides information on the necessary supportive infrastructure that must be in place for a successful system, how the services of established bodies can be used during the formative process, and guidance on the establishment of a body that meets international standards and best practices.
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Air freight posts stronger September growth: IATA
The International Air Transport Association (IATA) has released data for global air freight markets in September 2016 showing that demand, measured in freight tonne kilometers (FTKs), rose 6.1% year-on-year. This was the fastest pace of growth since the disruption caused by the US West Coast seaports strike in February 2015.
Freight capacity, measured in available freight tonne kilometers (AFTKs), increased 4.7% over the same period. Load factors remained historically low, keeping yields under pressure.
September’s positive performance coincided with an apparent turnaround in new export orders in recent months. Some unique factors also may have contributed, such as the rush replacement of Samsung Galaxy Note 7 devices during the month, as well as the early impacts of the collapse of the Hanjin marine shipping line at the end of August.
“Demand for air cargo strengthened in September. Although with growth in world trade virtually at a standstill, the air cargo sector still faces some major hurdles. We did have some encouraging news. The conclusion of the EU-Canada Free Trade Agreement is good news for the economies involved and for air cargo. Growth is the way to overcome the world’s current economic challenges. The EU-Canada agreement is a welcome respite from the current protectionist rhetoric and positive results should soon be evident. Governments everywhere should take note and move in the same direction,” said Alexandre de Juniac, IATA’s Director General and CEO.
Sept. 2016 (% year-on-year) | World share1 | FTK | AFTK | FLF (%-pt)2 | FLF (level)3 |
Total Market | 100.0% | 6.1% | 4.7% | 0.6% | 43.7% |
Africa | 1.5% | 12.7% | 34.0% | -4.5% | 23.8% |
Asia Pacific | 38.9% | 5.5% | 3.4% | 1.1% | 54.7% |
Europe | 22.3% | 12.6% | 6.4% | 2.5% | 44.9% |
Latin America | 2.8% | -4.5% | -4.7% | 0.1% | 37.9% |
Middle East | 14.0% | 1.2% | 6.2% | -2.0% | 41.0% |
North America | 20.5% | 4.5% | 2.6% | 0.6% | 33.9% |
Regional Performance
Airlines in all regions except Latin America reported an increase in year-on-year demand in September. However results continued to vary considerably.
Asia-Pacific airlines saw freight volumes increase by 5.5% in September 2016 compared to the same period last year. Capacity in the region expanded 3.4%. The positive Asia-Pacific performance corresponds with signs of an increase in export orders in China and Japan over the last few months. Seasonally-adjusted freight results for Asia-Pacific carriers are now trending upwards.
European airlines experienced a 12.6% increase in freight volumes in September 2016. Capacity increased 6.4%. The strong European performance corresponds with an increase in reported new export orders in Germany over the last few months.
North American carriers saw freight volumes expand 4.5% in September 2016 year-on-year, as capacity increased 2.6%. International freight volumes grew by 6.2% – their fastest pace since the US seaports disruption boosted demand in February 2015. However, in seasonally-adjusted terms volumes are still just below the level seen in January 2015. The strength of the US dollar continues to keep the US export market under pressure.
Middle Eastern carriers saw demand growth slow for the third consecutive month to 1.2% year-on-year in September 2016 – the slowest pace since July 2009. Capacity increased by 6.2%. Seasonally-adjusted freight growth, which had been trending upwards until the past year or so year, has now halted. This turnaround in performance is partly due to weaker conditions in the Middle East-to-Asia and Middle East-to-North America markets.
Latin American airlines reported a decline in demand of 4.5% and a drop in capacity of 4.7% in September 2016, compared to the same period in 2015. The ‘within South America’ market has been the weakest performing market so far this year with volumes contracting 14% year-on-year in August, the most recent month for which route specific data are available. The comparative strength of the US economy has helped boost volumes between North and South America with US imports by air from Colombia and Brazil increasing by 5% and 13% year-on-year respectively.
African carriers saw freight demand increase by 12.7% in September 2016 compared to the same month last year – the fastest rate in nearly two years. Capacity surged year-on-year by 34% on the back of long-haul expansion in particular by Ethiopian Airlines and North African carriers.
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Investment Policy Monitor: new laws, liberalizing measures, and international agreements
Some 36 countries took 53 investment policy measures between 1 May 2016 and 15 October 2016, according to UNCTAD’s latest Investment Policy Monitor. The share of liberalization, promotion and facilitation measures during this period was 74 per cent, which is lower than the average in recent years.
Boosting foreign investment is seen as an important means of reviving a stagnant global economy. “Investment promotion and facilitation measures also play a significant role,” the policy monitor says.
These policy measures show a continued move towards improving entry conditions, reducing restrictions and facilitating foreign investment. Most measures were taken by developing countries and transition countries. New investment restrictions for foreign investors were mainly based on concerns about the local producers’ competitiveness or other national interests.
Among the most important policy measures are the adoption of new investment laws in Algeria, Myanmar, Namibia and Tunisia. Other important developments during the reporting period are the adoption of a comprehensive investment liberalisation strategy in India, the replacement of the approval system by the filing system for the establishment of foreign enterprises in China and opening-up policies in various industries in Bahrain, Indonesia, Philippines and Saudi Arabia. As regards new regulations or restrictions, Brazil reversed its decision to allow full foreign ownership for domestic airlines.
Regarding international investment policies, countries concluded six international investment agreements (IIAs), bringing the total number of IIAs to over 3,320. At least four treaties entered into force, and a number of important negotiations are ongoing. An important IIA-related development occurred – the Comprehensive Economic and Trade Agreement (CETA) was signed by the European Union and Canada on 30 October 2016.
The reporting period was characterized by a landmark event, as G20 countries adopted Guiding Principles for Global Investment Policymaking. It is the first time in more than several decades of international investment policymaking that consensus has been reached between such a varied group of developed, developing and transition economies – representing over two thirds of global foreign direct investment.
Sustainable development-oriented IIA reform remained high on the agenda. Among others it was discussed at UNCTAD’s sixth World Investment Forum (WIF) and has informed treaty-making and treaty-revision processes at regional and bilateral levels.
» Download: Investment Policy Monitor No. 16 (PDF, 4.82 MB)
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Doing Business 2017: Economy profiles for select African countries
Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies, from Afghanistan to Zimbabwe, over time.
The report measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation. Doing Business 2017 presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business.
The data set covers 48 economies in Sub-Saharan Africa, 32 in Latin America and the Caribbean, 25 in East Asia and the Pacific, 25 in Eastern Europe and Central Asia, 20 in the Middle East and North Africa and 8 in South Asia, as well as 32 OECD high-income economies. The indicators are used to analyze economic outcomes and identify what reforms have worked, where and why.
The following economy profiles present the Doing Business indicators for a selection of sub-Saharan African countries. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2016 (except for the paying taxes indicators, which cover the period January – December 2015).
Doing Business 2017 finds that 37 of the region’s 48 economies adopted 80 reforms in the past year, an increase of 14 percent from the previous year. More than half of the past year’s reforms were implemented by the 17 members of the Organization for the Harmonization of Business Law in Africa (OHADA).
The region’s economies reformed most in the areas of Resolving Insolvency (with 18 reforms) and Starting a Business (15). Nigeria, Rwanda and South Africa, for example, made starting a business easier by introducing or improving online portals. Furthermore, as a part of the OHADA reform agenda, Cameroon, among other things, introduced a new conciliation procedure for companies in financial difficulties. This now makes resolving insolvency easier by allowing additional outlets to settle debts.
Seven economies implemented reforms related to Trading Across Borders. For example, Niger made trading across borders easier by removing the mandatory pre-shipment inspection for imported products.
As governments continue to take up the reform agenda, Doing Business data shows continued successes on the ground. For example, it now takes an average of 27 days to start a business in Sub-Saharan Africa, compared with 37 days five years ago.
Mauritius once again ranks best in the region, with an overall Doing Business global ranking of 49. Mauritius performs best in the areas of Protecting Minority Investors and Dealing with Construction Permits, with a rank of 32 and 33 respectively, on those indicators. For example, it takes 156 days to complete the construction permitting processes for simple buildings, compared to 183 days in France and 222 days in Austria.
Ranks of some other economies in the region are Rwanda (56), Botswana (71) and South Africa (74). This year’s report also covers Somalia for the first time, bringing the total number of economies covered globally to 190. Somalia is ranked 190.
Methodology
The Doing Business methodology has limitations. Other areas important to business – such as an economy’s proximity to large markets, the quality of its infrastructure services (other than those related to trading across borders and getting electricity), the security of property from theft and looting, the transparency of government procurement, macroeconomic conditions or the underlying strength of institutions – are not directly studied by Doing Business. The indicators refer to a specific type of business, generally a local limited liability company operating in the largest business city. Because standard assumptions are used in the data collection, comparisons and benchmarks are valid across economies. The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policy makers in designing regulatory reform.
More information is available in the full report. The data, along with information on ordering Doing Business 2017, are available on the Doing Business website.
Changes in Doing Business 2017
As part of a three-year update in methodology, Doing Business 2017 expands further by adding post-filing processes to the paying taxes indicator, including a gender component in three of the indicators and developing a new pilot indicator on selling to the government. Also, for the first time this year Doing Business collects data on Somalia, bringing the total number of economies covered to 190.
The paying taxes indicator is expanded this year to include post-filing processes – those processes that occur after a firm complies with its regular tax obligations. These include tax refunds, tax audits and tax appeals. In particular, Doing Business measures the time it takes to get a value added tax (VAT) refund, deal with a simple mistake on a corporate tax return that can potentially trigger an audit and good practices with administrative appeals process.
This year’s Doing Business report presents a gender dimension in four of the indicator sets: starting a business, registering property, enforcing contracts and labor market regulation. Three of these areas are included in the distance to frontier score and in the ease of doing business ranking, while the fourth – labor market regulation – is not.
Doing Business has traditionally assumed that the entrepreneurs or workers discussed in the case studies were men. This was incomplete by not reflecting correctly the Doing Business processes as applied to women – which in some economies may be different from the processes applied to men. Starting this year, Doing Business measures the starting a business process for two case scenarios: one where all entrepreneurs are men and one where all entrepreneurs are women. In economies where the processes are more onerous if the entrepreneur is a woman, Doing Business now counts the extra procedures applied to roughly half of the population that is female (for example, obtaining a husband’s consent or gender-specific requirements for opening a personal bank account when starting a business). Within the registering property indicators, a gender component has been added to the quality of land administration index. This component measures women’s ability to use, own, and transfer property according to the law. Finally, within the enforcing contracts indicator set, economies will be scored on having equal evidentiary weight of women’s testimony in court.
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Post-Brexit UK-ACP trading arrangements: Some reflections
The prospect of the UK formulating its own trade policy following Brexit is likely to have implications for the existing Economic Partnership Agreements (EPAs) between the European Union (EU) and some African, Caribbean and Pacific (ACP) countries, and the UK’s future trading arrangements with the ACP.
The latter will be determined by the nature of the UK’s trade deal with the EU post Brexit and the trading regime it sets up with those ACP countries that have an EPA. ACP countries receive duty-free and quota-free (DFQF) market access into the EU for all goods (except arms and ammunition) under the EPAs, while the same treatment is offered by the EU to least-developed countries (LDCs) through the Everything-but-Arms (EBA) scheme. In the absence of equivalent market access, these countries may face higher most-favoured nation (MFN) tariffs in the UK market. In the short-term, the challenge for the UK is to ensure trade continuity on terms that are at least as favourable as those provided under the EPAs.
This issue of Commonwealth Trade Hot Topics examines the implications of Brexit for existing EPAs, and options for trade arrangements that could avoid possible trade disruptions arising as a result of post-Brexit policy shifts.
EU, UK and sub-Saharan Africa EPAs
The EU, including the UK, remains a major trade, investment and development cooperation partner for many sub-Saharan African countries. These countries almost doubled their merchandise exports to the UK over the period 2000-2015, from US$6.5 billion to about US$12 billion (Figure 2), while overall exports from sub-Saharan Africa to the EU have grown from just over US$30 billion to US$71 billion. Despite its relatively low market share compared with the overall EU market, the UK is an important export destination for several sub-Saharan African countries. More than 40 per cent of exports from Botswana and Seychelles to the EU are destined for the UK, while another five countries send more than 20 per cent of their EU exports to the UK: The Gambia (32.5 per cent), Equatorial Guinea (32.4 per cent), Mauritius (29.3 per cent), Kenya (28.7 per cent) and South Africa (26.3 per cent). Several countries also depend heavily on the UK market for exports of particular products to the EU, such as tea (Kenya and Malawi), fresh vegetables (Kenya), processed fish products (Ghana, Mauritius and Seychelles), fresh or frozen beef (Botswana and Namibia), gold products (South Africa) and diamonds (Botswana and Zambia). Southern African citrus producers sell about 10 per cent of their overall exports to the UK.
In 2014, the EU concluded three regional EPAs with the Southern African Development Community (SADC), the East African Community (EAC) and West Africa. The EU set a deadline of 1 October 2016 to sign and ratify these agreements, after which the EU would revert to higher Generalised System of Preferences (GSP) duties for non-LDC African countries.
All SACU parties to the SADC EPA have ratified the agreement and it was provisionally implemented on 10 October 2016. In West Africa, Heads of State from the Economic Community of West African States (ECOWAS) endorsed the EPA for signature, but The Gambia, Mauritania and Nigeria have not yet signed, amid concerns that the EPA will harm their industrialisation. To avoid higher GSP duties, Côte d’Ivoire and Ghana ratified the 2007 Interim EPAs. In future, this may have implications for the ECOWAS common external tariff.
The EAC EPA is a full ‘regional’ EPA, which means that all five EAC members must collectively sign the agreement before it can be implemented. Kenya has ratified and Rwanda has signed the agreement, while Tanzania has declared it will not do so, fearing the consequences for its revenues and domestic producers and industries. A Summit of EAC Heads of State on 8 September 2016 requested a three-month extension to clarify some of the members’ concerns and called on the EU not to penalise Kenya. Although the European Parliament extended the deadline for Kenya to ratify the EAC EPA to 2 February 2017, the agreement was ratified on 20 September 2016.
But Brexit may complicate things still further for Kenya. In 2015, the UK received 16.5 per cent of total EU imports from the five EAC members (US$2.6 billion) and about 28 per cent of all EU imports from Kenya. Kenya’s most important exports to the EU are black tea (with about 80 per cent of its exports going to the UK), fresh or chilled beans (58 per cent), fresh cut roses and buds (16.5 per cent) and other fresh or chilled vegetables (80 per cent). Because the UK absorbs just under 30 per cent of Kenya’s exports to the EU (and this includes the bulk of its major exports to Europe), Kenya’s overall exports to the EU are bound to decline post-Brexit. This may upset the balance of liberalisation commitments in the EAC EPA if the UK is no longer a party to the agreement.
Given the possibility of a ‘smaller’ EU Single Market and related trade flows, several other EPA signatories with strong export exposure to the UK may have similar concerns if EPAs exclude the UK in the future. For example, 241 South African products are imported only into the EU by the UK, including about 98 per cent of its largest single export to the EU, namely gold products, including gold plated with platinum (CN71081310). Kenya has 213 products and Nigeria, yet to sign an EPA, 203 products destined only for the UK market in Europe.
Most exports from sub-Saharan Africa to the EU currently receive DFQF market access under the EPAs, where these have been signed, or the EBA scheme for LDCs. In the absence of similar treatment post-Brexit, a range of products could face higher MFN duties in the UK market, as well as competition from non-ACP developing countries. At a broad level, the products most vulnerable to higher average EU/UK MFN duties, as listed below, include:
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fish and seafood products (11.21 per cent)
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floricultural products (5.94 per cent)
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edible vegetables (7 per cent)
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meat, fish and seafood prepared food products (13.83 per cent)
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vegetable, fruit and nut prepared food products (13.4 per cent)
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tobacco and tobacco products (21.46 per cent)
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carpets (7.38 per cent)
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clothing (11.6 per cent)
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footwear (9.95 per cent)
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aluminium (6.45 per cent)
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vehicles (6.37 per cent)
Any erosion of preferences in the UK market for many of these value-added products could have an adverse impact on the continent’s plans for structural economic transformation, as outlined in the African Union’s development plan, Agenda 2063.
The potential impact on ACP exports
The UK is an important export destination for some ACP countries. As noted earlier, in the absence of equivalent market access as the EPAs post Brexit, many of these countries may face higher MFN duties and competitive pressures in the UK market. Based on average annual EU imports in 2013- 2015, 22 ACP countries, excluding the LDCs, face a potential calculable MFN tariff hike equivalent to more than 1 per cent of their total exports to the UK. In effect, these countries could face a ‘new tax’ of about US$250 million. In absolute terms, South Africa may have to pay the largest import duties (about US$80 million). Although they export considerably less than South Africa, two fellow SADC EPA states, Swaziland and Namibia, would also be impacted, facing a potential ‘tax bill’ equal to 8 per cent or more of their exports to the UK. However, proportional to current exports, two ESA EPA members would be the worst affected: Seychelles, followed by Mauritius.
UK policy options for EPA countries
There are various ways to frame and shape the UK’s future trading arrangements with the ACP to avoid such adverse outcomes. For the LDCs, perhaps the best option would be for the UK to devise its own GSP that builds upon and improves current arrangements for the world’s poorest countries, such as the EU’s EBA scheme. Post-Brexit, the UK Government should at least maintain this level of market access for LDCs. However, it could go further by introducing relaxed and more generous rules of origin (e.g. Australia and Canada require recipient countries to add only 25 per cent local value for goods to qualify for duty-free access) and reducing non-tariff barriers. The UK’s offer of trade preferences should be extended to services, in line with the agreed LDC Waiver under the World Trade Organization (WTO).
One key issue is whether the UK can accede separately to existing EPAs or install EPA-replicas for ACP countries that have signed the deals with the EU. While the existing EPAs could provide readily available frameworks, this would re-open negotiations on many contentious issues, as – given the market size – the UK would not have the same bargaining position as the EU, and the process could drag on for years. Some have also argued that rather than strengthening regional integration in Africa, the EPAs have actually fragmented the existing Regional Economic Communities by establishing five different reciprocal trading regimes with Europe. The UK will have to consider not only whether the replication of EPAs is possible, but whether it should be pursued.
To avoid any immediate adverse outcomes, the UK could explore offering temporary, unilateral preferential access to developing countries that currently have access to the UK market through FTAs and EPAs. Even though this violates WTO rules, the EU has used various Market Access Regulations to provide such access for some ACP countries since 2007, pending the signing and ratification of EPAs. A more WTO-consistent approach would be for the UK to request waivers to grant non-reciprocal preferences to ACP developing countries. There are precedents for such arrangements: the USA has WTO waivers for its trade preference initiatives with the Caribbean (i.e. the Caribbean Basin Initiative) and Africa (i.e. the African Growth and Opportunity Act, AGOA). This option would avoid the need for difficult negotiations with ACP countries at this stage, while ensuring the continuity of their preferential treatment.
Once the short- to medium-term transitory measures are in place to provide policy continuity and avoid trade disruptions, one medium- to longer-term option for the UK could be to negotiate development-friendly and WTO-compatible trade agreements with ACP regions. Under the African Union’s formal integration plan, member states aim to launch an African Customs Union by 2019. While this is an extremely ambitious target with many challenges, such a customs arrangement could provide an opportunity for post-Brexit UK and Africa to negotiate a single Free Trade Agreement (FTA) in goods that will also reinforce African continental integration. This agreement could also frame the UK’s approach to overall Aid for Trade to help African countries build and diversify their productive and supply capacities. The USA also envisages greater reciprocity in its trading relations with sub-Saharan African countries when AGOA IV expires in 2025. However, given the continent’s ambition for structural transformation and the concerns raised by LDCs about reciprocity, it is unclear whether African countries would be willing to negotiate an agreement that liberalises all trade substantially, as required by the WTO. On the UK’s side, it is unclear whether a trade agreement that excludes services and investment would satisfy the commercial interests of post-Brexit Britain.
One key challenge for many ACP exporters is compliance with the high standards and regulations required for access to the EU market. In the interim, the UK could retain most of the EU’s current body of trade-related standards. However, ACP suppliers feel that some of these regulations are unnecessarily onerous and even protectionist, and should be reviewed or rescinded. For example, citrus exports from South Africa and Swaziland to the EU have been impaired by stringent sanitary and phytosanitary (SPS) standards for citrus black spot, losing market share to Spain as a result.
Post-Brexit, the UK would have the autonomy to develop its own set of agricultural regulations based on internationally recognised science and in accordance with the WTO. Since the UK is not a citrus producer and relies on food imports, there may be a case for greater flexibility and for rescinding some EU measures regarded as unfair or protectionist by ACP producers, if this does not jeopardise plant health and food safety. For other goods imports, the UK and the EU could consider mutual recognition of standards, which would reduce ACP trade costs by requiring ‘one-time only’ compliance and certification.
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tralac’s Daily News Selection
The selection: Monday, 7 November 2016
For twitter updates from discussions at today’s Kenya-Botswana Business Forum: @Trade_Kenya, @AdanMohamedCS, @Kiptoock, @IndustryKE, @kncci
In Lusaka, tomorrow: the Southern African launch of the AfDB’s Feed Africa strategy
WTO issues new editions of Trade Profiles, World Tariff Profiles
The revamped Trade Profiles provides a series of key indicators on trade in goods and services for 195 economies. For each economy, the data is presented in a handy two-page format, providing a concise overview of global trade. The profiles begin with a snapshot of the importance of trade for each economy — indicating its world ranking for trade in both goods and commercial services. World Tariff Profiles, produced in cooperation with the United Nations Conference on Trade and Development and the International Trade Centre, has been expanded to provide information on tariffs and non-tariff measures imposed by over 170 economies. A new section covers the use of non-tariff measures, which are becoming increasingly important in international trade. The special topic for this edition is the 2017 version of the Harmonized System for classifying goods, which will enter into force on 1 January 2017. A section on data sources and frequently asked questions forms the final part of the publication.
SA’s trade minister, Rob Davies, interviewed by Zimbabwe Sunday Mail business reporter Africa Moyo: On the TFTA
But as Africa, colonialism divided us into 54 different countries. We believe as South Africa, we cannot simply industrialise off the South African economy and consumption, we need to have a regional market that even reaches beyond our existing regional communities. We should end up in the continent. The Tripartite (Free Trade Area) is very important. I think after a long debate, and we are part of the debate, the consensus that we have is that rather than focus on trying to deepen integration within our existing communities – in other words, we move Sadc into our customs union, our monetary union, something like that – the focus of our attention now ought to be on broadening integration across our regional communities. The tripartite is the first crack at that. But when we do that, we need to do that with a developmental paradigm.
We have already agreed on the legal text that was adopted about a year ago in Sharm El Sheik in Egypt. They are in the process of negotiating the trade in goods arrangements. We are not trying to open the arrangements that are already in existence. The focus is on negotiating with those in the big bloc who don’t have any preferential arrangements between themselves. In our case, as I said, we have to negotiate as Sacu. Our biggest negotiations in the bloc are with the EAC and with Egypt. There are a few others – Ethiopia, Djibouti, Eritrea and Sudan – outstanding. We are very close to concluding those schedules and there is another round of negotiations in December. We will see if we conclude; if not, it won’t be long into the New Year before we conclude.
Trade integration in West Africa Monetary Zone: update (Front Page Africa)
The West African Monetary Institute Director General Abwaku Englama said WAMI identified the need to assess progress on trade integration in the region. “I have been informed that the preliminary results of the newly constructed index show that the WAMZ trade integration index score stood at 47.1 in 2015, from 40.8 in 2014,” Englama said. Englama revealed that WAMI is expected to carry out a survey on informal cross border trade in the region. [Liberia hosts 8th WAMZ Trade Ministers’ Conference]
West and Central Africa’s digital economy: new initiative to spur growth in the sector (World Bank)
The World Bank Group and CTIC Dakar have launched the Jambar Tech Lab, a business acceleration program to help West and Central African tech start-ups commercialize and scale innovative digital products. First of its kind in the region, the program will connect 40 local high-growth startups with the knowledge, capital, and access to markets they need to grow. The program is part of a new regional effort to improve competitiveness, attract investment, and create jobs through digital technologies.
East African pharma companies missing out on fast-growing $5bn opportunity (UNCTAD)
The $5bn East African pharmaceutical market is expected to grow by more than 12% per year for the next five years, as lifestyle changes in the region lead to higher rates of non-communicable diseases such as diabetes. Such high growth offers significant opportunity, but so far the region’s 65 manufacturers have only been able to satisfy about 30% of market demand, leaving the other 70% to be captured by imports. "The biggest challenge facing local producers is the lack of capital they need to invest in improving product quality," says Christoph Spennemann, in charge of UNCTAD’s programme on intellectual property rights and development. Boosting this production requires foreign investors, Mr Spennemann says, but many investors want to see further harmonization of national drug regulations in the region, which includes Burundi, Kenya, Rwanda, Tanzania and Uganda. "It’s all about economies of scale," he says. "Investors are more interested in a regional market of 140 million people than individual countries." [Note: the conference resolutions can be downloaded from the link, above] [Zimbabwe: Govt works on $40m facility for drug firms]
Zimbabwe: Minister to present 2017 national budget next month (The Chronicle)
Finance and Economic Development Minister Patrick Chinamasa is expected to present the 2017 national budget early next month. The ministry’s permanent secretary Mr Willard Manungo said the process of interrogating the submissions from different stakeholders would be complete soon. Ministers and parliamentarians concluded a three-day pre-budget consultation meeting in Bulawayo at the weekend. “At the moment we are interrogating the submissions from various Government departments and ministries. We are looking forward to have the budget presented either at the end of the month or early December,” he said.
South Africa’s transition from TDCA to EPA: agricultural market access updates, downloads (tralac)
EU’s EPA strategy detrimental to Africa – ECOWAS farmers (Vanguard)
Zombie banks stalk Africa with mergers one way to limit risk (Bloomberg)
Regulators may have no choice but to force lenders to consolidate or close. A third of Nigeria’s 21 banks may be under-capitalized. Much smaller Uganda has 25 banks and last month suffered one collapse. Kenya has had three failures since August last year and with 40 lenders, boasts almost one bank per million people. Angola’s 30 or so banks may need to boost reserves by $4 billion, while a Mozambican lender was rescued by the central bank in September. Ghana is telling banks to combine and raise funds through the stock market. “The consequences of inaction will be disastrous,” said Robert Besseling, a Johannesburg-based executive director at business-risk consultancy Exx Africa. “Uncontrolled bank failures pose significant contagion risks to other banks, state-owned enterprises and private businesses.”
Fear of job losses after rise in import duty at Mombasa port (Daily Nation)
A duty increase on imported goods has caused a clearance clog at the Port of Mombasa, with more than 1,000 containers piling up uncollected. This is after the Kenya Revenue Authority increased tariffs three months ago. There are fears of job losses as many clearing and forwarding agents say they can no longer afford to release goods at the port, with the delays having a cost impact on importers through demurrage charges, hence lowered income.
Maritime trade and global piracy: latest International Maritime Bureau report
Kidnapping and hostage-taking persists off the coasts of West Africa and South East Asia, despite a 20-year low in piracy on the world’s seas, according to new figures from the International Chamber of Commerce International Maritime Bureau. IMB’s latest global piracy report shows that pirates armed with guns or knives took 110 seafarers hostage in the first nine months of 2016, and kidnapped 49 crew for ransom. Nigeria, a growing hotspot for violent piracy and armed robbery, accounts for 26% of all captures, followed by Indonesia, Malaysia, Guinea and Ivory Coast. But with just 42 attacks worldwide this quarter, maritime piracy is at its lowest since 1996. As for Somalia, zero incidents were recorded this quarter and just one attempted attack was recorded in the Gulf of Aden in the first nine months of 2016. But the situation ashore in Somalia, from where the pirate vessels set off, remains fragile.
India, Japan plan to develop ‘Pacific, Indian Ocean’ corridor (Economic Times)
India and Japan hope to put in a place a network connecting the Pacific to the Indian Ocean as they eye joint development of infrastructure and capacity building projects in this vast region, with a special focus on Africa, in the backdrop of China’s growing ambitions across Asia and Africa. The mechanism aimed at contributing to Asian stability connecting two oceans is expected to be put in place when PM Narendra Modi visits Tokyo for the annual summit with PM Shinzo Abe from November 10-12. A key aim of this mechanism is also to utilise India’s political network in Africa and Japanese funds to finance a variety of projects across the continent, people familiar with the development said.
Climate investment opportunities in emerging markets: an IFC analysis
A new IFC report shows that the historic global agreement on climate change adopted in Paris last year helped open up nearly $23 trillion in opportunities for climate-smart investments in emerging markets between now and 2030. IFC’s study, based on the national climate-change commitments and underlying policies of 21 emerging-market economies, representing 48% of global emissions, identifies sectors in each region where the potential for investment is greatest. This includes Sub-Saharan Africa, which represents a $783m opportunity — particularly for clean energy in Cote d’Ivoire, Kenya, Nigeria, and South Africa.
UN climate conference to continue momentum after Paris Agreement comes into force (UN)
In early October, the accord cleared the final threshold of 55 countries representing 55% of global emissions required for the accord to come into effect within one month. Its entry into force was extremely swift, particularly for an agreement that required a large number of ratifications and the two specific thresholds.
SA’s IDC signs $20m loan facility with Development Bank of Zambia to support small businesses (Lusaka Times)
Brazilian Senate approves $90.7m debt relief to Zambia (Lusaka Times)
Kenyan companies lead merger and acquisition deals in COMESA region (Business Daily)
What’s happening to the EAC integration dream? (New Times)
Zimbabwe: Govt pushes for expedition of National Export Strategy (The Herald)
Kenya: Govt to introduce toll stations on five major roads (Business Daily)
Tanzania: BOT’s July monthly economic review (pdf)
Abidjan-Lagos Corridor: ECOWAS validates Advisory Services Inception Report
IMF’s Fifteenth General Review of Quotas: report of the Executive Board to the Board of Governors
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East African pharma companies missing out on fast growing $5 billion opportunity
The $5 billion East African pharmaceutical market is expected to grow by more than 12% per year for the next five years, as lifestyle changes in the region lead to higher rates of non-communicable diseases such as diabetes.
Such high growth offers significant opportunity, but so far the region’s 65 manufacturers have only been able to satisfy about 30% of market demand, leaving the other 70% to be captured by imports.
“The biggest challenge facing local producers is the lack of capital they need to invest in improving product quality,” says Christoph Spennemann, in charge of UNCTAD’s programme on intellectual property rights and development.
“Local companies need to invest in new and better production and research facilities, but conventional banks see them as too risky and are reluctant to finance their projects,” he added, during a 2-4 November meeting in Nairobi on boosting pharmaceutical production in the East African Community (EAC).
Boosting this production requires foreign investors, Mr. Spennemann says, but many investors want to see further harmonization of national drug regulations in the region, which includes Burundi, Kenya, Rwanda, Tanzania and Uganda.
“It’s all about economies of scale,” he says. “Investors are more interested in a regional market of 140 million people than individual countries.”
“Before they invest, they want to be sure that a drug approved in one country can be sold in all five,” he says.
Right now this is not guaranteed because too many differences still exist between national regulations, Mr. Spennemann says, adding that the region is currently testing the feasibility of a joint approval from all five countries’ drug regulatory agencies.
Boosting local pharmaceutical production is hot on the political agenda for EAC governments, looking to reduce medical costs for families and to increase access to essential medicines, especially in rural areas.
In addition to regional policy harmonization, local pharmaceutical industries need a supportive domestic policy environment, including on tax, research and development, and trade policies. Get one of these policies wrong and local producers are at a disadvantage, Mr. Spennemann says.
At the Nairobi meeting, UNCTAD is supporting the EAC secretariat to look at proposals from the Federation of East African Pharmaceutical Manufacturers for boosting investment into the region’s pharmaceutical industry.
First International High Level Multi-Stakeholders Conference on Promoting Pharmaceutical Sector Investment in the EAC
The 1st International High Level Multi-Stakeholders Conference on Promoting Pharmaceutical Sector Investments in the East Africa opened on 2 November 2016 at the Laico Regency Hotel in Nairobi, Kenya.
The three-day conference brings together key stakeholders from EAC Partner States including Ministries of Health, Finance and Industry, National Medicines Regulatory Agencies (NMRAs), National Procurement Agencies (NMPAs), AU-NEPAD Planning and Coordinating Agency, World Health Organization (WHO), United Nations Conference on Trade and Development (UNCTAD), United Nations Industrial Development Organization (UNIDO) and the private sector (local and international pharmaceutical manufacturers) as well as international development partners and investors among others.
The overall objective of the conference was to develop a common and shared vision for promoting investments in the regional pharmaceutical manufacturing sector.
In her speech read by Mr. Barrack Ndegwa, the Integration Secretary, Kenyan Cabinet Secretary for East African Community Integration, Labour and Social Protection, Hon. Phyllis Kandie described the pharmaceutical sector is a critical area of cooperation in health matters within the EAC.
Hon. Kandie said the conference was therefore significant as it provides a platform for stakeholders to have a conversation among the policy makers, industry players, the civil society, as well as social and development partners on how to deepen cooperation in the sector.
She disclosed to the conference that in 2014, the pharmaceutical market of the EAC was valued at US$1.9 billion, adding that it was forecast to grow at a compound annual rate of 8.3% to reach US$4.2 bilion in 2024. However, Kenya, which is the leading pharmaceutical producer in the region, with approximately 50% production and rising exports, supplies just 25% of the Kenyan market.
The CS added that Tanzania supplies a declining share of its own domestic medicines market, down from 35% in 2009 to less than 10%-20% today.
The Cabinet Secretary informed the participants that despite these developments, the Pharmaceutical manufacturers operating from within the EAC region generally produce at a cost disadvantage to larger generic product manufacturers internationally due to a variety of reasons including scale, expensive asset base coupled with older technology, higher financing costs plus a lack of integration with active pharmaceutical ingredients suppliers.
“This situation makes domestically manufactured medicines uncompetitive compared to imports and the regional pharmaceutical market is therefore dominated by imports with domestic manufacturers only meeting less than 30% of the medicines demand.”
She called for the Development Partners and other stakeholders to support the growth of the sector by engaging and addressing the concerns of the domestic pharmaceutical manufacturers and potential investors.
On her part, Hon. Josiane Nijimbere, Burundi’s Minister of Public Health and the Fight Against AIDS, said medicines have become a very important and powerful tool, now more than ever, in improving the health status of populations and, in the long term, for reducing healthcare costs and ensuring sustainable development through health working human resource.
“I am therefore delighted that the East African Community has decided to hold this conference in collaboration with our Development Partners here present and those who have not been able to make it, raise awareness of various stakeholders on the need to promote investment in pharmaceutical manufacturing.”
She underscored the importance of the health sector for the citizens of East Africa as the EAC integration agenda aims at improving sharply standard of living the East African Citizenry.
“To this effect, the development of the pharmaceutical sector and investments is equally critical if we want to achieve the objectives of the Community.”
The EAC Deputy Secretary General in charge of Productive and Social Sectors, Hon. Christopher Bazivamo said that poor performance of the EAC health sector has contributed to shortage of essential medical products and health technologies, which could be produced within the region by EAC industrial sector.
“About 75% of the EAC pharmaceutical market demand is met through importation of medical products and health technologies while 25% is covered by domestic pharmaceutical production,” said Hon Bazivamo.
He urged Partner States to consider implementing incentive packages to promote domestic pharmaceutical production in the region which includes; a uniform preferential margin of 20% for all regionally produced medicines and medical devices in public tenders according to Article 35 of the Common Market Protocol; removal of duties for imported raw and packing materials, pharmaceutical manufacturing related equipment as well as spare parts for the equipment’s acquired by domestic manufacturers registered in the EAC; and classification and import restrictions for finished pharmaceutical products that can be produced within the region, based on regional capacity and quality audits of local manufacturers.
The High Level Mult-Stakeholders Conference on Promoting Pharmaceutical Sector Investments conference provides an opportunity and a platform for stakeholders to discuss and agree on strategic areas and policy incentive packages that promote EAC domestic pharmaceutical manufacturers and foster dialogue between policy makers, regulators and pharmaceutical manufacturers.
The Conference has been organized by the EAC Secretariat in collaboration with the EAC Partner States and Development Partners.
Resolutions
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The 1st International High Level Multi-Stakeholders Conference on Promoting Pharmaceutical Sector Investments in the East African Community (EAC) was held in Nairobi, Kenya at Laico Hotel on 2nd to 4th November 2016. The Conference was officially opened by Hon Christopher Bazivamo, EAC Deputy Secretary General Productive and Social sectors, Hon. Phyllis Kandie, Cabinet Secretary, East African Community, Labour and Social Protection of the Republic of Kenya and Hon. Dr. Josiane Nijimbere, Minister for Health and Fight against AIDS, Republic of Burundi.
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The conference was jointly organized by the East African Community Secretariat (EAC), Ministry of East African Community, Labour and Social Protection of the Republic of Kenya, GIZ/GFA Project on Pharmaceutical Sector promotion, Federation of East African Pharmaceutical Manufacturer’s Association (FEAPM), Bill and Melinda Gates Foundation, World Bank, African Union NEPAD Planning and Coordinating Agency, the World Health Organization (WHO), United Nations Industrial Development Organization (UNIDO), United Nations Conference on Trade and Development (UNCTAD) and German Metrology Institute (PTB).
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The conference was attended by domestic and international pharmaceutical manufacturers, stakeholders from Ministries of Health, Finance, Trade and Industry, National Medicines Regulatory Authorities (NMRAs), National Medicines Procurement Agencies (NMPAs), and development partners including UNAIDS, and Swiss Tropical Institute and experts from the cooperating partners.
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The conference made the following resolutions on this date 4th November 2017:
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Investment in development of EAC domestic pharmaceutical manufacturing sector has an important role in achieving economic transformation goals, access to medicines goals and Sustainable Development Goals (SDGs) and enhances inclusive growth in the health sector and economy at large. The EAC and FEAPM to develop a robust Incentive Framework that will lead to significant investments in regional pharmaceutical manufacturing.
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EAC to ensure policy coherence across the sectors of health, industry, trade, commerce, customs and enhanced market access at regional and national levels in the EAC Pharmaceutical Manufacturing Plan of Action (EACRPMPOA 2017-2027) and the EAC Medicines and Health Technologies Policy and Strategic Plan (2016-2021) currently under preparation.
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The EAC to undertake a stepwise approach towards the implementation and domestication of the EAC Harmonized Good Manufacturing Practice (GMP) Standards to ensure domestic pharmaceutical industry stays competitive at regional and international levels. Basing on the experience and benefits of the Kenya GMP roadmap the region commits to implementation of the roadmap within 5 years.
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In order for the EAC Pharmaceutical manufacturing sector to capitalize on the available market and ensure medical products produced domestically are safe, efficacious and of acceptable quality standards to build customer trust and confidence, the EAC domestic pharmaceutical manufacturers to utilize the EAC-Medicines Regulatory Harmonization scheme including the single application for registration of medical products to be marketed in all the five Partner States and joint GMP inspections which reduces duplication of efforts, costs and time to the Pharma sector.
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Preferential treatment of locally produced pharmaceutical products in government procurement is key to creating the necessary demand for locally manufactured products and thus more investments. To this end the government of East African Partner States and the private sector are called upon to give a preferential margin of up to 30% to the domestic manufacturers.
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For purposes of resolution No. (v) the region undertakes to operationalize Article 35 of the EAC Common Market Protocol , which clearly defines, ‘local’ in a regional content to ensure that preferential treatments accorded to nationals are extended to all suppliers within the East Africa Community.
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Noting that the low level of domestic production of essential medicines and health technologies leads to shortage of essential medicines and health technologies, the EAC and FEAPM to prepare a list of essential medicines that can be produced within the region. The region will then undertake classification and import restrictions for these finished pharmaceutical products based on regional capacity and quality audits of local manufacturer.
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Noting the importance of finance to investments in the sector, the EAC undertakes to explore innovative mechanisms for financing domestic pharmaceutical manufacturing.
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EAC in collaboration with FEAPM to formulate a regional skills development and partnership programme based on the assessment needs in pharmaceutical manufacturing and research centres.
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Noting the importance of innovation, research, technology and development to the sector, the EAC to undertake networking research centres and build synergies among researches taking place within EAC in biotechnology and pharmaceutical. Further they are to increase participation of EAC research institutions in researches taking place outside EAC including public-private product development partnerships on diagnostics and treatment of tropical and communicable disease.
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Noting the importance of Intellectual Property Rights, the governments of the EAC Partner States are called upon to implement the recommendations of the Regional Intellectual Property Policy on utilization of Public Health Related WTO-Trade Related Aspects of Intellectual Property Rights (TRIPS) under their domestic laws.
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EAC undertakes to implement the EAC Competition Policy to improve coordination, to combat substandard, spurious, falsely labelled, falsified and counterfeit products. Further the region commits to undertake pharma covigillance and post market surveillance activities.
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Noting the importance of enhancing market access for EAC products in other regions, the region undertakes to include pharmaceutical exports in regional and bilateral trade negotiations.
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The EAC commits to strengthen the existing multi sectoral regional and national steering committees for the implementation of the EAC Regional Pharmaceutical Plan of Action.
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The EAC welcomes the, ‘Nairobi Statement on Investments in Access to Medicines’ signed by UNCTAD, AUC, MOH Kenya, MOITI SA and UNAIDS and calls upon EAC Partner States to join in the commitment to promote local pharmaceutical production in support of SDG goals and emphasize policy coherence and market integration.
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The stakeholders recommended that the multi sectoral conference will be biennially to take stock of the development of joint activities and progress.
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UN climate conference to continue momentum after Paris Agreement comes into force
Three days after the entry into force of the landmark Paris Agreement, the Marrakesh Conference, which begins Monday, 7 November, in Morocco, will give United Nations Member States and the world the opportunity to maintain momentum on climate action and continue strengthening the global response to the threat of climate change.
“Our challenge is to sustain the momentum that has propelled the Agreement into force,” Secretary-General Ban Ki-moon told reporters at UN Headquarters in New York the past Friday, where he convened a meeting with civil society representatives from all over the world and thanked them for the “vision, courage, persistence and leadership [that] made this day happen.”
Adopted by 196 States Parties to the UN Framework Convention on Climate Change (UNFCCC) last December, the Paris Agreement, so-named after the French capital where it was approved, aims to strengthen the global response to the threat of climate change by keeping the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit it to 1.5 degrees Celsius.
In early October, the accord cleared the final threshold of 55 countries representing 55 per cent of global emissions required for the accord to come into effect within one month. Its entry into force was extremely swift, particularly for an agreement that required a large number of ratifications and the two specific thresholds.
The Agreement entered into force in time for the UNFCCC Marrakech Climate Conference, known by the shorthand COP 22, that begins in Morocco this Monday, where the first Meeting of the Parties to the Agreement will open on 15 November. Before the meeting wraps up on 18 November, parties hope to define the rules for the accord and to lay out a viable plan for providing at least $100 billion a year to developing countries to support climate action.
“The UN Climate Change Conference in Marrakech is the crucial next step for governments looking to operationalize the Paris Climate Change Agreement adopted last year,” said UNFCCC Executive Secretary Patricia Espinosa.
While the Paris Agreement gave clear pathways and a final destination in respect to decisive action on climate change, many of the details regarding how to move forward as one global community in that common direction still need to be resolved.
This is a moment of celebration but also a moment of reflection on the task ahead and a point where governments recommit to the new agenda of rapid implementation, not least in pressing forward with adequate support for vulnerable countries to take their own action.
With the entry into force of the Agreement just before the Conference, “the dialogue and decisions in Marrakech hold immense potential to accelerate and amplify the immediate response to the challenge recognized in the Paris Agreement. This meeting is therefore incredibly important,” Ms. Espinosa underscored.
As such, she encouraged world's governments to work together in the same spirit that produced such success over recent years. “I also encourage leaders of public and private sectors and every citizen to follow the Marrakech Conference proceedings to further understand how you can take action and contribute to the mounting momentum to meet the interlinked global challenges of climate change and sustainable development,” she added.
The President-Designate of COP 22, Salaheddine Mezouar, the Minister of Foreign Affairs and Cooperation of Morocco, said: “Marrakesh will be the COP of inflexion. Besides moving forward on major negotiation areas, action is taking more space and creating a tangible bridge between our vision for a brighter future and the implementation of concrete climate responsible projects on the ground.”
“We, Parties as well as non-State actors, have here a real opportunity to emphasize this momentum, celebrate successes and share experiences and learning to set inclusively the path forward for action,” he added.
COP 22 will include a number of meetings and high-level events, including the high-level segment to be attended by dozens of chiefs of State and Government, on Tuesday 15 November.
Other events include the facilitative dialogue on enhancing ambition and support, the ministerial high-level dialogue on climate finance, and the high-level event on enhancing climate action. Side events are also scheduled and a number of them are clustered around thematic days, including Africa Day, Climate Justice Day, Education Day, Gender Day, Farmers, Day, and Young and Future Generations Day.
On historic day for climate action, Ban urges sustained momentum for better, safer future
As the Paris Agreement on climate change enters into force, United Nations Secretary-General Ban Ki-moon has called for the same determination going forward to implement the Agreement as well as to achieve the 2030 Agenda for Sustainable Development.
“We remain in a race against time. But with the Paris Agreement and the 2030 Agenda for Sustainable Development, the world has the plans we need to make the shift to a low-emission, climate-resilient path,” Mr. Ban told the press on Friday at the UN Headquarters in New York.
“Now is the time to strengthen global resolve, do what science demands and seize the opportunity to build a safer, more sustainable world for all,” he added.
The Paris Agreement calls on countries to combat climate change and to accelerate and intensify the actions and investments needed for a sustainable low carbon future, and to adapt to the increasing impacts of climate change.
It also aims to strengthen the ability of countries to deal with the impacts of climate change and calls for scaled up financial flows, a new technology framework and an enhanced capacity-building framework to support action by developing countries and the most vulnerable countries in line with their own national objectives.
Further in his remarks on Friday, Mr. Ban recalled that the present generation to really feel the effects of climate change and the last that can prevent its worst consequences.
He added that over the past decade, a “great global coalition” for climate action, including government officials, scientists, faith leaders, business executives and civil society activists around the world was forged and it recognized that the future of people and planet was at stake.
“They made today possible,” he said, highlighting: “Today shows us what is possible when we join forces for our common future.”
UN chief discusses role of civil society in the days ahead
Also today, the Secretary-General chief held a meeting with representatives of civil society groups to discuss with them how their organizations could contribute to the objectives of the Paris Agreement, as well as their visions and concerns.
In his remarks, Mr. Ban thanked the civil society for their courage, persistence and leadership in realizing the Paris Agreement and called on them to “keep up the fight”, to press for action and to hold governments accountable.
“Your voices at the time were clearly heard by the leaders who attended the climate meeting [in Paris last year],” he said. “You showed the climate challenge stakes – and the solutions.”
The discussion with the civil society was moderated by David Nabarro, Special Adviser on 2030 Agenda for Sustainable Development, and attended by a number of representatives of civil society groups from all over the world.
Participating in Friday’s event were: Keya Chatterjee, Executive Director, US Climate Action Network (on behalf of CAN-International); Angie Fyfe, Executive Director USA, ICLEI – Local Governments for Sustainability; and Naomi Ages, Climate Liability Campaigner, Greenpeace.
Pre-recorded video messages were also delivered by: Sharan Burrow, General Secretary, International Trade Union Confederation (ITUC); Alina Saba, Researcher, Mugal Indigenous Women’s Upliftment Institute, Nepal & Asia Pacific Forum on Women, Law and Development; Winnie Byanyima, Executive Director, Oxfam International; and Kathy Jetnil-Kijiner, Instructor, College of the Marshall Islands & Co-Director, Jo-Jikum.
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EU’s EPA strategy detrimental to Africa – ECOWAS farmers
The Economic Community of West Africa States (ECOWAS’) farmers have called on African leaders to resist the pressure being put on them by the European Union to sign the Economic Partnership Agreement. The farmers group said the pressure and the strategies implemented by the EU to achieve the EPA put serious doubts about the real objectives.
It said that the reciprocal market opening asked by the European Union that is the world’s premier economic trade zone, will weaken different economic sectors, including emerging industries, by subjecting them to fierce and unfair competition with products of European economies.
In a letter signed by Djibo Bagna to President Muhammadu Buhari to congratulate him for refusing to sign the agreement, the farmers group said “Is it really for the sole purpose of economic development of our countries and our region? The EU cannot exert such pressure on our governments to sign an agreement in our own interest. It was obvious it will be to the detriment of our producers.
“The basis of the EPA is to preserve the EU’s economic interests and undermine our economic development. The former governor of the Central Bank of Nigeria, Professor Charles Chukwuma Soludo declared in March 19th 2012 that the EPA in West Africa would be like a second slavery.”
It further stated: “The planned competition between our agricultural products with those of the European Union will undermine the objectives of our agricultural policy and commitments by Heads of State. The Economic Partnership Agreement is part of the business strategy of the European Union to stem losses from markets that it suffers in Africa.”
The letter to Mr. President read in part: “On behalf of the members and Board of Trustees of the Network of Farmers Organisations and Agricultural Producers in West Africa (ROPPA), we extend our sincere greetings, congratulations and support for your Excellency’s continued commitment and initiatives to ensure peace, security, economic development and sustainable growth in Nigeria and the entire ECOWAS region.
“Your Excellency, ROPPA is working in 15 ECOWAS countries with governments, development partners and civil society organisations in the formulation and implementation of sectoral policies affecting agriculture and rural development. Our network also facilitates access of family farms to services and facilities to ensure economic development of our region.
“As part of its objectives, ROPPA is following with interest the negotiations of the Economic Partnership Agreement (EPA) between the European Commission, ECOWAS, UEMOA and Mauritania. On behalf of West African farmers organisations and civil society groups, we extend our support for your consistent position in defence of our region and its citizens in the EPA negotiations.
“We support the position taken by Nigeria under your leadership by refusing to sign the EPA. Your Excellency had reiterated this position by declaring to the plenary of the European Parliament on 3rd February 2016 that Nigeria could not sign the EPA because it would threaten the industrialisation of your great country. We all know whatever affects Nigeria affects the entire region. Your Excellency, Nigeria accounts for 51.6% of the West African population and 78.3% of West Africa’s GDP. Abuja is the ECOWAS headquarters and it represents the symbol of the West Africa’s economic and political integration.
“The integration of our region is a great potential for improved productivity, economic growth and gains. We do not need commercial partnership agreements that will weaken our economic growth. The reciprocal market opening asked by the European Union that is the world’s first economic trade zone, will weaken our different economic sectors, including emerging industries, by subjecting them to a fierce and unfair competition with products of European economies.
“The farmers of the region were invited through a participatory methodology in the development of both agricultural policies in our region (AUP and ECOWAP), and we appreciate their guidance towards reclaiming our food markets and our food security and sovereignty. Through the consolidation guidance processes of our agricultural policies towards food sovereignty, our region has truly consensual instruments for agricultural development, with a legitimacy that engages all stakeholders.
“West African Farmers Organisations welcome the commitment and reforms implemented in recent years by the Heads of State and Governments in the ECOWAS region to enable our region meet the challenges of food security and food sovereignty, tackle malnutrition, hunger, poverty, youth employment and ensure sustainable management of natural resources.
The vision is sustained by the Malabo Declaration to strengthen public investments in agriculture to increase productivity and supply in the food sector. It will also strengthen the determination of our policymakers in agriculture, forestry, pastoralism and livestock production and fisheries.
“These are the real levers for the development of the region. The planned competition between our agricultural products with those of the European Union will undermine the objectives of our agricultural policy and commitments by Heads of State. Your Excellency, the pressure and the strategies implemented by the EU to achieve the EPA puts serious doubts about the real objectives. Is it really for the sole purpose of economic development of our countries and our region? The EU cannot exert such pressure on our governments to sign an agreement in our own interest.
“It was obvious it will be to detriment of our producers. The basis of the EPA is to preserve the EU’s economic interests and undermine our economic development. The former governor of the Central Bank of Nigeria, Professor Charles Chukwuma Soludo declared in March 19th 2012 that the EPA in West Africa would be like a “second slavery”.
Non-reciprocal agreements
“The doubts of EU’s real intentions are verified through all alternatives to the EPA that it refuses to adopt. For example the EU may request a waiver at the WTO to maintain its trade preferences with West Africa. But the EU does not wish to renew non-reciprocal agreements with the ACP countries because it is pursuing a strategy to increase its access to developing countries markets through the multiplication of free trade agreements.
“Your Excellency, a look at the development in the world shows that all countries that have developed began by creating the necessary conditions for doing so. This is done by first securing their production sectors, investing to increase production and dissemination of productions and only after they are open to others. These conditions put together can ensure increased productivity, competitiveness and community preference.
“We cannot expect Africa to be the first example that will first open its market so that it will develop. Your Excellency, we are not against international cooperation and free trade agreements, however this Economic Partnership Agreement that the EU is seeking by hook or by crook for last 14 years is one of Europe’s many initiatives or attempts to exacerbate the underdevelopment of Africa and increase its dependence.
“Your Excellency, the West African farmers’ organi-sations and Civil Society thank you for your worthy position on the EPA and its disastrous consequences on our economies. Your Excellency has put the interests of your people and our community in front despite the pressures and short-term political goals. The history of our region and all the people will recognise this great role that you played.
“We request your Excellency to continue the dialogue and create awareness with other Heads of State in ECOWAS so that Nigeria’s position will be supported by other policy makers in the region and ensure the non-ratification of the EPA in the collective interest of our region. West Africa has the human and material resources to sustain itself and promote intraregional trade and economic growth. We wish to thank and congratulate Your Excellency for this great position you took and urge you to continue this great effort and initiative.”
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Liberia hosts 8th West Africa Monetary Zone Trade Minister’s Forum
Most African nations barely trade with their neighbors and they at most times focus on Asia, Europe and America as trade partners something that is largely responsible for the slow economic growth the continent is experiencing.
However, West Africa is trying to break the barriers to increase trade in the region due to a monetary zone formed to regulate and improve trade in order to bolster economic growth.
Annually, the West Africa Monetary Zone meets to strategize new plans, create new investment and trade opportunities.
This year WAMZ held its 8th trade minister’s forum in Monrovia which began with a technical working group. The conference was held from November 2-3 at the Boulevard Palace Hotel.
Opening the session, Liberia’s Commerce Minister Axel Addy said the forum was a very essential gathering that offered member states the opportunity to share country experience on cross border trade.
“Your presence here today indicates the commitment of the member states to the improvement of intra-regional trade, which is estimated, to be about 10 percent.
The importance of trade to economic growth and job creation cannot be over emphasized. It is my hope that this forum will proffer recommendations that will improve trade among us,” Addy said.
The Minister boasted of Liberia’s accession to the World Trade Organization, adding that Liberia has become a model for other nations on the continent to follow.
Minister Addy urged WAMZ member states to continue the unity in order to make trade across borders easier and cheaper.
Edwin Puwogar Speaking on behalf of Director of Customs Ecowas Commission averred that the Commission appreciates the good efforts being made by WAMI to boost economic development and regional integration among the WAMZ countries.
Puwogar added that there was an existing Memorandum of Understanding (MoU) between ECOWAS Commission and WAMI on the promotion of trade-related issues in ECOWAS and the WAMZ.
“This is borne out of the recognition that trade promotion is critical and vital for the success and effectiveness of monetary integration, poverty reduction and overall regional development,” Puwogar said.
Puwogar noted that ECOWAS since its inception has had a trade policy designed to increase intra-regional commerce, raise trade volume and generally galvanise the economic activities within the region to positively impact on the economic wellbeing of ECOWAS citizens.
Puwogar continued: “The ECOWAS trade policy is also meant to foster the smooth integration of the region into the world economy with due regard for the political choices and development priorities of Member States in the desire to engender sustainable development and reduction of poverty.”
According to a report from ECOWAS, trade has increased by an average of 18 percent per year between 2005 and 2014.
The report further stated that the main active countries in trade are Nigeria, which alone accounts for approximately 76 percent of total trade followed by Ghana (9.2 percent) and Côte d’Ivoire (8.64 percent).
It is dominated by mining commodities (oil resources, iron, bauxite, manganese, gold, etc..), agriculture (coffee, cocoa, cotton, rubber, fruits and vegetables, Services, especially finance, and other products rather marketed within the region (dry cereals, roots and tubers, livestock products), etc.
“Nigeria, Côte d’Ivoire, Ghana and Senegal concentrate 87 percent of this trade, with 79 percent of regional imports ($55,520 million per year) and 94 percent of exports and re-exports ($77,792 million per year).”
Powugar said that the ECOWAS Commission has accelerated efforts to finalize and adopt the common investment code policy for the region.
Powugar: “Efforts are also being made to foster the establishment of public-private partnerships at the regional level for financing development in West Africa”.
He added that Commission remains committed to collaborating with WAMI and other stakeholders to ensure free trade among ECOWAS member States.
According to him, available data reveals that intra-ECOWAS trade as a percentage of total external trade was not above 14 percent.
“This is unlike the European Union that has intra-regional trade not less than 60 percent of its total external trade,” he added.
“All impediments to free movement of goods within the Community need to be removed to boost intra-ECOWAS trade,” he stressed.
The West African Monetary Institute (WAMI) Director General Abwaku Englama said WAMI identified the need to assess progress on trade integration in the region.
“I have been informed that the preliminary results of the newly constructed index show that the WAMZ trade intergration index score stood at 47.1 in 2015 from 40.8 in 2014,” Englama said.
Englama revealed that WAMI is expected to carry out a survey on informal cross border trade in the region.