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Weak data buries the shine of Kenya’s huge mineral resource
Kenya has vast mineral deposits that remain largely unexploited as data gaps keep the country’s undiscovered underground wealth out of the economic system.
A report released on the country’s potential mineral resources show that Kenya has billions below its surface worth of minerals yet to be mapped and quantified for mining.
The Ministry of Mining, which is yet to identify a consultant expected to carry out a year-long aerial mapping of the country’s minerals said in the Kenya Mining Investment Handbook 2016 that the country’s mining potential is huge and remains unknown.
“Numerous mineral occurrences have been recorded and mapped in the country. However, no detailed exploration work has been carried out to establish the extent of most of these mineral occurrences.
Nonetheless, Kenya has numerous ores and industrial minerals, which have been established to be in substantial quantities.
These minerals include soda ash, fluorspar, titanium, niobium and rare earth elements, gold, coal, iron ore, limestone, manganese, diatomite, gemstones, gypsum and natural carbon dioxide,” the ministry wrote in the report.
Earlier this month, Kenya hosted the first mining forum where leaders pledged focus on the sector which is capable of supporting up to 10 per cent of Kenya’s Gross Domestic Product.
Mining Cabinet Secretary Dan Kazungu said 17 bidders had applied to be the consultant expected to conduct the Sh3 billion survey to map the country’s mineral locations and allow for informed marketing of the country as mining hub.
According to the report, Kenya has world class deposits of rare earth elements in the coastal region with an estimated worth of Sh6.2 trillion and these could propel the country to the list of top five nations with rare earth deposits in the world.
In addition, the country has the world’s top six deposits for Niobium with commercial deposits of coal having been discovered in the north eastern region of the country and are currently under review for potential exploitation.
Even before the survey expected to take place next year starts in western Kenya, where gold has been discovered, a number of global mining companies are already operating in the country mining millions in tonnes of ores. More are expected to join once the mapping is complete.
Tata Chemicals Magadi, which has its operation in the Lake Magadi region in the Great Rift Valley is Africa’s largest soda ash producer and one of Kenya’s leading exporters with an annual production of about 360,000 metric tonnes of Soda Ash according to the report.
Kenya Fluorspar Company Limited has been mining fluorspar for export in the Rift Valley System since 1971.
Another major mining firm, which has been around since 1942 is the Africa Diatomite Industries Limited (ADIL) exploiting diatomite in Gilgil, a town north west of Nairobi, for export.
DIL has access to good quality diatomite deposits estimated at over 6 million tonnes and currently boasts of having the only known viable quality deposits of Diatomite in Kenya.
Fenxi Mining, together with a local joint venture partner, Great Lakes Corporation are currently exploiting two exploration areas where coal deposits have been identified.
The company estimates that the area holds more than 400 million tonnes of coal reserves with estimated value of Sh4 trillion.
“The country is vastly underexplored for minerals and its mining sector is currently dominated by the production of non-metallic commodities.
Kenya is the third largest producer of soda ash in the world and the seventh producer of fluorspar. Metallic minerals currently produced in the country include titanium, gold and iron ore. Export statistics for Kenya indicate a constantly growing sector,” the report said.
In 2014, for instance, Kenya exported 281,503 metric tonnes of ilmenite, 52,465 mt of rutile and 23,000 mertric tonnes of Zircon.
After next year’s mapping, which has been pending since 2012 due to lack of funds, further exploration and uptake of mineral rights is expected to boost Kenya’s capacity to position itself as a mining hub.
» Download: Kenya Mining Investment Handbook 2016 (PDF, 8.14 MB)
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We need to up our game to provide support to exporters – Director-General October
The Director-General for the Department of Trade and Industry (the dti), Mr Lionel October says government needs to up its game to provide support for exporters to ensure increased growth of South African exports. He was addressing the Team Export South Africa (TESA) workshop held in Midrand today.
The two-day workshop is organised by the dti and is attended by government officials from all three spheres, export councils, business as well as export agencies.
October said exporters needed more support on institutional measures as well as financial to the level of the export bank. He said government was in fact in the process of converting the Export Credit Insurance Council (ECIC) into an Export Import Bank (Exim Bank) to ensure that exporters and export councils have the necessary resources they require.
“Countries do not export, companies do. At best we can play the facilitating role but companies should also play their role. We must close the gap between government and exporters, identify top 100 exporters and work with them to break into markets,” said October.
He highlighted the importance of driving transformation and ensuring that companies are compliant with the Broad-Based Black Economic Empowerment (B-BBEE) legislation for government to assist them.
“We must set the target for exporters to ensure integration of black exporters. B-BBEE is absolutely essential for us to grow the economy and it is integral to incorporate the private sector. We should be firm and say that we will support the automotive sector but there should be compliance with B-BBEE,” reiterated October.
Speaking as a member of the panel on institutional arrangements that government needs to put in place to increase export, the Chief Executive Officer of Black Business Council, Mr Mohale Ralebitso said government needed to deal with barriers of trade to ensure that there is free flow of trade. Ralebitso stressed that government should improve coordination with regards to dealing with logistics including clearing goods at customs, visas, legislation, red tape and paying SMMEs on time.
“Trade facilitation is pivotal as well as agency alignment to ensure that businesses are able to trade easily. the dti and Home Affairs Department need to coordinate for instance on issues of visas for business at least. We learnt from Kenya that other African countries need us to look at intra trade, meaning that as we export to those countries we also import from them to address the issue of trade imbalance,” he highlighted.
The workshop will also look at the institutional arrangements relating to private sector, Africa as an export market and export support measures.
Background
TESA is a platform that brings together all South African stakeholders that are involved in developing and promoting exports and exporters which includes the dti, provincial departments of economic development, provincial trade agencies, Export Councils, Metro Municipalities and other role players in the export value chain.
“The event is held once a year to discuss current global and local developments that have an impact of growth of exports from the country. The 2016 event has a theme: Exports as a driver for economic growth and employment,” says Mr October.
He adds that with the domestic economy projected to achieve less than 1% growth in 2016, growth in exports can provide a stimulus for growth in productive output in some of key targeted sectors that include agro-processing, manufacturing and defence industries.
Mr October says the event will be structured into 4 discussion panels that focus on the following topics:
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Institutional Arrangements by Government Institutions to promote growth in exports: This session aims to discuss ways that limited government resources can be deployed to make the most impact on growth of exports.
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Institutional Arrangements by Private Enterprises to promote growth in exports: This session aims to discuss ways that enterprises can group themselves to be better prepared to compete in export markets.
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Africa as an export market: What Opportunities and Challenges do South African companies face when doing business in the rest of the continent. What can SA Incorporated do to improve its competitive position on the continent.
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Export Support Measures: Most countries provide funding to stimulate their targeted growth sectors. What measures could be applicable for SA?
The workshop is part of the department’s strategy to ensure collaboration between government and business in growing the economy through increasing exports of South African products into other parts of the world.
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Report charts path for a “nutrition revolution” in Africa
The Comprehensive Africa Agriculture Development Programme (CAADP) is having a positive impact in countries that have implemented its recommendations, according to the 2015 Annual Trends and Outlook Report (ATOR) released on 18 October 2016. The report outlines how agriculture and food systems can improve food security and improve the health and productivity in Africa.
The ATOR, was released by the Regional Strategic Analysis and Knowledge Support System (ReSAKSS), a program facilitated by the International Food Policy Research Institute (IFPRI) in partnership with other Africa based CGIAR centers. The report examines the current status of nutrition in Africa, including progress in meeting Malabo nutrition targets, and emphasizes the importance of dietary quality and diversity. It also addresses how the agricultural sectors can ensure that food systems deliver more nutritious and nutrient dense foods.
The ATOR emphasizes the importance of strengthening human and institutional capacities for mainstreaming nutrition, wider implementation of programs and coordinating policies and programs across sectors more efficiently. Including nutrition indicators in national monitoring, and evaluation systems is essential for holding governments accountable.
“Improving food security is not only about making sure people are consuming adequate calories, but ensuring that diets provide adequate nutrients for the healthy growth and development of Africa’s children and the health and wellbeing of all people,” said Ousmane Badiane, IFPRI Director for Africa.
“This report shows that policymakers must not only monitor nutrition outcomes but set ambitious targets and design appropriate strategies to achieve these. The first step to reducing poverty and promoting economic growth in Africa is to reduce hunger and malnutrition which rob the continent of its human resource potential.”
The report found:
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Statistics and trends indicate a need for more concerted effort in tackling a triple burden of malnutrition in Africa that includes reducing undernutrition, micronutrient deficiencies, and overweight and obesity.
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The potential nutritional impact of existing food policies (including agricultural subsidies) should be reviewed, and reforms should be initiated for those policies that are likely to have adverse effects on people’s dietary quality and body weight.
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Comprehensive monitoring and evaluation systems, complete with key nutrition indicators and contextualized evidence, are needed to evaluate the impact of comprehensive investment plans on nutrition and attainment of the international, continental, and national commitments for growth, development, and nutrition.
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Overall, the analysis of CAADP indicators shows that countries that have been in the CAADP process the longest and those that have gone through most of the levels of the CAADP process have tended to register better outcomes in most of the indicators reviewed, thus highlighting the positive impact of CAADP.
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It is essential to harness the potential for science, technology, and innovation to reduce postharvest losses and food waste; promote product diversification with nutritious foods; improve processing to extend shelf life and make healthy foods easier to prepare; and improve storage and preservation to retain nutritional value, ensure food safety, and extend seasonal availability.
The ATOR includes chapters that discuss policies related to nutrition, the economic effects of nutrition interventions, past successes in improving nutrition in Africa, the harmful effects of aflatoxins, and more. The report was released at the 2016 ReSAKSS Annual Conference in Accra, Ghana. The conference is organized by IFPRI in partnership with the African Union Commission.
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tralac’s Daily News Selection
The selection: Monday, 24 October 2016
Events this week: In Geneva – the DRC’s Trade Policy Review (25, 27 October); In Maputo – Open forum on macroeconomic scenarios and challenges in the present situation (25 October), Conference on poverty and well-being in Mozambique (26 October)
Featured tweet, @megareg_iilj: ‘David Luke: Africa will lose from megaregional trade agreements. CFTA might mitigate losses and contributes to regional integration.’
Nancy Alexander: ‘Possible priorities of the 2017 German G20 Presidency’ (HBS)
The idea is to execute investment compacts with African governments that would represent frameworks for infrastructure and pave the way for private industry. (Compacts may be designed with the United Nations “Global Compact”.) Perhaps Germany will also revive aspects of its “investment for development” initiative which was advanced during its G8 presidency of the 2007 Heiligendamm Summit. The Finance Ministries are concerned about African debt. In that regard, the big question is: how could-large scale borrowing for infrastructure be justified given the fact that many African countries are highly indebted? Is it realistic to hope that investment will generate productivity and growth to facilitate repayment? Optimism will be tempered with some realism given not only the debt, but also low growth, a potential banking crisis, a slowdown in China (Africa’s major trading partner), depreciating currencies, and expanding deficits (especially given the decline in export revenues due to low commodity prices).
Intra-BRICS trade: an Indian perspective (EximBank India)
Over the past decade, there has been a shift in BRICS export interdependence. In 2006, with a share of 46.9% in BRICS intra-exports, China was the dominant exporter to rest of BRICS countries, followed by Russia (accounting for 20.9% of intra-BRICS exports in 2006), Brazil, India and South Africa. By 2015, while China remained the largest supplier to the rest of the BRICS countries, with an increased share of 56.3% in the intra-BRICS exports, Brazil became the second largest intra-BRICS exporter (17.8%), followed by Russia (14.5%), India (7.5%) and South Africa (4%) (see Table 3.2). China has also registered the fastest growth in intra-BRICS exports, with a CAGR of 13.5% during 2006-2015. It is pertinent to note that though South Africa has the smallest share in intra-BRICS exports, its importance as a supplier to BRICS has been growing. During 2006-2015, South Africa’s exports to BRICS grew at a CAGR of 12.3%. As in the case of exports, there has also been a shift in BRICS import interdependence. The share in intra-BRICS import of China, Russia, and South Africa which accounted for 43.2%, 16.4%, and 9.8%, respectively, in 2006, reduced to 40.8%, 13.8%, and 6.8%, respectively, in 2015. While share of Brazil and India increased from 10.4% and 20.2%, respectively, in 2006 to 12.8% and 28.8% in 2015.
"Dar, India trade notches $1.74bn by August" (IPPMedia)
The trade deficit on the part of Tanzania was $392m at the end of August after exporting only goods worth $676m against an import bill of nearly $1.07bn. “The top Indian imports from Tanzania are gold, wood, coconuts, Brazil nuts and cashew nuts as well as dried leguminous vegetables, oil-cake and other solid residues of vegetable fats,” the Indian High Commission notes in the latest India–Tanzania Trade Statistics report. Tanzania and India recorded the least balance of trade last year, which was only $110m compared to $1,174.14m and $1,556.54m in 2014 and 2013 respectively. [Trade high on Dar-Rabat vision]
Israeli exports to Africa rise as exports to China fall (YNetNews)
Israel has been exporting more to Africa as the continent experiences significant economic growth and as the Chinese economy begins to weaken. The Israel Foreign Trade Risks Insurance Corporation has approved 28 deals to be covered by the insurance corporation. The deals amount to approximately $1.05bn dollars. Fiscal year 2015 only saw 17 deals approved, amounting to $623m. The number of Israeli trade deals with African nations which were followed through on in 2015 was four, and amounted to $312m. However, a recent Ashra survey showed that approximately a quarter of all Israeli exporters believe that the African market is the most attractive market to expand operations in. The head of Ashra, Tzahi Malach, said that “we are expecting to see a significant increase in Israeli exports to Africa. The main countries we expect to see exporters shipping to are Zambia, Kenya, and Ethiopia.”
Mauritius at Guangdong 21st Century Maritime Silk Road expo (GoM)
Enterprise Mauritius is leading a delegation of 38 local participants at the 2016 Guangdong 21st Century Maritime Silk Road International Expo. According to the CEO of Enterprise Mauritius, Mr Radhakrishna, the expo (27-30 October) is the ideal platform for Mauritius to benefit from maximum visibility as a strategic partner for trade, investment and tourism. ‘The aim behind our participation is also to establish fruitful business contacts with over 60 participating countries. In addition, the strategic position of Mauritius presents the island as the springboard to propel China in Africa’, he stated. As at date, 30% of trade between Mauritius and China goes through Guangdong.
China’s growing presence in Africa wins largely positive popular reviews (pdf, Afrobarometer)
How do Africans see China’s foreign investment and influence in their countries? Findings from Afrobarometer’s 2014/2015 surveys in 36 African countries, which included a special series of questions on China, suggest that the public holds generally favourable views of economic and assistance activities by China. Africans rank the United States and China No. 1 and 2, respectively, as development models for their own countries. Remarkably, in three of five African regions, China either matches or surpasses the United States in popularity as a development model. In terms of their current influence, the two countries are outpaced only by Africa’s former colonial powers.
Tanzania: Transporters call for urgent improvement of Dar port services (IPPMedia)
The Minister of Industries, Trade and Investment, Charles Mwijage said operations at the port should conform to modern technology to make sure that clearance of the freight at the port does not exceed 24 hours. “It is absolutely unacceptable to dwell on the sickening 14-day bracket of shipment clearance which in neighbouring ports like Beira in Mozambique and Mombassa, Kenya takes 24 hours only. Necessary improvements must be in place the soonest. Dar es Salaam must be a port of choice and convenience,” Mwijage insisted. The minister made the remarks at the opening ceremony of the annual Tanzania Transporters Association stakeholders’ meeting in Dar es Salaam on Saturday.
Seven northern Kenya counties set to form economic bloc (Daily Nation)
Seven counties in Northern Kenya are Tuesday set to launch a bloc aimed at transforming the formerly marginalised region into an economic giant. Marsabit Governor Ukur Yattani said governors from Mandera, Wajir, Isiolo, Tana River, Lamu and Garissa are to join him for the launch in Marsabit Town. [Africa tilts as winners emerge from the commodities slump]
Rwanda, DR Congo sign deal to ease cross-border trade (New Times)
Officials in charge of trade from both countries signed the memorandum of understanding (MoU), last week, in Rubavu District, during the official launch of the Common Market for Eastern and Southern Africa Simplified Trade Regime. The move seeks to ease small-scale trade by waiving import duty on products whose worth is below $2000 (about Rwf1.6 million), according to officials. It is especially expected to help thousands of small-scale cross-border traders, largely women, to carry out their daily business smoothly. There is a list of 168 products categorised into agricultural, livestock, fisheries, construction, cosmetics and manufactured products. A joint periodic review will be conducted every six months to see if there are more products to add or remove, officials said.
DR Congo NGO ends boycott of UAE’s Kimberley Process chairmanship (The National)
The National Support Centre for Development and Popular Participation, known under its French acronym Cenadep, from the DRC, became the first member of the Civil Society Coalition to break ranks with the boycott organised last year. The Congolese organisation is one of 11 that make up the CSC. Others are believed to be considering the offer from Mr bin Sulayem, although Partnership Africa Canada, the most vociferous critic of the UAE under its director of research Alan Martin, has said that the boycott remains in place. Ola Bello, the executive director of one organisation that is attending the plenary, Good Governance Africa, said: "We are very pleased to see that in reflection of Africa’s tradition, the KP chair and some members of the CSC have decided to reconcile their differences and bring forward a positive agenda for change of the KP."
‘Zim should address high wage levels’ (The Herald)
Zimbabwe should address high wage levels, which are in some cases 10 times more than those prevailing in the region, as this is contributing to the erosion of competitiveness for local products, the Minister of Policy Coordination and Promotion of Socio-Economic Ventures in the President’s Office Simon Khaya Moyo has said. "A regional comparison puts Zimbabwe at a disadvantaged position as its wages are significantly higher. One erudite economist made a comparative analysis of the regional wages. He indicated that Zimbabwe offers minimum wages of $275 to $300, Malawi offers $30, Mozambique $120, Botswana $93 and Zambia $100. It is obvious that using this criterion of minimum wages, investors will not invest in Zimbabwe,” he said.
Ethiopia wants more business from SA (City Press)
Ethiopia’s drive to attract more South African investment is being hampered by a government that still distrusts business and a population wary of foreign domination. Africa’s second most populous country wants more foreign direct investment in agriculture, energy, transport and manufacturing, among other sectors, as it seeks to sustain an average economic growth rate of 11% over the past decade, according to Wegayehu Berga, the minister counsellor of business promotion at the Ethiopian embassy in Pretoria. However, at an investment briefing organised by the Gordon Institute of Business Science this week, PPC and Group Five, which are establishing themselves in the country, detailed tales of a slow-to-reform bureaucracy still married to paperwork, slow in decision-making and still protective of its dominance of the economy. “They are incredibly wary about business,” said Tony de la Motte, managing director of Group Five Projects, a unit of JSE-listed Group Five. “I couldn’t even get a one-year visa from this man,” De la Motte said, patting Berga’s shoulder at the panel discussion.
Egypt: FDI galore? (Ahram)
The FT said in an article last week that Egypt had moved to fifth place globally in 2016, up from 15th the previous year, in greenfield FDI inflows to a total of $20 billion. A greenfield investment is a form of FDI in which a parent company builds its operations in a foreign country from the ground up or expands its business including by building new distribution hubs and offices. The news raised eyebrows in Egypt because of the harsh economic situation of the country, especially amid the acute foreign currency shortage caused by the drying up of foreign currency sources, including FDI. But did Egypt really receive this amount of FDI? Official figures from the Egyptian government do not confirm this.
Women’s roles in the West African food system: implications and prospects for food security and resilience (SWAC, OECD)
This paper examines how women’s empowerment is essential for food and nutrition security and resilience in West Africa and suggests policy “pointers” arising from the West African experience that can help inform policies and strategies, particularly in view of the 2030 Agenda for Sustainable Development. West African women play a significant role at each stage in the food system, from production to distribution to nutrition, and they contribute to building resilience and adaptability to uncertainty and shocks including the effects of climate change. While it is clear that women significantly contribute to the eradication of hunger and malnutrition, it is also evident that there is a need for greater political representation and participation in policy dialogues.
South Africa to cooperate on competition law with Russia and Kenya (NLR)
Egypt’s ceramic exports to Africa could increase by 5% (Daily News)
Iran opens business unit in Cape Town (Tehran Times)
Africa Islamic Finance Forum explored development opportunities (Saudi Gazette)
Uganda: Tourism earns economy Shs7.3b (Daily Monitor)
Smuggling eats into Uganda tax revenue (The East African)
17th World Trade Union Congress, Durban: closing remarks by General Secretary of the WFTU, George Mavrikos
India pushes WTO members to accelerate work on outstanding Doha Round issues (LiveMint)
Why India sneezes when China catches a cold (LiveMint)
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How can trade policy be used to transform African livelihoods?
How can African countries and the international community overcome the existing challenges to building the poverty-reducing trade needed to meet the poverty-related Sustainable Development Goals in Africa?
To date, Africa’s progress in poverty reduction has been disappointing. Africa is the only developing region for which the Millennium Development Goal (MDG) of halving poverty was not met. The number of extremely poor Africans increased by more than 100 million between 1990 and 2012. Over the same period, the share of extremely poor Africans in the population declined from 57 percent to 43 percent. This represents about a 25 percent reduction, half of what was targeted under the MDGs. The world’s extreme poor are expected to be increasingly concentrated in Africa over the new 2030 Agenda for Sustainable Development period. In addition, deprivation is not confined to income poverty. Africa, excluding North Africa, has the world’s highest poverty rates as measured by the Multi-dimensional Poverty Index (MPI).
These persistent levels of high poverty in Africa are not a result of a lack of growth. In fact, the continent’s economies grew at an average of at least five percent above the global average of three percent over the MDG period. The problem was that this growth was not well-distributed, so it failed to lift more people out of poverty. At a time when the implementation of the 2030 Agenda has just started, it is clear that fresh thinking is needed on how to meet the challenge of inclusive growth and achieve the poverty-related Sustainable Development Goals (SDGs) on the continent.
Trade has a key role to play, although it has been under-exploited thus far in Africa. In particular, specific emerging policy reforms may provide significant momentum for progress. The establishment of a continental free trade area (CFTA) and an emphasis on boosting intra-African trade are key priorities of the continent’s development vision, the African Union’s “Agenda 2063 – the Future We Want for Africa.” This ambitious trade agenda is reinforced by important trade-related targets that are included as means of implementation for the SDGs, and the Addis Ababa Action Agenda (AAAA) contains several other trade elements.
Why has Africa failed to use trade as an effective tool for poverty reduction? The answer is that a robust policy response is required to meet the challenges of inclusive, diversified, and transformative trade. Trade costs and services restrictions are relatively high on the continent. Average tariffs for intra-African exports are higher than for exports to the rest of the world, which is further discussed below. Limited productive capacities have boxed African countries into the export of primary commodities with little value added. High global commodity prices only served to increase Africa’s commodity dependence and aggravate inequalities within and between African countries.
In addition, while the global trade regime falls short of what is needed for Africa, mega-regional trade agreements (MRTAs) and reciprocal trade agreements with the EU are expected to create additional challenges for Africa’s structural transformation. The current slowdown in global trade and growth will also make poverty-reducing trade even more difficult.
Overcoming these challenges will not be easy. The nine key trade policy actions discussed in the remainder of this article, however, can go a long way towards trade reforms that can contribute more effectively to poverty reduction and the achievement of the 2030 Agenda in Africa.
Enhancing regional integration: the top priority for Africa
Intra-African trade has great potential to facilitate economies of scale, diversification, and value addition. In 2013, about two thirds of intra-African trade was in manufactured products. However, intra-African exchanges stood at just 16.3 percent of total African trade in the same year, providing significant scope for expansion. We propose three strategic policy imperatives that are needed to harness this potential and fast track the continental integration agenda.
Timely implementation of an inclusive CFTA agreement
The average applied rate of tariff protection within Africa is 8.7 percent, compared to only 2.5 percent imposed on the rest of the world. Disciplines are also needed for non-tariff barriers. Timely implementation of the CFTA would allow to rectify this and also offset the expected negative impact of MRTAs on preference erosion and the increased reciprocity of the Economic Partnership Agreements (EPAs).
Modelling work at the ECA indicates strong positive impacts of the CFTA on intra-African trade – which is already more diversified than Africa’s trade with the rest of the world – as well as on real incomes and industrial development. Real wages for all categories of African workers are shown to receive a positive boost from the CFTA, with unskilled workers benefiting the most.[1] To ensure the realisation of these positive welfare impacts, safeguards are needed to protect agriculture livelihoods, along with a mechanism to review the CFTA’s impact on trade and poverty running up to 2030.
Supportive non-tariff policy initiatives to enable firms to take advantage of the CFTA
To date, implementation of the Boosting Intra-African Trade (BIAT) initiative has been disappointing, slow, and uncoordinated. In order to reduce the relatively high costs to intra-African trade, this must change. Mainstreaming the seven BIAT clusters – trade policy, trade facilitation, productive capacity, trade-related infrastructure, trade finance, trade information and factor market integration – into the development policy and programmes of African countries and regional economic communities (RECs) would go a long way in achieving this. In particular, efforts to enhance cross-border infrastructure should continue to receive attention.
African leaders must take full ownership of the continent’s infrastructure agenda and adopt innovative financial strategies to mobilise funds required for its implementation. As the scope of the CFTA includes services, its aim should also be to increase the degree of services liberalisation beyond the current status in the RECs.
Establishment of a Continental Customs Union (CCU) supportive of structural transformation
The trade-weighted applied tariff on industrial products in least developed countries (LDCs) is 18 percent for intermediates, compared to 12 percent for finished products. High import costs for intermediates is constraining industrialisation in Africa, where intermediates account for a stable share of 60 percent of merchandise imports.[2]
A CCU would help to align African countries’ attempts to achieve strategic consistency between trade and industrial frameworks, as discussed further below. ECA modelling work highlights the potential positive impacts a CCU can have on driving Africa’s structural transformation, if appropriately designed.[3]
An African common external tariff (CET) should impose lower tariffs on intermediate inputs and capital goods important for industrialisation but not available locally. This would facilitate their use as imported inputs in production processes, and increase the possibilities for exporting transformed products. A sensitive item list for specific agricultural and industrial goods that are produced locally would help to avoid a rapid influx of imported goods on the African market, which could hold back domestic competitiveness, economic transformation, and poverty reduction efforts.
Harnessing regional opportunities at home: smart industrialisation through trade
Actions are needed at the national level to support regional integration and its role in industrialisation, both of which are imperative for economy-wide productivity improvement, job creation, and poverty reduction in Africa. The key lies in providing a conducive environment for the integration of African businesses into regional and global value chains (RVCs and GVCs) – in particular micro, small, and medium enterprises (MSMEs), which are key to reducing poverty through trade. Trade policy can be used in the following three “smart” ways to maximise the gains from closer regional integration and drive structural transformation and value addition in Africa.
Tariff reforms to ensure strategic consistency between trade and industrial frameworks and promote poverty reduction
African governments need not wait for a CCU to reduce tariffs on strategic industrial production inputs. Domestic tariff reforms to promote industrialisation are needed now – this will also make the process of aligning external tariff structures as part of an African CET easier further down the line. Governments should lower protection for imported intermediate and capital inputs such as fertilisers, machines, and spare parts that are crucial to industrialisation but not produced locally. Tariffs should also be reduced on energy-access technologies, which are seldom manufactured in African countries.
These interventions would cut costs of industrialisation and foster domestic value addition in RVCs, thereby facilitating integration into higher rungs of GVCs. Such smart industrialisation through trade is not a new concept. The East Asian Tigers all benefited from deliberate trade policies. To avoid a sudden fiscal shock due to loss of tariff revenues, however, there is a strong case for development partners to support compensation schemes over the Agenda 2030 period.
Appropriate intellectual property (IP) policies to support the cross-border transmission of knowledge and innovation
To facilitate technological transmission and catch-up, the global IP system provides flexibilities for LDCs in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Using these flexibilities can be helpful in building the competitiveness needed to integrate into GVCs and ensuring income convergence with developed countries and poverty reduction more generally.
The Association of Southeast Asian Nations (ASEAN) countries rarely sign external agreements that are stricter than their global IP obligations, for example, and eligible members have also exploited flexibilities offered by the global IP system. This has helped to transform ASEAN into an innovative and competitive bloc.[4]
African countries must be supported to establish domestic IP policies and laws that are appropriate to their level of development. The CFTA agreement provides a perfect opportunity for Africa to set common IP rules and use flexibilities based on a common approach.
Effective and efficient services that facilitate trade and investment
Services trade restrictions do not feature prominently in the 2030 Agenda, yet competitive services are key to poverty reduction since they improve downstream productivity, cut business costs, enhance access to GVCs and generate employment. Liberalisation of services sectors that facilitate trade, investment, and MSME competitiveness should thus be prioritised to secure quick gains for African economies. As noted above, services liberalisation and the establishment of common regulatory frameworks are part of the CFTA negotiating agenda.
A global trade regime that addresses Africa’s needs
The international trade landscape will influence how well Africa can take advantage of welfare-enhancing trade opportunities. Very little has been achieved under the Doha Development Agenda and there is broad consensus that, overall, the outcomes of the 2015 WTO 10th Ministerial Conference were sub-optimal. As the WTO’s post-Nairobi work programme is being developed, African countries should continue to push for multilateral trade reform. In addition to these efforts, three critical areas of support are required from the international community.
Move beyond the 2030 Agenda’s focus on market access
African countries already benefit from duty-free quota-free (DFQF) access in their main foreign markets. The priority for the continent is support to mobilise productive capacities, alongside more generous rules of origin to stimulate investment, boost exports, and address Africa’s development needs. Flexible requirements for domestic value added and cumulation zones extending beyond narrow regional groupings would encourage diversification, local and regional processing, and integration into GVCs.
Appropriately manage tariff reductions contained in reciprocal trade agreements
A shift towards greater reciprocity in Africa’s trade agreements is expected over the next decade. The recently agreed EPAs between the EU and regional African groupings, while asymmetric, call for the partial and gradual opening of African markets to EU imports. In 2025, the African Growth and Opportunity Act (AGOA) is also expected to be succeeded by an agreement with a more reciprocal structure.
Tariff reductions on imports from outside Africa need to be appropriately phased, so that African industries have time to adapt. Tariffs on intermediate and capital goods not produced locally could be removed first, followed by tariffs on intermediate and capital goods for which some domestic and regional production exists, and finally by tariffs on finished products. This sequencing would support Africa’s industrialisation and technological catch-up, while also providing temporary protection for local producers to guard against premature de-industrialisation.
Agreements should also contain provisions that African countries can use for industrialisation purposes, as in the proposed East African Community EPA. It is imperative that signatory countries undertake comprehensive analyses of new agreements’ implications on industrial development and poverty reduction.
Improve the targeting of Aid for Trade (AfT)
Empirical studies show that AfT can support poverty reduction through increased export diversification, employment, and foreign direct investment. Although boosting intra-African trade in particular would offer significant gains for Africa in terms of export diversification and poverty reduction, regional AfT is lacking. CFTA implementation would benefit from short-term regional AfT support. For example, although revenue losses from tariff reductions are expected to be small given the relatively low level of intra-African trade, adjustment assistance from donors may be required to meet budget shortfalls, especially in the current context of low commodity prices.
Conclusion
Although Africa is unlikely to eliminate extreme poverty by 2030, it can make serious strides in this direction. The policy actions presented above all point to the need for economic transformation in order to support Africa’s poverty-reduction agenda. This is the key to creating decent jobs, improving productivity, increasing incomes, reducing vulnerability and risks, and overcoming poverty in Africa. In particular, industrial development must become the core objective of trade policy for African governments, RECs, and the international community.
In this context, the importance of regional integration should not be underestimated. Closer collaboration and increased intra-African trade is required if Africa is to benefit from economies of scale and develop significant RVCs. Intra-African trade has already proved to be an important source of industrial upgrading and export diversification on the continent, yet it has a lot more to offer.
This piece is based on a longer paper which is published by ICTSD here. The views expressed in this article are the authors’ own and may not necessarily reflect the position of UNECA.
Lily Sommer is Trade Policy Fellow at the African Trade Policy Centre (ATPC) in the Regional Integration and Trade Division (RITD) at the United Nations Economic Commission for Africa (UNECA). David Luke is Director of the African Trade Policy Centre (ATPC) in the Regional Integration and Trade Division (RITD) at the United Nations Economic Commission for Africa (UNECA).
This article is published under Bridges Africa, Volume 5 - Number 8, by the ICTSD.
[1] See United Nations Economic Commission for Africa, “Assessing Regional Integration in Africa V: Towards an African Continental Free Trade Area,” 2012.
[2] United Nations Economic Commission for Africa, “Economic Report on Africa 2015: Industrializing Through Trade”, 2015.
[3] See Mevel, Simon and Stephen Karingi, “Deepening Regional Integration in Africa: A Computable General Equilibrium Assessment of the Establishment of a Continental Free Trade Area followed by a Continental Customs Union,” Paper presented at the 7th African Economic Conference, 2012.
[4] United Nations Economic Commission for Africa, “Assessing Regional Integration in Africa VII: Innovation, Competitiveness and Regional Integration”, 2016.
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Intra-BRICS trade: An Indian perspective
Executive Summary
In the recent years, developing countries have increasingly emerged as regional and global growth engines, reflecting higher growth in economic activity and trade, as compared to the developed economies. Brazil, Russia, India, China and South Africa (BRICS) – the five emerging global powers from the continents of Asia, Africa and Latin America – are incrementally increasing their global engagements. Today, BRICS economies together account for 22.5 per cent of the global output, 17.2 per cent of global trade, and over 40 per cent of the global population.
Earlier called BRIC, without South Africa, this group was initially coined by Goldman Sachs in 2001, by Jim O’Neill in a paper titled ‘Building Better Global Economic BRICs’. This paper concluded that over 10 years the weight of the BRIC countries and especially China in world GDP will grow, raising important issues about the global economic impact of fiscal and monetary policy in the BRIC countries. In 2003, their report, “Dreaming with BRICs: The Path to 2050” stated that by 2050 these economies together would be larger in US Dollar terms than the G-6 (‘Group of Six’), consisting of the United States, Germany, Japan, the United Kingdom, France and Italy.
BRICS had a tentative start in the margins of the 61st session of the UN General Assembly in New York in September 2006. The foreign ministers of four countries, Brazil, Russia, India and China, met briefly to explore ways to cooperate politically. The proposal to hold regular meetings came when the leaders of Russia, India and China met at the margins of G-8 Outreach Summit in St. Petersburg in July 2006 (Group of Eight consists of France, Germany, Italy, the United Kingdom, Japan, the United States, Canada, and Russia).
This grouping of vastly different economies took a concrete shape when the leaders of the BRIC nations (Brazil, Russia, India, and China) agreed to hold regular summits starting in 2009 to discuss broad range of issues. South Africa was added to the list on April 13, 2011 creating “BRICS” (Brazil, Russia, India, China and South Africa). Nonetheless, BRICS remains largely heterogeneous in character, with wide variance in the socio-political-legal frameworks of member countries.
By the year 2020, nominal GDP of BRICS economies is projected to touch US$ 23 trillion and its share in world GDP is expected to increase to 25.2 per cent. Growth in BRICS economies is also expected to stabilize by 2020, with India and China being the major drivers of the region’s growth.
BRICS Global Trade
The significance of international trade among BRICS countries was highlighted during the Sixth BRICS Summit in Fortaleza, Brazil in 2014. During this Summit the BRICS countries adopted a key decision on launching comprehensive talks regarding the BRICS Strategy for Economic Partnership and a draft BRICS Roadmap for BRICS Trade, Economic and Investment Cooperation.
The total trade of BRICS has almost doubled from US$ 2.8 trillion in 2006 to US$ 5.7 trillion in 2015. This upward trend has been underlined by favorable growth performances of both its exports and imports. In the case of exports, total exports of BRICS has risen from US$ 1.6 trillion in 2006 to US$ 3.2 trillion in 2015, with a resultant rise in the share of BRICS in global exports from 13.2 per cent to 19.3 per cent during the period. As regards imports, total imports of BRICS have also witnessed a continuous growth. In 2015, total imports rose to US$ 2.5 trillion (15.1 per cent of global imports), up from US$ 1.3 trillion (10.3 per cent of global imports) in 2006.
BRICS together maintain a trade surplus, which has increased from US$ 314.8 billion in 2006 to US$ 644.7 billion in 2015. China, Russia and Brazil, maintained a trade surplus, while India and South Africa maintained a trade deficit in the same year.
Electrical machinery and equipment dominated the exports of BRICS, accounting for 19.6 per cent of its global exports in 2015. Other commodities in its export basket include machinery and equipment; mineral fuels, oils and its distillation products; furniture, bedding, mattresses, and cushions; and vehicles other than railway or tramway. Exports of furniture, bedding, mattresses, and cushions registered the highest growth with a CAGR of 14.4 per cent during 2006 and 2015.
Imports of BRICS were also dominated by electrical machinery and equipment, accounting for 20.7 per cent of its global imports in 2015. While BRICS’ export of electrical machinery and equipment mainly included telephone sets (HS 8517), imports of the BRICS economies was dominated by electronic integrated circuits (HS 8542). Other items in the import basket of BRICS include mineral fuels, oils and its distillation products; machinery and equipment; optical, photographic, medical or surgical apparatus; and vehicles other than railway or tramway.
Intra-BRICS Trade
BRICS countries have made significant progress in integrating with the global economy. Analysis of trading patterns within BRICS countries reveals that levels of intra-BRICS trade are quite diverse, mainly reflecting comparative sizes of the economies. Over the past decade, intra-BRICS trade has increased by nearly threefold, supported by increase in intra-regional trade for all the member countries.
An analysis of the intra-BRICS trade reveals that China has played a significant role by accounting for nearly half of the intra-BRICS trade. This was followed by India, Brazil, Russia, and South Africa.
However, it may be mentioned that BRICS countries have not harnessed the potential offered by the regional cooperation, especially given the significant growth of its market size to US$ 16.5 trillion in 2015 from US$ 6.1 trillion a decade ago, supported by a large consumer base of over 3 trillion population.
An analysis of trade intensity index (TII) highlights that trade intensities of Brazil and South Africa with BRICS have improved since 2001, while that of China, India and Russia, on the other hand, have deteriorated since 2001.
The mutually invigorating trade interactions among the BRICS countries is reflected in their trade composition. Brazil and Russia are among the world’s largest producers and exporters of natural resource, while most of their imports include manufactured and processed goods. India and China, on the other hand, are among the major exporters of manufactured and processed goods, and major importers of natural resources. South Africa, apart from being a major trading partner for India, China and Brazil, serves as an important trade route for India-Brazil trade. Thus, growing synergies among the BRICS economies is mutually beneficial to the members. According to Goldman Sachs, a significant driver of BRICS growth stems from the large scale Chinese and Indian industrialisation and urbanisation creating strong demand for Russia’s and Brazil’s abundance of natural resources.
Potential for Enhancing India’s Trade with BRICS
Underlying the robust trend in bilateral trade between India and rest of BRICS countries, has been the rising trend in India’s trade deficit with BRICS countries. India’s trade deficit with rest of BRICS increased from US$ 8.7 billion in 2006, to US$ 58.4 billion in 2015. India maintained the largest trade deficit with China (US$ 52 billion), followed by Russia (US$ 2.9 billion), South Africa (US$ 2.5 billion), and Brazil (US$ 1 billion).
To further enhance India’s trade with the BRICS countries, and at the same time to address the rising trade deficit, an important strategy would be to focus on India’s export potential to these countries. Such a strategy would also contribute to the overall efforts to enhance India’s trade with BRICS.
While India’s current global capability could be matched with the import demand of BRICS countries, leading to enhanced exports from India, strategy to promote bilateral trade relations could also encompass the case for enhancing domestic production in India to cater to the large demand existing in other BRICS countries.
Given India’s expertise in several manufactured products, and technology which is affordable and adaptable, other BRICS countries would also stand to gain with increased import of such items from India. This would also help in further strengthening bilateral ties, and resulting in a mutually rewarding long-term partnership. Potential items of export for India to other BRICS countries up to the 6-digit HS code, have been identified and presented in the study.
Challenges and the Way Forward
BRICS countries have made significant progress in integrating with the global economy. According to the IMF, more than 40 per cent of the global economic growth is generated by BRICS economies. However, the share of intra-BRICS trade to its global trade is still as low. Further, intra-BRICS trade is dominated by China on both export and import fronts. The growth of intra-BRICS trade has been constrained primarily by high and escalating trade costs and restrictive trade policy environment.
In the World Bank’s ‘Ease of Doing Business’, trading across borders index, it has been observed that despite progress made in the past, the trading across borders rankings of BRICS countries remain low. Cumbersome documentation and customs clearance, poor inland transportation and terminal handling, are some of the reasons that hamper exports.
BRICS economies have reduced their tariff rates in the recent years, however, there exists import restrictions in terms of non-tariff barriers. There has been a rise in the incidence of technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS) applied by the BRICS. Apart from these, the prevalence of anti-dumping measures, countervailing duties and safeguards have also affected intra-BRICS trade.
In order to expand cooperation in trade among BRICS countries, the following goals should be pursued:
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enhancing consultations and exchanging information on macroeconomic and trade policies;
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encouraging trade and investment links between BRICS countries with an emphasis on promoting market access on goods and services amongst BRICS countries and supporting industrial complementarities, sustainable development and inclusive growth;
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simplifying and increasing the efficiency of administrative procedures to facilitate and accelerate mutual trade and investment;
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improving the transparency of trade and investment climate in the framework of international obligations and national legislation; and
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creating favorable conditions for development of mutual trade and foreign direct investment in the BRICS countries in order to diversify production and exports.
Exim India’s Endeavours to Harness Synergies with BRICS countries
Export-Import Bank of India (Exim India or the Bank) has played a catalytic role in augmenting India’s increasing integration with the global economy, with particular reference to the countries of the South. The BRICS economies have been a focus region for Exim India, and thus a critical component of its strategy to promote and support two-way trade and investment. As a partner institution to promote economic development, the commitment towards building relationships with the BRICS economies is reflected in the various activities and programmes, which Exim India has set in place.
Exim India is the nominated member development bank from India under the BRICS Interbank Cooperation Mechanism. Other nominated member development banks from other BRICS nations are: Banco Nacional de Desenvolvimento Economico e Social (BNDES), Brazil; State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank), Russia; China Development Bank Corporation (CDB), Chinam, and Development Bank of Southern Africa (DBSA), South Africa.
In April 2010, Exim India entered into a Memorandum of Cooperation (MOC) with BNDES, Vnesheconombank, and CDB, in the BRIC (Brazil, Russia, India, China) Summit held in Brazil. The MOC signed in the presence of Heads of four States/ Governments seeks to develop crossborder transactions and projects of common interest; strengthen and enhance trade and economic relations between BRIC countries and its enterprises; and finance the investment projects and to work towards economic development of BRIC countries.
Towards fostering institutional linkages, the Bank entered into a Framework Agreement on Financial Cooperation with BNDES, Vnesheconombank, CDB, and DBSA at the third BRICS Summit, held in Sanya, China in April 2011. The Agreement aims to facilitate financial cooperation among the partner development banks of the BRICS countries, with a view to promoting trade and investment for economic development. As a follow-up to this Agreement, the Bank hosted a Technical Group Meeting in Kumarakom, Kerala, in February 2012, during which the member development banks discussed and finalised two Agreements viz., ‘Master Agreement on Extending Credit Facility in Local Currency’ and ‘BRICS Multilateral Letter of Credit Confirmation Facility’. During the fourth BRICS Summit hosted by India in New Delhi in March 2012, Exim India signed these two multilateral financial cooperation agreements with other member development banks. The Bank also hosted the Annual Meeting and Financial Forum under the BRICS Interbank Cooperation Mechanism coinciding with the fourth BRICS Annual Summit at New Delhi.
Exim India has signed two multilateral financial cooperation agreements with other member development banks of BRICS nations, in the presence of Heads of States/Governments of the BRICS countries during the fifth BRICS Summit 2013. The two agreements signed during the occasion are: (i) BRICS Multilateral Infrastructure Co-financing for Africa; and (ii) BRICS Multilateral Cooperation and Co-financing Agreement for Sustainable Development. These two agreements are aimed at setting broader agenda for cooperation in these key areas; and are expected to enhance cooperation among BRICS development banks to promote intra-BRICS trade. Exim India has also been participating in the Annual Meetings of the BRICS Financial Forum, under the BRICS Interbank Cooperation Mechanism.
Exim India has entered into a Cooperation Agreement on Innovation with the four major development banks of other BRICS countries, which was signed in the presence of Heads of States/Governments of the BRICS countries, during the sixth BRICS Summit held in Fortaleza, Brazil, in July 2014. The Agreement is expected to enhance cooperation among BRICS development banks in the field of innovation and to promote intra-BRICS cooperation in innovation financing.
During the seventh BRICS Summit held in Ufa, Russia, in July 2015, Exim India entered into a multilateral cooperation agreement with other member development banks of BRICS expressing their intent to co-operate with the New Development Bank (NDB). The Bank also entered into a co-operation agreement with BNDES at Ufa, Russia on the sidelines of the 2015 Annual Meetings of the BRICS Interbank Co-operation Mechanism. This MOU is aimed at sharing of knowledge, information and best practices; capacity building of personnel, including project development skills; promotion of joint events, research and programmes; development of effective and sustainable financing solutions for projects of mutual interest, including projects in third countries, such as PPP projects; and co-financing.
• Presidency of the BRICS Interbank Co-operation Mechanism
India has assumed the Chairmanship of BRICS Forum for 2016 and Exim India, being the nominated member development bank from India, has assumed the Presidency of the BRICS Interbank Co-operation Mechanism. The Bank organised a Technical Group meeting in Udaipur, during March 10-11, 2016, to discuss various areas for furthering co-operation among member development banks. During India’s Chairmanship, the Bank has planned a series of events and seminars, including the Annual Meeting and the Financial Forum of the BRICS Interbank Cooperation Mechanism.
• Cooperation with NDB
Exim India entered into a multilateral co-operation agreement, along with Chairmen/Presidents of other member development banks of BRICS nations, expressing their intent to co-operate with the NDB promoted by the BRICS nations. This Agreement is aimed at setting a broader agenda for co-operation with the NDB guided by the existing international banking practices; the principles of equality, mutual benefit and responsible financing; and the existing partnership among the BRICS national development banks. The Agreement is expected to enhance cooperation between BRICS development banks and the NDB, individually or collectively, on sharing of information, knowledge and experiences; extending guarantees and counter guarantees; co-financing; and issuance of bonds, among others. The Agreement was signed in the presence of Heads of States/Governments of the BRICS countries in Ufa, Russia during the BRICS Summit 2015.
• Exim Bank of India BRICS Economic Research Award
During India’s Presidency under the BRICS Interbank Co-operation Mechanism, Exim India has instituted the Exim Bank of India BRICS Economic Research Award, with the objective to encourage and stimulate advanced research on economics related topics of contemporary relevance to the member nations of BRICS. The Award, comprising a citation and prize money of Rupees 1.5 million (approximately US$ 20,000) would be supported by the Bank. The jury will accept as entries doctoral theses written by nationals of any of the five member nations of BRICS, who have been awarded a doctorate or accepted for award of a doctorate from any recognised nationally accredited University or academic institution globally.
• Other Activities
In 2015-16, Exim India conducted two seminars in Delhi and Ahmedabad on “Capacity Building Programme on Promoting Trade and Investments with BRICS countries” in association with Federation of Indian Chambers of Commerce and Industry.
Exim India organized a 10-day handicraft artisans training programme in Jaipur under the aegis of BRICS on September 7, 2016. The training programme jointly organized with National Centre for Design and Product Development (NCDPD) had 46 participants from the five BRICS nations. The workshop was organized with an objective of creating awareness on hand-embroidery and stitching patterns among BRICS nations. The artisans developed home furnishing and utility products by combining fusion of various crafts such as Gota, Chikankari, Kachchi Embroidery, Zari/Zardozi, Crewel Embroidery, Sozni, Ari from India and Dimensional Embroidery (Brazil), Chain Stitch (Russia), Suzhou (China) and Kaross (South Africa) which are popular handicraft design styles from the BRICS Nations.
Exim India plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises through a wide range of products and services. Exim India, with its comprehensive range of financing programmes (which include Lines of Credit, Buyer’s Credit under National Export Insurance Account, and Overseas Investment Finance, among others), advisory and support services, seeks to create an enabling environment for enhancing two-way flow of trade, investment and technology between India and other BRICS countries. While promoting infrastructure development and facilitating private sector development in host countries, the various efforts of Exim India, ensconced in its range of activities, also contribute towards institutional building in these countries.
EXIM Bank’s Working Paper Series is an attempt to disseminate the findings of research studies carried out in the Bank. This paper was compiled by Mr. David Sinate, Chief General Manager; Mr. Vanlalruata Fanai, Assistant General Manager; and Ms. Snehal Bangera, Manager. Views expressed do not necessarily reflect those of the Bank.
» Download: Intra-BRICS Trade: An Indian Perspective (PDF, 8.17 MB)
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Smuggling eats into Uganda tax revenue
Uganda is losing tax revenue in a lucrative underground trade of smuggled goods, consisting mainly of cosmetics and motorcycles.
Sources at the Uganda Revenue Authority said that the value of goods impounded in Mpondwe, western Uganda at the border with the Democratic Republic of Congo stood at Ush200 million ($57,734) per month by the end of September.
Last year, the Uganda National Bureau of Standards banned the sale of cosmetics containing hydrotoxins and mercury due to the health risks they posed to consumers, but traders are secretly bringing them into the country.
The banned beauty products are popular because they cost below Ush5,000 ($1.4) per unit compared with an average price of Ush8,000 ($2.3) per unit for “safe” brands.
The URA also said that the number of motorcycles impounded at the Mpondwe border rose to an average of 100 units per month by close of September.
Motorcycles are charged a common external tariff of 25 per cent of assessed customs value while the average market price of a motorcycle is estimated at Ush3.7 million ($1,068). Imported motorcycle parts are subject to a 10 per cent duty rate.
The amount of money recovered from motorcycles seized at the western Uganda-DRC border area is estimated at Ush120 million ($34,640) per month, URA officials said.
The lack of a strong government presence, porous borders and the presence of armed rebel groups operating in the eastern DRC is fuelling the trade in smuggled goods, experts said.
“Motorcycles should be treated as a factor of production instead of an ordinary transport tool. A farmer, trader, teacher and veterinary doctor all rely on them to supply goods and services,” said URA manager for customs operations in the western region, Asadu Kigozi Kisitu. “It would, therefore, be appropriate to either cut the import duty rate levied on motorcycles or transfer the duty to local fuel prices at a time when smuggling on fuel imports has dropped considerably.”
Excise duty levied on petrol was raised from Ush1,000 ($0.29) to Ush1,100 ($0.32) per litre in the current financial year.
Smuggling incidents pegged on fuel imports have dropped sharply since the rollout of the single customs territory window that requires importers of eligible goods to clear taxes before submitting customs declaration forms.
The proposal to cut import duty on motorcycles has attracted criticism from both business people and government technocrats.
According to Edward Kigongo, the chief executive of Ken Group, a stationery supplier, the government would do better if it cut taxes on three-wheeled motorcycles that are used widely to carry merchandise, and raise import taxes on two-wheeled motorcycles in order to minimise their numbers on the road.
A tax expert at Uganda’s Ministry of Finance, Planning and Economic Development Moses Ogwapus said that rather than favour importers, there is a need to pay more attention towards protecting investors in the motorcycle assembly sector where government focus across the region has shifted.
“The Council of Finance Ministers is also considering lowering taxes that will benefit companies that invest in production of motorcycle parts,” said Mr Ogwapus. “In the light of these circumstances, cutting the CET on imported motorcycles would inevitably destroy new investments in the motorcycle assembling industry.”
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Rwanda, DR Congo sign deal to ease cross-border trade
Rwanda and DR Congo have signed a new agreement establishing a framework for bilateral cooperation in the area of cross-border trade and elimination of non-tariff barriers.
Officials in charge of trade from both countries signed the memorandum of understanding (MoU), last week, in Rubavu District, during the official launch of the Common Market for Eastern and Southern Africa Simplified Trade Regime (COMESA STR).
The move seeks to ease small-scale trade by waiving import duty on products whose worth is below $2000 (about Rwf1.6 million), according to officials.
It is especially expected to help thousands of small-scale cross-border traders, largely women, to carry out their daily business smoothly.
There is a list of 168 products categorised into agricultural, livestock, fisheries, construction, cosmetics and manufactured products.
A joint periodic review will be conducted every six months to see if there are more products to add or remove, officials said.
According to Francois Kanimba, the Minister for Trade, Industry and EAC Affairs, both the MoU and the Simplified Trade Regime will ease cross-border formal and informal trade between the two countries.
He said the launch of STR was long overdue as Rwanda and DR Congo are member states of COMESA.
The framework agreement aims to facilitate cross-border trade; eliminate non-tariff barriers; commercial and customs fraud; and ensure proper management and exchange of information and statistics, among others.
Kanimba explained that it is part of government’s strategy to promote trade with all its neighbouring countries through setting up required infrastructure, especially roads and markets, along borders.
“The official launch of the COMESA Simplified Trade Regime and the signing of the MoU between both governments is one of the concrete steps to strengthen trade between Rwanda and the DR Congo,” he said.
He hailed cross-border women traders for their role in economic development.
“We have the responsibility to support these (women) traders to develop their undertakings and make their business formal,” he added.
Kanimba said, through the simplified trade regime, traders will be able to acquire free access to simplified certificates of origin from the borders.
“Easy access of these certificates should decrease fraudulent practices across the borders,” he noted.
In 2015, total trade between the two countries amounted to $164, 5 million, according to figures from the ministry.
Formal trade between the two countries has increased by 15 per cent between 2014 and 2015.
“To maintain the momentum calls for coordinated and targeted actions between our two countries to improve such transport networks, storage facilities, construction of border markets, improved systems to further make trade faster and cheaper,” said the minister.
“Our success will depend on keeping the momentum for the full implementation of simplified trade regime at all major border posts,”
Nefertiti Ngudianza Bayokisa Kisula, the Congolese Minister for Trade, observed that small-scale cross-border trade is growing faster and needed to be encouraged to boost regional trade.
“Rwanda and DR Congo are working together, and we will work hard to take both countries to another level,” she said.
“The policy is to work with neighboring countries and others to boost trade and relations.”
Between 40,000 and 45,000 people cross Rwanda’s border with DR Congo known as Petite Barrière, daily.
There are 23 cooperatives in Rwanda and 12 associations in DR Congo plus others working individually.
Asinah Mujawamaliya, a small-scale cross border trader, said easing trade among small-scale traders would increase their returns.
“Waiving import duty will help improve our earnings as we used to pay this tax whenever we crossed the border. We found it hard, we are grateful for the good relations between both countries and happy that women businesses are being supported,” she said.
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How digital finance could boost growth in emerging economies
Delivering financial services by mobile phone could benefit billions of people by spurring inclusive growth that adds $3.7 trillion to the GDP of emerging economies within a decade.
Two billion individuals and 200 million micro, small, and midsize businesses in emerging economies today lack access to savings and credit. Even those with access must often pay high fees for a limited range of products. Economic growth suffers. But a solution is right in people’s hands: a mobile phone. Digital finance – payments and financial services delivered via mobile phones and the Internet – could transform the lives and economic prospects of individuals, businesses, and governments across the developing world, boosting GDP and making the aspiration of financial inclusion a reality.
A new report from the McKinsey Global Institute (MGI), Digital finance for all: Powering inclusive growth in emerging economies, is the first attempt to quantify the full impact of digital finance. In addition to extensive economic modeling, the report draws on the findings of field visits to seven countries – Brazil, China, Ethiopia, India, Mexico, Nigeria, and Pakistan – and more than 150 expert interviews. It also lays out the key conditions that will need to be met to capture the benefits.
The research finds that widespread adoption and use of digital finance could increase the GDPs of all emerging economies by 6 percent, or a total of $3.7 trillion, by 2025. This is the equivalent of adding to the world an economy the size of Germany, or one that’s larger than all the economies of Africa. This additional GDP could create up to 95 million new jobs across all sectors of the economy.
Many stakeholders would benefit. Digital finance could provide access to 1.6 billion unbanked people, more than half of them women. An additional $2.1 trillion of loans to individuals and small businesses could be made sustainably, as providers gain newfound ability to assess credit risk for a wider pool of borrowers. Governments could gain $110 billion per year by reducing leakage in public spending and tax collection. Providers of financial services would benefit, too. They stand to save $400 billion annually in direct costs by shifting from traditional to digital accounts, which can be 80 to 90 percent less expensive to service. By expanding their customer base, providers increase revenue opportunities and could sustainably increase their balance sheets by as much as $4.2 trillion.
The economic potential varies significantly, depending on a country’s starting position. Lower-income countries such as Ethiopia, India, and Nigeria have the largest potential, with the opportunity to add 10 to 12 percent to their GDP, given low levels of financial inclusion and digital payments today. Pakistan has a somewhat lower GDP potential, at 7 percent. Middle-income countries such as Brazil, China, and Mexico could add 4 to 5 percent to GDP – still a substantial boost.
Digital payments and financial services are part of the vital infrastructure of a modern economy, enabling individuals, businesses, and governments to transact cheaply and efficiently. For a range of companies, including banks, telecommunications companies, payments providers, financial-technology start-ups, retailers, and others, the potential business opportunity is large. In most countries, which players will dominate is still up for grabs.
The opportunity to accelerate inclusive growth could be addressed rapidly and without the need for major investment in costly additional infrastructure. Mobile phones are the game changer that make this all possible. In 2014, nearly 80 percent of adults in emerging economies had a mobile phone, while only 55 percent had financial accounts. Almost 90 percent of people in emerging economies have access to a network, and the share of those with 3G or 4G coverage is growing.
To capture the opportunity, businesses and government leaders will need to make a concerted and coordinated effort. Three building blocks are required: widespread mobile and digital infrastructure, a dynamic business environment for financial services, and digital finance products that meet the needs of individuals and small businesses in ways that are superior to the informal financial tools they use today.
Widely used digital finance has the power to transform the economic prospects of billions of people and inject new dynamism into small businesses that today are held back for lack of credit. Rather than waiting a generation for incomes to rise and traditional banks to extend their reach, emerging economies have an opportunity to use mobile technologies to provide digital financial services for all, rapidly unlocking economic opportunity and accelerating social development.
James Manyika is a director of the McKinsey Global Institute, where Susan Lund is a partner; Marc Singer is a senior partner in McKinsey’s San Francisco office, where Olivia White is a partner; and Chris Berry is a consultant in the Vancouver office.
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Global cooperation through carbon markets could cut climate mitigation costs dramatically: World Bank report
101 Countries consider carbon pricing as part of their Paris Agreement commitments
Greater cooperation through carbon trading could reduce the cost of climate change mitigation by 32 percent by 2030, according to a new World Bank report released today at an international carbon event in Vietnam.
New modelling analysis undertaken for the State and Trends of Carbon Pricing 2016 report shows that increased international carbon trading could enable large-scale emissions reductions at much lower cost than at present, based on the carbon mitigation goals spelled out in countries’ national climate plans under the Paris Agreement – the Nationally Determined Contributions, or NDCs. By the middle of the century, an international market has the potential to reduce global mitigation costs by more than 50 percent.
The goal of limiting emission reductions to meet a 2°C or lower target will be difficult to achieve cost-efficiently without more carbon trading, according to the report, prepared by the World Bank and launched at the 15th Assembly of the Partnership for Market Readiness.
“The more we cooperate through carbon trading, the larger the savings and the greater the potential to increase ambition by countries in the short term,” said John Roome, Senior Director for Climate Change at the World Bank. “To be effective, carbon pricing policies must be coordinated with other energy and environmental policies – this will require collaboration within and between countries.”
The Paris Agreement, reached at COP21 in late 2015, sets up a framework for global cooperation through carbon markets. Over 100 countries consider carbon pricing initiatives as part of their NDCs, through emissions trading within or across borders, international crediting, carbon taxation and other measures.
Under this new cooperative framework, one country can benefit from mitigation activities resulting in emission reductions in another country to fulfill its NDC. The report indicates that financial flows of 2-5 percent of gross domestic product in countries with lower-cost mitigation activities could be realized for investments that will reduce emissions by 2050.
The report also shows that momentum on carbon pricing has continued to grow. In 2016, 40 national jurisdictions and over 20 cities, states, and regions are putting a price on carbon, including seven out of 10 of the world’s largest economies. The coverage of carbon pricing initiatives on global emissions has increased threefold over the past decade, translating to the equivalent of around 7 gigatons of carbon dioxide (GtCO2e), or about 13 percent of global GHG emissions. In addition, governments raised about US$26 billion in revenues from carbon pricing initiatives in 2015. This represents a 60 percent increase compared to the revenues raised in 2014.
This year saw the launch of two new carbon pricing initiatives: British Columbia put a price on emissions from liquefied natural gas plants alongside its carbon tax, and Australia implemented a safeguard mechanism to the Emissions Reduction Fund, requiring large emitters that exceed their set limit to offset excess emissions.
Looking ahead, next year could see the largest ever increase in the share of global emissions covered by carbon pricing initiatives in a single year. If the Chinese national Emissions Trading System (ETS) is implemented in 2017 as planned, it would become the largest carbon pricing initiative in the world, surpassing the EU ETS. Initial estimates show that emissions covered by carbon pricing initiatives could increase from 13 percent to between 20 and 25 percent of global GHG emissions.
In April, the High Level Panel on Carbon Pricing called upon the international community to double the percentage of global emissions covered by explicit carbon prices to 25% by 2020 and to double it again to 50% within a decade. Heads of State from Canada, Chile, Ethiopia, France, Germany and Mexico are among the leaders calling for this increased commitment.
The report was prepared with the technical support of Ecofys and Vivid Economics.
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tralac’s Daily News Selection
The selection: Friday, 21 October 2016
Out next Tuesday: The Doing Business 2017 report
Featured tweets:
@WorldBankPSD: Paul Brenton: "Reducing trade barriers in agriculture in Africa requires understanding the institutions and politics involved. They matter."
@alykhansatchu: Creating and strengthening trade ties between Africa Latin America and Caribbean #LACAfricaSummit (24-25 November, Nairobi, @LACAfricaSummit)
Featured commentaries:
Carlos Lopes: ’Africa’s no-regret route to industrialisation’ (African Arguments): What is clear is that governments have the central role in taking the long view. Policy stability, effective pubic institutions and consistent implementation make all the difference in creating credible incentives to unlock private investment. But while governments lead the way, they should realise that they cannot hope to design, fund and achieve a green and inclusive economy on their own. It will require a more sophisticated approach. The time for Africa has come. It is within the continent’s reach to opt for a new, cleaner and more efficient growth formula that will result in shared prosperity. The window of opportunity is open – it just needs to be seized.
Dipti Jain: ’Will Modi’s target of doubling BRICS trade by 2020 materialize?’ (LiveMint): A look at historical intra-BRICS trade data suggests that the target is unlikely to materialise. Here’s why. For intra-BRICS trade to increase to $500bn by 2020, it would have to grow at a minimum of 12.7%. But between 2006 and 2015, annual average growth in trade between BRICS countries was at 10.1%. The historical data should be read with the caveat that South Africa became a member of the block in December 2010. What makes Modi’s hopes look even more far-fetched is the fact that intra-BRICS trade has been declining over the last two years.
Chad P. Brown: ’Duty-free beats headphones? Yes, plurilateral trade agreements have something for everyone.’ (Washington Post): Smaller deals and selected countries — that’s the WTO approach to trade deals nowadays. These “critical mass” or “plurilateral” negotiations get far less attention than NAFTA or the Trans-Pacific Partnership - but quietly bring in real trade benefits and cooperation. How does this work? Here’s a closer look at the first of these new agreements, a move to lower trade barriers on information technology and medical equipment.
Banks failing coast to coast show spreading Africa distress (Bloomberg)
African banks are sinking deeper into trouble. Drowning in bad debt and swamped by slowing economies, more and more of the continent’s lenders are starting to fail. The collapse of a Ugandan bank, said to be an acquisition target of Bob Diamond’s Atlas Mara Ltd., is adding to woes stalking the industry from Mozambique to Nigeria. High interest rates, soaring levels of unpaid loans and low commodity prices are just some of the factors felling banks as growth across the world’s poorest continent stutters. “We’ve been forecasting an African banking crisis since the beginning of this year,” said Robert Besseling, a Johannesburg-based executive director at business-risk consultancy Exx Africa. “We’re likely to see more banks fail in Nigeria. The Kenyan banking sector will have to consolidate and Ethiopia’s will have to liberalize. Angola is also struggling. Some Ghanaian banks have reported heavy losses. The other one to watch is the DRC, which has also seen some turbulence.”
Kenyan, Australian markets regulators ink deal to support fintech (Business Daily)
The Capital Markets Authority of Kenya and the Australian Securities and Investments Commission have signed a co-operation agreement aimed at promoting innovation in financial services in their respective markets. “We are committed to facilitating innovation in financial services, leveraging Kenya’s positioning in the region as an innovation centre. This however calls for us to assess lessons learned and to compare strategies to balance innovation and regulation with our peer regulators,” said CMA chief executive Paul Muthaura. Mr Muthaura noted that the CMA has recently moved towards the establishment of a Regulatory Sandbox structure that is designed to encourage innovation in the capital markets.
Promoting pharmaceutical sector investments in the EAC region (UNCTAD)
The overall objective of the workshop (2-4 Nov) is to develop a common and shared vision for promoting investment in the regional pharmaceutical manufacturing sector, including; (i) sensitize pharmaceutical manufacturers on the EAC Regional Harmonized Medicines Registration Procedures/guidelines and address their concerns, if any, (ii) discuss and propose the most viable incentive schemes for promoting local pharmaceutical manufacturing, (iii) make recommendations for consideration by the Partner States’ governments on promotion of local pharmaceutical manufacturing industry, (iv) promote and foster dialogue between the policy makers, regulators and pharmaceutical manufacturers.
Mauritius tycoons eye a share of the growing EAC pie (The Star)
Growth-hungry Mauritius has set eyes on investment opportunities in the five-nation East Africa Community bloc, with Nairobi poised to be its hub. The Indian Ocean island nation is targeting to use a two-day Buyers Sellers Meeting forum in Nairobi from Monday. Another forum will be held in Mombasa on Thursday next week to help in sealing major deals, Enterprise Mauritius through its liaison office in Nairobi said in a statement yesterday.
Namibia: New tariffs as EPA kicks in (The Namibian)
Finance minister Calle Schlettwein yesterday said a new tariff book will be gazetted next month as part of Namibia’s Economic Partnership Agreement with the European Union. This comes after the EPA, an agreement where there would be less or zero tariffs on trade between the EU and the SADC, has been provisionally effected. Schlettwein said although Namibia has ratified the EPA, it has yet to be gazetted. Therefore, all parties will have to use the old tariffs and get refunds once the new tariff book has been gazetted.
Rwanda: Grain council calls for sensitisation on rules of origin (New Times)
The Eastern Africa Grain Council Rwanda has called for more sensitisation about rules of origin policies between regional blocs to ensure local traders understand them to benefit from the proposed Tripartite Free Trade Area. Epiphanie Karekezi, the EAGC Rwanda market information system officer, said creating a ‘common understanding’ of the rules of origin between stakeholders in the sector will help spur trade in grains and cereals in the free trade area, as well as help improve quality along the value chain, ensuring better earnings for farmers. Nathan Gashayija, the director in charge of co-ordination at the Ministry of Trade, Industry and EAC Affairs, said the free trade zone presents Rwandan traders and grain and cereal exporters, in particular, immense business opportunities.
Zimbabwe: statement by the IMF
“On October 20, 2016, Zimbabwe settled its overdue financial obligations to the Poverty Reduction and Growth Trust (PRGT) of the IMF. Zimbabwe had been in continuous arrears since 2001. To settle these obligations, which amounted to SDR 78.3 million (about US$107.9 million), Zimbabwe transferred part of its SDR holdings kept at the IMF to the PRGT account. Zimbabwe is now current on all its financial obligations to the IMF.”
ZimTrade: Reducing export time can grow GDP 2-4% (NewsDay)
Trade promotion body, ZimTrade, says reducing the amount of time it takes to export by at least 10 days would result in gains to the gross domestic growth rates of 2 to 4%. Speaking at the Maximising Competitive Advantage to Drive Export-Led Growth conference in Harare yesterday, ZimTrade chief executive officer, Sithembile Pilime said there was need to reduce documentation to allow for only relevant and efficient regulations to be in place. Among the impediments, ZimTrade identified the temporary export permits (TEP) required for goods exported for exhibition and a deposit of 10% of the value of goods being exported from the company as the most challenging. The need for the review comes as the government was accepted as a member of the African Trade Insurance Agency. [Govt moots strategies to boost exports]
India-US Trade Policy Forum: joint statement (USTR)
While welcoming the success of the TPF to date, and that two-way bilateral goods and services trade reached $109 billion in 2015, the Ministers recognized that for economies of their size, a great deal of potential remains. Both sides agreed to continue their efforts for exploring possibilities for opening markets as well as expanding the share of existing trade to each other’s territory. Sharing a desire to increase bilateral trade in goods and services, the two governments reviewed substantive progress achieved in deepening bilateral trade and investment in 2016, and discussed planned engagement for 2017 which can further promote economic growth and job creation in both India and the United States. Minister Sitharaman and Ambassador Froman discussed and exchanged views on a range of trade and investment issues, in particular, (i) Agriculture, (ii) Trade in Services and Trade in Goods, (iii) Promoting Investment in Manufacturing, and (iv) Intellectual Property.
China scores WTO victories against some US anti-dumping methods (Reuters)
China won the bulk of a WTO complaint against certain US methods of determining anti-dumping duties on Chinese products in a WTO dispute panel ruling released on Wednesday. The panel ruled against the US Commerce Department’s practise of "zeroing" in cases involving targeted dumping. In zeroing, the department typically assigns a value of zero any time a producer’s export price is above that producer’s normal home market price, partly to account for freight and customs charges. In practice, the zeroing methodology tends to increase the level of U.S. anti-dumping duties on foreign producers.
This article summarizes relevant policies for the structural transformation of African agriculture and rural space based on Korean experiences in agricultural development and transformation through KSP-AfDB joint consulting in 2015. It highlights policy alternatives to support the structural transformation of agriculture and rural space by analyzing the agricultural development status of Tanzania and Uganda among the Sub-Saharan African countries, and by conducting a comparative analysis with Korean agriculture and experiences in rural development.
UNGA Second Committee debates macroeconomic policy questions
Bangladesh’s representative, speaking for the Group of Least Developed Countries, said they had increased their share in world goods and commercial services exports from 0.7% in 2005 to 1.03% in 2014, but that it had dropped by 20% in 2015. Small islands were losing comparative trade advantage due to reduced tariff lines under the World Trade Organization. Erosion of preference and loss of tariff revenue, as well as employment and various kinds of adjustments, should be fully compensated for least developed countries, he continued. They urgently needed duty- and quota-free market access for all products, simplified and transparent rules of origin and financial and trade capacity-building. [Note: Session documents available for download]
Africa Q3 2016 report (Oxford Economics, ICAEW)
Uganda: Shilling strengthens against the dollar as PTA loan comes (Daily Monitor)
Yuan to Nam dollar exchange facilitation doubles (Namibia Economist)
Nigeria’s customs service promotes Mandarin learning among officers (FOCAC)
Geingob US trip opens new pathways (Southern Times Africa)
Egypt forms committee to set profit margins for sale of basic goods (Egypt Independent)
Southern African Power Pool to become competitive (Southern Times)
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Speakers call for fair multilateral trading system to ensure sustained growth, as Second Committee debates macroeconomic policy questions
Exports had remained stagnant or drastically declined due to low world prices, failure to adapt to changing markets and policies penalizing their traditional activity, Maldives’ delegate told the Second Committee (Economic and Financial) on 20 October 2016 as it began its debate on macroeconomic policy questions.
Speaking for the Alliance of Small Island Developing States, he said those nations were heavily dependent on imports, while exports were a central source of foreign exchange and cash income. Stressing the need for a fair multilateral trading system to ensure sustained growth in global trade, he said the international trade regime should accommodate the needs of small island States.
Similarly, Bangladesh’s representative, speaking for the Group of Least Developed Countries, said they had increased their share in world goods and commercial services exports from 0.7 per cent in 2005 to 1.03 per cent in 2014, but that it had dropped by 20 per cent in 2015. Small islands were losing comparative trade advantage due to reduced tariff lines under the World Trade Organization.
Erosion of preference and loss of tariff revenue, as well as employment and various kinds of adjustments, should be fully compensated for least developed countries, he continued. They urgently needed duty- and quota-free market access for all products, simplified and transparent rules of origin and financial and trade capacity-building.
Malaysia’s delegate, speaking for the Association of Southeast Asian Nations (ASEAN), said, on a more positive note, that trade in his group had remained upbeat and economies resilient, with gross domestic product (GDP) nearly doubling since 2007. Stressing that trade must be supported by deliberate policies and global partnerships, he said regional trade liberalization had contributed significantly to freer movement of goods across ASEAN member States.
Introducing the report, “Trade and Development Board on its sixty-second executive session”, a senior official of the United Nations Conference on Trade and Development (UNCTAD) said the world was in a period of weak trade growth that could seriously affect delivery of the Sustainable Development Goals. World merchandise trade volume grew by only 1.5 per cent in 2015, and world trade in both goods and services contracted that year for the first time since the financial and economic crisis of 2008‑09.
Global trade dynamism might have already passed its peak levels as value chains became less dynamic relative to GDP growth rates, he said. Least developed nations were behind in meeting the target of doubling their share of world trade as set out under the Istanbul Programme of Action and under the Sustainable Development Goals.
Belarus’ delegate, also noting that trade volumes were declining worldwide, warned that they would be at their lowest since the Second World War if that trend continued. Her Government was pushing for a trade cooperation action plan with middle income countries, as they had been cast aside when it had come to trade and development agreements.
Speakers also focused on the need to cancel least developed countries’ debt and increase official development assistance for all developing countries if they were to achieve the 2030 Agenda for Sustainable Development. They also stressed the need to reform the international financial architecture and tackle volatility in exchange rates as well as financial flows.
Also speaking were representatives of Thailand (for the “Group of 77” developing countries and China), Jamaica (for the Caribbean Community), Dominican Republic (for the Community of Latin American and Caribbean States), Australia (for the Cairns Group), Brunei Darussalam, Philippines, Mongolia, India, Russian Federation, Indonesia, Norway, Peru, Burkina Faso, Singapore, Zambia and Brazil.
Presenting reports on Follow-up to the International Conferences on Financing for Development and the international financial system and development was the Director of the Financing for Development Office, Department of Economic and Social Affairs. Introducing the report on international trade and development was the Head of the Trade Negotiations and Commercial Diplomacy Branch, United Nations Conference on Trade and Development. Presenting the report on external debt sustainability and development was the Head of the Debt and Development Finance Branch, United Nations Conference on Trade and Development.
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World Bank’s Poverty Commission releases report on how to better measure and monitor global poverty
The World Bank’s Commission on Global Poverty has submitted recommendations on how to more comprehensively measure and monitor global poverty in support of the Bank Group’s goals of ending extreme poverty by 2030 and boosting shared prosperity.
“The aim of our Report was to improve the way the World Bank monitors poverty. By focusing on changes over time, we can learn, taking account of the potential margins of error, about the evolution of global poverty. The confidence to be placed in these conclusions can be increased by improvements in the methods of analysis and in the underlying data. Outside the World Bank, it is hoped that this report will be of value to everyone engaged in poverty measurement across the world, and be a highly positive force in encouraging partnerships,” said Sir Anthony Atkinson, Lead Author & Chair of the Commission on Global Poverty.
In its report, the Commission acknowledges the challenges posed by its recommendations, including the limited statistical resources available to poor countries, the need for collaboration across countries and agencies, and different national circumstances among low, and middle-income countries.
The Commission also recommends that the World Bank hold constant the yardstick for measuring extreme poverty – at $1.90 a day in 2011 PPPs – until 2030, the target year for the Bank’s own goal of ending poverty as well as the end-year for the Sustainable Development Goals (SDGs), the first and foremost of which is the eradication of extreme poverty everywhere, in all its forms.
In expressing its sincere gratitude to Sir Tony Atkinson and his Commission, the Bank Group said ‘its recommendations would guide the poverty monitoring work of the World Bank Group and other development partners and practitioners for many years to come.’
“Ending poverty is at the core of the World Bank’s development work. As we strive towards ending extreme poverty by 2030, the recommendations of the Commission on Global Poverty will inform how we measure progress in all dimensions of our work,” said World Bank Chief Economist, Paul Romer,” We are extremely thankful to the Commission for taking on this important task and providing its valuable recommendations.”
Romer said that the Bank agreed with the Commission’s call for the extreme poverty line to be cited as “the International Poverty Line (IPL)”, and expressed in each country in terms of its local currency. The Commission had also urged the Bank to “establish its own requirements with regard to the measurement of non-monetary poverty”, and to introduce a “multi-dimensioned poverty indicator based on the counting approach, and covering the overlap of dimensions.”
In response, Romer said the World Bank would now track non-monetary deprivations of poverty in three specific domains, namely: educational outcomes; access to health care; and access to basic services, such as water, sanitation and electricity. He said the Bank was particularly interested in the overlap among these different deprivations, and between them and monetary poverty.
The Commission, set up last year by the World Bank, brought together 24 of the world’s leading poverty experts, under the chairmanship of Sir Anthony Atkinson, a leading authority on inequality, Centennial Professor at the London School of Economics, and a Fellow of Nuffield College, Oxford University.
The Commission’s final report includes a set of 21 recommendations. Highlights include recommendations on broadening the conception of poverty to include non-monetary measures of deprivation; a suggestion to introduce a societal headcount measure of global poverty, which combines absolute and relative elements of poverty, and a recommendation to publish a global profile of the poor.
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Banks failing coast to coast show spreading Africa distress
African banks are sinking deeper into trouble. Drowning in bad debt and swamped by slowing economies, more and more of the continent’s lenders are starting to fail.
The collapse of a Ugandan bank, said to be an acquisition target of Bob Diamond’s Atlas Mara Ltd., is adding to woes stalking the industry from Mozambique to Nigeria. High interest rates, soaring levels of unpaid loans and low commodity prices are just some of the factors felling banks as growth across the world’s poorest continent stutters.
Ugandan regulators on Thursday suspended the board of Crane Bank Ltd. and took over operations because the lender was under-capitalized, days after trying to ward off a run on deposits. Nigerian regulators in July replaced the management of the country’s eighth-largest bank. Kenya and Zambia both seized some of their smaller banks, Mozambique this month had to stabilize one of its lenders, while Democratic Republic of Congo had to step in for one of its biggest banks.
“We’ve been forecasting an African banking crisis since the beginning of this year,” said Robert Besseling, a Johannesburg-based executive director at business-risk consultancy Exx Africa. “We’re likely to see more banks fail in Nigeria. The Kenyan banking sector will have to consolidate and Ethiopia’s will have to liberalize. Angola is also struggling. Some Ghanaian banks have reported heavy losses. The other one to watch is the DRC, which has also seen some turbulence.”
The mounting issues faced by lenders in sub-Saharan Africa marks a turning point for the continent once lauded as the next big investment destination. That lured the likes of ex-Barclays Plc Chief Executive Officer Diamond to start London-based Atlas Mara, a business focused on buying African financial-services companies. He was following other lenders tapping into the region’s young population, rising wealth and two decades of record growth.
‘Bad Asset’
Crane, which has 46 branches, was taken over by the Bank of Uganda because it posed a risk to the country’s financial system and threatened deposits, the central bank said. It comes at a time when growth is slowing, with Uganda expanding at 3.9 percent in the second quarter from 5.4 percent a year earlier.
“These banks were in a pretty high growth phase for about 10 years, so like any banking system in the world, you go through that credit cycle,” said Ronak Gadhia, a research analyst at London-based Exotix Partners LLP. “When you see a slowdown in payments from government ministries and institutions, that has a pretty big knock-on in private sector. In Uganda, they were massively plugged into South Sudan. That might be an element as well.”
The closely held lender Crane, controlled by one of Uganda’s richest men, said in September it was looking for a strategic equity investor with a regional network after making losses in 2015. Atlas Mara valued the bank at $250 million, while Crane Bank said it’s worth $300 million, the Nairobi-based East African newspaper reported on Oct. 11, without saying where it got the information. Talks are at an early stage, a person familiar with the matter told Bloomberg on Oct. 18, asking not to be identified because the discussions are private.
“It’s still entirely possible for them to buy it,” said Ayodele Salami, who holds Atlas Mara among the $450 million of African equities he oversees as chief investment officer at Duet Asset Management in London. “There’s nothing wrong with buying a bank that has failed. It’s what price did you pay for it and how much money you need to bring it back. Buying a failed bank isn’t the problem. That could actually be a value-accretive deal.”
Atlas Mara’s share price has tumbled more than 72 percent since it’s initial public offering in December 2013, falling to a record intraday low of $2.95 on Wednesday. The company is just getting started and needs time to build its African business, already spanning seven countries from Rwanda to Zimbabwe, Diamond, 65, said in an interview last month. A spokesman for Atlas Mara declined to comment on Thursday.
‘Dangerous Cocktail’
Economic growth in sub-Saharan Africa may decelerate to 1.4 percent this year from 3.4 percent in 2015, which was already the slowest pace in 15 years, according to International Monetary Fund data. The economy’s outlook is being clouded by a slowdown in China, Africa’s largest trading partner; a commodity rout; depreciating currencies; widening government budget deficits and an energy shortfall.
South Africa is also caught up in the slump with its economy expected to expand just 0.4 percent this year, according to its central bank. Nonetheless, its lenders remain well-capitalized and while non-performing loans are rising, they averaged only 3.1 percent of advances for the four largest lenders at the end of the first half, according to PricewaterhouseCoopers LLP research. Having tightened credit and lowered their risk appetite, these Basel III-compliant lenders may fare better than peers on the rest of the continent.
“In Kenya and Nigeria, you potentially have the dangerous cocktail of increasing non-performing loans and reducing liquidity,” Gadhia said. “You’re going to see migration from smaller banks to bigger banks. That could present challenges.”
There are still opportunities, especially in Kenya, where regulators and the finance ministry are bolstering regulations and encouraging lenders to combine, Exx Africa’s Besseling said. What happened in the country, where regulators seized three banks over an eight-month period, was an anomaly because those failures were caused mostly by mismanagement, and the economy isn’t as dependent on commodity prices, he said.
The biggest risk may lie in Nigeria, where non-performing loans have surged to their highest levels in six years and the economy is forecast to contract in 2016 for the first time in more than two decades. At the same time, interest rates are at their highest level in five years and inflation is accelerating at the fastest pace on record.
“What we’re seeing in Nigeria is far more serious,” Besseling said, adding that it could spill over into Ghana and other surrounding countries. “The Western region really is highly exposed.”
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New tariffs as EPA kicks in
Finance minister Calle Schlettwein yesterday said a new tariff book will be gazetted next month as part of Namibia's Economic Partnership Agreement (EPA) with the European Union.
This comes after the EPA, an agreement where there would be less or zero tariffs on trade between the EU and the Southern African Development Community (SADC), has been provisionally effected.
Schlettwein said although Namibia has ratified the EPA, it has yet to be gazetted. Therefore, all parties will have to use the old tariffs and get refunds once the new tariff book has been gazetted.
Speaking at a press conference yesterday, EU ambassador to Namibia Anna Hybaskova said the EPA has been provisionally accepted by the EU parliament, as all 28 parliaments states still have to ratify it.
Hybaskova said whatever is being imported from the EU will have to be equally shared among the SADC countries.
EU head of cooperation in Namibia Markus Theobald said some of the benefits of the agreement are that the EU is liberalising 10% of their products, while Namibia is only liberalising 86% of its products.
He said it will help empower Namibia, and means that Namibia will have less revenue from the immediate charging of tariffs, although the economic benefits will offset these losses.
“This will be an economic boost for Namibia, in particular for the private sector,” he stated
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Grain council calls for sensitisation on rules of origin
The Eastern Africa Grain Council (EAGC) Rwanda has called for more sensitisation about rules of origin policies between regional blocs to ensure local traders understand them to benefit from the proposed Tripartite Free Trade Area (TFTA).
EAGC argues that rules of origin will be essential to foster trade in grains and cereals in the free trade area. Rules of origin help in determining a product’s country of origin in international trade.
The proposed Tripartite Free Trade Area is trade agreement between the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC), and East African Community (EAC).
If it is implemented next year as planned, it will create the largest free-trade zone in Africa, covering an area from Cape Town to Cairo, with a population of over 600 million people across 26 countries.
Epiphanie Karekezi, the EAGC Rwanda market information system officer, said creating a ‘common understanding’ of the rules of origin between stakeholders in the sector will help spur trade in grains and cereals in the free trade area, as well as help improve quality along the value chain, ensuring better earnings for farmers.
Karekezi, however, said in an interview with The New Times on Wednesday that the country should consider issues, like the volume of grains and cereals imported or exported as raw materials, and products made from these raw materials, including flour and bread, to protect local traders and firms and avoid market distortions.
“For instance, industrialists may need to import maize in case there are limited volumes on the Rwandan market. However, as a country we can impose taxes on maize flour imports to avoid unfair competition,” she explained.
That is why all sector players need to understand how the concept of rules of origin works and how we position ourselves in TFTA to remain competitive, Karekezi added.
Emmanuel Gahutu, the Rwanda Revenue Authority head of tariff, valuation and rules of origin unit, explained that rules of origin help the tax body determine the origin of goods, making it easy for them to apply appropriate taxes, among others.
He emphasised the importance of drafting policies that are simple, flexible and transparent, arguing it would ensure easy adoption, which is crucial in trade.
Nathan Gashayija, the director in charge of co-ordination at the Ministry of Trade, Industry and EAC Affairs, said the free trade zone presents Rwandan traders and grain and cereal exporters, in particular, immense business opportunities.
Gashayija said traders will gain from a larger market, noting that challenges associated with overlapping membership to different blocs would be removed.
“The free trade zone will also ensure competitiveness of local products, besides providing the business community an avenue to exploit untapped natural resources, among others,” he said.
Of the six EAC countries, only Tanzania belongs to SADC and is the only EAC member that does not subscriber to the COMESA bloc.
This means that whereas Tanzanian products can benefit from preferential treatment, including duty free access, Rwanda, Kenya, Uganda, and Burundi cannot benefit from such incentives.
Experts say that is the more reason the free trade zone is a key milestone that could deepen intra-regional and inter-country trade across the 26 states.
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U.S. Chamber releases new report on trade facilitation in East Africa, outlines transformational projects and opportunities for U.S. investment
The U.S. Chamber of Commerce U.S.-Africa Business Center released a new on 18 October 2016 on trade facilitation in East Africa, outlining the work governments in the region have undertaken to improve infrastructure and address economic challenges, and offering recommendations to address and overcome remaining trade barriers.
In the past decade, East Africa’s growth has outpaced the rest of the continent. Regional integration has aided in boosting trade within the region and improved East Africa’s access to global markets. Though some barriers to trade remain, several large-scale infrastructure projects currently underway hold promise for improved trade relationships and economic productivity for East Africa.
“East Africa is a vibrant, fast-growing region of the world with a great deal of untapped potential,” said Scott Eisner, president of the U.S.-Africa Business Center and vice president of African Affairs for the U.S. Chamber. “Though the relationships between the U.S. and East African nations have deepened in recent years, trade between us remains limited. As the region undertakes and completes a set of high-priority infrastructure projects, opportunities will ripen for strategic engagement on the part of the U.S. private sector in a brighter future for East African trade.”
The U.S. Chamber of Commerce and the Africa Expert Network have highlighted the economic diversity of East Africa’s six critical economies and examined the EAC’s role in implementing rapid institutional change and becoming one of the continent’s most dynamic trade blocks. The EAC has gradually reduced tariffs, trade barriers, and bottlenecks in the region, helping members increase their trade performance, all key factors which promote East Africa as a great region for trade opportunities.
U.S. Chamber of Commerce and the Africa Expert Network
While U.S. trade with this region is still limited, representing just 5 percent of total East African trade, China and India have become the region’s largest trading partners and the European Union is looking to develop a stronger partnership as well.
The United States’ share of East African trade in 2015
U.S. Chamber of Commerce and the Africa Expert Network
Governments are actively working to reduce trade barriers and address infrastructure challenges, as well as shifting their policies to attract foreign investment. The Trade Facilitation Agreement (TFA), a landmark agreement concluded by the World Trade Organization in 2013, is also aimed at solving these issues, but has yet to be ratified as of June 24, 2016.
But even as those broader market access and policy changes continue to take hold, East African countries are currently moving forward with transnational and national infrastructure projects that have the potential to change the face of international trade in the region.
In the coming years, East African economies will likely follow in the footsteps of the “Next Eleven,” a group of 11 countries that were identified by Goldman Sachs as the successors of the BRIC countries. The only question is what direction the U.S. will take in its trade relationship with East Africa, especially as other nations continue to increase their investment in the region.
The report highlights a number of large-scale infrastructure projects with the potential to improve trade in the East African region and offers several recommendations for reducing impediments to trade through additional transformative trade infrastructure projects.
Implementation of these recommendations in East Africa, the report says, will create more opportunities for U.S. companies in new and existing infrastructure initiatives, as well as in other industries like tourism, agriculture, manufacturing, and energy.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations. Its International Affairs division includes more than 70 regional and policy experts and 25 country- and region-specific business councils and initiatives. The U.S. Chamber also works closely with 117 American Chambers of Commerce abroad.
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tralac’s Daily News Selection
The selection: Thursday, 20 October 2016
Tenth African Development Forum postponed to 2017 (UNECA)
COMESA Summit: Heads of State and Government communiqué
On outstanding issues for COMESA-EAC-SADC Tripartite Free Trade Area negotiation: (i) Urged Member States to finalize work on the industrial and infrastructure development pillars, (ii) Called upon Member States to endeavor to achieve flexible tripartite Rules of Origin that promote industrialization and intra-regional trade; (iii) Called upon Member States that have not produced their Tariff Offers and Schedules to do so; (iv) Noted that Tripartite Ministerial Meetings will be held in Nairobi, Kenya on 25–31 October 2016 and urged COMESA Member States to attend and support progress on key outstanding issues so that the Tripartite FTA Agreement is implemented as soon as possible. On capacity building: Endorsed and commended the decision of Council to launch the COMESA Virtual University through which 22 collaborating universities will give a Masters’ Degree in Regional Integration beginning next academic year.
Tripartite FTA signatures rise as Libya signs (COMESA)
Libya has signed the COMESA-EAC-SADC Free Trade Area agreement bringing to 18 countries (out of 26) in the tripartite blocs that have signed. Libyan Minister of Foreign Affairs Mohamed A.H. Syala, signed the agreement during the 19th COMESA Heads of State Summit. The leaders commended the countries that have signed the agreement and urged those that have not signed to do so in order to start the process of ratification to enable the TFTA Agreement to enter into force by1 January 2017. The Agreement requires 14 ratifications to enter into force. So far, no country has ratified it.
African nations block WTO talks on digital trade rules (LiveMint)
Stiff resistance from African nations led by Morocco forced a deferment of the negotiations on rules for electronic commerce/digital trade at the WTO on Tuesday. According to several participants familiar with the developments at the meeting, the African countries accused “powerful countries” of shifting focus away from outstanding Doha issues. Ambassador Alfredo Suescum of Panama, who convened the session as the Friend of the WTO’s General Council’s chair to discuss proposals tabled by the US, the European Union, Canada, and several other countries, was forced to suspend the meeting following protests by several members of the Africa Group such as Uganda, Cameroon, Zimbabwe, and South Africa among others. [Food security left out of Oslo WTO meet agenda]
Tanzania’s industrial production, trade policy interface:
Cheap imports on receiving end (Daily News): The government made a guarantee yesterday to protect local industries against cheap and sub-standard imports as the Census of Industrial Production 2013 showed that there were 49,243 industries in the country, most of which are small-scale establishments.
Only 20% of industries sell outside (The Citizen): Only 19.4% of Tanzania’s industries are able to sell their products outside the country, a new report shows, casting doubts about the competitiveness of locally produced goods in the international market. "This trend reflects a lack of competitiveness of the products in the international market," said Mr Khalfani, calling upon the government to have a clear strategy that will assist domestic industries to produce products for exports. According to the report, Tanzania’s products are uncompetitive at the international scene due to a lack of laboratories for raw-materials and product testing whereby it was established that 69.7 per cent of large scale processing factories were operating without laboratories.
The Census of Industrial Production, 2013 (National Bureau of Statistics): The CIP 2013 is the fourth comprehensive industrial census to be conducted in Tanzania Mainland since Independence in 1961. The first, second and the third censuses were undertaken in 1963, 1978 and 1989 respectively. The report summarizes major findings on the characteristics of establishments, employment and employment compensation, gross output, intermediate consumption and value added. The results are categorized by industrial activity, employment size, geographical location and ownership.
Zimbabwe National Competitiveness Report: Cost of doing business a major deterrent (The Herald)
Basically, the NCR explains what the issues are with Zimbabwe and why we are struggling to compete with neighbouring countries. Looking through the report, there were glaring policy issues which Government needs to urgently address as these negatively affect Zimbabwe’s competitiveness and access to much needed investment, both local and foreign. The issues are as follows: If one wants to build a factory for a $100m project in Zimbabwe they will have to pay on average 1,5% of the project cost to get Environmental Management Authority clearance. That translates to $1,5m for one clearance certificate. The same environmental clearance costs $150 000 in neighbouring Zambia, in South Africa, R10 000 and in Mozambique 0,2% of the cost, so $200 000. Why then must Zimbabwe charge 10 times for the same certificate what our neighbours Zambia and Mozambique are charging?
COMESA to assist Zimbabwe firms retool (The Chronicle)
COMESA will soon release funds to help Zimbabwean companies retool and expand manufacturing capacity. In an interview with Zimbabwean journalists, Minister Bimha said the funding would target both existing and emerging industries. “Coming up with a measure like Statutory Instrument 64 is not the solution. It’s only just a component of broader measures that you must employ. We must now look for funding to enable companies to retool and re-equip. I had discussions with the Comesa secretary-general and he has promised that Comesa will be able to assist Zimbabwe retool, particularly as a result of the measures we have put forward."
DRC slashes visa fee for Dar, Kampala by 50% (Daily News)
The DRC government has announced a 50% reduction in the costs of visa fees for Tanzanians and Ugandans, from $100 to $50, with effect from 1 November. DRC’s Director General of Immigration, Mr François Beya Kasonga, says the move is part of visa harmonisation process for Central Corridor Member Countries, in which Burundi, DRC, Rwanda, Tanzania and Uganda are involved. Already Burundi, DRC and Rwanda enjoy Visa free movement among themselves under the Economic Community of the Great Lakes Countries (CEPGL) arrangement.
Ethiopia: World Bank Group statement
The recent tragic events in the Amhara and Oromia regions that led to the declaration of a state of emergency in Ethiopia are of great concern to the World Bank Group. Such events have dire economic and developmental consequences. We are currently in the process of developing a new Country Partnership Framework for Ethiopia. The CPF is informed by an extensive series of consultations with Ethiopians in order to reflect their aspirations in our engagement and harmonize the CPF priorities with the most urgent development needs of the country.
How do cities in Ethiopia create jobs? (World Bank)
This paper reviews city-based industrialization across Ethiopia to understand (a) its importance in driving net job creation, and (b) the factors that determine the success of high-growth industries and cities. The focus of the analysis is on firms, industries, and cities in Ethiopia that create and sustain jobs. The analysis finds that much of new job creation is found in emerging cities, although capital intensity in production is also increasing. As in other countries, 97 percent of new jobs are created by large firms, and it is incumbents and not new entrants that contribute to initial and sustained increases in employment. Agglomeration economies, better business environment, and access to better infrastructure are factors that matter, albeit differently, depending on firms’ size, life-cycle, and rate of growth.
ICT use, innovation, and productivity: evidence from Sub-Saharan Africa (World Bank)
This paper examines empirically the links between adoption of information and communications technology, defined as usage by firms, innovation, and productivity using firm-level data for a sample of six Sub-Saharan African countries: the DRC, Ghana, Kenya, Tanzania, Uganda, Zambia.
UNGA Second Comittee: debate on least developed and landlocked developing states (UN)
Buffeted by a global economic slowdown, the impacts of climate change and falling commodity prices, least developed and landlocked developing States needed sustained international support, Member States said today as the Second Committee (Economic and Financial) discussed groups of countries in special situations. Gyan Chandra Acharya, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, then introduced three reports: (i) Implementation of the Programme of Action for the Least Developed Countries for the Decade 2011—2020, (ii) Charter of the Technology Bank for the Least Developed Countries, (iii) Implementation of the Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014-2024.
Soaring costs force more Chinese firms to look overseas (SCMP)
Chinese firms are increasingly eyeing opportunities outside of the country, with Africa becoming a favoured destination rather than locations in Asia, as business costs at home surge and the yuan depreciates. Ministry of Commerce figures, released on Tuesday, show China’s non-financial outbound direct investment (or ODI) surged 53.7% in the first nine month on year to 882.78bn yuan. Last month alone, ODI rose 56.9% year-on-year to 16.16bn. According to greenfield investment monitor fDi Markets, a service from the Financial Times, China-sourced capital expenditure into Africa experienced a dramatic 515% increase in 2016 from 2015 figures, with five months of data to record and publish remaining, to $14bn.
Arancha González: ‘How does gender affect the participation of SMEs in international trade?’ (ITC)
Women’s economic empowerment must be an integral part of trade policy not only because it generates employment but because women reinvest up to 90% of their earnings in their families and communities, and are a powerful tool linking trade to development. Therefore, including gender perspectives in our analysis of trade policy and related agreements is an essential element of an integrated development policy framework. There exist several policy instruments that provide specific entry points to mainstream gender dimensions in international trade policy. Allow me to talk about a few:
Today’s Quick Links:
Botswana: Upsurge in parastatals crowds out private sector (Mmegi)
Trans Kalahari Corridor transformation underway (Mmegi)
Zimbabwe: Cross-border traders work on loans for members (NewsDay)
Benefits of SGR must trickle down (editorial comment, Business Daily)
Rwanda, Morocco sign 19 pacts as Kagame hosts King Muhammed VI (New Times)
Morocco king seeks support for AU bid in East Africa (Business Daily)
UN, AU partnership to foster job opportunities for youth in rural Benin, Cameroon, Malawi, and Niger
Habitat III: statement by multilateral development banks
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COMESA Summit closes with leaders issuing a Communiqué
The 19th COMESA Heads of State and Governments Summit has come to close with leaders attending the Summit issuing a Communiqué on a raft of decisions to advance the COMESA integration agenda.
The new chairman of the COMESA Authority, President Hery Rajaonarimampianina noted with satisfaction that the theme of the Summit “Inclusive and Sustainable Industrialization” had been validated through varied interventions from delegation that attended the Summit and preceding policy organs meetings.
In his statement to mark the conclusion of the summit, President Rajaonarimampianina called for the prioritization of technology and innovation, SMEs and private sector initiatives. This in addition, greening of economies, value addition, diversification and capacity building in the public and private sectors which enjoyed continental consensus as priority initiatives.
He reaffirmed the commitment of the Government of Madagascar to peace and stability and conveyed his gratitude to the Summit for the confidence in his country to Chair COMESA.
“Let us forge stronger friendship and cooperation among COMESA Member States as well as the sharing of experience in addressing critical challenges including industrialization,” said the President.
COMMUNIQUÉ
The Nineteenth Summit of the Authority of the Common Market for Eastern and Southern Africa (COMESA) was held at the Ivato International Conference Center in Antananarivo, Madagascar on 18-19 October, 2016 with the theme of “Inclusive and Sustainable Industrialization”.
The following countries were represented at the Summit: Botswana, Brazil, Canada, Cuba, Germany, India, Finland, France, Japan, Nigeria, Norway, Palestine, Russia, Saudi Arabia, South Africa, Sweden, and the United States of America:
The following represented COMESA Institutions: the Honourable Lady Justice Madame Lombe Chibesakunda, Judge President, COMESA Court of Justice; Mr. Tadesse Admassu, President, Eastern and Southern Africa Trade and Development Bank (PTA Bank); Mr. Mahmood Mansoor, Executive Secretary, COMESA Clearing House; Mr. George Oduori Otieno, Chief Executive Officer, African Trade Insurance Agency (ATI); Dr. Amany Asfour, Chairperson, COMESA Business Council; Dr. M. Charles Moturi, Chairman, Leather and Leather Products Institute (LLPI); Mr. George Lipimile, Director, COMESA Competition Commission; Mrs. Katherine N. Ichoya, Executive Director, Federation of Associations of Women in Business in Eastern and Southern Africa (FEMCOM); Mr. Argent Chuula, Chief Executive Officer, Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA); and Mr. Ibrahim Zeidy, Director, COMESA Monetary Institute;
The following institutions were also represented; the African Capacity Building Foundation (ACBF); the African Development Bank (ADB), the International Monetary Fund (IMF); the International Organisation for Migration (IOM), the United States Agency for International Development/Regional Economic Development Services Office for East and Southern Africa (USAID/REDSO/ESA); the World Bank (IBRD); the World Food Programme (WFP); United Nations Development Programme (UNDP), World Trade Center and UNAIDS;
OPENING OF THE SUMMIT
Welcome Statement by His Excellency Hery Rajaonarimampianina, President of the Republic of Madagascar
His Excellency the President of Madagascar and host of the summit: welcomed his colleagues the presidents and plenipotentiaries to Madagascar which was holding a COMESA summit for the first time while the country was emerging from strife; and underscored the vision of COMESA; he highlighted the timeliness of the summit theme for addressing the priority of economic transformation and addressing the global economy challenges; responding to African Union Agenda 2063 and SDG 9 as well as adding value to resources including the ocean and coastal economies;
He emphasized industrialisation as a fulcrum and pillar for reviving the regional economies; and underscored the importance of Agro industry, mining and textiles as well as ICT and Innovation. He called for viable infrastructure for adaptation and economic transformation, which requires finance, stability, energy, and innovation. He requested that particular attention be given to island Member States so they access infrastructure and connectivity, and pointed out that island countries bear a heavy burden from climate change. He ended by wishing their Excellencies and all delegates a wonderful stay and invited them to see the land of treasures and opportunities;
Keynote Speech by His Excellency Hailemariam Desalegn, Prime Minister of the Federal Democratic Republic of Ethiopia
Honourable Ahmed Shide, State Minister for Finance, delivered the statement of the out-going chairman of the Authority His Excellency Hailemariam Desalegn, Prime Minister of the Federal Democratic Republic of Ethiopia, the outgoing Chairperson. He expressed gratitude for serving as chair and to the teamwork he received from the Bureau; and highlighted achievements during his tenure.
COMESA had some of the fastest growing economies in the world, and manufacturing activity improved. However, there was need to strengthen the regional market and boost intra-regional trade, using a developmental approach to economic integration. He pointed out that COMESA institutions can be helpful in addressing the challenges of a multi-polar world. He ended by underscoring regional integration as a bulwark against the onslaught of globalisation and nationalist movements in developments;
Statement by Amany Asfour, Chairperson of the COMESA Business Council (CBC)
Dr Amany Asfour, the Chairperson the COMESA Business Council (CBC), in her statement: read the Declaration of the private sector adopted by the CBC Forum attended by 200 enterprises; covering agriculture, ICT, standards, technology and innovation institutions, information platform and COMESA Portal for market intelligence, buyer-seller platforms, Triple Helix Approach, technology hubs, credit and financing, preferential public procurement, and industrialisation;
Statement by His Excellency Mr Erastus Mwencha, Deputy Chairperson of the African Union Commission (AUC)
His Excellency Mr Erastus Mwencha, Deputy Chairperson of the African Union Commission delivered a statement greatly welcoming the summit theme and it's three elements of idustrialisation, inclusiveness, and sustainability which address anti-globalisation and nationalism, climate change adversely affecting agriculture, weak demand for commodities which call for shifting away from commodities to industrialisation and diversification.
He noted the emerging global coherence and the Common African Position which shaped the SDGs; commended COMESA Member States for their contribution to the CFTA establishment through the Tripartite FTA which will respond to the mega regional trade arrangements being formed by developed countries. He welcomed the COMESA 2016-2030 Medium Term Strategic Plan; and referred to the AU first 10 year Priorities under Agenda 2063 to silence guns by 2020 and to step up economic growth through investing in agriculture. He expressed pleasure at seeing that COMESA was ever vibrant;
Statement by His Majesty, King Mswati III of the Kingdom of Swaziland and Chairperson of the Southern African Development Community (SADC)
The Right Honourable Sibusiso Barnabas Dlamini, Prime Minister of the Kingdom of Swaziland delivered a statement of His Majesty King Mswati III, Chairperson of SADC. The Honourable Prime Minister highlighted the importance of the Tripartite FTA and called on countries that have not signed the Agreement to do so and those that have signed to ratify the Agreement. He thanked COMESA for supporting SADC in working with Madagascar to address the recent crisis. He referred to the El Nino disaster in the Southern Africa region and appealed to COMESA to join in mobilisation of the required Humanitarian effort to come to the rescue of affected populations. He called for collaboration with SADC in implementing the COMESA MTSP as the SADC Strategy 2015-2063 shares similarities; informed Summit that 300 scholarships have been put in place for the SADC University on Science, Technology and Innovation;
Acceptance Speech by the Incoming Chairperson of the Authority
Following his election as Chairperson of the COMESA Authority, His Excellency Hery Rajaonarimampianina delivered a statement; thanking COMESA for entrusting the office of Chairperson to Madagascar. He affirmed that no effort will be spared to make his tenure a success. He thanked the outgoing Chairperson, who presided over COMESA during a turning point in history when the SDGs, the Paris Climate Change Agreement and the Tripartite FTA were agreed. He called for a rekindling of the fire of integration of the founding fathers, decried the exportation of unprocessed low value products and called for value addition, diversification, and economic transformation. He called for independent sustainable funding sources for independence and dignity of the Organisation;
Vote of Thanks by His Excellency William Ruto, Deputy-President of the Republic of Kenya
His Excellency Mr William Ruto, Deputy President of the Republic of Kenya moved a vote of thanks to His Excellency Hery RAJAONARIMAMPIANINA the host of the Summit, on behalf of their Excellencies the Heads of States and Government and Plenipotentiaries and all delegates. He conveyed gratitude for the very warm hospitality and excellent facilities to the Government and People of Madagascar. He thanked as well the host for his wise words and assured him that their Excellencies would discuss issues before the Summit under the theme of “Inclusive and Sustainable Industrialization”. He called for continuous reform and improvement of COMESA as an institution.
AFTER THE FORMAL OPENING OF THE SUMMIT, THE AUTHORITY:
ELECTED by acclamation His Excellency Hery Rajaonarimampianina, President of the Republic of Madagascar as Chairperson, and His Excellency Robert Gabriel Mugabe, President of the Republic of Zimbabwe as Deputy Chairperson;
EXPRESSED gratitude to His Excellency Prime Minister Hailemariam Desalegn, Prime Minister of the Federal Democratic Republic of Ethiopia and Outgoing Chairperson of the COMESA Authority for his illustrious and outstanding leadership of COMESA for the period of 2015-2016;
RECOGNISED and EXPRESSED gratitude to His Excellency President Joseph Kabila Kabange, President of the Republic of the Democratic Republic of Congo (DRC) for his excellent and steadfast support and leadership on the COMESA Bureau as Vice Chairman, Chairman and Rapporteur of the COMESA Authority for the past three years;
NOTED the Report of the Secretary General on industrialization in COMESA;
NOTED the Final Communiqué of the Ninth First Ladies’ Roundtable;
NOTED the Declaration issued by the COMESA Business Council;
CONSIDERED AND ADOPTED the Report of the Fifteenth Meeting of the COMESA Ministers of Foreign Affairs;
CONSIDERED AND ADOPTED the Report of the Thirty Sixth Meeting of the COMESA Council of Ministers;
ON THE COMESA BUSINESS COUNCIL AND PRIVATE SECTOR DEVELOPMENT
NOTED the Declaration issued by the COMESA Business Council; INCLUDING the conclusions and recommendations of the Tenth COMESA Business Forum;
COMMENDED the COMESA Business Council (CBC) on the implementation of the Local Sourcing Project and the Local Source Recognition Award which focus on building the technical capacity of the SMEs on standards; and promoting market linkages and sustainable buyer – seller partnerships between the SMEs and corporate companies in the region;
URGED the Member states to partner with the private sector in the implementation of strategic measures that address issues of technical capacity, market access and SME competitiveness to ensure their inclusive participation in regional supply chains as this is central to sustainable agriculture industrialization. Such measures include; harmonization of the regulatory framework for standards, strengthening standards infrastructure, creating affordable certification mechanism and developing specialized SME financial institutions;
ON THE COMESA ANNUAL REPORT
LAUNCHED the COMESA Annual Report for 2015;
ON COOPERATION BETWEEN COMESA AND PARTNERS
EXPRESSED Gratitude to all Cooperating Partners of COMESA for their continued financial and technical support to the implementation of COMESA programmes;
NOTED with appreciation the confirmation by the United Kingdom that despite BREXIT the United Kingdom shall honour its commitments to trade and development assistance;
CALLED on COMESA Member States to harness their individual strengths and act collectively as a bloc in addressing the contemporary challenges of the multi-polar world we live in that requires international and regional solidarity;
GENDER AND WOMEN AFFAIRS
COMMENDED the COMESA Convergence Council for endorsing PTA Bank to be the Manager for the COMESA Women Empowerment Economic Fund (WEEF) and assist in mobilizing additional funds for it;
COMMENDED the Republic of Madagascar, Republic of Malawi and the Republic of Mauritius for the signing of the COMESA Social Charter, and URGED COMESA Member States that have not yet signed the Charter to sign it so that it can enter into force for implementation;
CALLED ON COMESA Member States to own and participate in the implementation of the African Development Bank funded 50 Million African Women Speak Project and to work closely with FEMCOM to establish the project country teams;
ON COMESA INSTITUTIONS
RECOGNISED with appreciation the contribution made by COMESA Institutions in supporting the COMESA Integration Agenda;
NOTED with appreciation the establishment of the Regional Design Studio by the COMESA Leather and Leather Products Institute (LLPI) as a Regional Flagship Project, focusing on Small and Medium Enterprises(SME) incubation and development of skills, improved productivity and competitiveness to unlock the socio-economic potential of the Region's leather sector;
URGED COMESA Member States and the Secretariat to work expeditiously together in the mobilization of resources for the construction of the FEMCOM Complex in Lilongwe, Malawi;
ON THE COMESA FREE TRADE AREA (FTA)
URGED Eritrea and Ethiopia to take definitive steps to join the COMESA FTA in order to enhance integration of the Common Market;
CALLED UPON COMESA Member States to implement the COMESA Industrialization Policy in order to produce value added products so as to increase intra-COMESA trade in manufactured and inter-mediate products;
WELCOMED the Decision of Council that the COMESA Business Council establish a regional forum for national trade promotion organizations which should work with trade investment promotion agencies in Member States and National Private Sector Associations to promote intra-COMESA trade;
UNDERSCORED the critical importance of prioritizing the elimination of barriers to trade and investment through facilitating movement of goods and services, relaxation and gradual elimination of visas to movement of people, and addressing economic structural bottlenecks in COMESA which will reduce the cost of doing business and boost intra-COMESA trade and investment;
ON NON-TARIFF BARRIERS
WELCOMED the new SMS reporting tool for non-tariff barriers and welcomed the progress made by Member States in resolving reported non-tariff barriers;
ON THE SUGAR SAFEGUARDS
ENDORSED the decision of Council to extend the sugar safeguard for Kenya by two more years;
ON THE CUSTOMS UNION
WELCOMED the progress made in implementation of the customs union instruments, especially the customs regulations;
ON THE COMESA-EAC-SADC TRIPARTITE ARRANGEMENT
WELCOMED the launch of the Tripartite Free Trade Area on 10 June 2015;
COMMENDED the 18 Member States that have signed the COMESA-EAC-SADC Tripartite Free Trade Agreement (TFTA) and CALLED UPON COMESA Member States that have not signed to do so;
CALLED UPON the Member States that have signed the TFTA Agreement to complete the ratification process so that the Agreement can enter into force for implementation;
ON OUTSTANDING ISSUES FOR NEGOTIATION
URGED Member States to finalize work on the industrial and infrastructure development pillars;
CALLED UPON Member States to endeavor to achieve flexible tripartite Rules of Origin that promote industrialization and intra-regional trade;
CALLED UPON Member States that have not produced their Tariff Offers and Schedules to do so;
NOTED that Tripartite Ministerial Meetings will be held in Nairobi, Kenya on 25–31 October 2016 and URGED COMESA Member States to attend and support progress on key outstanding issues so that the Tripartite FTA Agreement is implemented as soon as possible;
ON THE CONTINENTAL FREE TRADE AREA (CFTA)
WELCOMED the launch of the negotiations for the Continental Free Trade Area on 15 June 2015 and CALLED UPON the Member States to endeavor to complete the negotiations within the indicative time frame;
REITERATED the objective that both the TFTA and CFTA should pursue the broader objectives of the African Union to accelerate economic integration of the Continent with the main aim of achieving economic growth, alleviating poverty and attaining sustainable economic development;
ON TRADE RELATIONS WITH PARTNERS
WELCOMED with appreciation to the United States Government the extension of AGOA to 2025 and the constructive engagement with the US on the post 2025 scenarios;
CALLED on Member States to prepare AGOA utilization strategies in order to drive maximum benefits from the initiative in collaboration with the Secretariat;
ON CAPACITY BUILDING
ENDORSED AND COMMENDED the decision of Council to launch the COMESA Virtual University through which 22 collaborating universities will give a Masters’ Degree in Regional Integration beginning next academic year;
WELCOMED the establishment of the SADC University for Science and Innovation that was launched at the SADC Summit in August, 2016;
APPLAUDED His Majesty King Mwsati III of the Kingdom of Swaziland and Chairman of SADC for hosting the University and CALLED upon the COMESA Virtual University to collaborate with the SADC University;
ON INFRASTRUCTURE
COMMENDED COMESA Member States for the investment being put in infrastructure development especially in air, rail, road and water transport as well as energy and Information Communication Technology (ICT);
CALLED UPON Member States to implement Legal Notice No. 2 of 1999 on air transport liberalization in the COMESA region so as to create a seamless airspace;
EMPHASIZED the importance of improving the maritime connectivity between the island Member States of COMESA and also between mainland COMESA Member States and island Member States in the Indian Ocean region;
ENDORSED the establishment of the Regional Cyber Security Center with the Association of Regulators for Eastern and Southern Africa and URGED development partners to support it;
WELCOMED the decision of Council to establish the COMESA Railways Association;
ON FINANCING COMESA
CALLED UPON Member States to duly make their contributions to COMESA and UNDERSCORED the importance of financing the elimination of trade barriers to create a seamless COMESA regional market, as well as the industrialisation and economic infrastructure interconnectivity programs and in this regard AGREED to appropriately prioritise these sectors for financing;
ENCOURAGED Member States to work closely with the PTA Bank on its multi-currency operations and the mobilization of Central Bank deposits as well as pension fund investments;
DOMESTICATION OF COMESA LEGAL INSTRUMENTS AND DECISIONS
ENDORSED the Council Decisions on Domestication and URGED Member States to domesticate COMESA legal instruments and Council Decisions in their domesticate legal regimes and institutional frameworks;
ON INVESTMENT
NOTED with satisfaction that Intra-COMESA investment flows are increasing steadily in various sectors including financial services and manufacturing;
NOTED that the Agreement establishing the COMESA Common Investment Area is to be reviewed and a revised Agreement will be ready for signature at the next Summit of the Authority;
ON NEW INSTITUTIONAL STRUCTURES FOR IMPLEMENTING COMESA PROGRAMS
WELCOMED and ENDORSED the Decisions of the Council on New Institutional Structures for Implementation of COMESA Programs and requested member States to formally submit to the Secretariat Expressions of Interest of the Sectors and Clusters they elect to lead;
WELCOMED the COMESA Regional Payment and Settlement Scheme as a mechanism for effecting payments within the COMESA region;
WELCOMED the multi-currency platform established by the COMESA Trade and Development which has a balance sheet of over $400 Billion; CALLED UPON Member States to open accounts and make deposits into the COMESA Trade and Development Bank, which will further ease the challenges of transferring funds and making payments in COMESA;
ON MIGRATION
CALLED UPON COMESA Member States to address illegal migration and human trafficking prevalent in the COMESA region;
URGED COMESA Member States to fully implement the COMESA Protocol on Gradual Relaxation and Eventual Elimination of Visa Requirements;
ON SIGNING OF AGREEMENTS
WITNESSED the signing of the COMESA Social Charter by the Republic of Madagascar;
WITNESSED the signing of the COMESA-EAC-SADC Tripartite Free Trade Area Agreement by the State of Libya (TFTA);
ON ADMINISTRATIVE, LEGAL AND INSTITUTIONAL MATTERS
COMESA Court of Justice
APPOINTED and SWORE IN the Honourable Lady Justice Madame Qinisile Mabuza of the Kingdom of Swaziland (Eswatini) as Principal Judge of the COMESA Court of Justice;
APPOINTED and SWORE IN the Honourable Justice Chinemberi Energy Bhunu of the Republic of Zimbabwe as Judge of the First Instance Division of the COMESA Court of Justice;
ON CONSTRUCTION OF THE COMESA HEADQUARTERS
EXPRESSED appreciation to the Government of the Republic of Zambia for donating 10 hectares of land for the construction of the new COMESA Headquarters;
CALLED upon the Ministerial Committee on the construction of the new COMESA Headquarters to expeditiously conclude financing arrangements for the construction of the new Headquarters; and DIRECTED the Secretariat to commence construction of the new Headquarters immediately;
ON GOING PAPERLESS
COMMENDED the COMESA Secretariat and welcomed the first ever COMESA paperless Summit, which was environment friendly and efficient;
ON MEDIUM TERM STRATEGIC PLANS
ADOPTED the COMESA 2016-2020 Medium Term Strategic Plan;
ADOPTED the COMESA Court of Justice 2016-2020 Medium Term Strategic Plan;
ON THE OCEAN/BLUE AND COASTAL ECONOMIES
WELCOMED the prioritization of Ocean/Blue economy in the 2016-2020 and URGED the Secretariat to work with island economies and coastal States for the development and implementation of appropriate economies.
ON APPLICATION FOR MEMBERSHIP BY TUNISIA AND SOMALIA
MANDATED the Bureau of Council to enter into negotiations with Tunisia and Somalia on terms and conditions of Accession to the COMESA Treaty;
ON PEACE, SECURITY AND STABILITY
REITERATED the importance of peace security and stability for creating an enabling environment for investment, economic development and a viable integration for the region;
ACKNOWLEDGES that the security situation in Burundi has improved especially in the capital city Bujumbura and its surrounding areas and urged the Government of Burundi to continue to ensure security in the country;
CALLED upon all Member States to contribute to the stabilisation of Burundi and not to encourage any armed movement activities;
EXPRESSED deep concern over the violence that followed demonstrations on 19 and 20 September, 2016 in the Democratic Republic of Congo, and URGED all parties to exercise maximum restraint as well as seek non-violent means to resolve the dispute;
COMMENDED the political and social leaders that participated in the national inclusive political Dialogue in the Democratic Republic of Congo for signing the final political agreement on 18 October 2016 and CALLED on all the political actors that did not participate in the said Dialogue to communicate their amendments to the final political agreement; and by so doing contribute to paving the way toward democratic and peaceful election;
APPRECIATED the gesture made by the Government of Eritrea in releasing four Djiboutian Prisoners of War and URGED the parties to settle other outstanding issues and to hasten normalization of their relations;
COMMENDED the United Nations for facilitating the peace process and welcome the signing of the Libya Political Agreement (LPA) on 17 December, 2015 in Morocco and the formation of the Government of National Accord;
CALLED for full support of the Government of National Accord by all parties in Libya and also CALLED on the House of Representatives to meet its commitments in the Libyan Political Agreement by approving the cabinet
EXPRESSED deep concern over the declining economy of Libya and CALLED for the urgent restoration of the damaged oil infrastructure in order to increase output; as well as CONDEMNED all illicit economic activities including the illegal sale of oil as well as the currency black market;
EXPRESSED satisfaction with the progress being made in Madagascar in promoting reconciliation and economic recovery;
RECOGNIZED the encouraging progress between Sudan and South Sudan in improving bi-lateral relations;
REITERATED the concern that both Sudan and South Sudan have not made much progress relating to the demarcation of their border and the resolution of the disputed areas and CALLED on the two parties to expedite negotiations and resolve on this matter peacefully;
CONGRATULATED the Government of Sudan for successfully holding a peaceful referendum for the Darfur region;
STRONGLY CONDEMNED all activities of negative forces operating in the region including the Allied Democratic Forces (ADF), the Democratic Forces for the Liberation of Rwanda (FDLR) and the Lord’s Resistance Army (LRA); and EXPRESSED CONDOLENCES to the Governments and families affected by the brutal acts of these groups;
STRONGLY CONDEMNED all acts of terrorism and EXPRESSED SUPPORT for all measures established to counter terrorism and especially the efforts of the National Governments as well as the international partners who have extended support to the affected Governments in counter-terrorism including training and funding for security forces;
CALLED on Member States to strengthen their disaster preparedness as well as continue to build their national resilience capacities and the mainstreaming of climate change in their national development agendas;
ON DEMOCRACY, GOVERNANCE AND ELECTIONS
REITERATED the importance of democracy and good governance in the maintenance of peace, security and stability and URGED COMESA Member States continue to strengthen democratic processes, structures and institutions to in order to consolidate democracy and good governance of the region;
CONGRATULATED H. E. Prime Minister Hailemariam Desalegn upon his re-election as the Prime Minister of the Federal Democratic Republic of Ethiopia;
CONGRATULATED H. E. President Pierre Nkurunziza upon his re-election as President of the Republic of Burundi;
CONGRATULATED H.E. President James Michel upon his re-election as President of the Republic of Seychelles;
BID farewell to H. E. President James Michel upon his resignation as president of the Republic of Seychelles as well as APPRECIATED his contribution in the country and in the region; and CONGRATULATED H. E. Danny Faure upon his ascension to the high office of President of the Republic of Seychelles;
CONGRATULATED H.E. President Yoweri Kaguta Museveni upon his re-election as President of the Republic of Uganda;
CONGRATULATED President Azali Assoumani upon his election as President of the Union of the Comoros;
CONGRATULATED H.E. President Ismail Omar Guelleh upon his re-election as President of the Republic of Djibouti; and
CONGRATULATED H.E Edgar Chagwa Lungu and Mrs. Inonge Mutukwa Wina upon their re-election as President and Vice President of the Republic of Zambia.
VOTE OF THANKS BY HIS EXCELLENCY MR JOSEPH BUTORE, VICE-PRESIDENT OF THE REPUBLIC OF BURUNDI
The Vice-President of the Republic of Burundi, His Excellency Mr Joseph Butore, moved a vote of thanks to His Excellency Hery Rajaonarimampianina and commended the Government and People of the Republic of Madagascar on behalf of all delegates to the Summit, for organizing a successful Summit. He paid tribute to the Bureau of the Summit for the able manner in which they had managed the Summit. He welcomed the theme of the Summit and called for the required policies to achieve economic transformation through inclusive and sustainable industrialization. In this regard, he commended the Summit on the decisions taken and directives given, which will provide solutions and ways forward on critical of economic and political challenges facing the region. He underscored the need for translating decisions and words into concrete actions. He congratulated the new Judges appointed to the Court and called upon them to be brave and impartial in their work.
Following the vote of thanks, the Vice-President of the Republic of Sudan made a statement welcoming the achievements made in COMESA regional integration programmes and by the COMESA institutions including the Trade and Development Bank. He noted that the region still faced challenges such as value addition and diversification and regional value chains which are instrumental in boosting intra-COMESA trade and investment and creating jobs. He mentioned other challenges such as gender, foreign debt, the global financial crisis, climate change, political and economic sanctions and internal conflicts. He ended his intervention by calling for peace and stability without which there can be no trade investment and economic development in the region.
CLOSING OF THE SUMMIT
In closing the Summit, His Excellency Hery Rajaonarimampianina expressed gratitude to their Excellencies for attending the Summit and also making significant decisions that would advance the COMESA integration agenda. He noted with satisfaction that the theme of the Summit had been validated through enthusiastic interventions, and called for the prioritization of technology and innovation, SMEs and private sector initiatives, greening of economies, value addition, diversification and capacity building in the public and private sectors, which enjoyed continental consensus as priority initiatives.
He reaffirmed the commitment of the Government of Madagascar to peace and stability and conveyed his gratitude to the Summit for the confidence in his country to Chair COMESA. He called for stronger friendship and cooperation among COMESA Member States as well as the sharing of experience in addressing critical challenges including industrialization. He called on COMESA Member States to continue implementing decisions that have been made and maintain solidarity. He wished their Excellencies safe passage home.
The Authority ADOPTED its Final Communiqué as read by the Chairperson of the COMESA Council of Ministers, the Honourable Tazafy Armand, Minister of Commerce and Consumption of the Republic of Madagascar.
DONE at Antananarivo, Madagascar on the Nineteenth DAY OF OCTOBER, 2016 in the English, French and Arabic Languages and all texts being equally authentic.
Related News
tralac’s Daily News Selection
The selection: Wednesday, 19 October 2016
Towards an Africa Open Data Network: an update from LDRI
Building the future: a look at the economic potential of East Africa (US-Africa Business Center)
The US Chamber of Commerce US-Africa Business Center has released a new report (pdf) on trade facilitation in East Africa, outlining the work governments in the region have undertaken to improve infrastructure and address economic challenges, and offering recommendations to address and overcome remaining trade barriers. Part one profiles six of the region’s leading economies, while part two looks at recent economic growth in these countries and its effects on trade. Part three outlines the effects of regional integration on trade and the current challenges facing the EAC. Part four outlines the main barriers and bottlenecks to trade. Part five outlines four transformational projects for East African trade and how US firms can engage in them.
William Davis: ‘Tracking regional integration in Africa’ (Bridges Africa)
Monitoring mechanisms such as the Africa Regional Integration Index are far less effective if they cannot track progress over time. That is why the index will not just be a one-off report, but a recurring publication of the three institutions. It will also facilitate further policy analysis based on the data collected for the index that can inform the integration agenda. Given that the continent is currently negotiating the CFTA, which, if achieved, would promise to revolutionise Africa’s integration, a credible monitoring mechanism is needed now more than ever, in order to ensure that what is agreed through the CFTA is put into practice. For the preparation of the second edition of the index, the three institutions behind it (AUC, AfDB and ECA) will conduct a thorough review of the methodology, including through gathering feedback from member states and other stakeholders on the first edition and how the methodology might be improved. They will then revise the methodology accordingly. In addition, the three institutions will add a system for measuring countries’ integration with the continent as a whole, as well as for comparing all African countries’ performance in this regard against that of one another. [The author is attached to the UNECA’s African Trade Policy Centre]
Trade as a tool to achieve the SDGs in Africa: full text of Bridges Africa,Volume 5-Number 8
Rethinking intra-African trade through CAADP implementation (pdf, LDRI)
In 2013, African countries imported more than $3.6bn worth of processed dairy products ranging from whole milk to dried skimmed milk. Data from FAOSTAT shows the value and volume of dairy imports by African countries continues to grow, demonstrating a growing demand for processed dairy. This is a signal for the potential of the dairy sector in contributing towards tripling of intra-African trade. A brief analysis of the effectiveness of the dairy sectors in Kenya, Ghana, and India has been undertaken in this think piece as we explore the institutions in the value chain and market aspects that determine the success or failure of dairy and livestock sectors in general. [The analyst: Kasyoka Mutunga]
Africa gets advice on pitfalls of importing poor quality items from China (CapitalFM)
Guo Ce, the office counselor [in Nairobi], says his department has dedicated Mondays to getting feedback as well as advising the business community about importing from China. Guo attributes the complaints to the low pricing of ordered goods without assurances on quality, lack of legal contracts with Chinese factories, lack of understanding of the use to which items will be put and misunderstandings between parties. "If a customer wants good quality products, he has to pay a reasonable price, but if the focus is on low cost, the standard will not be the same as for high-priced goods due to the production cost. That is the basic economic and trade rule,” says Guo. The office offers to suggest reliable e-commerce websites to importers who cannot travel to China to vet suppliers. Once importers have had a conclusive discussion with their chosen supplier, they are advised to visit the Counselor’s Office before sending any money to get suggestions on how to check the credibility of merchants. Guo says his office is in the early stages of discussions with the Kenya Bureau of Standards to come up with a database of companies doing illegal business between China and Kenya in order to compile a blacklist.
Kimberley Process chairman calls for UN body to oversee global diamond trade (The National)
The UAE, as the chair of the Kimberley Process organisation that regulates the global diamonds trade, has called for a permanent body under the auspices of the United Nations to oversee the multibillion dollar business. Ahmed bin Sulayem, who heads up the UAE’s KP chairmanship for 2016, has written to all members of the Civil Society Coalition, the group of non-governmental bodies involved in the diamond trade, asking them to back the new proposal for a UN body as a "genuine effort to bring back peace into the KP family in the interest of all stakeholders". Some civil society members representatives have been critical of the UAE’s chairmanship of KP, citing concerns about diamond valuation in the Dubai Diamond Exchange and its regulation of diamond traders in the Dubai Multi-Commodities Centre free zone.
Mike Muller, Christophe Bellmann: ‘How might trade policy contribute to sustainable water management?’ (pdf, ICTSD)
The paper identifies some of the key intersections between trade policy and water management, in areas such as agriculture, hydropower generation, water services and wastewater management. While the local nature of water systems and the diversity of water management objectives is not conducive to the application of trade instruments to enforce a prescriptive, one-size-fits-all, approach to water management, the paper identifies a range of areas in which trade policy could support the sustainable management of water.
Botswana’s competition authority turns five, punches above its weight (UNCTAD)
Established just five years ago, Botswana’s competition authority has helped reinject millions of dollars into local businesses and save thousands of jobs in an economy where unemployment persists at around 20%. In sectors such as health, retail, tourism, and agriculture, it has investigated alleged cartels and bid rigging, and assessed hundreds of mergers and acquisitions. "For such a young competition authority, these are very big achievements," says Elizabeth Gachuiri, who, as an UNCTAD economist working on competition and consumer protection, helped establish the authority. "Most competition authorities in developing countries have not investigated cartels or done dawn raids like they have in Botswana," she adds, ahead of a meeting in Geneva on competition policy.
Competition policy conferences hosted by UNCTAD: access the documentation : Intergovernmental Group of Experts on Consumer Protection Law and Policy (17-18 October), Intergovernmental Group of Experts on Competition Law and Policy (19-21 October)
Tanzania: No consensus yet on EAC single tourist visa (Daily News)
The EAC regional block has never reached a consensus on the issuance of the single tourist visa by Kenya, Uganda and Rwanda. "There has never been any agreement on the arrangement at the EAC level, as a matter of fact, the member states are still discussing the issue," Acting Director for Trade and Investment in the Ministry of Foreign Affairs and East African Cooperation, Bernard Haule, said yesterday. The official stated further that after recommendations by the experts, the sectoral ministers in July 2013 agreed to form another working team to propose the best ways member countries could address the issues raised by the first team. "Before the team got to work and suggest the way forward, the three countries decided to introduce the single visa on their own," he remarked. [No EAC common visa in place yet]
Linking politics to fresh COMESA extension not viable (editorial comment, Business Daily)
The latest decision by the Common Market for Eastern and Southern Africa to extend the restrictions on duty-free sugar imports into Kenya by another two years raises pertinent issues. The industry has been surviving on extensions for more than a decade now, and the latest is one of the most intriguing. COMESA said in a statement that it was convinced that failure to allow the extension could have political ramifications given that the August 2017 General Election is around the corner and the opposition would have used it in the campaigns against the ruling coalition. There is difficulty in convincing other impartial observers as to whether politics should actually be a factor in making momentous economic decisions whose impact go beyond elections held every five years.
COMESA states urged to increase power generation for industrial use (New Times)
Dr Kipyego Cheluget, the COMESA assistant secretary general, said access to power for industrial and commercial use is a key driver of growth and job-creation. Speaking in statement ahead of the third edition of the iPAD Rwanda Energy Infrastructure Forum in Kigali, Cheluget said COMESA will fast-track implementation of key electricity generation and interconnection projects as part of efforts to support this goal. He identified some of the projects that will be fast-tracked as the Zambia-Tanzania-Kenya power interconnector, and the Uganda-Rwanda, Rwanda-Burundi power interconnector projects.
Chinese firm to build Sh2.6bn power line to Tanzania (Business Daily)
Kenya has awarded a Chinese firm the contract to construct a power transmission line connecting to Tanzania to grow electricity trade with countries in East and Southern Africa for reliable supply. The 96-kilometre line will run from Isinya substation in Kajiado to the border town of Namanga. The line will be jointly financed by Kenyan government (Sh439.4 million) and the AfDB which will offer Sh2.2 billion ($22.4 million). Construction will take 22 months. The project is set to interconnect the East African power pool, comprising Kenya, Uganda, Rwanda and Ethiopia with the southern markets.
Ghana: More focus needed on transhipment – World Bank (GhanaWeb)
Periklis Saragiotis of the World Bank says Ghana must look more seriously into shipment processes and procedures at the Tema Port if it is to become a hub for the West African sub-region. Manuel Henriques, Principal Private Sector development specialist-trade facilitation explained that while the Tema Port was a major part of one of the key trade corridor, the Tema-Ouagadougou corridor, it also represented about three quarters of the amount of time and costs it took to move goods from Accra to Ouagadougou.
African Trade Insurance Agency open for business in Ethiopia, Zimbabwe (African Business Magazine)
In both countries, ATI has a current project pipeline estimated at over one billion USD, which is expected to double in the short-term based on existing demand for its products. Prospective projects include a 400 MW solar energy plant in Ethiopia that would contribute to the country’s carbon neutral growth plan to improve the living conditions of its citizens. And in Zimbabwe, ATI is considering a line of credit targeting commercial banks that will allow them to increase their lending volumes.
Commission on Global Poverty: final report, recommendations (World Bank)
The World Bank’s Commission on Global Poverty has submitted recommendations (pdf) on how to more comprehensively measure and monitor global poverty in support of the Bank Group’s goals of ending extreme poverty by 2030 and boosting shared prosperity. In its report, the Commission acknowledges the challenges posed by its recommendations, including the limited statistical resources available to poor countries, the need for collaboration across countries and agencies, and different national circumstances among low, and middle-income countries. In response, Paul Romer said the World Bank would now track non-monetary deprivations of poverty in three specific domains, namely: educational outcomes; access to health care; and access to basic services, such as water, sanitation and electricity. He said the Bank was particularly interested in the overlap among these different deprivations, and between them and monetary poverty.
UNGA: Second Committee meeting on globalization, interdependence (UN)
International migratory flows were increasing and well-managed migration policies and governance were essential, Member States said as the Second Committee (Economic and Financial) discussed globalization and interdependence. At the opening of the meeting, three documents were introduced: the report on the New International Economic Order; the report of the Director General on the International Year of Light and Light-based Technologies, 2015; the Secretary-General’s report on international migration and development (document A/71/296).
The world’s first Global Manufacturing and Industrialisation Summit (GMIS) will be hosted by the UAE Ministry of Economy and UNIDO, in collaboration with the Global Agenda Council for the Future of Manufacturing of the WEF. The inaugural summit (27-30 March 2017) will offer a voice and a venue for leaders with vision to shape the future of manufacturing with a hand-selected audience of 1,200 delegates will be in attendance, including Heads of State, Government Leaders, Ministers, Policy Makers and C-Level Executives from Global 2000 Companies.
Summary of deliberations of the SADC Technical Committee on Certification and Accreditation (pdf, SAQA)
As part of providing technical support and common understanding among Member States to fast-track alignment to the Regional Qualifications Framework, the TCCA developed a set of Regional Guidelines for Aligning NQFs to the RQF. Delegates also deliberated and agreed on a comprehensive two-year Plan of Action which sets out the urgent actions that should be implemented to effectively coordinate, facilitate and expedite implementation of the RQF. The priority actions include:
Today’s Quick Links:
ECOWAS, Islamic Development Bank: update on MOU
West Africa Regional Ministerial Conference: Jobs for youth in Africa
Egypt secures 60% of finances required for IMF loan
We are borrowing more sensibly than Kufuor did - Mahama
World Export Development Forum: summary
Habitat III: input reports from 26 African countries
Kenya: Focus turns to Karigithu for enforcement of Togo pact on maritime issues
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