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Joint communiqué issued at the end of the State Visit to Kenya by H.E. Jacob Zuma, President of the Republic of South Africa
At the invitation of H.E. Uhuru Kenyatta, President of the Republic of Kenya, H.E. Jacob Zuma, President of the Republic of South Africa, paid a historic State Visit to Kenya from 10-12 October, 2016. H.E. President Zuma was accompanied by a delegation consisting of six Ministers, senior officials and a business delegation.
During the visit, aimed at further strengthening the ties of friendship and cooperation between Kenya and South Africa, the two Heads of State held substantive and fruitful discussions on issues of common interest at bilateral, regional and international levels. The two leaders discussed ways to further strengthen the excellent cooperation that exists between the two countries. In this regard, the two leaders witnessed the signing of the following Agreements and Memoranda of Understanding:
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MoU for Cooperation between Kenya Investment Authority, and Investment South Africa;
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MOU on Police Cooperation;
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Agreement on Visa Exemption for Passport Holders of Diplomatic and Ordinary/Service Passports;
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MoU on Cooperation in the Field of Biodiversity, Conservation and Management;
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Agreement on Defence Cooperation.
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Memorandum of Understanding between the Government of the Republic of Kenya and the Government of the Republic of South Africa concerning the development and implementation of LAPSSET Corridor Projects in the Republic of Kenya
Desirous of further strengthening and elevating the status of bilateral relations between the two countries, the two leaders directed that negotiations towards the establishment of a Special Status Agreement be commenced between their respective Ministries responsible for Foreign Affairs. It was noted that once instituted, the Special Status Agreement will form the basis for the establishment of a Bi-National Commission.
The two leaders, while noting with satisfaction the vibrant trade relations between the two countries, acknowledged that there remained an immense untapped potential to expand, both in value and volume terms, the scale of two countries’ commercial relations. In this regard, the leaders agreed to progressively remove all barriers to trade between the two countries.
The two leaders addressed the Joint Kenya-South Africa Business Forum which brought together leading Kenyan and South African business representatives and witnessed the signing of MoU for Cooperation between Kenya Investment Authority, Export Promotion Council and Trade-Invest South Africa.
Acknowledging that free movement of people was a pre-requisite for enhancing Economic ties, the two Presidents directed their respective Ministers responsible for immigration matters to resolve all outstanding immigration issues. The two leaders further acknowledged the positive steps taken by both sides in this area and the immigration concessions made by the South African Government that included: a three year multiple entry visa for frequent travelers; a ten year multiple entry visa for frequent business travelers; a ten year multiple entry visa for Academics holding African passports; decrease of VFS service fees from $71 to $49; issuing of study visa for the duration of study; offering permanent residence to graduates studying within the critical skills category; removal of transit visas for travelers transiting through South African Airports.
The need for the expeditious implementation of these areas already agreed upon was emphasized.
The two leaders further noted that the ultimate goal in this regard, is to work towards achieving a Visa-free status.
The two principals reaffirmed their commitment to the attainment of Africa’s Agenda 2063 and reiterated their commitment to working together in promoting peace and security in the Continent and to work even more closely to find sustainable resolutions to ongoing conflicts in Africa.
As the African Union Commission prepares to elect a Chairperson, Deputy Chairperson and Commissioners in Addis Ababa in January 2017, the two leaders agreed on the need to ensure that the most suitable candidates for all the positions, that will protect the interests of the continent and fast track the implementation of Agenda 2063, are appointed. In this regard, H.E. President Uhuru Kenyatta requested for the support of South Africa for the candidature of Amb. Amina Mohamed, Cabinet Secretary for Foreign Affairs, as the next Chairperson of the African Union Commission.
The two leaders, while noting that terrorism continued to pose a serious threat to the peace and stability in the region, and on the continent agreed to broaden the two countries’ counterterrorism partnership, including in new areas such as cyber security, the financing of terrorism and stemming radicalization.
Recalling with pride the two countries’ strong cooperation on multilateral issues, as exemplified by collective efforts that resulted in the Paris Agreement on Climate Change and the Sustainable Development Goals, and taking into account the importance of the forth-coming United Nations Conference on Housing and Sustainable Development (Habitat III), scheduled in Ecuador later this month, the two leaders agreed to continue working closely to rally other countries to support the common African position.
The two leaders reiterated their shared position on the need to reform multilateral institutions including the United Nations Security Council and the Bretton Woods institutions to better represent the interests of the developing countries.
H.E. President Zuma expressed his deep appreciation, and that of his delegation, for the warm welcome and hospitality extended to him and his delegation.
H.E. President Jacob Zuma invited H.E. President Uhuru Kenyatta to pay a reciprocal State Visit to South Africa at a date to be agreed through diplomatic channels. H.E. the President of the Republic of Kenya graciously accepted the invitation.
Issued at Nairobi, Republic of Kenya
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India-SACU trade pact talks needs to be revived: South Africa
South Africa on Wednesday pressed for revival of the negotiations for the proposed preferential trade agreement between India and five-nation Southern African Customs Union (SACU).
South Africa’s Minister of Trade and Industry Rob Davies said that both the sides have their sensitivities but the effort should be to expedite the negotiations, which are on a “very slow track”.
“India has got its sensitivities, we have our sensitivities,” Davies told PTI in an interview.
Citing an example, he said there are high taxes on wines in India and “we are pretty sensitive about our clothing and textiles. So, I think sensitivities there on both the sides”.
When asked whether there is any deadline to conclude the negotiations, he said, “No we have not (fixed any deadline). It (has) gone on to a very slow track. We could agree to revive it”.
On the major hurdles in pushing the negotiations for preferential trade agreement (PTA), the minister said there are multiple taxes in India like duties in states.
The SACU consists of Botswana, Lesotho, Namibia, South Africa, and Swaziland.
The proposed agreement aims at reducing tariffs or customs duties on certain products.
The PTA is slightly different from the free trade agreement (FTA). In FTA, the two sides reduce or eliminate duties on maximum number of products they trade in, whereas in PTA, the tariffs are eliminated or cut in certain number of items.
In more than three years of negotiations, only five rounds talks have held so far for the proposed pact.
The pact assumes significance as India is giving more emphasis on markets, including Latin America and Africa, for increasing its exports.
“We have been talking about for some years a preferential trade agreement between India and SACU... I think, the PTA is right architecture and the level of ambition is feasible and possible. We could foresee the things being picked up again... I know it has lost ground... But we would be happy for that process to be picked up,” he added.
In PTA, both the sides can identify the complementarity and work around those, he said.
Africa’s main exports to India are gold, coal, diamonds and platinum, while its imports from India include auto components and steel.
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Business leaders read wish list to South Africa’s Zuma
The Kenyan business community wants levies and entry restrictions imposed by South Africa on Kenyan products such as tea, soda ash and processed meat dropped.
Representatives who spoke at the Kenya–South Africa Business Forum in Nairobi, attended by President Uhuru Kenyatta and his South African counterpart Jacob Zuma, said the two countries should sign a bilateral agreement to fast-track trade.
The businessmen also want visa restrictions imposed on Kenyans travelling to South African lifted.
“African countries have largely been brothers in the political context, but this is not translated into the economic context. The rest of the world is scrambling for Africa, why not us?” posed the Kenya Association of Manufacturers (KAM) chairwoman Flora Mutahi.
Ms Mutahi said intra-Africa trade stands at 11 per cent, while Africa’s trade with the European Union is 65 per cent, the US 40 per cent and Asia at 25 per cent.
Kenya’s exports to South Africa amounted to $15.98 million, representing 0.3 per cent of the $5.3 billion exported to the rest of the world in 2015, according to Kenya Private Sector Alliance (Kepsa).
The main Kenyan exports to South Africa comprise of vegetables, coffee, tea, tobacco products, cut flowers and mechanical appliances. Kenya’s imports from South Africa amounted to $605.28 million in 2015.
Major imports from the country include iron, steel, vehicles and electrical machineries.
Trade imbalance between the two countries is skewed in favour of South Africa.
Carol Kariuki, the Kepsa chief executive, urged both governments to address the issues of inadequate industrial skills, support for manufacturing and industrialisation, and improvement of the immigration process.
The business community also noted that Kenyan value added products were uncompetitive due to constraints such as high costs of inputs and technology.
Both Kenya and South Africa private sector lobbies had identified some opportunities to build trade between the two countries.
These include the need for partnership in infrastructure development like maritime for locally owned ships, railways and energy as well as further improving the business environment, trade and investment by reducing trade barriers.
“There is need for common standards for professionals so that people like lawyers, engineers and doctors can operate between the two countries without further training,” said Ms Kariuki.
“We would like to see African goods and products treated as local products so that we can start addressing issues of rules of origin,” she added.
Fast-tracking regional agreements, especially tripartite free trade area of East Africa Community (EAC), COMESA and SADC which will establish a market constituting 26 countries was also put on the table.
President Zuma said Africa’s future looks bright as seen through the tripartite free trade area which has 600 million people with a GDP of $1 trillion.
“The two countries have good foundations for economic growth through good national economic development plans of Kenya’s Vision 2030 and South Africa’s National Development Plan of 2030,” said Mr Zuma.
He said that both plans are intended to transform the economies into rapidly industrialised nations offering their citizens a high quality of life.
President Kenyatta said the two governments need to do more to facilitate trade and allow free movement of goods and people sooner rather than later.
“We have made significant progress in these areas; eliminating or lowering many of the barriers to trade and movement that once existed. And we will continue to make progress,” said Mr Kenyatta.
He said that Kenya and South Africa are leading the process of integration in their respective regions as per the goals of the African Union.
“The full potential of Africa cannot be exploited if we are not working in harmony,” said Mr Kenyatta.
Remarks by President Jacob Zuma on the Occasion of the Kenya-South Africa Business Forum
Good afternoon to you all.
It gives me great pleasure to address this esteemed business forum of our two countries.
Let me begin by extending our appreciation of the of hospitality and warm welcome accorded to us by His Excellency, President Kenyatta and the people of Kenya.
This is a historic and significant State Visit for South Africa, which
will contribute immensely to the deepening of relations between the two countries and people.
We had very fruitful and productive bilateral discussions this morning with President Kenyatta.
We are both very upbeat about the visit and believe it is the beginning of a new chapter in the history of bilateral relations between South Africa and Kenya.
We are writing a chapter of deeper cooperation and fraternal relations which will contribute meaningfully in lifting our peoples from the clutches of poverty and underdevelopment.
We have agreed among others to prioritise economic cooperation between our two countries. The business forum is thus important as provides an avenue to discuss this important issue, of further enhancing trade and investments between South Africa and Kenya.
At the bilateral level, our current trade totals 7.9 billion rand.
I am sure you would concur distinguished guests, that this does not reflect the true potential of our two economies.
We have a good foundation to build from. More than 60 South African companies operate in Kenya currently.
We encourage more South African businesses to consider Kenya as an investment destination, and encouraging Kenyan businesses to do likewise in South Africa.
New sources of economic growth must be enhanced, with emphasis on the agri-business, services, automotives, capital equipment, infrastructure, energy and information technology sectors.
This would require a concerted effort towards developing industrial clusters, and an adjustment of policies to ensure global competitiveness.
Initiatives to this effect are already underway through a quadrilateral arrangement between South Africa, Kenya, Nigeria and Egypt, to promote industrialisation. This is a very important development for the continent.
The future also looks bright for the continent and our respective regions, given the developments such as the Tripartite Free Trade Area between SADC, the COMESA and the East African Community.
This Tripartite Free Trade Area combines the three major regional economic communities of approximately 600 million people and a combined GDP of one trillion US dollars.
For our two countries, we have a good foundation for economic growth, given the synergy between our national development plans, the Kenyan Vision 2030 and South Africa’s National Development Plan 2030.
Both aim to transform our economies into rapidly industrialised countries offering all their citizens a high quality of life.
The plans furthermore outline key infrastructure development projects including, the strengthening of electricity generation and the expansion of transport networks. This presents mutually beneficial investment opportunities.
We stand ready to work with the business sectors of the two countries on this march towards economic growth and prosperity.
Let me emphasise that in our discussions earlier we agreed on the need to create a good environment for easier movement of goods and people between the two countries.
This will contribute to promote the ease of doing business between the two countries.
This is in line with the general sentiment within the African Union, that African nations should soften their borders to promote people to people cooperation and intra-African trade.
It is also in line with the drive for regional integration in the continent.
Further discussions will be taking place between two countries on these issues of migration and non-tariff barriers to trade.
Indeed, the State Visit has gone very well thus far.
We urge you, as the business sector, to take advantage of this strategic partnership between the two economies.
I wish this Business Forum every success.
Asante Sana!
Issued by: The Presidency
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Global Hunger Index: Over 45 countries on pace for “moderate” to “alarming” hunger levels by 2030 UN deadline
The global community is not on course to end hunger by the United Nations Sustainable Development Goal deadline of 2030, according to data from the 2016 Global Hunger Index. If hunger declines at the same rate as the report finds it has since 1992, more than 45 countries – including India, Pakistan, Haiti, Yemen, and Afghanistan – will still have “moderate” to “alarming” hunger scores in the year 2030, far short of the goal to end hunger by that year.
“Simply put, countries must accelerate the pace at which they are reducing hunger or we will fail to achieve the second Sustainable Development Goal,” said IFPRI Director General Shenggen Fan. “Ending global hunger is certainly possible, but it’s up to all of us that we set the priorities right to ensure that governments, the private sector and civil society devote the time and resources necessary to meet this important goal.”
The Central African Republic, Chad, and Zambia had the highest levels of hunger in the report. Seven countries had “alarming” levels of hunger, while 43 countries – including high-population countries like India, Nigeria, and Indonesia – had “serious” hunger levels.
The report outlined some bright spots in the fight to end world hunger. The level of hunger in developing countries as measured by the Global Hunger Index has fallen by 29 percent since 2000. Twenty countries, including Rwanda, Cambodia, and Myanmar, have all reduced their GHI scores by over 50 percent each since 2000. And for the second year in a row, no developing countries for which data was available were in the “extremely alarming” category.
But declines in average hunger levels across regions or individual countries do not tell the whole story. The averages can mask lagging areas where millions are still hungry, demonstrating the need for data and targeted solutions for the communities facing the greatest need. Although the Latin America region has the lowest regional GHI score in the developing world, Haiti, for example, has the fourth highest GHI score at an “alarming” 36.9. Mexico has a low level of overall hunger, but also contains areas within its borders where child stunting – an indicator of child undernutrition – is relatively high.
“Whilst the world has made progress in the fight against hunger there are still 795 million people condemned to facing hunger every day of their lives,” said Dominic MacSorley, CEO of Concern Worldwide. “This is not just unacceptable, it is immoral and shameful. Resources like the Global Hunger Index provide us with a critical insight into the scale of the global hunger crisis. Agenda 2030 provides us with the ambition and commitment to reach zero hunger. We have the technology, knowledge and resources to achieve that vision. What is missing is both the urgency and the political will to turn commitments into action.”
Another obstacle for reaching zero hunger is the lack of complete data for calculating the index scores for 13 countries. 10 of these countries have indicators like stunting, wasting and child mortality that raise significant concern for having high hunger levels, including Sudan, South Sudan, Somalia, and the Syrian Arab Republic.
“Armed conflict is a leading cause of hunger and undernutrition in many of these countries,” said Bärbel Dieckmann, President of Welthungerhilfe. “Zero Hunger will only be possible if we significantly increase political commitments to conflict resolution and prevention.”
The GHI, now in its 11th year, ranks countries based on four key indicators: undernourishment, child mortality, child wasting and child stunting. The 2016 report ranked 118 countries in the developing world, almost half of which have “serious” or “alarming” hunger levels.
The GHI score for the developing world as a whole is 21.3, which is in the low end of the “serious” category. Regionally, Africa South of the Sahara has the highest hunger level, followed closely by South Asia. Rounding out the top 10 countries with the highest levels of hunger after Central African Republic, Chad, and Zambia are: Haiti, Madagascar, Yemen, Sierra Leone, Afghanistan, Timor-Leste, and Niger.
Around half of the populations of Haiti, Zambia, and the Central African Republic are undernourished – the highest in the report. In Timor-Leste, Burundi, and Papua New Guinea, approximately half of children under five are too short for their age due to nutritional deficiencies.
“The 2030 Agenda set a clear global objective for an end to hunger – everywhere – within the next 14 years,” says David Nabarro, Special Adviser to the UN Secretary-General on the 2030 Agenda for Sustainable Development and Climate Change. “Too many people are hungry today. There is a need for urgent, thoughtful and innovative action to ensure that no one ever goes hungry again.”
Global, Regional, and National Trends
Since 2000, significant progress has been made in the fight against hunger. The 2000 Global Hunger Index (GHI) score was 30.0 for the developing world, while the 2016 GHI score stands at 21.3, representing a reduction of 29 percent (Figure 2.1). To put this in context, the higher the GHI score, the higher the level of hunger. Scores between 20.0 and 34.9 points are considered serious.
Thus while the GHI scores for the developing world – also referred to as the global GHI scores – for 2000 and 2016 are both in the serious category, the earlier score was closer to being categorized as alarming, while the later score is closer to the moderate category. Underlying this improvement are reductions since 2000 in each of the GHI indicators – the prevalence of undernourishment, child stunting (low height for age), child wasting (low weight for height), and child mortality.
Large Regional Differences
The global averages mask dramatic differences among regions and countries. Africa south of the Sahara and South Asia have the highest 2016 GHI scores, at 30.1 and 29.0, respectively. Both reflect serious levels of hunger. In contrast, the GHI scores for East and Southeast Asia, Near East and North Africa, Latin America and the Caribbean, and Eastern Europe and the Commonwealth of Independent States range between 7.8 and 12.8, and represent low or moderate levels of hunger.
Best and Worst Country-Level Results
From the 2000 GHI to the 2016 GHI, 22 countries made remarkable progress, reducing their GHI scores by 50 percent or more. Seventy countries made considerable progress with scores that dropped by between 25.0 percent and 49.9 percent, and 22 countries decreased their GHI scores by less than 25 percent. Despite this progress, 50 countries still suffer from serious or alarming levels of hunger. Since 2000, Rwanda, Cambodia, and Myanmar, positioned at the top of Figure 2.3, have seen the largest percentage reductions in hunger of all the countries categorized as serious or alarming, with 2016 GHI scores down by just over 50 percent relative to the 2000 scores in each country. Each of these countries has experienced civil war and political instability in recent decades, and the improvements may in part reflect increased stability.
Seven countries still suffer from levels of hunger that are alarming. The majority of those are in Africa south of the Sahara: the Central African Republic, Chad, Madagascar, Sierra Leone, and Zambia. The exceptions are Haiti and the Republic of Yemen. The Central African Republic and Chad, in the lower right-hand corner of Figure 2.3, are obvious areas of concern. These countries have the highest GHI scores in this year’s report, coupled with relatively low percentage reductions in hunger since 2000. In the Central African Republic, violence and mass displacement resulting from a four-year-long civil war have taken a heavy toll on food production (FAO 2016a). Chad, which has also had a long history of civil war, has faced deteriorating food security, due in part to a recent influx of refugees and extreme weather events (FAO 2016b). The examples of these countries underscore that despite significant progress in reducing hunger globally, violent conflict, poor governance, and climate-related impacts on agriculture ensure that hunger continues to plague our planet and requires a transformative plan of action.
Due to insufficient data, 2016 GHI scores could not be calculated for 13 countries; however, based on available data, as well as the available information from international organizations that specialize in hunger and malnutrition, and the existing literature, 10 of these countries are identified as cause for significant concern: Burundi, the Comoros, the Democratic Republic of the Congo, Eritrea, Libya, Papua New Guinea, Somalia, South Sudan, Sudan, and the Syrian Arab Republic. In the absence of GHI scores, it is critical to analyze the available food security and nutrition data to understand the situation in these countries to the greatest extent possible, particularly given that levels of child undernutrition and child mortality in some of these countries are among the highest in the world. Furthermore, it is vitally important that up-to-date data are made available for these countries without delay.
Subnational Hunger and Undernutrition
Examination of individual GHI indicators at the subnational or state levels reveals disparities within countries, both in terms of absolute values and changes over time. Variations in GHI indicator values can exist within countries at all levels of the GHI Severity Scale. For countries that have low hunger and undernutrition levels nationally, examination of data at the subnational level can help identify areas of the country that lag behind, such as in Mexico and Jordan where stunting rates are shown to vary substantially between states. On the other end of the GHI Severity Scale, subnational data for the alarming countries can reveal areas that are in crisis. For example, in Zambia and Sierra Leone, GHI indicators vary widely within each country. In Cambodia, which has seen impressive reduction in its GHI score since 2000, improvements have been uneven between provinces. Such examples of subnational disparities serve as a springboard for further research into the specific causes, circumstances, and challenges of hunger at the subnational level.
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tralac’s Daily News Selection
The selection: Wednesday, 12 October 2016
Underway, in Abuja: Transfer pricing regional meeting for ECOWAS Member States
The meeting (11-13 October) provides a platform for ECOWAS countries to take stock of the current state of transfer pricing in the region and to determine the direction of further progress. Over 60 participants, including tax administration and tax policy officials from 15 Member States of ECOWAS as well as representatives from the ECOWAS Commission, the EU, WAEMU, the WBG, OECD, ATAF, and the West African Tax Administration Forum (WATAF), will attend. Initiatives will be identified to assist member states to address implementation challenges arising from the scarcity of data, information and limited capacity.
Underway, in Entebbe: 2nd Partnership for Aflatoxin Control in Africa Platform meeting
Rhoda Peace Tumusiime, the Commissioner for Rural Economy and Agriculture at the AU Commission, said the objective of the meeting was to track progress of implementing the specific actions identified at the first Partnership Platform Meeting and to assess efforts of the last two years (2014-2016) of implementing PACA activities at continental, regional and national levels in order to capture the attained successes and record challenges, for the development of a clear roadmap for the next two years of implementation, among others. The EAC Deputy Secretary General, Jesca Eriyo, said Aflatoxin was a major barrier to the continent’s agricultural produce accessing export markets since stringent regulations on aflatoxin contamination limits how much produce enters the global food market. It was estimated that losses associated with Aflatoxin in Africa escalate to $450 million each year due to stringent EU standards alone.
A new emerging rural world: an overview of rural change in Africa (CIRAD/NEPAD)
This second, revised and supplemented edition of the atlas A New Emerging Rural World takes stock of rural restructuring in Africa, both North and sub-Saharan. It relates data on demographics, population, urbanization and resource use with spatial and economic dynamics, both on a continental scale and through several regional examples. It is a totally original tool, and is intended to fuel the debate on the main regional and continental development issues.
Guidelines and commentary for co-operation in Value Added Taxes in the SADC region (pdf, SADC)
These Guidelines have been produced for the use of tax officials in the SADC Region as part of regional co-operation in taxation and related matters as mandated by the SADC Protocol on Finance and Investment. In no way must these Guidelines be construed to be law, or an interpretation of the law, or of any policy or practice of any of the Member States or of the SADC region. The accuracy or completeness of the information contained in these Guidelines has not been verified by independent sources and no reliance should be placed on it in any legal or other context.
200 police officers to escort cargo on Northern Corridor (Daily Nation)
Inspector-General of Police Joseph Boinnet has deployed 200 police officers to escort cargo on the Northern Corridor. The officers will work with the Kenya Transporters Association to ensure goods transported on the corridor, mainly from the port of Mombasa, is secured. KTA Chief Executive Officer Alfayo Otuke said transporters will next week meet with the security agencies to discuss how they will work together with the officers. “This follows rampart cases of cargo theft that sometimes led to loss of lives. This situation has seen some transporters rerouting to Tanzania,” he said. The deployment follows President Uhuru Kenyatta’s directive last month that a unit be set up to secure cargo on the corridor.
Tanzania: Transport drives growth high as agriculture remains vital (Daily News)
The transport sector recorded 30.6% growth in the second quarter up from 9.4% in the first quarter to drive growth of the second quarter to 7.9% which has put the nation firmly on course to meet the 2016 growth targets of 7.2%. According to Central Bank Governor, Prof Benno Ndulu, growth in the transport sector was boosted by an increased railway transportation after upgrading of the railway infrastructure and fleet modernisation in the Tanzania Railway Limited. Growth in the transport sector was also due to a significant increase of transit cargo volume from Dar es Salaam port to neighbouring landlocked countries of Zambia, Burundi, Rwanda, Malawi, and Uganda contrary to widespread speculations that transit cargo had declined. He said transit cargo volume to Rwanda had increased by 17.5%, Uganda (22.3%), Malawi (14%), Burundi (4.8%) and Zambia (3.7%).
SA to push for greater liberalisation of Africa’s airspace (Business Day)
African countries continue to lag behind in various commercial activities underlying the aviation sector, and SA will push for greater liberalisation of airspace on the continent in order to pursue growth, Deputy Transport Minister Sindisiwe Chikunga said. The election of all eight African states that stood for election to the 36-member council of the International Civil Aviation Organisation (ICAO) pointed to a "new era" in aviation in Africa, where passenger numbers were expected to double by 2034, Chikunga said. EO of the African Airlines Association Elijah Chingosho said the target date of open skies — January 2017 — in Africa would be missed, but "the momentum was unstoppable". The increasing liberalisation of African markets over the past few years had allowed African carriers to improve on market share, said Chingosho.
Jan Hoffmann: ‘7 reasons why the Bali trade facilitation agreement needs to happen’ (WEF)
How many trillion of dollars of trade or GDP exactly are generated depends on a number of assumptions, but there is no doubt that the impact is positive. But why exactly? In today’s trade-logistics and development context, trade facilitation has become ever more important. And here are seven specific reasons why.
Uhuru Kenyatta: remarks at a joint press conference with Jacob Zuma (State House)
First, we have agreed to purposely and practically increase trade between our two countries. To turn into reality the immense untapped potential to expand the scale of our commercial relations. We can exploit that potential by progressively removing all barriers to trade. We are glad that South Africa understands the anxiety about non–tariff barriers that prevent us from exporting tea, coffee or soda ash. Mr President, I applaud your commitment to urgently resolving this outstanding matter. Second, I am happy to report that the South African government will consider our request that Kenyan nationals be granted visa on arrival. This is a privilege that Kenya already extends to South African nationals. In our view, there is no reason why both our countries cannot agree on exemption of visas for each other’s citizens.
Beating the slowdown in Zambia: reducing fiscal vulnerabilities for economic recovery (World Bank)
Zambia currently faces an unsustainable fiscal outlook. The economy has been badly affected by the triple shocks of 2015 (copper downturn, poor harvest, power shortages). The shocks have in turn reduced Government revenues. At the same time, public spending has risen as Government has sought to subsidise rising fuel, power and maize prices and the cost of servicing debt has increased. The fiscal deficit is now at historically high levels, and accessing financing to maintain this deficit is becoming increasingly difficult and costly. Zambia faces a real and rising risk of debt distress in the coming decade, particularly if it has to rely on non-concessional and commercial debt to plug budget deficits stretched by growing recurrent expenditure.
Botswana: Decent work and the 2030 agenda (UNDP)
So with this in mind, what has to be done? Multiple things, of course, but allow me to highlight some of particular importance, what you may refer to as a 10+ Action Plan for employment creation with a focus on reducing youth unemployment: [Keynote address by Anders Pedersen (@AndersP_UN) at the HRDC Job Summit]
Uganda: Government releases new oil standards (Daily Monitor)
As Uganda approaches the oil production phase, the government has issued standards that sector players will be required to adhere to. The 195 standards are expected to be adhered to by suppliers, exploration companies, oil companies, the oil refinery and distributors of refined products. The focus of the standards is petroleum and petrochemical products, drilling, development and production equipment materials, petroleum management, refining and transportation, and distribution.
Pradeep S. Mehta: ‘Call for a multilateral competition regime’ (LiveMint)
Fortunately, there have been some positive developments on this front. Competition authorities from BRICS countries have signed a cooperation agreement and patent authorities are having separate meetings. In addition, there is a BRICS food working group to develop suitable strategies. And above all, the theme—“Building Responsive, Inclusive and Collective Solutions”—of the eighth BRICS summit, to be held in India this month, is very apt in the given situation. All this adds to the suitability of the forum in the present “time and space” to take a lead in developing an agenda for a multilateral competition policy. A suitable approach for BRICS nations could be to first have a plurilateral competition policy among them and then open it for other like-minded countries to join the arrangement. [Pradeep S. Mehta is secretary general, CUTS International]
Global Investment Trends Monitor (UNCTAD)
FDI inflows to Africa could return to a growth path in 2016, increasing by an average of 6% to $55-60bn. This bounce-back is already becoming visible in announced greenfield projects in Africa. In the first quarter of 2016, their value was $29bn, 25% higher than the same period in 2015. The biggest rise in prospective investments are in North African economies such as Egypt and Morocco, but a more optimistic scenario also prevails more widely, for example in Mozambique, Ethiopia, Rwanda and Tanzania.
Romola Adeola: ‘Africa has much to do before it starts its own humanitarian agency’ (M&G Africa)
Several proposals were canvassed at the first meeting of the specialised technical committee set up to consider the issues of migration, refugees and internally displaced persons. The most significant was the establishment of an African Humanitarian Agency. The idea isn’t new: it was mooted in 2015 by the East African Regional Consultation on Humanitarian Effectiveness meeting in Arusha, Tanzania. And the AU presented the idea to the 2016 World Humanitarian Summit in Istanbul, Turkey. But can it work? In anticipation of the establishment of an agency, there are certain concerns that need to be addressed. I will discuss the five key ones.
ECOWAS and Germany to consolidate progress in West African integration
William Kavila, Pierre Le Roux: Inflation dynamics in a dollarised economy - the case of Zimbabwe
Tanzania: Govt completes evaluation of 82 privatised entities
Jayanta Roy: ‘Can India adapt to new trade realities?’
D. Ravi Kanth: ‘Doublespeak at the WTO’
DRC governance issues: SADC’s Mahiga-led mission starts, briefing to UNSC by Maman Sidikou (Special Representative of the UNSG, Head of MONUSCO)
Zimbabwe-Mozambique Joint Permanent Commission on Defence and Security opens in Harare
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SA, Kenya ease the environment for business
South Africa and Kenya have agreed to create an enabling environment to ease the conditions for doing business between the two countries.
The President said this on Tuesday at a media briefing held in Nairobi, Kenya, at the conclusion of official discussions with Kenyan President Uhuru Kenyatta. President Zuma said discussions were quite fruitful and productive.
“The Tripartite Free Trade Area – covering the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and Southern African Development Community (SADC) – is one of the practical initiatives taken by governments to facilitate trade and investment in the continent, consistent with our determined effort to implement the African Union Agenda 2063 and its Plan of Action.
“We welcome the signing of new bilateral agreements today. The signing of these instruments is a clear indication of our collective determination to take our relations to a higher level.
“We are indeed working towards a strategic partnership anchored on economic and security cooperation. In our deliberations, we reviewed a wide range of bilateral, regional and international issues of mutual interest,” said President Zuma.
The cooperation between the two countries spans across a number of fields, and the President said they have taken these relations to a higher level today.
“We see a lot of room for the further expansion of relations. Over the years, there has been a remarkable increase in economic relations between our two countries, as demonstrated by the large number of South African companies operating in Kenya.
“To date, over 60 South African companies are doing business here. Trade cooperation continues to show an upward mobility, thus making Kenya one of South Africa's top trading partners on the continent.
“We will later today interact with the South Africa-Kenya Business Forum and encourage further economic cooperation,” said the President.
African development
With regard to continental developments, the two Presidents discussed issues related to peace and security in the continent.
President Zuma said they have noted with great concern the challenges posed by terrorism and extremist groups that continue to affect some of African countries on the continent.
“We condemn in the strongest possible terms all forms of terrorism and extremism. We reiterate the need for joint regional and continental efforts towards countering these negative elements. Since we are in East Africa, it was only natural that we spent considerable time discussing the current challenges in Burundi, South Sudan and Somalia.
“We expressed our grave concern about the ongoing conflicts in these sister countries, which affect the entire region. We urge the government of Burundi and people of Burundi to speed up the national dialogue process under the stewardship of the East African Community.”
He said further fighting will only exacerbate the human suffering in South Sudan.
“On the DRC, we urge all stakeholders to participate in the national dialogue process. We hope that the dialogue will come up with a clear roadmap towards elections,” said the President.
Considering their commitment to finding African solutions to African problems, President Zuma said they have agreed to work together to deal with these challenges.
The two Heads of State reiterated their common position on the need to reform the multilateral institutions, including the United Nations Security Council, to better represent the interests of the developing world.
Joint Press Briefing
Nairobi, 11 October 2016
Speech by His Excellency Hon. Uhuru Kenyatta
Mr. President, it is great to welcome you on this, the first State Visit to our country by a South African Head of State.
My Administration has looked forward to this moment. It is my pleasure to extend a warm welcome to you on behalf of the people of Kenya.
Your visit takes place as our continent navigates a critical juncture in its journey toward the prosperity and peace pursued by successive generations of Africans. Our partnership can provide the vision, means and frameworks to leverage the power of entrepreneurship latent in our people, and to productively harness the energy and creativity of our youth.
In a few hours, President Zuma and I will address hundreds of South African and Kenyan investors and entrepreneurs.
Their coming together, the stretch of their continental and global ambitions, are the ingredients for building our relationship into a powerful engine for prosperity.
Thanks to them, and many like them, Africa is being redefined from the false images of hopelessness that have been peddled in years past.
Today, the world sees in Africa a continent able to sustain growth despite a global slowdown; a youthful population that harnessed promises decades of productivity; and African governments with an increased appetite and capability to collaborate and solve big challenges.
South Africa and Kenya are important actors on the continental stage, and carry particularly heavy responsibilities in helping shape the policies that drive the continent.
I am therefore particularly pleased by President Zuma’s visit since it offers us a chance to better understand one another, and strengthen our bond so that it helps continue raising this continent to new heights.
Critical to our agenda is strengthening our government-to-government, business-to-business, and our people-to-people relations. Central to achieving this aim is our taking conscious steps to remove barriers to the movement of peoples, goods and services.
Today we have taken some of those steps.
First, we have agreed to purposely and practically increase trade between our two countries. To turn into reality the immense untapped potential to expand the scale of our commercial relations. We can exploit that potential by progressively removing all barriers to trade.
We are glad that South Africa understands the anxiety about non-tariff barriers that prevent us from exporting tea, coffee or soda ash. Mr. President, I applaud your commitment to urgently resolving this outstanding matter.
Second, I am happy to report that the South African government will consider our request that Kenyan nationals be granted visa on arrival. This is a privilege that Kenya already extends to South African nationals. In our view, there is no reason why both our countries cannot agree on exemption of visas for each other’s citizens. Such an action would go a long way to allowing our people to get to know one another to mutual benefit.
Third, we have signed two Memoranda of Understanding in the field of security. One for police cooperation and one for defence cooperation. These agreements are aimed at enhancing regional and continental security which are a pre-requisite for development.
President Zuma and I also agreed to broaden our counterterrorism partnership, to focus on new areas such as cyber security, the financing of terrorism, and stemming radicalization.
Fourth, we signed an agreement for south African investment in the development of LAPPSET, a pivotal project for Kenya, the region, and our continent. Investment in Africa by Africans is critical to the growth of intra-African trade and investment.
Last but not least, we have agreed to expand our co-operation in different areas such as learning from each other’s financial service sectors, and cooperating in technical and vocational training. In this regard, we have instructed our Foreign Affairs ministries to commence discussions to develop a special framework to deepen and enhance our cooperation further.
Our relationship is called to bear the weight of a continent’s urgent expectations of peace, prosperity and dignity. Our bilateral agreements help forge this bond, so that from it we can prove to be equal to the dreams of our forefathers, the hopes of our citizens, and to willingly shoulder responsibility for those unborn.
With these reflections, let me now invite my Brother, President Zuma, to say a few words.
Thank you.
Source: State House
Remarks by President Jacob Zuma
Allow me Mr President to start by extending my sincere gratitude to you for inviting us to visit this beautiful country.
I thank you for your warm welcome and the hospitality extended to my delegation since our arrival.
I concur fully with the remarks by President Kenyatta.
Indeed, we have just concluded our discussions which were quite fruitful and productive.
In our deliberations, we reviewed a wide range of bilateral, regional and international issues of mutual interest.
The cooperation between our two countries spans across a number of fields and today, we have taken theses relations to a higher level.
We see a lot of room for the further expansion of relations. Over the years, there has been remarkable increase in economic relations between our two countries as demonstrated by the large number of the South African companies operating in Kenya.
To date, over sixty South African companies are doing business here.
Trade cooperation continues to show an upward mobility, thus making Kenya one of South Africa's top trading partners on the Continent. We will later today interact with the South Africa-Kenya Business Forum and encourage further economic cooperation.
We have also agreed to create an enabling environment to ease the manner of doing business in our respective countries.
The Tripartite Free Trade Area – covering COMESA, East African Community and Southern African Development Community, is one of the practical initiatives taken by Governments to facilitate trade and investment in the Continent, consistent with our determined effort to implement the African Union Agenda 2063 and its Plan of Action.
We welcome the signing of new bilateral agreements today.
The signing of these instruments is a clear indication of our collective determination to take our relations to a higher level.
We are indeed working towards a strategic partnership anchored on economic and security cooperation.
With regard to continental developments, we discussed issues related to peace and security in the continent.
We have noted with great concern the challenges posed by terrorism and extremist groups that continue to affect some of our countries on the continent. We condemn in the strongest possible terms all forms of terrorism and extremism.
We reiterate the need for joint regional and continental efforts towards countering these negative elements.
Since we are in East Africa, it was only natural that we spent considerable time discussing the current challenges in Burundi, South Sudan and Somalia.
We expressed our grave concern about the on-going conflicts in these sister countries which affect the entire region.
We urge the Government of Burundi and people of Burundi to speed up the national dialogue process under the stewardship of the East African Community.
We condemn the recent call by the SPLM-In-Opposition under Dr Riek Machar for a popular armed resistance against the government in Juba. There is absolutely no need for fighting.
Further fighting will only exacerbate the human suffering in South Sudan. We call on Dr Riek Machar to return to Juba and participate in the Transitional Government.
On the DRC, we urge all stakeholders to participate in the national dialogue process. We hope that the dialogue will come up with a clear roadmap towards elections.
Considering our commitment to finding African solutions to the African problems, we have agreed to work together to deal with these challenges.
We concluded our discussions by reiterating our common position on the need to reform the multilateral institutions, including the United Nations Security Council to better represent the interests of the developing world.
We are happy and satisfied that this visit has indeed taken relations between South Africa and Kenya to a much higher level.
We look forward to increased and deeper cooperation, friendship and solidarity between the two nations.
I thank you.
The Agreements signed today are the following:
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Minister of Home Affairs, Mr Malusi Gigaba signed an agreement on Visa Waiver for Diplomatic and Official Passport Holders.
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Minister of International Relations and Cooperation, Ms Maite Nkoana-Mashabane signed an agreement on Mutual Assistance between Customs Administrations.
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Minister of Defence and Military Veterans, Ms Nosiviwe Mapisa-Nqakula signed an agreement on Military Training, Visits and Technical Assistance.
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Minister of Police, Mr Nathi Nhleko signed a Memorandum of Understanding on issues related to Police Cooperation.
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Minister of Environmental Affairs, Ms Edna Molewa signed a Memorandum of Understanding in the field of Biodiversity Conservation and Management, and
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Minister of Public Enterprise, Ms Lynne Brown signed a Memorandum of Understanding on the Lamu-South Sudan-Ethiopia Transport (LAPSSET) Corridor.
Source: The Presidency
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A new emerging rural world: An overview of rural change in Africa
A new, revised and supplemented edition of the atlas A New Emerging Rural World – An Overview of Rural Change in Africa is just out. It was officially launched at the second Africa Rural Development Forum, organized by NEPAD in Yaoundé from 8 to 10 September 2016. The atlas reports on the dynamics at play within the rural world in Africa and on territorial restructuring within the continent.
This second, revised and supplemented edition of the atlas A New Emerging Rural World takes stock of rural restructuring in Africa, both North and sub-Saharan. It relates data on demographics, population, urbanization and resource use with spatial and economic dynamics, both on a continental scale and through several regional examples. It is a totally original tool, and is intended to fuel the debate on the main regional and continental development issues.
It is published jointly by CIRAD and NEPAD (New Partnership for Africa’s Development, a technical body of the African Union), with financial support from the Agence française de développement (AFD), and fits in with NEPAD’s new Rural Futures Programme, which is intended to support territorial dynamics and structural change for sustainable development of the continent.
The atlas comprises 24 spreads and 77 illustrations, and is the fruit of collaboration between 53 authors, 23 from CIRAD and 20 representatives of African institutions. It will be supplemented and updated regularly.
The atlas was widely praised by the participants in the 2nd Africa Rural Development Forum organized by NEPAD in Yaoundé, Cameroon, from 8 to 10 September 2016, and is due to be presented shortly to the European Union, the main donors in the rural sector and African Heads of State at the African Union Summit in Addis Ababa in late January 2017.
It is available online, in English and French.
Introduction
Regaining control of territorial development
Against the backdrop of globalisation with tensions running high, while our planet struggles against climate change and the depletion of non-renewable resources, Africa is faced with the challenge of inventing original development models. These models need to address the considerable requirements generated by improvements in the standard of living, population growth and economic diversification, without reproducing traditional growth models that are no longer sustainable. This challenge is central to the African Union’s Agenda 2063 for the structural transformation of the continent. It implies mobilising all territorial resources available, in both urban and rural areas, in order to make full use of the range of existing spatial dynamics.
• Enhancing territorial dynamics
After two decades of structural adjustment policies and their consequences, Africa has entered a new phase of change over the last 15 years: continued demographic and urban transition, sustained economic growth driven by an expanding domestic market, rising commodity prices and growth in foreign investment. Although the recent situation marked by conflicts and a slowdown in growth linked to falling mining and oil product prices calls for caution, these changes have moved the continent forward from the risk of deadlock to the hope of emergence.
These dynamics could give the impression that according to past transitions observed in other continents, the rural world is doomed to gradual decline in favour of rapidly expanding cities, supported by a solid industrialisation process. A careful examination of changes in African economies and societies, however, reveals a far more complex, diverse picture, with major differences across the countries and regions of the continent.
First, the population boom, with the arrival of 1.35 billion more people by 2050, will not be confined to the cities, which will continue to grow rapidly, without reaching the pace observed over the last 25 years. The population should remain predominantly rural until the 2040s, and population density in rural areas will continue to increase, with 350 million new people by 2050. Africa will also be the only part of the world where the rural population will continue to expand beyond that date. Next, for the time being, urban economies are not following the industry-based development model observed elsewhere. African cities are largely built on commercial and administrative income and are characterised by the scale of informal employment, which is often low-skilled, in trade, services and very small craft and building enterprises.
However, increasing population density in Africa is also shaping territories due to ever closer linkages between cities, rural areas and the small towns connected to them. The unprecedented scale of circulations – of products, people and ideas – facilitates the emergence of new territorial dynamics based on the mobilisation of resources of different origins, encouraging innovation and contributing to spatial reshaping.
On the one hand, the rapid development of telephony, the – still tentative – progress of access to energy and the construction of major transport and irrigation infrastructure all vastly increase the attractiveness of some regions, sometimes to the detriment of others. The growth of mining activities and local and foreign investors’ interest in the most fertile agricultural land are often presented as new leverage for development. Because of the concentration of capital they imply, the variety of stakeholders they mobilise, the different decision-making levels they involve and their ambivalent impacts on the development of their host regions, these activities illustrate the complexity of the processes underway.
The other side to rural change, which is not as visible being more fragmented and less publicised, is driven by the efforts of rural families to combine their multiple activities, which straddle urban and rural areas and are sometimes supported by remittances, and to sustain places that may be remote. The growing audience of farmers’ organisations gives greater visibility to these actions, which often build on the dynamism of local, national and cross-border markets associating farmers, small traders, and entrepreneurs engaged in agricultural and food product processing, who all feed the cities and generate the vast majority of current jobs. The examples of the Ouagadougou-Accra and Nairobi-Kampala corridors, the Senegal River Valley and the Lake Chad region illustrate this intensity of linkages between urban and rural areas. These linkages are reshaping the economic geography with the emergence of new development centres, beyond the outward-looking agricultural or mining export sectors that have until now been associated with economic modernity in Africa.
Between hope, tension and conflict, linked in particular to use of and access to natural resources, there is a growing chorus of voices stressing the importance of including these territorial dynamics in discussions underway on development models. The extent of needs connected with sustainable improvements in the standard of living implies striking a balance between economic performance, equitable wealth redistribution and respect for the environment. Although Africa’s increasing integration in the global economy continues to provide numerous opportunities, the vagaries of international markets also imply eff ectively mobilising the breadth of the African domestic market and developing the resources provided by territorial dynamics.
• Avoiding the excesses and risks of metropolisation
Only a small number of countries situated at both ends of the continent have so far truly initiated their structural change, with more diversified, wealthier economies that are supported by territorially balanced urbanisation with a high density of economic activity and more effective integration in the global economy. Elsewhere, economic changes paint a mixed picture, in which structural elements still override recent dynamics. Agriculture remains the bedrock of activity for a predominantly rural population and urbanisation is continuing, mainly in favour of the capitals, based on an informal sector that makes it difficult to finance the infrastructure needed and to shift the balance to other cities and rural areas. Integration in the global economy remains fragile, with exports of primary commodities that undergo little or no processing (mining, forestry and export agriculture).
These activities, and especially those in the mining sector, inflate growth in absolute terms and, in some countries, stimulate investment dynamics. However, they rarely have any real spilllover effects, create few jobs and are of little benefit to the majority of the population. They stimulate growth in the biggest cities through investment in property and public works, which often leads to neglect of urbanisation from the below, that of small towns, and of agriculture, by fostering the apparently easier option of food models based on imported products.
These dynamics accentuate the metropolisation movement, which further reinforces the territorial imbalances inherited from the colonial period – where the capital was usually the port of export – that were amplified after independence. For political reasons, the states have largely focused on their capitals to the detriment of small and medium-sized cities. These cities have grown in size due to population growth, but without benefitting from public investment in infrastructure and services, thereby increasing the appeal of the big city and enhancing population differences. Today, there are considerable threshold effects between the biggest city and the secondary towns in many countries, and the growing demands linked to this urban macrocephaly are an obstacle to the overall regional development. The situation is heightened by the horizontal, often poorly controlled nature of urban development, which magnifies network costs (highways, transport, water, sanitation and electricity) and the burden on public finances.
Because of this metropolisation, which is reflected in the progressive extension of large-scale conurbations that are increasingly difficult to manage, the public authorities are paying more attention to urban matters, to the detriment of “rural affairs”. This trend is encouraged by the new economic geography rationale, which sees agglomeration economies as a key driver of growth, whereas the concentration of activities and people provides only very limited leverage where low value-added activities are involved and people are poor.
The challenge is therefore to restore balance between regions, which requires support for rural dynamics and for the development of secondary towns. Failing this, there is a major risk of further rural depopulation and large-scale migration towards the most populated urban areas – with heightened economic, social, environmental and political tensions – and the simultaneous development of spatially marginalised areas with no prospects for the people living there. In the absence of significant compensatory financing, government withdrawal and neglect of entire regions are an open door to long-term instability. The areas of influence won over the last 10 years by Al Qaeda in the Islamic Maghreb and Boko Haram in the Sudano-Sahelian region, or by the older Lord’s Resistance Army in Uganda and its northern and western neighbours, stand as a strong reminder of this harsh reality.
• Fostering activity and employment through territorial development
Avoiding dangerous dual strategies that assume areas of investment and growth on the one hand and areas of decline on the other, while meeting the needs of structural change, implies getting off the beaten track of “business as usual” and the traditional view of public policies.
This change is all the more necessary given that Africa is facing a surge in its working age population, which will become the main source of growth in the global workforce. Over the next 15 years, 440 million young people will reach working age. This massive influx of young working-age people is an exceptional opportunity for the dynamism of African economies, provided that the level of training is enhanced and that the economic and institutional environment is conducive to investment.
Meeting this challenge implies moving away from an excessively segmented, centralised approach to public policies. Despite progress in regional policies and decentralisation, most policy and public investment decisions are still made by states and their sectoral administrations, which are disinclined to take account of the diversity and complexity of territorial issues. The statistical segmentation of rural and urban areas, whose boundaries are increasingly blurred by densification and lifestyle changes, as well as that of public action between sectors and fields of activity, makes it difficult to identify existing economic, social and spatial dynamics and their support. There is no sectoral silver bullet – like industrialisation, which is often put forward – that would tackle the scale of the continent’s needs. There is, however, an urgent need to reinvest in multisectoral, place-based sustainable development strategies that help to build on assets and to take into account the constraints inherent in the development of the different regions.
This “re-territorialisation” of public policies calls for the implementation of participatory approaches, stronger local authorities and concerted regulations between different levels of governance, as well as reinvestment in infrastructure and services in rural towns and small and mediumsized cities. It could help to revitalise local development processes and to create jobs through the densification of rural-urban linkages and better support for initiatives. By simultaneously planning the development of agriculture and that of small towns from a territorialised approach based on the idea of supply and employment basins, the renewal of public policies is one of the key drivers of structural change in Africa.
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Beating the slowdown in Zambia: Reducing fiscal vulnerabilities for economic recovery
Zambian policy makers, like others in commodity-exporting countries, have faced increasing challenges in the past two years, in the face of reduced demand from China and uncertain economic recovery in developed economies. For Zambia, falling copper prices and a power crisis have contributed to an economic slowdown, according to a recently published World Bank policy note.
Beating the Slowdown in Zambia: Reducing Fiscal Vulnerabilities for Economic Recovery, notes that Zambia recorded impressive economic growth for a decade from 2004, as copper prices soared on the back of global economic growth and increased demand from China. However, in 2015, real gross domestic product (GDP) growth slowed to an estimated 3.2%, its lowest rate since 1998. This relatively low growth was a result of falling copper prices and below average rainfall which led to a weaker 2014-15 harvest and lower reservoir levels, exacerbating an already growing power crisis characterised by daily power outages, according to the policy note. These pressures combined with the fiscal vulnerabilities to reduce investor confidence as the exchange rate depreciated rapidly, inflation spiked at over 20%, and a trade deficit returned after a nine-year absence.
“What remains critical is that any reduction in the fiscal deficit is planned and managed carefully,” said Gregory Smith, World Bank senior country economist for Zambia and an author of the report. “A disorderly and incomplete adjustment will not restore market confidence. A too severe or too quick adjustment will undermine growth.”
Large fiscal deficits and inefficient government spending persist as sources of vulnerability for Zambia, limiting the scope for rapid economic recovery. Year-on-year increases in public expenditure, funded by external borrowing, have increased the cost of maintaining macroeconomic stability and placed the burden on monetary policy and the private sector. The absence of fiscal buffers has left Government with little room to maneuver in the face of the shocks and has limited fiscal space to sustainably compensate for slower growth, rising costs and recent job losses.
The policy note examines Zambia’s fiscal vulnerabilities and the costs associated with its expansionary, subsidy-oriented fiscal policy. It then sets out the benefits of coordinating fiscal policy with monetary policy in a way that is mutually reinforcing and beneficial to private sector investment, instead of having the two pull in opposite directions, as is currently the case. Finally, it makes recommendations to help shift the fiscal position to a more sustainable path and in turn improve market confidence and the prospects for sustainable economic recovery. The policy note complements the June 2016 economic brief, Beating the Slowdown: Making Every Kwacha Count.
Call for a multilateral competition regime
Control over the global food value chain is getting consolidated in fewer private hands, posing serious security concerns
Four current multibillion-dollar deals in the agriculture sector are ringing alarm bells around the world – the takeovers of Syngenta by ChemChina and of Monsanto by Bayer; and the mergers between Dow Chemical and DuPont, and between Potash and Agrium. Consequently, the global agricultural input market will get further concentrated, which in turn would have an impact on the global food value chain (GFVC). After ‘defence’, it is ‘food’ that is the most important consideration for a nation’s security. Thus, the fact that control over GFVC is getting consolidated in fewer private hands could pose serious security concerns. It is suggested that Brics (Brazil, Russia, India, China, South Africa) countries should tackle this jointly through a coordinated competition policy.
Unlike many countries, it may not be an immediate concern for India, but having allowed foreign direct investment in the food sector, it needs to closely track such global developments. It should become a partner to any global strategy to deal with increasing consolidation in GFVC and associated concerns such as abuse of dominance. A key element of any such strategy would be competition policy.
The core of competition law enforcement is ‘economic analysis’, which in turn is guided by the ‘economic doctrine’ followed by the enforcing country. While some will emphasize ‘efficiency’ during economic analysis, others may like to include the ‘public welfare’ angle.
There may also be different treatment for different sectors. For instance, the farmers’ margin getting increasingly squeezed between input providers and commodity buyers. Such uneven bargaining power in GFVC might not come into the ambit of the competition lens from the ‘efficiency’ and ‘optimal resource allocation’ angles. On the contrary, such analysis might favour consolidation among ‘input providers’ and ‘commodity buyers’.
It would not be easy for individual, particularly developing countries to deal with cross-border competition concerns. If approached individually, it is more likely that their economic analyses would get influenced by the ‘economic doctrine’ practised by powerful, rich countries. Therefore, affected countries, especially developing country blocks such as Brics should come together to deal with global competition concerns.
Fortunately, there have been some positive developments on this front. Competition authorities from Brics countries have signed a cooperation agreement and patent authorities are having separate meetings. In addition, there is a Brics food working group to develop suitable strategies. And above all, the theme – “Building Responsive, Inclusive and Collective Solutions” – of the eighth Brics summit, to be held in India this month, is very apt in the given situation. All this adds to the suitability of the forum in the present “time and space” to take a lead in developing an agenda for a multilateral competition policy. A suitable approach for Brics nations could be to first have a plurilateral competition policy among them and then open it for other like-minded countries to join the arrangement.
Albeit, as China’s own state enterprise, ChemChina, is acquiring Syngenta, it would like a facilitative approach and may like to “exploit the global market” in future. Though China has said that it is acquiring Syngenta to improve domestic agriculture productivity, it may be interesting to note here that while the US has given a green signal to the ChemChina-Syngenta deal, China seems to have done the same for Bayer-Monsanto.
The agenda on trade and competition policy was introduced at the World Trade Organization (WTO) in 1996 as “new issues”, along with investment and transparency in government procurement. To begin with, it was a study approach, but later it became a negotiating agenda. This was opposed by the developing world and finally all of them, other than trade facilitation, were withdrawn from the WTO Doha Development Agenda in 2004. Since then there has been a sea change in global economic architecture, following the two WTO ministerial meetings at Bali in 2013 and Nairobi in 2015. In all probability, competition policy and investment policy may be on the future negotiating agenda at WTO as plurilateral agreements. With substantial experience of trade and globalization in the developing world, the developing countries should participate proactively in such negotiations so that they can influence the contents and ensure that they are balanced.
In any multilateral negotiation, contentious issues arise mainly because of two factors: (1) aggressive agenda of market access; and (2) the defensive agenda, which includes protection of policy space to address national concerns. For example, inclusion of intellectual property rights in the WTO acquis was the most contentious issue during the Uruguay round. This was finally settled when trade and intellectual property rules allowed policy space for nation states to address their concerns, particularly with respect to agriculture (seed) and health (pharmaceuticals).
Today finding common ground on the regulation of market distortions in the highly sensitive sectors of food and agriculture through better and cooperative competition regimes, and more so in the multilateral trading system, is an imperative which we can ignore at our own peril. Brics can offer a middle path and introduce it at WTO.
Pradeep S. Mehta is secretary general, CUTS International. Ujjwal Kumar of CUTS International contributed to this article.
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tralac’s Daily News Selection
The selection: Tuesday, 11 October 2016
Featured tweet, @AUTradeIndustry: 5th AUC Industry Stakeholders Strategic retreat & AU SME Strategy & Master plan 2017-2021 workshop validation kicked off in Nairobi.
This week is ‘Africa Week’ at the UN: Africa Week 2016 will highlight some of Africa’s strategic partnerships, including partnerships that are well-established, such as with the USA, the European Union and Japan as well as partnerships with new and emerging partners, such as Brazil, China, Republic of Korea, India and Turkey, who held Summits in recent years to strengthen their relations with Africa. Africa’s strategic partners continue to invest heavily in supporting a range of Africa’s aspirations and goals, including in peace and security, democracy, good governance, human rights, human development, agricultural development, infrastructure development, humanitarian assistance, and the promotion of resilient and quality health systems, among others. [Programme]
The economic impact of the SADC EPA Group-EU Economic Partnership Agreement (European Commission)
Based on the simulation results, SADC EPA countries’ GDP will be positively affected by the agreement, albeit to a small extent: Individual countries see their GDP grow by between 0.01% and 1.18%, whereas the weighted average GDP increase, which is strongly dominated by South Africa, is about 0.03% (Importantly, all results refer to the situation in 2035 compared to a situation without the EPA). The variation between countries reflects the extent to which the EPA and the baseline differ: [Update: Entry into force of the SADC-EU Economic Partnership Agreement]
Zimbabwe gazettes iEPA trade guidelines (The Herald)
Government has enacted legislation exempting or prescribing customs and exercise duties applicable to products from 27 European countries under the interim Economic Partnership Agreement with Eastern and Southern Africa states.
EAC Secretary General, Amb. Liberat Mfumukeko: overview of priorities, activities (EAC)
As the new Secretary General, I would like to take this opportunity to share with you my Vision and priorities for the Community in the next 5 years. For my tenure in office I will focus on fewer priorities that will deliver quick results. I want to focus on areas that will touch on the lives of East Africans and address the basic needs such as food, health, education and improved incomes. I will therefore ensure that a big percentage of the EAC resources are directed to sectors such as Agriculture, Health, Education, and Employment creation. To achieve this I will strive to establish strategic partnerships with the development partners, the private sector and also the civil society organisations and of course the members of the fourth Estate. In line with this we have listed a few priorities as follows:
EALA holds session in Zanzibar: The Assembly (10-21 October) is expected to dispense with three key Bills, the EAC Trafficking in Persons Bill 2016, the EAC Polythene Materials Control Bill 2016 and the EAC Gender Equality and Development Bill 2016.
South Africa must open market to African investors – Ghana’s trade minister (Graphic)
The Minister of Trade and Industry, Dr Ekwow Spio-Garbrah, has called on African countries and their companies to put emphasis on inter-country partnerships within Africa in order to deepen trading and investments on the continent. He said boosting intra-regional trade and investments would not just happen by rhetorics but by deliberate investment decisions to work closely with the private sector and governments of the continent to harness opportunities and add value to raw materials and natural resources. Addressing newsmen at the Standard Bank Group’s second inter-Africa trade and business conference in Accra, Dr Spio-Garbrah said South Africa, for instance turned to be a more protected economy, but [should] take a cue from Ghana’s liberalised environment which had welcomed a lot of South African interests and other foreign investors, and open up its market to other investors from Africa. “I think it is in South Africa’s own interest to open up and allow competition from other parts of the continent, just as we also allow them to compete here in Ghana. They don’t easily license banks, for example. It has about four to three mainstream banks in South Africa, whereas there are 30 in Ghana. So as we have allowed Stanbic to operate here, if a uniBank or Zenith wants to open in South Africa, they will have a hard time,” the minister, Pan Africanist and diplomat said.
Tanzania: Gas bonanza hits snag (IPPMedia)
According to the Natural Gas Utilisation Master Plan (2016-2045) (pdf), unveiled last week by the Ministry of Energy and Minerals, this is the chosen strategy to help catapult economic growth and transform Tanzania into a major gas exporter. "Tanzania is strategically located close to markets where most of the demand growth is expected. Therefore, the expected potential markets for Tanzania LNG could include Japan, China, South Korea and India," says the document. But the plan also warns that an oversupply in natural gas in the world market could slash the demand outlook for Tanzania’s targeted customers, forcing the country to consider gas exports to neighbouring countries through pipelines. "With the declining oil price globally, it is possible that pipeline export into the regional markets can be a better option to monetise Tanzanian natural gas," says the master plan. According to the 81-page document, the government plans to consider regional gas supply pipeline projects to connect Tanzania with the EAC, SADC and other African partner states.
WIPO Harare workshop: African states must compile, publicize IP statistics (IPW)
According to WIPO, only 25 out of the 54 African countries have been consistently availing their data to the international body. ARIPO is comprised of 19 member states. Mosahid Khan, head of the IP Statistics Section at WIPO, revealed that in many instances, IP offices are not aware of the importance of IP data. Reliable IP statistics are an important tool in understanding trends in policy, business, and technology worldwide. During the workshop (pdf), it was resolved that had all African states been providing their statistical data to international and regional bodies, the gloomy picture of Africa’s contribution to global intellectual property transactions would be significantly different.
Carlos Lopes: ‘Maritime safety, security and development in Africa’ (UNECA)
Africa’s maritime economy currently is linked to about 70% of the continent’s GDP, generating about three quarters of government’s fiscal revenues. With Africa’s expanding economies coupled with rapid population growth and urbanization, we can expect increased pressure on coasts and marine resources. Port throughput on the continent is expected to rise from 265 million tons in 2009 to more than 2 billion tons in 2040. Safer and more efficient ports could strengthen regional integration in the continent and could also play a crucial role in the implementation of the Continental Free Trade Area.
Kenya’s new Shipping and Maritime Affairs Department: a Q&A with PS Nancy Karigithu (The Star)
Because maritime activities are generally interconnected, the clusters must innovate, improve productivity, improve access to employees, suppliers and information, exploit complementarities, give birth to new businesses, and engage the local citizens. The biggest challenge we have as a country is failing to take account of the inter-connectedness of industries and human activities centered on the sea. The Integrated Maritime Policy development process now underway will help address some of these gaps and concerns.
Lesotho, Swaziland and Zimbabwe: food standards workshop (FAO)
A food chain approach coupled with intersectoral collaboration is crucial to address and prevent food safety threats. Addressing food safety problems paves the way for increased international trade as more markets open up to animal and plant products meeting international standards. Through a 12 month project funded by FAO, Lesotho, Swaziland and Zimbabwe, worked with FAO/WHO Codex Coordinating Committee for Africa (CC-AFRICA) to strengthen their institutional capacities to address food safety through adherence to CODEX Alimentarius also known as the food code. While all countries in the SADC region are members of the CODEX, their participation in relevant CODEX standard-setting bodies was limited mainly because of resource constraints.
Zambia: Traders improvement in product compliance cheers ZABS (Daily Mail)
The Zambia Bureau of Standards has commended traders for improvement in the levels of product compliance to standards on imported products. According to a statement availed to the Daily Mail last week, statistics indicate that in August 2016, a total of 197 samples were received from the border offices and submitted to the testing laboratories at the bureau. “We are pleased to note that the results available showed that 60.2% of the sampled products were compliant to Zambian standards,” the statement reads.
Zimbabwe: SADC’s Tourism Satellite Account proposal (The Chronicle)
Meanwhile, Minister Mzembi has urged the Zimbabwe Tourism Authority and tour operators to be aggressive and market regional tourism products as part of the local product in the context of the ‘regional integrated tourism products’ policy which the region is pushing for. There have been complaints from some sections that South Africa, in particular, has been promoting the Victoria Falls as a South African tourism product and as such accruing revenues that should be benefiting Zimbabwe, and to some extent Zambia. He said the Tourism Satellite Account, which SADC is presently developing, will help to ensure that Zimbabwe gets its fair share of revenue from such a regional focus.
Nigerian-German bilateral trade dropped by 50% in 2015 (TODAY)
The volume of bilateral trade between Nigeria and Germany has decreased from 5.4 billion Euros in 2014 to 2.9 billion Euros in 2015, Frank-Walter Steinmeier, German Minister of Foreign Affairs, has said. Steinmeier announced this on Monday at the end of Bi-National Commission between the German delegation and Nigerian counterparts. According to Steinmeier, to this end German Government offers an Export Credit Guaranteed Scheme as a means of providing support for German export transactions with private buyers in Nigeria. He added that the scheme offered investment guarantees for German investment in Nigeria.
New ICC global survey finds worsening global shortage of trade finance (ICC)
The increasing engagement of African economies and businesses in international trade is also a key focus of this year’s Global Survey. While intra-African trade has shown signs of significant growth - accounting for nearly 18% of the region’s total trade in 2014, an upward trend from 10% in 2010 - intra-African investment accounts for only 12% of the total value of investment in Africa, in comparison to 33% in Asia. In addition, 66% of businesses find access to finance a significant obstacle to trade in Africa. "Africa has a trade finance shortage estimated at between US$110 to US$120 billion - a range far higher than the previous estimate of US$25 billion," said Vincent O’Brien, a member of the ICC Banking Commission Executive Committee. [Africa’s trade finance market: facts and challenges]
AfDB to launch an Africa Investment Forum (AfDB)
According to Senior Vice President, Dr Frannie Leautier: “The AIF will coordinate with other Africa investment fora and work to strengthen collaborative efforts to crowd-in necessary investment, and attract social impact financing to Africa. It will support AfDB regional member countries and potential investors through the provision of rigorous, authoritative and robust, business intelligence and analytical work on African’s competitiveness.”
BRICS members to sign pact to reduce non-tariff barriers (Livemint)
BRICS trade ministers will meet in New Delhi on Thursday ahead of the 8th BRICS Summit meeting in Goa on Saturday and Sunday to discuss global economic trends and their influence on BRICS trade and investment. A commerce ministry official, speaking on condition of anonymity, said that agreements on developing a portal for small and medium enterprises as well as one on non-tariff measures are expected to be signed in Goa. The official said the ministry’s proposal to come out with a travel card for easier visas for businessmen and tourists among the Brics nations did not take off as the Union home ministry is not very keen on it.
The 19 countries with the highest international trade tariffs
Nigeria’s new Development Bank: update
Uhuru urges Tanzania, Burundi to effect work permit fees waiver (Daily Nation)
COMESA, USAID sign $77m, five-year partnership agreement
Western Cape Government conducts trade and investment mission to USA
Economy Watch Namibia: September 2016
Malawi Investment Forum: update
Nigeria Economic Summit (NES 22): Adedoyin Salami
27 African countries adopt Marrakesh Declaration on Adaptation of African Agriculture
Zimbabwe to import 100 000t of maize from Tanzania
China offers $600m in aid, loans to Portuguese-speaking countries in Asia, Africa
China to engage in infrastructure development in Mozambique: Premier Li
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The Economic Impact of the SADC EPA Group-EU Economic Partnership Agreement
An analysis prepared by the European Commission’s Directorate-General for Trade
On 3 April 2014, Heads of State and Governments of Africa and of the European Union gathered at the Fourth EU Africa Summit declared: “Our economies remain closely linked, and we will work to ensure that the growth of the one will help the other. We are also convinced that trade and investment and closer economic integration on each of our continents will accelerate that growth.” While acknowledging the “valuable role” of development assistance, they called for “a fundamental shift from aid to trade and investment as agents of growth, jobs and poverty reduction.”
Economic Partnership Agreements (EPAs) between the EU and African, Caribbean and Pacific (ACP) countries are the main pillar of ACP-EU trade cooperation, and aim at creating the right conditions for trade and investment. In this context, the EPA between the EU and the SADC (Southern African Development Community) EPA Group[1] establishes a long-term and stable trade relationship between both Parties, in compliance with international trade rules.
The current population of the SADC EPA countries combined is 89 million people. The two largest countries are South Africa and Mozambique, accounting for respectively 61% and 30% of the region’s total population. The average GDP per capita is roughly 3,700 EUR. In purchasing power parities (PPP), this value is much higher, at about 8,400 EUR. Behind this average hides significant variation. Per capita GDP in the region’s richest country, Botswana is approximately 15,700 EUR, which is roughly 14 times as high as it is in the region’s poorest country, Mozambique. The regional average GDP per capita is about 25% that of the EU. Real GDP grew by an annualised 3% over the last decade, a period in which the corresponding figure for the EU was 1%. In total, the EU imported about 23.7 billion EUR worth of goods from the region whereas its goods exports were 27.2 billion EUR.
The rationale and content of the SADC EPA
The EU’s trade relations with the ACP countries were historically framed by a series of conventions, which granted unilateral preferences to the ACP countries on the EU market. By the end of the 1990s, it was found that these conventions did not promote trade competitiveness, diversification and growth as intended. They were also found to be in breach of the World Trade Organisation’s (WTO) principles, as they established unfair discrimination between developing countries. A change was therefore required. EPAs were the response defined jointly by the ACP countries and the EU in the Cotonou Agreement signed in 2000. EPAs build a new reciprocal partnership for trade and development, asymmetric in favour of ACP countries.
In keeping with the objectives set out in the Cotonou Agreement, sustainable development is a key objective of the EPA, which is explicitly based on the “essential and fundamental” elements set out in the Cotonou Agreement (human rights, democratic principles, the rule of law, and good governance). The joint EPA institutions are tasked with the function of monitoring and assessing the impact of the implementation of EPAs on the sustainable development of the Parties, also carving out a clear role for civil society and members of parliament.
In view of these objectives, the EPA differs from most Free Trade Agreements (FTAs) currently in place or negotiated by the EU with other trading partners: while it remains a reciprocal agreement, it weighs in favour of southern Africa through specific provisions:
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Asymmetric market access: The EU has committed to opening its market more than the SADC EPA countries have committed to do. The agreement fully takes into account the differences in the level of development between the two regions.
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Safeguards: Under the terms of the agreement, SADC EPA countries continue to be able to protect their sensitive products from European competition either by keeping tariffs in place or, if necessary, by imposing safeguard measures. To support local agricultural production, the EU has also agreed not to subsidise any of its agricultural exports.
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Flexible rules of origin: companies in the SADC EPA region also have more flexibility to use foreign components while still benefitting from free access to the EU market. In the SADC EPA, the rules defining the origin are formulated in a way to support development of new value chains in the region. The so-called “cumulation of origin” enables canned fruit exporters to source fruit from neighbour countries, or textile producers to use imported fabric. This type of flexible rules of origin will benefit companies in agri-food, fishery and industrial sectors.
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Development: The EU complements the market opening effort of its partners with substantial development assistance. This will contribute to development, sustainable growth and reducing poverty.
The estimated effects of the tariff reductions set out in the SADC EPA
The economic impact of the EPA was assessed using a dynamic general equilibrium model, tailor-made for trade policy analysis and adjusted to the specific characteristics which apply to the southern African countries. In a conservative manner, only the impact of the tariff reductions was assessed, i.e. what is easily quantifiable from the agreement. Essential provisions of the EPA (rules of origin, trade facilitation, cooperation on norms, and development assistance) were not considered in the model even though they weigh in favour of SADC EPA countries. The results presented in this study are therefore expected to be exceeded over time.
Based on the simulation results, SADC EPA countries’ GDP will be positively affected by the agreement, albeit to a small extent: Individual countries see their GDP grow by between 0.01% and 1.18%, whereas the weighted average GDP increase, which is strongly dominated by South Africa, is about 0.03% (Importantly, all results refer to the situation in 2035 compared to a situation without the EPA).
The variation between countries reflects the extent to which the EPA and the baseline differ: in countries such as Namibia, the EPA provides duty-free quota-free access while the country, in the absence of EPA, would not benefit from a preferential treatment (hence the higher impact). In Botswana, the main export items (e.g. diamonds) would still benefit from low duties without the EPA (hence the lower impact). For a least-developed country like Mozambique, which would still benefit from duty-free quota-free in the absence of EPA, the main benefits to be expected rather come from the flexible rules of origin, regional integration as well as cooperation on norms and standards to boost its exports (all factors which could not be quantified and therefore were not included in the model).
Total exports from the SADC EPA Group to the world are positively affected by the EPA as are total imports. SADC EPA exports are expected to increase on average by 0.13% and imports by 0.14%. In particular, SADC EPA exports to the EU are expected to increase by 0.91%. The agreement has no measureable impact on the EU’s overall trade with the world. Exports to the SADC EPA countries are anticipated to increase by 0.73% against a scenario where there would be no EPA.
The sectors with the highest expected increases in exports from SADC EPA countries are red meat (15.3%) and sugar (13.7%). Other sectors where an increase in exports is expected are beverage and tobacco, dairy products, fisheries, motor vehicles, “other food”, textile, utilities, vegetable oil, vegetables and fruit, and white meat. While several of the increases are sizeable, decreases are usually below 0.1%, with the exception of wearing apparel (-1.2%), cattle (-0.8%) and electronics (-0.4%). The increase and decrease reflect the comparative treatment of each sector under the EPA by comparison to the baseline: in many sectors, EU customs duties are already low in the baseline scenario (especially when it comes to inputs into the production or primary products), while EU customs duties on finished goods and agricultural goods are much higher in the baseline than in the EPA, hence the higher positive impact in those sectors.
The remuneration of the factors of production is generally positively affected by the EPA even if only to a small extent. Remuneration of labour and land is generally expected to increase, while other factors such as capital and natural resources offer a more mixed picture.
The SADC EPA is expected to modestly reduce the poverty headcount in the two countries observed (South Africa and Namibia).
As a result of tariff reduction, SADC EPA countries will collect less import duties, but the decrease is on average not higher than 0.59% of total import duty collection at the end of the liberalisation period. Revenue loss is therefore expected to be limited.
Conclusion
The EPA paves the way for a stable and long-term bi-regional trade relationship between southern Africa and the EU. The outcome of the negotiations is a WTO-compatible Agreement that offers asymmetry in market access. The duty-free access to the European market for the Botswana, Lesotho, Mozambique, Namibia and Swaziland (BLMNS) countries will no longer be at the discretion of the EU but will be anchored in a treaty between the Parties. South Africa has also negotiated better access than currently granted under the Trade, Development and Cooperation Agreement (TDCA) between South Africa and the EU
Outlook
The EPA, including through its development cooperation pillar, is expected to facilitate intra-regional trade as well as the region’s trade with the world. The SADC EPA will also re-establish the common external tariff of the Southern African Customs Union (SACU) and thereby renew the proper functioning of the oldest existing customs union in the world.
The EPA creates a joint Council and a joint Committee in charge of the implementation of the agreement. It will be the task of those institutions to ensure that the EPA is properly implemented, as well as to make proposals for the review of priorities set out in the agreement. For that purpose, constant monitoring of implementation is paramount.
[1] Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland.
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36th Meeting of the COMESA Intergovernmental Committee opens in Antananarivo
Industrialization in focus as COMESA Policy organs begin meeting
COMESA leaders have begun meeting in Madagascar to set the programme for the next one year for the 19 member regional economic bloc, focusing on the role of industrialization in addressing low trade volumes.
The Intergovernmental Committee (IC) that brings together Permanent/Principal Secretaries was the first to kick off with a call to member States to enhance their capacities to produce goods and services that have a high technology content in order to scale up industrialization
In his opening address to the meeting, the Minister of Trade and Consumption in Madagascar, Hon. Armand Tazafy said regional integration will only be consolidated when the value of traded commodities especially agriculture and minerals products was high.
Currently, the region trades more externally than internally with assessed trade potential value that would enhance intra-COMESA trade for goods, standing at US$ 82.3 billion. Intra-COMESA trade would increase by US$ 41.15 billion if 50% of the current external trading was channeled to the region, according to a study conducted recently by the COMESA Secretariat.
“Without sustainable industrialization, our region cannot adequately respond to the ever increasing needs of high value products with the rising middle class in our continent which has been forced to source elsewhere.”
The minister urged member states to involve the Micro, Small and Medium Enterprises (MSMEs) in contributing towards industrialization in the region through backward and forward linkages. He said enhanced value addition and creation of value chains would ensure inclusive and sustainable industrialization while investment on the affected sectors would be increased.
Recently, the regional bloc adopted the COMESA Industrial Policy as well as the COMESA Common Investment Area to assist in facilitating both intra-regional and Foreign Direct Investments into the region.
“Member States should complement this initiative in the productive sector by implementing programmes that seek to enhance innovation and the utilization of science and technology even in rudimentary production processes.” Minister Tazafy said noting that this was being achieved through product and commodity clusters.
Secretary General of COMESA, Sindiso Ngwenya said time had come for COMESA to review its business processes including the model that the organization and its predecessor the PTA has used over the years.
“It goes without saying that regional cooperation and integration like any development process requires continuous review and reforms to ensure not only its relevance but the capacity to deliver on its promise,” Mr Ngwenya said.
He urged the Intergovernmental Committee to review whether it has adequately executed its role under the COMESA Treaty of developing programs and action plans.
“Has the Inter-Governmental Committee lived to its promise by developing programs and action plans? Perhaps the Committee has partially developed programs but I doubt that it has developed action plans and action plans for whom,” posed the Secretary General.
The PSs meeting which concludes on Wednesday, will receive progress reports of various technical committees and COMESA institutions. Each Member State will have an opportunity to report on its status of implementation of COMESA Programmes.
The outputs of the IC will inform the decisions taken by the Council of Ministers that meets later this week and the declarations of the Heads of State and Government during their Summit on 18-19 October 2016.
Statement by Mr Sindiso Ngwenya at the Opening of the Meeting of the Inter-Governmental Committee
Antananarivo, 10 October 2016
I have the pleasure to extend a warm welcome to all of you who have been able to make it to this important meeting which will yet again review the state of play of regional integration and come up with ways and means of strengthening and deepening mutually beneficial cooperation for the benefit of the COMESA citizens in particular and Africa in general. COMESA, as one of the eight African Union recognized Regional Economic Communities is key to the implementation of agenda 2063 and its 10 year program under the mantra of the “Africa we Want”.
I would like to take this opportunity on your behalf and indeed on my own behalf to thank the Government and the people of Madagascar for hosting this year’s annual COMESA policy organs meetings. Our Guest of Honor, please kindly convey our most profound gratitude to His Excellency, Mr. Hery Rajaonarimapianina President of the Republic of Madagascar. The conference and logistic facilities place at our disposal augurs well for the success of this year’s policy organs meetings.
I would like to make four points during the opening session of this meeting.
Firstly , that this meeting marks a turning point in the way COMESA meetings have been organized since its establishment and that of its predecessor the Preferential Trade Area for Eastern and Southern African States( PTA) in that we have for first time deployed modern Information and Communications.
Technology to run a paperless conference. Indeed, there are some of us who will feel threatened or uncomfortable with the technology. That is to be expected as disruptive technology when introduced has its birth pangs. What is, however, certain as in the case of any virtual application and systems is that once we get used to the systems they become our second nature. We indeed, live in a virtual digital world of television, telemedicine, E Commerce, Trade Facilitation, out sourcing and offshoring in production and banking to mention but a few.I would venture to say never in the history of mankind has technology made our lives and work more simpler and pleasurable than today.
It is my conviction that the introduction of a paperless conference will make us worker smarter and not harder as it will eliminate the drudgery associated with manual systems and enable us to produce reports in real time, thus putting COMESA in the same league as the private sector. I may for those who are not aware, draw attention to the fact that our mother continental body the African Union is already running paperless meetings including the AU Summits of Heads of State and Government. There are those among us who may be asking themselves the question of what are the advantages and benefits of a paperless conference which in years to come I predict will become a virtual conference. My simple response is to invite the meeting to imagine the next three days having a total number of 4,320 minutes (each day has 1440 minutes) and that each day is in effect, a time bank from which we draw our assets in minutes and hours. You will agree with me that the supply of these minutes is limited. You will further agree with me that time has no value before it is used or after it is wasted. The introduction of a paperless conference will therefore make all us worker smarter and save on time and make us accomplish more in the limited time. I would venture to say that we stand in the threshold of accomplishing more due to the following three essentials:
Firstly, we shall eliminate the unnecessary, slave-of-habit things that fritter away so much energy and time;
Secondly, the paperless conference will stop us from doing things in a hard way as it is simpler and faster and saves on resources and will enable us to go green; and
Third, it will enable us to do two or three things at once. Is it wonderful that technology can make it easier for us to be multi tasked! Muti tasking up to now has been the preserve of those who are endowed with special genes.
Allow me to conclude by making a direct link of running a paperless conference by giving a simple example of how COMESA can contribute to reducing carbon emissions. Currently for every COMESA policy organs meetings we use 1,000 reams of paper weighing 2,500 kilograms which require 60 fully grown trees to make. The carbon foot print of this paper is approximately 4,000 kilograms CO2 equivalent.
My second point concerns the role played by this Inter Governmental Committee of Permanent/ Principal Secretaries as provided for in Article 14 of the COMESA Treaty. The Treaty in Article 14 sub paragraph 2 provides that this Committee shall and I quote “be responsible for the development of programs and action plans in all sectors of cooperation except in the finance and monetary sector”. The rhetorical question I would pose during this opening session which will be substantively addressed during the course of the meeting is; has the Inter Governmental Committee lived to its promise by developing programs and action plans? Perhaps the Committee has partially developed programs but I doubt that it has developed action plans and action plans for whom. Without preempting the debate on this matter, I would humbly suggest that it is time for the organization to review its business processes including the business model that COMESA and its predecessor the PTA has used over the years. It goes without saying that regional cooperation and integration like any development process requires continuous review and reforms to ensure not only its relevance but the capacity to deliver on its promise.
My Third point, very briefly is that it has and is becoming increasingly evident that the full implementation of the COMESA Treaty provisions require fundamental changes in the governance structures of COMESA to make it a truly member State driven and owned institution. For example, a cursory examination of the various provisions of the Treaty reveal that instead of member States taking action to implement the provisions of the Treaty, decisions are taken by Council which are even weaker than the commitments member States have made when they signed and ratified in the Treaty. It would appear to me that what is required is for each member State to self select and assign itself a specific leadership role to coordinate either sectors or sub sectors with the support of the Secretariat. This innovation will not only enable our leaders to provide leadership but allow for peer to peer review and sharing of experiences. It is high time for COMESA to become a learning organization. A dare say that the strength of the Asian and South East Asian economies and integration arrangements has been and still is their capacity and ability to work together. In other words, these economies are learning economies that leverage and thrive on best practices. Within the COMESA family, there are member States that are emerging as global leaders in consistently implementing reforms and being learning economies on issues, such as, free movement of people, talent mobility and the ease of doing business.
My fourth and last point is on partnership within the region between our governments and private sector and other stake holders on one hand and with sister regional organizations and international cooperating partners on the other. On this note, I would like to urge member States to ensure that there is coherence with respect to national development programs and regional integration programs and projects. With respect to Inter regional economic communities member States, particularly those that belong to multiple RECs are in an advantageous position to ensure program harmonization and joint actions to avoid duplication of effort and waste of resources. Finally, on behalf of member States I would like to thank all cooperating partners for supporting with financial and technical resources COMESA programs.
I thank you for your kind attention.
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EAC Secretary General Amb. Liberat Mfumukeko addresses the media on his priorities for the next five years
Address by Secretary General, Amb. Liberat Mfumukeko, during the Press Conference on 10th October 2016 at the East African Community (EAC) Headquarters in Arusha, Tanzania
I warmly welcome you to this Press Conference and to the EAC Headquarters. This is your home and this Media Centre was set up purposely to assist you in your work. I highly commend the Journalists in our region for the wonderful job they have done so far in articulating the EAC Regional Integration Issues to the people of East Africa and beyond. In doing so, I wish to affirm to you that the EAC Secretariat through the Corporate Communication Department will continue facilitating you with information and knowledge on regional integration whenever you are writing a story on it.
As you are aware, I took over EAC Leadership from my predecessor Amb. Dr. Richard Sezibera in April this year. I will steer EAC for the next five years. During my tenure I commit to engage with you frequently pertinent issues about the Community. I firmly believe that the media has a big role to play in this integration journey. As the media, you have a mammoth task of educating the East Africans the benefits of integrating and also updating and sensitizing them on the achievements made so far.
A. Key Achievements
In April this year EAC attained international recognition as the fastest growing Regional Economic Bloc in Africa as was reported by the Guardian Newspaper. This acclaim is as a result of the major accomplishment EAC has attained in the recent past. EAC also emerged as the most integrating Regional Economic Community (REC) in the Continent according to the recent Africa Regional Integration Index Report 2016, jointly carried out by African Union Commission (AUC), African Development Bank (AfDB) and the United Nations Commission for Africa (UNECA).
According to the study, which covered eight recognized Regional Economic Communities (RECs) in Africa, EAC emerged the overall top performing REC on Regional Integration.
EAC has registered great strides in the key pillars of integration and let me just highlight a few achievements:
1. As a result of lot of work done by colleagues in the customs directorate, EAC is now implementing a single customs territory, which means goods are cleared only once at the entry point. This has resulted in the drastic reduction of the period taken to clear and transport goods. It used to take 20 days to clear and transport goods from Mombasa to Kampala, it now takes four days to transport goods to Kampala and about six days from Mombasa to Kigali. This has greatly reduced the cost of doing business by bringing down the transport costs.
Am happy to inform you also that out of the out of the 15 borders earmarked to operate as One Stop Border Posts, 11 have now been completed and 10 of these are already operational. One stop border posts will reduce the amount of time spent at the boarder points.
2. As you are all aware, we are now in a common market where there is free movement of people, goods and capital. Laws have already been enacted in our partner states to ensure that the citizens enjoy the freedoms, move freely, and trade freely. Members of the media, I hope you are aware that in three out of the five countries in EAC, their respective citizens can enter and exit their territories using their IDs. I am sure that shortly this will be the norm in all the countries after the process of ensuring this is complete. I also wish to inform you that come 2017, the International East African Electronic passport will be in use.
3. In terms of free movement of labour, some EAC Countries are now issuing work permits free of charge and also some professionals can practice in the region without requirement of further accreditation because their qualifications are mutually recognized, this include Engineers; Architects; Accountants; and Veterinary Officers. Process is underway for Lawyers.
4. Ladies and Gentlemen, you all know that EAC has been working on a process of laying the foundation for establishment of a monetary union. The dream is to have east Africans trade easily using any of their currencies and eventually have an East African common currency. Towards this we have started the process of starting four key institutions to support the monetary union as provided for in the Protocol, namely; EAC Monetary Institute; EAC Statistics Bureau; EAC Financial Services Commission; and EAC Surveillance, Compliance and Enforcement Commission; is underway.This is because establishment of a strong Monetary Union will require a robust institutional framework to ensure compliance and safeguard the convergence process.
5. I wish to remind you that EAC is the only block in the continent that has a dream of walking the whole journey of integration. Our ultimate dream is to be in a political federation which is the most unique feature of our integration process. To prepare ground for this EAC continues to promote good governance across the region. This is evidenced by the successful Election Observer Missions in the Republic of Burundi; the United Republic of Tanzania; and the Republic of Uganda. We have also established an EAC Panel of Eminent Persons to support internal capacity for preventive diplomacy to support internal capacity for preventive diplomacy, with the intention of promoting local solutions to local problems.
6. Dear Friends, there can never be a successful integration unless the countries are connected. We have implemented programs aimed at connecting the region and mainly in infrastructure and Energy. In this area we have engaged and completed specific projects e.g.:
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The completion of the construction of the Arusha-Namanga-Athi River Road linking Kenya and Tanzania.
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Commencement of the construction of sections of the Arusha-Holili/Taveta-Voi road (240 km) this year. This is the 2nd multinational road coordinated by the Community.
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Enactment of the EAC Vehicle Load Control Act, 2016 and the EAC One Stop Border Posts Act, 2016 to reduce the destruction of roads and by overloaded vehicles and ease the movement of persons and goods across the EAC borders respectively. This will result in savings above USD 1.5 Billion for the Partner States.
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Construction of the Standard Gauge Railway (SGR) from Mombasa to Nairobi (472 kms) is at an advanced stage and progress is approximated at 70% as at March 2016; Completion expected June 2017.
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In addition to this, EAC now boasts of a liberalized air transport services. Each major city pairs in the region is serviced by more than 4 flights every day.
Key Achievements under the Energy Sector in EAC:
Under the Energy Sector, a lot of achievements have been registered and the main one being development of the Power Master Plan which will be a Blue print for generation and transmission expansion in the region for the next 25 years. As a result installed capacity increase from 2691 MW (2008) to 4125 MW (current) and interconnectivity of power network has been increased.
Secondly, there are cross border electricity connections that have already been realized in the borders of Namanga, LungaLunga and Kikagati-Murongo is under implementation.
A number of projects have been planned and feasibility studies already launched for:
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Natural Gas Pipeline from Dar es Salaam to Tanga and Mombasa – completed 2011
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Scoping for Renewable Energy Resources in the EAC Region – completed 2013
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Technical Capacity for Small Hydropower Development – completed 2013
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Five Year Implementation Action Plan for the EAC Strategy on Scaling Up – completed 2014
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Oil Products Pipeline from Kigali to Bujumbura – under procurement
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Oil Products Pipeline from Mbarara-Mwanza-Isaka-Dar es Salaam – under procurement
I also wish to inform you that in June this year, we launched the East Africa Centre for Renewable Energy and Energy Efficiency which is domiciled in Uganda.
I could go on and on listing the achievements. This serves to demonstrate to you that the notion that there is nothing that happens in Arusha is wrong, there is also an impression that EAC is about travelling and earning allowances, again this is far from the truth. Alot is happening, of course there is travelling but for work which is very regulated and monitored now. I also need to say that our court is now very busy with most East Africans seeking justice from this court on various matters while our Assembly has been very active playing an oversight role for the East Africans.
B. Priority Areas for the Next 5 Years
As the new Secretary General, I would like to take this opportunity to share with you my Vision and priorities for the Community in the next 5 years. For my tenure in office I will focus on fewer priorities that will deliver quick results. I want to focus on areas that will touch on the lives of East Africans and address the basic needs such as food, health, education and improved incomes. I will therefore ensure that a big percentage of the EAC resources are directed to sectors such as Agriculture, Health, Education, and Employment creation. To achieve this I will strive to establish strategic partnerships with the development partners, the private sector and also the civil society organisations and of course the members of the fourth Estate. In line with this we have listed a few priorities as follows:-
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Consolidation of the Single Customs Territory (SCT) to cover all imports and intra-EAC traded goods including agricultural and other widely consumed products
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Further liberalization of free movement of skilled labour across the Partner States
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Enhancement of regional industrial development through investment in key priority sectors, skills development, technological advancement and innovation to stimulate economic development
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Improvement of agricultural productivity, value addition and facilitation of movement of agricultural goods to enhance food security in the region; and
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Promotion of regional peace, security and good governance.
Under the above priorities, activities would be identified annually that will have very clear targets and results.
C. Progress Made Since Assuming the Office of the Secretary General
a) Instituting Cost Reduction Reforms in the EAC Organs and Institutions
Since taking over the office in May this year, I instituted several reforms in the EAC Organs and Institutions aimed at cost reduction in the EAC projects and programmes. The reforms target savings to the tune of US$6 million in the Financial Year 2016/2017 alone.
The implementation of these reforms are going on very well and already some positive results are being received, for example, for the first three months of implementation (May to August 2016), the first estimates point to savings of US$588,768 in travel expenditures alone. We shall calculate again for the months September to October. The reforms focus on cutting any wastage, containing and reducing travel where all EAC Staff must spend 50 percent of their time in Arusha and also hold 25% of the meetings via video conference facility. We have also reduced the number of days for our meetings to a maximum of four. Dear friends it is no longer business as usual.
b) EAC passed the rigorous EU Fiduciary Risk Assessment
The European Union, through a consultancy firm, Moore Stephens LLP based in London, undertook a Fiduciary Risk Assessment (FRA) on the EAC Secretariat’s operations in 5 Pillars, namely, Internal Control System; Accounting Systems; Independent External Audit; Procurement; and Sub-Delegation. The firm checked on our procedures and processes on the mentioned pillars.
According to the findings, the EAC Secretariat has met the internationally acceptable standards and successfully undergone the assessment as required by the European Union. The conclusion was that EAC applies appropriate rules and procedures in all material aspects for providing financing from European Union funds through procurement and in accordance with the criteria set by the European Commission. This milestone shall now enable the EAC Secretariat to directly access funding from the European Union through contribution agreement i.e. EAC will be allowed to use its own procedures during implementation. It is important to note that EAC has gone through the same assessment twice in the past without success in 2006, and also in 2008. Passing of the assessment in 2016 June is a great testimony that our procedures and systems have greatly improved and now development partners have confidence in our systems and processes. A similar assessment was conducted by USAID with similar results.
c) Project Coordination Mechanism Launched
EAC has more than 45 different projects and sub sectors that we are involved in (from road construction, energy, culture, citizen sensitization, immigration etc.)
To eliminate duplication, poor reporting and enhance coordination with development partners who contribute more than 50% of the EAC budget we established the Project coordination unit to enhance how funds are managed and other funding from Development Partners.
A multi-disciplinary team has been appointed initially to serve on an interim basis as the EAC Projects Coordination Unit. This Unit is now functional and monitoring all EAC donor funded projects and has already created a database for all these projects and can produce a single report for all projects.
The Unit serves as a one-stop desk for information on EAC projects both internally and externally and we are working on full time staffing modalities to be considered in the near future.
d) Strengthening Relations with Bilateral and Development Partners
In order to unlock the potential bilateral partner resources that can be availed to the EAC, the SG has held high level diplomatic missions in East Africa and Abroad.
One of these high level missions include negotiation with the EU in Brussels and where the future cooperation between EAC and EU was discussed and a grant totaling Euro 85 Million was committed to our work.
These funds will support the following key priorities i.e. Peace and Security, Regional Integration, Natural Resources, Institutional Strengthening and Partner States will access Euro 40 Million for Trade facilitation.
The EAC SG has also held strategic discussions with all Development Partners contributing to the EAC Partnership Fund, USAID, Trade Mark East Africa (TMEA), KfW, Aga Khan Foundation and United Nations, with the aim of cementing the relationship between EAC and the Development/bilateral Partners.
Further bilateral discussions have been held with Ambassadors from Germany, USA, Belgium, France, Brazil and Ireland.
During all these high level discussions, the Development Partners reaffirmed their strong commitment to supporting EAC, financial and technically to achieve its overarching mandate and ambition.
e) Implementation of Quality Management System
The Secretariat has continued to rollout Quality Management System based on ISO 9001:2008. I am happy to report now that EAC is ISO certified; this is also confirmation that our processes meet the international recognised standards.
f) Joining of the Republic of South Sudan
In terms of geographical growth, EAC has now reached a mark of serving a population of over 160 million people with the joining of South Sudan who is now a full member of East African Community having deposited the instruments for ratification with the Secretary General in September this year. This means that South Sudan will now be integrated into the activities, programmes and projects of EAC and will commence contributing to the EAC budget.
D. Facts About EAC Community Financial Statements for the Financial Year 2014/2015
I would like to take this opportunity to inform you that the East African Community Financial Statements for the Financial Year 2014/2015 were audited by the EAC Audit Commission made up of the Auditors General of the EAC Partner States. An unqualified (clean) audit opinion was issued, meaning that the Financial Statements presented fairly, in all material respects, the financial position, performance and cash flows in accordance with the accounting reporting framework used (International Public Sector Accounting Standards) and comply with the provisions of the Treaty for Establishment of the East African Community. The report was tabled to the East African Legislative Assembly for debate at the First Meeting of the Fifth Session of the Third Assembly that was held from Monday, August 22nd 2016 to Friday, September 2nd 2016, in Arusha, Tanzania.
As is the practice in the audit processes, the Audit Commission issued to the EAC Secretary General a Management Letter highlighting areas that require improvement, without alluding to fraud. The management of the Community appreciated the recommendations of the Audit Commission and the East African Legislative Assembly on the Accounts and is implementing them.
While the EAC appreciates the role of the Media and welcomes interaction with many journalists, the Management was taken aback by some of the commentaries and headlines that seemed to sensationalize clearly out of context certain aspects of the Accounts.
The Citizen newspaper, dated 4th September, 2016, led with a top headline (“Revealed: Billions swindled at EAC”). The Management of the Community wishes to clarify that the thrust of the Article gave the wrong impression to the readers of a clandestine and wilful pilferage of the Community finances. Clearly, the main issues even reading from the Article were of an administrative nature, and their cost implications unavoidable as matters of overtime payment for eligible categories of staff, compensation for untaken leave at separation with the employer are employees' non-negotiable legal entitlements. The payment for goods and services delivered/provided to the Community again are liabilities that must be settled.
I wish to reiterate that a number of issues were raised which have to be addressed by the management, some of the issues concern procurement and travel where reforms have already been instituted to address them. I wish to state categorically that there were no billions lost, actually there is no evidence of any money lost. We are committed to improve our practices to ensure that we are within the rules and ensure efficiency and cutting costs. Already we have changed a lot on the way we are doing our business now.
One of the areas where we are committed to ensure 100% compliance is in the procurement of goods and services. I know you are aware of some issues in the procurement of EAC insurances and others. I wish to clarify that the process was stopped to ensure compliance in our internal processes. There are many procurements that were put on hold to ensure that all provisions of the procurement manual are complied to. I can confirm that now this is going on very well and I want to assure you that the audits of especially 16/17 will be very impressive. Some of the issues that were raised by the audit of 14/15 had been raised in the previous years and a time had to come to put a stop on some things.
Implementation of reforms is not smooth, its painful, not always acceptable to everyone but it’s time to face reality or perish, act or be acted on.
E. Conclusion
In conclusion, I want to exude the confidence that I have and assure you that EAC will achieve its mandate as per the treaty, there is strong resolve and willingness to improve in the way we do business, once again I pledge to work with you, the Media, in order to intensify our reach out to the people of East Africa and to deepen our relations and also to practice the Open Door Policy with you.
I thank you for your kind attention.
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Maritime safety, security and development in Africa
Africa boasts of an abundance of natural resources, in particular aquatic and marine resources, with a potential that has not yet been fully tapped in the context of economic growth and sustainable development.
The African Great Lakes constitute the largest proportion of surface freshwater in the world (27%). This becomes therefore a globally important strategic resource as reserves of freshwater are dwindling in most parts of the world. In fact, Lake Victoria is the third largest fresh water lake in the world by area, and Lake Tanganyika is the second largest in volume and depth in the world. Freshwater and ocean fish make a vital contribution to the food and nutritional security of over 200 million Africans and provide income for over 10 million annually.
From the 54 African States, 38 are coastal States. Maritime zones under Africa’s jurisdiction total about 13 million square kilometres including territorial seas and approximately 6.5 million square kilometres of the continental shelf. We have two thirds of the equivalent area of Africa’s landmass under the sea. This is huge! One of our Oceans, the Indian Ocean, is the third largest in the world carrying a large part of the world’s trade by sea. The significant dependence of African countries on international trade makes maritime transport crucial for the continent’s economic development. Indeed more than 90% of Africa’s imports and exports are conducted by sea and some of the most strategic gateways for international trade are in Africa.
The African Union rightly calls Africa’s Blue Economy “a new frontier for the continent’s renaissance” in its 2050 Africa’s Integrated Maritime Strategy (AIM). We have a hidden treasure under and within our seas, which needs to be revealed, protected and built upon to contribute to the structural transformation process of our continent. The potential is significant. Africa’s maritime economy currently is linked to about 70% of the continent’s GDP, generating about three quarters of government’s fiscal revenues. With Africa’s expanding economies coupled with rapid population growth and urbanization, we can expect increased pressure on coasts and marine resources. Port throughput on the continent is expected to rise from 265 million tons in 2009 to more than 2 billion tons in 2040. Safer and more efficient ports could strengthen regional integration in the continent and could also play a crucial role in the implementation of the Continental Free Trade Area (CFTA). It would also bolster the emerging African manufacturing industry and also generate significant revenues for governments as well as employment opportunities for many Africans. Ensuring maritime security and safety is paramount for Africa’s development.
It is known that the threats which jeopardise Africa’s maritime area include transnational organised crime such as illegal arms and drug trafficking, piracy and armed robbery at sea, illegal oil bunkering, crude oil theft along African coasts, maritime terrorism, human trafficking, people smuggling and asylum seekers travelling by sea. Illegal, unreported and unregulated (IUU) fishing and overfishing, as well as environmental crimes such as deliberate shipwrecking and oil spillage, and the dumping of toxic wastes are also of significant concern. Another major challenge is container traffic, as more than seven million large and small containers are moving around the world every day, the ability of port and customs official to check their contents is limited. Recent experience has indicated that these containers can be used to smuggle everything from terrorists to illegal substances.
Existing vulnerable legal frameworks combined with the lack of and/or poorly maintained aids to navigation, the absence of modern hydrographic surveys, up-to-date nautical charts as well as maritime safety information in a number of African States are nonexistent or insufficiently developed which is detrimental to maritime security and safety. Even where they are developed ocean governance is extremely difficult in the high seas and on a regional scale, the patchwork of regulations can be very complex with even less ability for enforcement.
Most of these threats are geopolitical in nature and are particularly complex as they are multifaceted and interconnected. Their consequences are also dire. The increasing piracy acts have become a major impediment to the competitiveness of African ports over the past decades. Piracy attacks increase not only shipping costs to Africa but also affect directly port traffic flows with ships avoiding risky routes. The attacks have been particularly detrimental, reducing traffic flow to, and from African ports located between the Red Sea and Indian Ocean, near the Somalia coast, and in the Gulf of Guinea. Even though the piracy in the Strait of Malacca, next to Malaysia and Singapore, is significantly higher than Somalia, the perception is not that. Besides loss of lives, assets and opportunity costs foregone, the wider implications of maritime terrorism are that any political instability in a coastal African state is capable of generating threats to global traffic and freedom of navigation and could trigger a contagion effect inland. This could lead to a vicious circle where the threats and impacts are exacerbated by and/or lead to political instability, corruption, lack of state control, among others.
The strategic importance of securing our maritime zones cannot be taken lightly. A holistic and integrated approach based on combined metrics of growth and progress in which economic success is linked with environmental and material stewardship is necessary to address existing threats and vulnerabilities and realize the full potential of Africa’s Blue Economy requires, social responsibility and the highest governance and transparency standards.
There are some key ideas we must keep in mind while crafting this approach. Firstly, we need to take stock of our “blue” endowment in order to protect these important assets and optimize their use and management to achieve structural transformation and inclusive sustainable development. The Economic Commission for Africa recently launched its publication on the Blue Economy, which offers a comprehensive step‐by‐step guide to help African countries and regional bodies to better understand the vast potential of the Blue Economy. It provides policy makers, regional organisations, development practitioners and other stakeholders on the continent and beyond, with an operational framework, case studies, comparative experiences and examples of policy formulation processes as further guidance material to better mainstream the Blue Economy into their national development plans, strategies, policies and laws, aiming to foster structural transformation.
Secondly, regional cooperation must be at the forefront to effectively confront the threats to maritime security. Harmonized transnational co-ordination and regulation must be strengthened to address illegal activities over the coastal areas and across borders taking into consideration different jurisdictions relating to territorial waters, exclusive economic zones (EEZs), or high seas in a context of poor border demarcation. This will require strengthening monitoring, control and surveillance in these different spaces. The role of regional and sub-regional bodies, such as the African Union and the RECs, would be crucial, as would that of other regional cooperation mechanisms.
Thirdly, the connections and interdependence of different economic sectors, and enhancing responsiveness to emerging sectors is a must. It is equally fundamental to recognize climate change imperatives through the prioritizing of resource efficiency and low carbon footprint models with equity and social inclusion, and job creation.
African countries must squarely address these challenges, take full stock and realize their transformative potential in the Blue Economy context. If properly secured and harnessed, our Blue Economy can be a major contributor to continental transformation and growth, advancing knowledge on marine and aquatic biotechnology, the growth of an Africa-wide shipping industry, the development of sea, river and lake transport and fishing; and exploitation and beneficiation of deep sea mineral and other resources.
This article is based on a speech by Carlos Lopes, ECA Executive Secretary, at the opening of the side events of the African Union Extraordinary Summit on Maritime Security and Safety and Development in Africa, held in Lomé on 10 October 2016.
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Opening ‘Africa Week’ at UN, Ban highlights importance of partnerships with and for the continent
Noting the socio-economic progress made by African countries and their centrality in major sustainable development discourses, United Nations Secretary-General Ban Ki-moon on 10 October called for continued support to the continent, particularly for strengthening good governance and for the implementation of the 2030 Agenda for Sustainable Development.
“An age-old African word of wisdom reminds us: ‘If you want to go fast, go alone; if you want to go far, go together’,” said Mr. Ban in his remarks at the inauguration of a series of events focused on the African continent known informally as the Africa Week.
“The road to 2030 is long and arduous. If we are to achieve our collective global vision of delivering a life of dignity for all and leaving no one behind, we all need to work together in unison and with vigour,” he added.
Held this year under the theme Strengthening Partnerships for Inclusive Sustainable Development, Good Governance, Peace and Stability in Africa the 2016 Africa Week will, among others, highlight the importance of diverse partnerships for the effective implementation of the 2030 Agenda and African Union’s Agenda 2063, including partnerships between the UN, the wider international community and the continent’s regional and subregional organizations.
In his remarks, the Secretary-General recalled that UN has worked tirelessly to strengthen peace and security in Africa and noted the Organization’s support for implementation of the African Peace Security Architecture in moving ahead with the African Union initiative to ‘silence the guns by 2020,’ as well as working alongside it to consolidate peace in the Great Lakes, the Sahel, the Horn of Africa and other troubled spots.
He, however, also noted that conflicts in South Sudan, Sudan and in other countries continue to cause horrific suffering, with impacts ranging far and wide across the continent. Mr. Ban also drew attention to events that have drawn the credibility of some elections on the continent into question and thereby pushing countries to the precipice of conflict.
“The international community needs to support African countries, working with all relevant national and regional stakeholders, including the African Peer Review Mechanism, to improve good governance, and the conduct of elections and to ensure that civil society has the freedom to play its vital role,” he said.
Also, highlighting the threat of climate change, Mr. Ban said that African countries did little to contribute to climate change but would be among those most affected by its impact. He expressed that with entry of the Paris Agreement into force on 4 November, the world will have a framework, including for financing and technology transfer, that can help Africa to mitigate and adapt to this threat.
The UN chief also noted the importance of South-South and triangular cooperation drew attention to recent initiatives such as the Forum on China-Africa Cooperation and the Tokyo International Conference on African Development (TICAD), where billions of dollars for the continent’s development had been pledged.
Also addressing the meeting, Peter Thomson, President of the UN General Assembly underscored the importance of the imminent entry into force of the Paris Agreement and particularly for Africa’s prospects for sustainable development.
“The 2030 Agenda, Addis Ababa Action Agenda, and Paris Agreement together provide humanity with a universal masterplan that – if implemented urgently, effectively and at scale – will transform our world, by eliminating extreme poverty, building peaceful and inclusive societies, increasing prosperity, empowering women and girls, and combating climate change,” he said in his own remarks.
Welcoming the alignment of Agenda 2063 with the 2030 Agenda, he added: “It is a clear demonstration of African States’ commitment to driving coherent, coordinated, effective, efficient, and sustainable development.”
Mr. Thomson also highlighted the importance implementing these development agenda. He also said that the SDG Implementation Team he set up in his Office after assuming the presidency of the Assembly will work to drive the implementation of the global goals.
He also called for fostering open and inclusive societies with accountable institutions to sustain as well as to prevent and counter threats to peace and security, and stressed the importance of strengthened strategic partnerships between countries, within regional and sub-regional organizations, and with the UN, to ensure coherence and coordination of efforts.
“In many ways, Africa’s journey has been the UN journey. And as we embark upon our universal effort to transform our world, we stand shoulder-to-shoulder with Africa in this effort,” said the President of the General Assembly, noting: “A great deal of work lies ahead, but I am steadfastly confident that sustainable peace and sustainable development are within reach. Indeed, as the great Mandela once said ‘It always seems impossible until it’s done.’”
Africa Week, which this year runs from 10 to 14 October at UN Headquarters, traditionally comprises high-level discussions and events held on the margins of the General Assembly’s annual consideration of the landmark New Partnership for Africa’s Development (NEPAD), and other vital issues concerning the continent.
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WIPO workshop: African states are themselves to blame, should compile, publicize IP statistics
Each year, the World Intellectual Property Organization (WIPO) Economic and Statistics Division sends out questionnaires, which intellectual property offices worldwide are expected to complete and return.
But because the survey is voluntary, many African countries, including some Africa Regional Intellectual Property Organisation (ARIPO) member states, do not respond to the questionnaires.
According to WIPO, only 25 out of the 54 African countries have been consistently availing their data to the international body. ARIPO is comprised of 19 member states.
Mosahid Khan, head of the IP Statistics Section at WIPO, revealed that in many instances, IP offices are not aware of the importance of IP data. Reliable IP statistics are an important tool in understanding trends in policy, business, and technology worldwide.
To increase awareness, WIPO held a Sub-Regional Workshop on the Development and Effective Use of Intellectual Property Statistics for ARIPO Member States in Harare, Zimbabwe late last month. The workshop was organised by WIPO and the Japan Patent Office (JPO) in cooperation with the Government of Zimbabwe and ARIPO.
The workshop, according to Khan, aimed to build statistical capacity within IP offices, and also called on African IP offices to value the importance of IP statistics reporting.
“One of the aims of the WIPO workshop was to raise awareness of the importance of reliable IP statistics and how those statistics can help offices make evidence-based decisions,” he said.
During the workshop, it was resolved that had all African states been providing their statistical data to international and regional bodies, the gloomy picture of Africa’s contribution to global intellectual property transactions would be significantly different.
Fernando dos Santos, director general of ARIPO, while addressing the participants, added that Africa has but itself to blame for the sad picture that is portrayed globally, and urged member states to realize that statistics also help them in forecasting, planning and monitoring their IP activities.
In an email exchange, Khan added that “many African IP offices store information in paper format, making it difficult and resource intensive to extract statistical information.”
IP offices do not always have the necessary statistics skills for developing and maintaining statistical databases. A lack of resources at IP offices hampers their statistical activities.
However, IP offices are migrating to electronic format and WIPO is helping them to migrate from paper to electronic format through its Industrial Property Automation System (IPAS). This will make it easier for offices to extract statistics in the near future.
Uganda is one of the ARIPO member states that provide IP statistics to WIPO every year.
According to Kagwa John Marius, patent examiner at the Uganda Registration Services Bureau, “URSB uses IPAS, an IP administration system that automates processing of trademarks, patents and industrial designs.”
“IPAS is used to generate IP statistics with exception of copyright. The generated statistics depend on the information requested. These are then stored in a shared drive so that other officials can refer to them as and when desired. Manual registers are maintained as a requirement of the law for applications and registrations of copyright, trademarks and patents. Manual registers are also used in providing information and statistics,” said Marius.
According to Ruhima Mbaraga Blaise, division manager, IP, Office of the Registrar General of Rwanda, the country has different types of reporting which include the electronic publication of IP every month. The report or data are generated by IPAS and published in Rwanda Development Board website.
“The IPAS system has different fields of reporting, but the system is under construction and not yet finished,” Blaise said. The annual report submitted to WIPO is stored in electronic format.
WIPO does not provide any incentives to offices to complete the questionnaire, but the benefits should encourage offices to share their data.
First of all, according to Khan, offices will benefit from having high quality data. For example, offices will be able to use the data for their budgetary and planning purposes. High quality data will allow offices to forecast future demand for IP rights and future revenue, enabling them to plan better and improve the efficiency of their offices.
Data availability will allow offices to devise policy based on empirical evidence rather than on anecdotal information. A country is able to use the available data to monitor its IP activity and compare its performance against other countries.
Furthermore, WIPO’s IP data are used by many agencies for various products,such as WIPO’s Global Innovation Index, and the World Bank’s World Development Indicators. IP data availability will provide an accurate picture of member countries’ IP activity. The statistics indicate the country’s global rank for each indicator.
The statistics also associate IP activity relative to countries’ economic performance. For example, users can compare the trend of a country’s total IP filings with that of the country’s GDP.
After compiling the data, WIPO makes it available to the public through its website and various publications. This data is then used by researchers, policymakers, and the private sector.
“Submission rate varies across regions and year. For example, 127 offices shared their data with WIPO in 2014 and 2015. For 2016, we have received data from 130 offices to date,” Khan revealed.
Statistical country profiles provide information on patents, utility models, trademarks and industrial designs. They cover different dimensions of IP activity, including incoming and outgoing filings, the share of filings in different technological fields, total patents in force, and the use of international IP systems by applicants.
The IP filings and grants are divided into three categories; resident, non-resident and abroad. A resident filing refers to an application filed in the country by its own resident; a non-resident filing refers to the application filed by a foreign applicant. An abroad filing refers to an application filed by the country’s resident at a foreign office.
According to the WIPO Statistics Database, other WIPO’s statistics come from several sources that include: data compiled by WIPO during the application process of international filings through the Patent Cooperation Treaty (PCT), the Madrid System for trademarks and the Hague System for industrial designs, and data extracted from the Patent Statistical Database, (PATSTAT) database, maintained by the European Patent Office.
WIPO administers 26 treaties including the WIPO Convention.
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New ICC survey finds worsening global shortage of trade finance
Small- and medium-sized enterprises (SMEs) and African countries are suffering the most from a deepening global trade finance gap according to the ICC 2016 Global Survey on Trade Finance.
According to this year’s Global Survey – which received 357 responses from 109 countries worldwide – 61% of respondents reported a global shortage of trade finance. Only 52% of respondents reported an increase in trade finance activity, compared to 63% in 2015 and 80% in 2012. Furthermore, the perceived shortfall came predominantly from regional and global banks – 78% and 56% respectively, compared to 41% of national banks.
Small- and medium-sized enterprises
ICC Secretary General John Danilovich said: “We must emphasise the importance of trade finance. It is often forgotten – trade finance has dropped off the international agenda. We need to do more to communicate its central importance to the global economy.”
The Global Survey also shows that SMEs face 58% of total rejections – despite submitting 44% of all trade finance proposals, in contrast to 40% submitted by large corporates (33% of rejections) and 16% by multinational corporations (9% of rejections).
Impediments
In addition, 90% of Global Survey respondents cited the cost and complexity of compliance requirements relating to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulation as barriers to the provision of trade finance, up from 81% in the 2015 Global Survey. Indeed, 40% of respondents reported terminating banking relationships due to compliance requirements, with 83% expecting compliance costs to increase in 2016. Other impediments to trade finance noted by respondents included low issuing bank credit ratings (86%), low country credit ratings (82%), regulatory requirements (76%), and low obligator or company ratings (70%).
Instruments
A decrease in the use of traditional trade finance was also evident in this year’s Global Survey report, with nearly 50% of respondents reporting a decrease in commercial Letters of Credit, while nearly 35% reported an increase in supply chain finance deals.
Challenges
“Year on year, the Global Survey continues to provide a snapshot into market trends, ensuring that the trade finance industry keeps pace with an ever-changing banking environment and remains fit for purpose ,” said Daniel Schmand, Chair of the ICC Banking Commission that conducted the Survey.
“This year’s Survey highlights the challenges ahead, revealing that compliance is one of the main impediments to trade finance provision – with the majority of industry players only expecting complexity and cost to increase further over the rest of the year. Urgent action is required to limit the effects of such requirements on trade finance provision, and to help meet the needs of global SMEs, which are being disproportionately affected.”
Digitization
This year’s Global Survey also highlights the benefits that digitization brings to the industry – particularly by automating processes and reducing the cost and complexity of trade finance. Despite this, only 7.4% of banks reported that their trade finance processes had been digitized “to a great extent”, while 43% reported “very little” advancement, with global banks the most likely to embrace digital solutions. However, the Global Survey predicts an acceleration towards digitization in the years to come for the trade finance industry.
Africa
The increasing engagement of African economies and businesses in international trade is also a key focus of this year’s Global Survey. While intra-African trade has shown signs of significant growth – accounting for nearly 18% of the region’s total trade in 2014, an upward trend from 10% in 2010 – intra-African investment accounts for only 12% of the total value of investment in Africa, in comparison to 33% in Asia. In addition, 66% of businesses find access to finance a significant obstacle to trade in Africa.
“Africa has a trade finance shortage estimated at between US$110 to US$120 billion – a range far higher than the previous estimate of US$25 billion,” said Vincent O’Brien, a member of the ICC Banking Commission Executive Committee. “In particular, the unprecedented fall in commodity values has created liquidity gaps for many banks across the region. Initiatives that facilitate internal and external trade should be fully encouraged, while Africa also needs to attract much-needed financing to support trade and meet the significant trade finance deficits.”
Background
ICC Global Survey
ICC’s Global Survey – released every year since 2009 – is enriched by data, insights and expert commentary from a variety of partners, contributors and specialists in trade, financing and development. It provides a unique perspective on the foregoing issues in business and trade, and can inform the decision of bankers, financiers, business executives and entrepreneurs, as well as policymakers at national, regional and international levels – with the objective of helping to restore trade as a driver of economic growth, value-creation and development.
Data from this year’s Global Survey was put under the spotlight at a SIBOS Banking Commission meeting, which focused on the debate around trade and trade finance. In addition, the report findings aim to inform the high-level discussions at WTO, IMF and World Bank annual meetings occurring this week in Washington.
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Global FDI to fall 10-15% in 2016, road to recovery looks bumpy
Global FDI flows are expected to drop to between $1.5 and $1.6 trillion in 2016, a fall of 10% to 15% from 2015, before recovering in 2017 and 2018, according to estimates from UNCTAD’s latest Global Investment Trends Monitor.
FDI flows have been volatile in recent years, with analysts warning that this uncertainty will have its own negative impact on trade and global value chains. In the meantime, the road to the recovery of global FDI looks rocky, UNCTAD Secretary-General Mukhisa Kituyi said.
“This drop in FDI is troubling, because our global economy urgently needs investment to get it going again,” Dr. Kituyi said.
The latest data support estimates that FDI flows are falling, a forecast made last June in the World Investment Report. Declining FDI reflects the fragility of the global economy, the persistent weakness of aggregate demand, sluggish growth in some commodity exporting countries, and a slump in the profits of some multinational enterprises (MNE) in 2015.
“We forecast FDI to pick up in 2017, then to reach $1.8 trillion in 2018, but it will remain lower than the pre-crisis peak,” Dr. Kituyi said.
One striking aspect of the analysis is the diversity between the different regions. In Africa, FDI inflows are likely to return to growth in 2016. And after steep falls for the past three years, FDI flows into transition economies are expected to increase modestly too. But in developing Asia and in Latin America and the Caribbean, FDI is expected to decline. In developed economies, FDI grew sharply in 2015, but this growth is not expected to last in 2016.
This diversity holds true for mega-groupings too. For G20 countries, UNCTAD forecasts a fall in FDI flows of between 5 and 10% in 2016. APEC members are also expected to see FDI fall by 15 to 20%. However, BRICS countries could see FDI return to growth, increasing some 10%.
Overall, expectations about short term FDI flows are best described as mildly pessimistic. FDI will decline in both developing and developed countries.
Global Investment Prospects Assessment 2016-2018
Key factors influencing future FDI
Global FDI inflows are expected to decline by 10-15 per cent in 2016, reflecting the fragility of the global economy, persistent weakness of aggregate demand, effective policy measures to curb tax inversion deals and a slump in MNE profits. Elevated geopolitical risks and regional tensions could further amplify the expected downturn. FDI flows are likely to decline in both developed and developing economies. Over the medium term, global FDI flows are projected to resume growth in 2017 and to surpass $1.8 trillion in 2018.
The world economy continues to face major headwinds, which are unlikely to ease in the near term. Global GDP is expected to expand by only 2.4 per cent, the same relatively low rate as in 2015. A tumultuous start to 2016 in global commodity and financial markets, added to the continuing drop in oil prices, have increased economic risks in many parts of the world. The momentum of growth slowed significantly in some large developed economies towards the end of 2015. In developing economies, sluggish aggregate demand, low commodity prices, mounting fiscal and current account imbalances and policy tightening have further dampened the growth prospects of many commodity-exporting economies. Elevated geopolitical risks, regional tensions and weather-related shocks could further amplify the expected downturn.
The global economic outlook and lower commodity prices has had a direct effect on the profits and profitability of MNEs, especially in extractive industries. After two years of increase, profits of the largest 5,000 MNEs slumped in 2015 to the lowest level since the global economic and financial crisis of 2008-2009.
The value of announced cross-border deals may be less affected than in recent years by purely tax-driven deals, as the United States Treasury Department imposed new measures to rein in corporate inversions in April 2016. The new rules, the Government’s third wave of administrative action against inversions, make it harder for companies to move their tax domiciles out of the United States and then shift profits to low-tax countries. As a result, the $160 billion merger of pharmaceutical company Pfizer (United States) with Ireland-based Allergan Plc was cancelled.
Over the medium term FDI flows are projected to resume growth in 2017 and surpass $1.8 trillion in 2018, reflecting the projected increase in global growth.
FDI prospects in megagroupings
Megagroupings such as the G20, the TTIP, Asia-Pacific Economic Cooperation (APEC), the TPP, the RCEP and the BRICS account for a significant share of global FDI.
The economic collaboration in megagroupings is raising expectations of higher future FDI flows into these groups from intra-regional and extra-regional sources. The prospect of a large regional market, liberalization, removal of tariff barriers and complementarity of locational advantages are expected to encourage companies from inside and outside each grouping to establish a stronger presence. Megagroupings are expected to increase opportunities for market-seeking, resource-seeking and efficiency-seeking FDI and to lead to an evolving investment environment that will influence greater intra-economic group value chain activity. However, as inflows to megagroupings are currently highly concentrated, their short-term FDI prospects will continue to be influenced by few large economies.
Regional FDI prospects
Africa
FDI inflows to Africa could return to a growth path in 2016, increasing by an average of 6 per cent to $55-60 billion. This bounce-back is already becoming visible in announced greenfield projects in Africa. In the first quarter of 2016, their value was $29 billion, 25 per cent higher than the same period in 2015. The biggest rise in prospective investments are in North African economies such as Egypt and Morocco, but a more optimistic scenario also prevails more widely, for example in Mozambique, Ethiopia, Rwanda and the United Republic of Tanzania.
Depressed conditions in oil and gas and in mining continue to weigh significantly on GDP growth and investment across Africa. The rise in FDI inflows, judging by 2015 announcements, will mostly occur in services (electricity, gas and water, construction, and transport primarily), followed by manufacturing industries, such as food and beverages and motor vehicles. MNEs are indeed showing great interest in the African auto industry, with announced greenfield capital expenditure into the industry amounting to $3.1 billion in 2015. Investment into Africa’s auto industry is driven by industrial policies in countries such as Morocco, growing urban consumer markets, improved infrastructure, and favourable trade agreements. Major automotive firms are expected to continue to expand into Africa: PSA Peugeot-Citroen and Renault (France) and Ford (United States) have all announced investments in Morocco; Volkswagen and BMW (Germany) in South Africa; Honda (Japan) in Nigeria; Toyota (Japan) in Kenya; and Nissan (Japan) in Egypt.
To reduce the vulnerability of Africa to commodity price developments, countries are reviewing policies to support FDI into the manufacturing sector. East Africa has already become more attractive in this sector as a source and investment location, especially in light manufacturing. MNEs are therefore investing across Africa for market-seeking and efficiency-seeking reasons. Proximity can be beneficial, so Bahrain, France, Italy, the United Arab Emirates and the United Kingdom remain prominent as investors; but closeness to major markets in Europe and West Asia is also attracting export-oriented investors from East, South and South-East Asia, which are focusing on locations in North and East Africa such as Ethiopia.
Liberalization of investment regimes and privatization of State-owned commodity assets should also provide a boost to inflows. In Algeria, for example, Sonatrach SPA, the State-owned oil and gas company, intends to sell its interest in 20 oil and gas fields located in the country. Similarly, in Zambia, the Government is bundling State-owned businesses into a holding company and trying to attract foreign buyers. Other liberalization measures include the removal of further restrictions on foreign investments in most African countries. Kenya has moved to abolish restrictions on foreign shareholding in listed companies as competition for capital heats up among Africa’s top capital markets. The move comes just a year after the United Republic of Tanzania lifted a 60 per cent restriction on foreign ownership of listed companies, permitting full foreign control.
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WTO, IMF and World Bank leaders: “Trade must be an engine of growth for all”
WTO Director-General Roberto Azevêdo, International Monetary Fund (IMF) Managing Director Christine Lagarde and World Bank Group President Jim Yong Kim came together on 7 October to argue that the benefits of trade must be spread more widely.
They were taking part in a joint event entitled “Making Trade an Engine of Growth for All”, held at the IMF’s headquarters in Washington D.C. The three leaders also discussed the importance of making the credible and balanced case for trade.
The Director-General said:
“While I believe that trade is essential for economic growth and development around the world, I also believe that trade is imperfect. Despite the overall gains it delivers, it can have negative effects in some parts of the economy and those effects can have a big impact on some people’s lives. We have a responsibility to reflect on this and to respond.
“We have to work harder to ensure that the benefits of trade are more widely shared. We also need a clearer analysis of the challenges before us so that we can tailor our response. The charge often levelled against trade is that it sends jobs overseas, particularly in manufacturing. Trade can indeed cause this kind of displacement, and we need to respond to it. But actually trade is a relatively minor cause of job losses. The evidence shows that well over 80% of job losses in advanced economies are not due to trade, but to increased productivity through technology and innovation.
“So we need to be clear-eyed about the problems in the job market. No-one could attack technology – trade is a much easier scapegoat. But the wrong diagnosis leads to the wrong medicine. And, when trade is considered the main issue, all too often the suggested prescription is protectionism. This medicine would harm the patient, rather than help him.
“To properly address the real challenges before us we need comprehensive and crosscutting domestic policies that address education, reskilling and support to the unemployed. We also need renewed leadership to keep delivering reforms at the global level. Finally, we need to work harder to make a credible, balanced, powerful argument for trade. We must join forces with partners like the IMF and World Bank to produce new research and new arguments to help make the case. Today’s seminar marks the start of this shared effort.”
The event was moderated by Shawn Donnan of the Financial Times. Other panellists included Chrystia Freeland, Canada’s Minister of International Trade, Douglas Irwin, Professor at Dartmouth College, Lord Mandelson, former European Trade Commissioner, and Ernesto Zedillo, former President of Mexico.
Joint IMF-World Bank-WTO seminar: “How to Make Trade an Engine of Growth for All”
Remarks by DG Azevêdo
Good afternoon. It’s great to be here. Thanks to the IMF for hosting us this afternoon.
Let me start by saying that I feel a lot better making the case for trade today than I did just a year ago. Back then it felt like a lonely position to take!
It seems that ill-informed anti-trade arguments have encouraged more people to speak up for trade.
But let me say one more thing upfront. While I believe that trade is essential for economic growth and development around the world, I also believe that trade is imperfect.
Despite the overall gains it delivers, it can have negative effects in some parts of the economy. And those effects can have a big impact on some people’s lives.
We cannot ignore that, and we all have a responsibility to reflect on it and to respond.
To start with, we have to work harder to ensure that the benefits of trade are more widely shared. And we also have to work harder to make a credible, balanced, powerful argument for trade.
We need to put some rationality back into the discussion. We need a clearer analysis of the challenges before us so that we can tailor our response.
The charge often levelled against trade is that it sends jobs overseas, particularly in manufacturing.
Trade can indeed cause this kind of displacement, and we need to respond to it. But actually trade is a relatively minor cause of job losses.
The evidence shows that well over 80% of job losses in advanced economies are not due to trade, but to increased productivity through technology and innovation.
150,000 Kodak employees lost their jobs to new technologies like Instagram, which was developed by just 15. A 10,000 to one ratio.
There are currently over 3.5 million truck drivers in the US, and many more jobs supporting those drivers – providing coffee, food, motel rooms and so on.
Self-driving technology is set to dramatically transform that picture. So how are we going to adapt?
You could ask the same question about many other lines of work.
In fact, almost 50% of existing jobs in the US are at high risk of automation. And the number is higher in many developing countries.
So we need to be clear-eyed about the problems in the job market. No-one could attack technology – trade is a much easier scapegoat.
But the wrong diagnosis leads to the wrong medicine. And, when trade is considered the main issue, all too often the suggested prescription is protectionism. This medicine would harm the patient, rather than help him.
Protectionism is flawed in so many ways.
By pushing up prices, it hits the poorest the hardest.
People on high incomes would stand to lose up to 28% of their purchasing power if borders were closed to trade. But what would happen to the poorest consumers? They could lose up to 63% of their spending power.
More than that, protectionism is an ineffective and very expensive way of protecting jobs.
When the US applied tariffs on Chinese truck tyres in 2009, it was estimated that, due to higher prices, it cost the economy $900,000 to save each job. Furthermore, there were job losses in the tyre retail sector due to slumping sales.
For these reasons – and many others – protectionism is the wrong medicine.
We also need to understand better the situation in trade growth.
Last week the WTO announced revised trade forecasts. We now expect trade growth in 2016 to be just 1.7%. This would be the lowest rate of expansion since the financial crisis.
Of course the primary causes for this poor trade performance are sluggish economic growth and weak investment activity.
However, even if protectionism is actually a relatively minor factor here, it does pose big downside risk.
So we need policies which are designed to respond to these challenges. Policies that:
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promote a more inclusive trading system;
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boost trade growth; and that
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respond to the labour displacement effects of technological innovation.
New domestic policies will be essential.
Action is needed across government – not just in trade ministries. More efficient labour market policies – like reskilling – will be essential. These policies need also to provide for adjustment support to the unemployed.
We should learn from where things have been done well – such as the adjustment programmes in Singapore, Denmark and South Korea.
All of this will require political leadership. And it must be joined by leadership at the global level as well.
It’s great that Chrystia Freeland is here today, because Canada – and Prime Minister Trudeau – is one of the real champions of this issue today.
Over the last three years the WTO has made a lot of progress – delivering trillion-dollar deals, such as the Trade Facilitation Agreement and the Information Technology Agreement.
There is now a clear sense that we can do more.
As well as discussing the longstanding issues, WTO members are also looking at issues that promote inclusive and sustainable growth. The Environmental Goods Agreement is making good progress.
They are also discussing, among other things:
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how to better support SMEs;
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how to harness the power of digital trade to foster inclusive growth;
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how to lower the costs of trading (including in services); and
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how to reduce subsidies that harm the environment – like those that lead to overfishing.
We are still at the early stages of these discussions, but engagement is high and so is ambition.
So there is a lot to do.
We have to work together to make a well-informed and balanced case for trade.
We must join forces to produce new research and new arguments to help make the case. Today’s seminar marks the start of this shared effort. This is a fantastic start.
Thank you.
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AfDB to launch an Africa Investment Forum
The Board of the African Development Bank (AfDB) has approved the institution’s proposal to launch an ‘Africa Investment Forum (AIF)’ – a meeting place for investors interested in Africa.
The AIF will showcase bankable projects, attract financing, and provide platforms for investing across multiple countries. It will also serve as a unique forum for international business and social impact investors looking to transact and deploy funds in Africa and act as an avenue for connecting investors with both public and private sector projects throughout the continent.
According to Senior Vice President, Dr. Frannie Leautier: “The AIF will coordinate with other Africa investment fora and work to strengthen collaborative efforts to crowd-in necessary investment, and attract social impact financing to Africa. It will support AfDB regional member countries and potential investors through the provision of rigorous, authoritative and robust, business intelligence and analytical work on African’s competitiveness.”
The creation of the AIF was approved by the Bank’s Board of Directors on 7 October 2016, along with the creation of a Water, Human and Social Development Department; an Infrastructure, Cities, and Urban Development Department; as well as a Syndication, Financial and Technical Services Department. These are refinements to the institution’s new Development and Business Delivery Model (DBDM), which was approved by the AfDB Board of Directors on April 22, 2016.
The DBDM aims to streamline business processes to improve efficiency, enhance financial performance; increase development impact, and move the Bank’s operations much closer to its clients so as to improve delivery. The refinements were proposed by the Bank’s Management, which is making great strides in implementing the DBDM.
On approval of the proposed amendments, President Akinwumi Adesina, Chairman of the Board said, “I commend the immense support and encouragement by Board members. The new structures are well thought out and will enable the Bank to achieve its transformation objectives. The African Investment Forum is a transformational instrument that will make it possible to crowd in investments to garner the huge financing required in critical areas, with the private sector playing a crucial role,” he underscored.
The AfDB is on track with the implementation of its new structure, which will be rolled out in phases over the 2016-2018 period. The structure is designed to ensure the successful implementation of the Bank’s Ten Year Strategy and its five scaled-up core development priorities for the continent, namely the High 5s – Light up and power Africa, Feed Africa, Industrialise Africa, Integrate Africa and Improve the Quality of life of the People of Africa.