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Inequalities exacerbate climate impacts on poor and vulnerable people – new UN report
Evidence is increasing that climate change is taking the largest toll on poor and vulnerable people, and these impacts are largely caused by inequalities that increase the risks from climate hazards, according to a new report launched by the United Nations on 3 October 2016.
“Sadly, the people at greater risk from climate hazards are the poor, the vulnerable and the marginalized who, in many cases, have been excluded from socioeconomic progress,” noted UN Secretary-General Ban Ki-moon in the World Economic and Social Survey 2016: Climate Change Resilience – an Opportunity for Reducing Inequalities, produced by the UN Department of Economic and Social Affairs (DESA).
“We have no time to waste – and a great deal to gain – when it comes to addressing the socioeconomic inequalities that deepen poverty and leave people behind,” he added.
Speaking to reporters at UN Headquarters in New York on the launch of the report, the UN Assistant Secretary-General for Economic Development Lenni Montiel said: “Persistent inequalities in access to assets, opportunities, political voice and participation, and in some cases, outright discriminations leave large group of people and community disproportionally exposed and vulnerable to climate hazards.”
He added that through transformative policies, the government can “address the root causes of inequalities, to reduce the vulnerabilities of people to climate hazards, building their longer term resilience.”
On transformative policies, the Chief of Development Strategy and Policy at UN Department of Economic and Social Affairs, Diana Alarcon, said such policies could help build climate change resilience, close inequality gaps, provide access to financial services, to diversification of the livelihoods, to quality education and health and social security. She added: “it is that kind of transformation that leads to development.”
While there is considerable anecdotal evidence that the poor and the vulnerable suffer greater harm from climate-related disasters, the report determined that much of the harm is not by accident, but that it is due to the failure of governments to close the development gaps that leave large population groups at risk.
In the past 20 years, 4.2 billion people have been affected by weather-related disasters, including a significant loss of lives. Developing countries are the most affected by climate change impacts. Low-income countries suffered the greatest losses, including economic costs estimated at 5 per cent of gross domestic product.
The report argues that while climate adaptation and resilience are overshadowed by mitigation in climate discussions, they are vital for addressing climate change and achieving the Sustainable Development Goals (SDGs) by 2030.
Specifically, the report found that families living in poverty systematically occupy the least desirable land to damage from climate hazards, such as mud slides, periods of abnormally hot water, water contamination and flooding. Climate change has the potential to worsen their situation and thereby worsen pre-existent inequalities. The report shows that structural inequalities increase the exposure of vulnerable groups to climate hazards.
According to the latest data, 11 per cent of the world’s population lived in a low-elevation coastal zone in 2000. Many of them were poor and compelled to live in floodplains because they lacked the resources to live in safer areas. The data also underscore that in many countries in South and East Asia, and Latin America and the Caribbean, many people have no other option than to erect their dwellings on precarious hill slopes.
The report also found a larger concentration of poor and marginalized groups in arid, semi-arid and dry sub-humid aridity zones which cover about 40 per cent of the Earth’s land surface. About 29 per cent of the world’s population live in those areas and are facing additional challenges owing to climate change.
Transformative policies for addressing root causes
According to the report, building resilience to climate change provides an opportunity to focus resources on reducing long entrenched inequalities that make people disproportionately vulnerable to climate hazards. The best climate adaptation policies, the report states, are good development policies that strengthen people’s capacity to cope with and adapt to climate hazards in the present and in the medium term.
Looking ahead, the report recommends the use of improved access to climate projections, modern information and communications technologies, and geographical information systems to strengthen national capacity to assess impacts of climate hazards and policy options statistically.
The report voices a concern that international resources to support climate change resilience are insufficient. At last year’s Paris climate conference, informally known as COP21, countries committed to setting a goal of at least $100 billion per year for climate change mitigation and adaptation activities in developing countries. However, adaptation costs alone range from $70 billion to $100 billion per year by 2050 in the developing countries, and these figures are likely to underestimate real costs, according to the report.
The 2030 Agenda for Sustainable Development calls for transformative policies to deliver on our collective promise to build a life of dignity for all on a cleaner, greener planet.
“The challenges are enormous, but the world possesses the know-how, tools and wealth needed to build a climate-resilient future – a future free from poverty, hunger, discrimination and injustice,” the Secretary-General stressed in the report, noting the importance of the enabling policy environment as well as the support of the international community.
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Second Africa Oil Governance Summit: African oil exporters urged to invest in agriculture
Stakeholders at the just ended two-day Second Africa Oil Governance Summit have urged the governments of petroleum Exporting nations on the continent to invest heavily and properly in agriculture.
Participants to the forum argued late Tuesday that due to the volatility of petroleum prices, steps should be taken to invest aggressively in poverty reduction initiatives.
A communiqué issued at the close of the forum further requested state petroleum institutions to coordinate effectively with National Development Institutions to ensure integrated resource development for inclusive growth.
Participants at the forum organized by Accra-based energy think-tank Africa Center for Energy Policy (ACEP) identified illicit financial outflows from Africa as one of the major loopholes in the continent’s desire to be financially independent.
They therefore urged that leadership on the continent pass appropriate legislations and invest in capacity building to check illicit financial outflows particularly from the oil and gas sector.
“We demand further that our governments build appropriate partnership with the international community to design appropriate global guidelines and response to illicit financial outflows,” the communiqué read.
They were of the view that African government could channel increased domestic revenues resulting from curbing illicit financial outflows and improvement in tax administration into financing sustainable development initiatives to ensure the achievement of the Sustainable Development Goals (SDGs).
Another way African resource-rich countries lose resources, the participants observed was the indiscriminate granting of tax concessions as a means of attracting Foreign Direct Investment (FDI) into the resource exploration and exploitation sector.
They therefore urged the leaders of the various African countries to stop the blanket granting of tax concessions to extractive companies, and must review tax concession policies to appropriately target investments that bring maximum benefits to our countries.
“To this effect, we demand that our governments conduct a comprehensive evaluation of the current tax concession regime to determine its effectiveness as a tool for investment attraction,” the communiqué advocated.
Communiqué from the Second Africa Oil Governance Summit
We, participants at the second Africa Oil Governance Summit held in Accra from 26th to 27th September, 2016, having discussed issues relating to the effects of oil price shocks on the economies of African countries;
Convinced that the failure to take appropriate actions and measures to address the negative effects of oil price shocks could have adverse implications for the provision of social and economic infrastructure and services to our people;
Aware that the state of oil resource governance in Africa is still under-developed and could further compound our development challenges;
Satisfied that the African Mining Vision could facilitate Africa’s accelerated development through value linkages and regional integration;
Do hereby resolve that African governments should consider and implement the following recommendations adopted by us:
Recommendations on addressing the effect of oil price shocks
1. African governments should introduce mechanisms for addressing the effects of oil price shocks on the economies and development of African countries through diversification of their economies from overdependence on petroleum revenues; establishing sovereign wealth funds with proper governance structures to save for the future; introducing appropriate fiscal rules to stabilize the economies and creating backward, forward and side linkages with the rest of the economy.
2. African governments should increase the quality of spending at all times to ensure that budgetary shortfalls resulting from oil price shocks do not affect development. To this effect, we demand that governments should spend petroleum revenues efficiently and responsibly by ensuring that there is value for money for projects funded with petroleum revenues.
Recommendations on improving oil resource governance
3. African governments should leverage the low price era to reconsider their governance structures and build institutional frameworks to manage future oil booms
4. African governments must institute and further develop transparent processes in petroleum licensing such as open and competitive bidding processes, mandatory contract disclosure requirements and the establishment of public register of companies.
Recommendations on improving domestic resource mobilization
5. African governments should pass appropriate legislation and invest in capacity building to check illicit financial outflows particularly from the oil and gas sector. We demand further that our governments build appropriate partnership with the international community to design appropriate global guidelines and response to illicit financial outflows.
6. African governments should increase their tax efforts by improving on tax administration and widening the tax base. Governments should develop comprehensive taxpayer database to identify and track tax payers for the purposes of increasing domestic revenues for development and fostering of public accountability.
Recommendations on promoting investment attraction in Africa’s extractive sector
7. African governments should invest in increasing the capacity of our institutions to generate and protect knowledge of our geological environment and to be able to estimate the value of untapped resources to increase our negotiation position in our relationship with investors for the exploitation of our resources.
8. African governments should stop the blanket granting of tax concessions to extractive companies, and must review tax concession policies to appropriately target investments that bring maximum benefits to our countries. To this effect, we demand that our governments conduct a comprehensive evaluation of the current tax concession regime to determine its effectiveness as a tool for investment attraction.
Recommendations on promoting regional integration
9. African governments should increasingly involve their citizens in the implementation of the African Mining Vision which has been adopted as the blueprint for Africa’s natural resource development. We further demand that relevant stakeholders should make efforts to mainstream the Vision into local policies and laws.
10. The development of Africa’s natural resources should promote regional integration through the development of shared infrastructure, shared institutional and regulatory capacity, and harmonized policies and legislations.
Recommendations on promoting sustainable development
11. African governments, as a matter of urgency, should aggressively engage their citizens to ensure local ownership of the Sustainable Development Goals to improve on development accountability.
12. African governments should channel increased domestic revenues resulting from curbing illicit financial outflows and improvement in tax administration into financing sustainable development initiatives to ensure the achievement of the sustainable development goals.
13. African governments should prioritize investments in agriculture and human capital development for the use of petroleum revenues to facilitate poverty reduction and reduce income inequality. We further demand that state petroleum institutions should effectively coordinate with National Development Institutions to ensure integrated resource development for inclusive growth.
Recommendations on community engagement and development
14. Africa governments must adopt and implement policies such as Free Prior and Informed Consent to ensure the protection of community rights. Governments should collaborate with key stakeholders to consider alternative livelihood for communities affected by extraction activities.
15. African governments must develop and implement integrated community resource development plans to ensure that communities affected by extraction are developed into growth poles to support the economy.
16. African governments must incorporate into their petroleum laws requirements for Community Development Agreements to empower communities affected by extraction to effectively engage oil companies on their development priorities.
17. Stakeholders must provide financial support to communities affected by extraction to seek legal action against governments and companies destroying the environment and the livelihoods of communities.
Going forward
Although these recommendations focus on African governments as institutions that must provide leadership and resources for the implementation of the recommendations, it is equally important for other stakeholders including oil exploration and service companies, Parliament and independent institutions, Civil Society Organizations, the media and the general citizenry to effectively participate in all processes involved in the management of oil resources to ensure that our governments are held accountable for their stewardship of the resources.
We finally demand that this communiqué is widely distributed to our governments, regional institutions, parliament, African citizens and development partners.
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Wildlife enforcement networks meet to further strengthen collaboration to combat ‘industrial scale’ crime
Over 90 representatives from wildlife enforcement networks across the world met in Johannesburg during CoP17 for frank discussions on strengthening frontline cooperation and coordination to combat transnational organized wildlife and forest crime.
CITES Secretary-General John E. Scanlon has described wildlife crime as “a multi billion dollar threat to wildlife and ecosystems, people and economies, which is taking place on an industrial scale”.
He said: “Collaborative support for the people serving in the front lines and often in dangerous conditions is critical to the implementation of the Convention. When backed by powerful international agencies, wildlife enforcement networks are in a far stronger position to support the tracking, apprehension and prosecution of sophisticated criminal gangs involved in wildlife trafficking.”
The second global meeting of the Wildlife Enforcement Networks took place from 28-29 September in Johannesburg, South Africa. It was convened by the Secretariat of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and its partners in the International Consortium on Combating Wildlife Crime (ICCWC). The Consortium is a collaboration of agencies comprising CITES, INTERPOL, the United Nations Office on Drugs and Crime (UNODC), the World Bank and World Customs Organization (WCO). Regional and sub-regional wildlife enforcement networks, regional and global enforcement bodies, and intergovernmental and nongovernmental organizations attended.
The meeting was organised thanks to generous funds provided to ICCWC by the Department of State of the United States of America and followed the first global meeting held in the margins of CITES CoP16 in Thailand, which was also funded by the United States.
Ambassador Judith Garber, Acting Assistant Secretary, Bureau of Oceans and International Environmental and Scientific Affairs, US Department of State said: “We have come a long way since we last met in Bangkok in 2013 and we can identify common elements of success: expanded avenues of communication, dedicated enforcement and prosecutorial officials, targeted outreach to the public, improved training based on similar curriculums, and the commitment of political leaders to treat wildlife trafficking as the serious crime that it is.”
Last week’s meeting sought to identify ways of enhancing the effectiveness of regional and sub-regional networks in supporting member states implement their commitments under CITES and other international agreements. Coordinating and strengthening national, regional and cross regional responses to combat wildlife crime was also on the agenda.
Participants agreed to explore ways of enhancing collective law enforcement efforts through the use of secondments, twinning programmes, mentorships or attachés, as well as strengthening links and cooperation with relevant regional law enforcement bodies.
With the aim of further strengthening WENs, delegates considered best practices and lessons learned from existing networks, and new opportunities for promoting the use of tools and services available to strengthen law enforcement efforts.
The two-day meeting benefited from the collective perspective of a number of non-governmental organizations that shared lessons learned and recommendations based on their work supporting regional networks.
Key outcomes of the meeting included:
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A request for ICCWC to convene an experts’ group workshop to develop guidelines for the establishment of new networks and the strengthening of existing networks; and,
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A request for networks to strengthen their engagement with relevant regional law enforcement bodies, as well as to encourage their member states to make use of existing tools and services such as those provided by the Consortium.
The full report of the meeting will be made available on the ICCWC website.
Since 2010, ICCWC partners have scaled up their collective efforts to ensure that wildlife crimes are met with a more coordinated law enforcement response. Practical interventions include the development of training materials on anti-money laundering with a focus on wildlife crime and the implementation of the ICCWC Wildlife and Forest Crime Analytic Toolkit. The Toolkit provides a comprehensive evaluation of every aspect of national responses to wildlife crime, so that targeted responses can be developed based on the findings. ICCWC has also developed an indicator framework on wildlife and forest crime, for countries to measure and monitor their enforcement efforts, responses and capacity to counter wildlife crime.
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Gloves off as sugar regulator vows bitter war against cartels
The sugar directorate has put on boxing gloves vowing to kick out cartels distorting the supply chain, and who have been blamed for the recent surge in retail prices.
The directorate says a web of tightly-knit middlemen who have exclusive rights to buy sugar for distribution, are controlling the price at retail outlets.
The move follows the recent increase in consumer prices of sugar with a kilogramme retailing at an average of Sh135 from Sh120 two months ago.
The Sugar directorate has now ordered factories to sell the commodity directly to farmers, youth and women groups, reversing the long-standing tradition where millers have only been dealing with a handful of distributors.
Tough conditions put in place by sugar millers have made it hard for many business people to venture into the lucrative trade that mainly comprises barons keen on controlling the shelf price of the essential commodity.
For one to become a distributor, a factory requires a capital of over Sh10 million and he/she should have a warehouse to store the commodity.
“As a solution to the distributor problem and the lack of regulations to check hoarding and inflating prices, I have directed millers to open up their distribution channels,” said Mr Alfred Busolo, director general of Food and Agriculture Authority (AFA).
“We should now see youth and women groups being allowed to trade in branded sugar in all areas of the country. Farmers as well shall be allocated sugar on check-off at the prevailing factory prices.”
To avoid handling cash, Mr Busolo said factories would be encouraged to use mobile channels.
At the moment, sugar directory has no regulations in place to control activities of distributors, who at times end up hoarding the commodity to create an artificial shortage and hence push up prices.
The authority has written to millers instructing them to furnish the directorate with their details in order to shed light on their activities.
Mr Busolo has also urged millers to open depots in towns closer to the locals.
“Ideally if Kenya National Trading Corporation (KNTC) was active we should have checked the power of the distributors who fix prices arbitrarily,” he said.
Before liberalisation of the sub-sector in early 1990s, all sugar manufactured in the country was sold to KNTC, which was responsible for distribution throughout the country.
Kenya Sugar Board
But with the advent of a free market, factories can now sell sugar through appointed distributors and wholesalers.
This is not the first time that the authorities have attempted to eliminate distributors from the sugar supply chain.
The now defunct Kenya Sugar Board (KSB) had planned in 2014 to get rid of the distributors from the supply chain.
“The only way to make the consumer prices realistic is by eliminating middlemen and allowing the chain stores and wholesalers to acquire the commodity directly from the factories,” said KSB then.
In 2013, the government moved to root out cartels with a directive that millers suspend all exclusive contracts with distributors, but this only lasted for a while.
The State noted that the move would encourage direct sale of sugar to any buyer and/or retailer and get rid of market distortions that contribute to the unjustified pricing.
Between 1998 and 2001, Kenya experienced what was perceived to be the biggest crisis to hit the sub-sector. This was characterised by the near-collapse of the industry as most sugar mills suffered serious financial crises. The cause was often attributed to managerial inefficiency and unregulated importation of sugar as a result of liberalisation.
Some of the retail outlets have also come under fire with the regulator accusing the retail chain of creating an artificial shortage in the market in order to unjustifiably increase prices.
The directorate says the distributors have been hoarding and rationing sugar to create an artificial shortage. This has led to the prices shooting up as high as Sh145 at a supermarket. Others are selling at Sh135.
The Competition Authority of Kenya (CAK) has moved in quickly to conduct investigations on the allegations levelled against the retailer.
The move follows the regulator’s request to the competition watchdog to investigate the outlet over anti-competitive behaviour.
Sugar regulator imported more than 15,000 tonnes of the commodity last week to tame the rising cost even as retailers complain of an acute shortage in the market.
“There is a serious sugar supply crisis in the market. We are trying our best to source as we also maintain low prices,” said Naivas Chief Commercial Officer Willy Kimani.
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tralac’s Daily News Selection
The selection: Monday, 3 October 2016
President Kenyatta has announced, today, that @AMB_A_Mohammed is vying for the position of @_AfricanUnion Commission Chair
Concluding today, in Addis: draft Services Sector Development Programme workshop: The objectives of the meeting are to: review and enrich the draft Services Sector Development Programme (SSDP), develop capacity building for member states and RECs in tailoring the SSDP to their respective jurisdictions, provide an overview of the services negotiations under the CFTA.
Starting today, in Addis: Third meeting of the Continental Free Trade Area Negotiating Forum: The main objective of the third meeting of the CFTA Negotiating Forum is to consider and adopt Terms of Reference for the remaining technical working groups; and to consider and adopt the modalities for the CFTA negotiations in trade in goods and trade in services. The main expected results are therefore adopted ToRs for the remaining technical working groups (on rules of origin, sanitary and phytosanitary measures, trade remedies and customs procedures and trade facilitation) as well as an adopted modalities for the CFTA negotiations in trade in goods and trade in services.
Southern Africa: How does an illegal gold miner get money across the border? (GroundUp)
“Our money transfers are unregistered in South Africa. They are built on simple cellular phone technology and cross-border trust,” explains a dealer, who operates from Springs. “Our customers are dozens of immigrants with no passports – irregular gold miners and foreign girls working in Johannesburg beauty salons. We think our fees are 50% lower than the likes of Western Union. Receivers, across the borders, in Zimbabwe and Mozambique, get paid in goats, cattle or dollars.” He is one of a set of cross-border entrepreneurs that has arisen in the wake of the flow of immigrants from neighbouring countries to South Africa’s informal gold mining towns like Springs, 50 km from Johannesburg, and to the giant farms in Limpopo where Zimbabwean and Mozambican immigrants pick fruit He explains how the cross-border informal money transfers work, entirely built on trust. “The hard-living foreign gold miners, called Ma Gweja, surrender their earnings to us, the carefully vetted Gweja cross-border money transfers agents. We are their countrymen after all,” says Miyambo.
Botswana’s Letshego drives financial inclusion in Mozambique (Mmegi)
Letshego Holdings Limited continues to make great strides in delivering on its mandate to ensure simple, affordable and appropriate financial solutions across Africa. Mozambique, a key market for the group, remains central to this, as evidenced by the launch of the Letshego “BlueBox”, which will be a unique proposition of the agency banking model of the business. Banco Letshego comprises 12 branches across all provinces in the country and serving over 60,000 customers through a hub and spoke model.
Note: the Second East Africa Microfinance Summit will take place in Dar es Salaam, 2-4 November
Standard Chartered launches ‘Banking the ecosystem’ strategy to support global trade
Multinational corporations have built their businesses around sophisticated supply chains to achieve stable production volumes on one hand, and robust sales and distribution channels on the other. These supply chains have become increasingly complex over recent years as production opportunities in lower cost economies of Southeast Asia and Africa emerge and patterns of global demand evolve. As supply chains evolve, so do the banking services that companies require to mitigate risk, maintain liquidity across the supply chain and facilitate growth. This report, commissioned by Standard Chartered Bank, considers how supply chains are changing, based on the experience of sample industries, and features direct insights from treasurers on the implications of these changes.
Participation in global value chains in Latin America: implications for trade and trade-related policy (pdf, Working Party of the Trade Committee, OECD)
Latin America has a dense web of intra and extra-regional preferential trade agreements. In principle, this means that much of trade faces low border barriers. Nevertheless, the overlap, duplication and conflicts among the different rules and standards governing trade under these PTAs are likely reducing the benefits of these agreements. This is prompting renewed interest in the idea of linking or harmonising the various Latin American PTAs. To help inform this debate, this study analyses the impact of rules of origin and non-tariff measures on GVC integration in the region, and examines relevant harmonisation initiatives.
East African trade policy dynamics, perspectives:
Region urged to expedite anti-counterfeit law (New Times): EAC member states should hasten the finalisation and enactment of the EAC Anti-Counterfeit Law in order to establish a regional framework to fight counterfeits, stakeholders have recommended. This was raised at the end of the second regional anti-illicit trade conference in Nairobi, Kenya, recently which was organised by the East African Business Council, in partnership with the EAC Secretariat. Patricia Hajabakiga, a member of East Africa Legislative Assembly Committee on Communication, Trade and Investment, said the EAC Anti-Counterfeit Bill was still with the Council. “It has been there for a long time. It is a big problem since the Customs Management Act cannot adequately deal with the magnitude of the problem. It was in the past tabled in the House but was withdrawn by the Council to make it more comprehensive,” the legislator said.
New EAC rules of origin ‘will spur regional manufacturing industry’ (New Times): Different stakeholders were speaking during the 7th session between the Ministry of East African Community and the Rwandan private sector, last week. The meeting sought to learn from the private sector’s experience on the implementation of the revised EAC Rules of Origin, and to share updates ahead of another meeting later this month that is envisaged to carry out a comprehensive review of Common External Tariff. Fred Nuwagaba, a senior customs officer at Rwanda Revenue Authority, warned the business community that, recently, there have been problems with people from some EAC member states who export cooking oil to Rwanda after only purifying and packaging crude oil commonly imported from Asia, a practice he said does not qualify for the preferential treatment under the new rules of origin.
Rwanda: New committee to facilitate trade (New Times): The National Trade Facilitation Committee, to be headed by the Ministry of Trade and Industry, was announced at a meeting in Kigal. The committee brings together the private sector, civil society and public sector representatives as well as trade-related service suppliers to discuss issues of trade and trade related policies and agree on better approaches to reform and improve. The committee will be deputised by the Rwanda Revenue Authority as a key implementing agency. It was inaugurated following a three-day training and awareness workshop of the members held in Kigali that sought to build its capacity to ensure all members are well equipped to deal with the assigned responsibilities and deliver on the expected results.
Uganda, Kenya in spat over beef, sugar (The East African): Uganda and Kenya are both being accused of trade protectionism, with Kampala denying market access to Kenya’s beef and Nairobi restricting the amount of sugar imports from Uganda. Ugandan authorities are reluctant to lift the ban on Kenyan beef because the matter is still a “very sensitive one.” The East African has established that politics rather than technical concerns is at the centre of the Uganda-Kenya beef and sugar talks. Kenyan beef traders have been out of the Ugandan market for over 15 years. [Now Kenya makes plans to produce industrial sugar]
South Africa: August 2016 merchandise trade statistics (SARS)
The R8.56bn trade balance deficit for August 2016 is attributable to exports of R90.24bn and imports of R98.80bn. Exports for the year-to-date grew by 9.0% from R679.27bn to R740.70 billion. Imports for the year-to-date of R733.29bn are 2.6% more than the imports recorded in January to August 2015 of R714.37bn. The world zone results from July 2016 (revised) to August 2016 are:
Namibia: Second Quarter Bulletin (pdf, BoN)
Merchandise trade balance: During the second quarter of 2016, the merchandise trade deficit declined on an annual basis, due to an increase in the value of merchandise exports, coupled with a reduction in import payments, while it deteriorated, quarter-on-quarter. The trade deficit declined significantly, year-on-year, by 32.1% to N$8.4bn (Table 5.1). This decline was mainly supported by increased export earnings, which rose by 8.3% to N$13.7bn, combined with a drop in the import bill. In this regard, imports fell by 11.6% to N$22.1bn, reinforcing the improvement of the deficit in the trade balance. On the exports front, earnings from uranium, manufactured products and re-exports contributed to the increase in exports. At the same time, the decline in import payments were attributed to a reduction in expenditure on major import categories, such as fuels, vehicles, aircrafts and vessels. Conversely, the trade deficit widened noticeably by 44.0%, on a quarterly basis, mainly due to a decline in export receipts relative to the growth in the import bill.
Zimbabwe: National Competitiveness Commission Bill gazetted (The Chronicle)
The Government has gazetted the National Competitiveness Commission Bill as it moves to expedite the creation of an efficient and cost-effective business operating environment, an official has said. The development fundamentally paves way for the repeal of the National Incomes and Pricing Act Chapter 14:32 and operationalisation of the NCC. The NCC’s role - among others- is to co-ordinate government policy related to the business sector.
Mozambique may solve current crisis by selling gas in advance (Club of Mozambique)
Mozambique’s Deputy Minister of Industry and Trade, Rajendra de Sousa, believes that Mozambique can can solve its current debt crisis through advance sales of natural gas. Interviewed by the Portuguese daily “Publico”, Sousa said the crisis is structural, but made worse by the public debt. This debt soared by some 20% with the government guarantees granted in 2013-2014 for over $2bn worth of loans contracted by three quasi-public companies. But Sousa was confident that this debt could be swiftly cleared by sales in advance of the huge gas reserves discovered in the Rovuma Basin, off the coast of the northern province of Cabo Delgado. The gas discoveries have been made in blocks where the operators are the Texas-based company Anadarko, and the Italian energy company ENI. But so far all the gas remains at the bottom of the sea – neither Anadarko nor ENI have yet made their final investment decision, on which will depend the billions of dollars required to build the factories making liquefied natural gas.
West African corridors: studies highlight improved performance, need for short term high impact projects to consolidate gains (AfDB)
The study, conducted in four countries – Côte d’Ivoire, Ghana, Togo, Burkina Faso – along the Abidjan-Ouagadougou corridors; Tema-Ouagadougou; Lomé-Ouagadougou, found that all three corridors have seen improvements in both costs and time. The average corridor costs have gone down by 16% and average corridor times by 6% over the last 4 to 8 years. In terms of cost distribution, the survey indicated that trucking costs absorb about 65% of the total corridor transport costs; ports take 20% while border crossings and clearance at the inland terminal account for about 15% of the total corridor costs for import. The study found that export is generally less expensive and faster than import. Other indicators were also shared such as process and travel time to move goods along the corridors and rail versus road indicators. [Download the draft reports, conducted by SAANA, here]
Deepening regional integration in Africa: maximizing the utilization of AGOA in ECOWAS (Wilson Centre)
In answering the above questions, it is crucial for the U.S. government to continue expanding on its strategy and trade capacity-building in Africa. The most important need is assistance in deepening regional integration in ECOWAS (and other RECS), particularly in harmonizing the processes of the Free Trade agreement and especially the removal of tariffs on industrial products. Moreover, it is essential that African governments establish effective dialogue with the private sector, civil society, and policymakers to chart new and robust ways to be relevant in the new trade policy environment. [The analyst: George Boateng] [For the full set of policy options and recommendations, see the companion Policy Brief]
Selected highlights from the WTO Public Forum 2016:
How and why to rethink data flow restrictions (ICC): In a new set of recommendations issued at the WTO Public Forum, ICC calls on policymakers to consider the detrimental effects to GDP growth from applying blanket restrictions and highlights the importance of creating trusted environments to better enable use of information and communication technologies, and related data flows, on which companies of all sizes rely. To help policymakers address negative implications for growth from blanket restrictions to data flows, the new ICC primer outlines seven steps that governments can take to ensure citizens and companies realise the full potential of the Internet as a platform for innovation and economic growth. The recommendations are: [Trade in the digital economy: a ICC primer on global data flows for policymakers (pdf)]
Related: MSMEs and e-commerce: preliminary report (pdf, WTO Business Focus Group 1); Digital customs for improved border management and e-commerce opportunities: roundtable at WTO Public Forum 2016
The gender dimensions of services (ICTSD)
This paper provides an in-depth analysis of the gender-based constraints faced by women in accessing employment and business opportunities in trade in services, and the wider service sector. Additionally, the paper offers a set of policies that support equal access to the benefits of services growth for both genders, and create an inclusive policy and regulatory environment that reduces the gender-based constraints faced by women wage-workers and entrepreneurs in the services sector. [The analysts: Julia Lipowiecka, Tabitha Kiriti-Nganga]
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South Africa Merchandise Trade Statistics for August 2016
South Africa posts 8.6 billion-rand trade deficit in August
South Africa’s trade balance swung to a deficit in August after three months of surpluses as shipments of precious metals and stones, which include gold and diamonds slumped.
The 8.6 billion-rand ($619 million) deficit compares with a revised surplus of 5 billion rand in July, the Pretoria-based South African Revenue Service said in an e-mailed statement on Friday. The median of 10 economist estimates compiled by Bloomberg was for a surplus of 1.6 billion rand.
South Africa recorded its first quarterly trade surplus in a year in the three months through June as mining exports surged, helping to narrow the deficit on the current account, the broadest measure of goods and services, to 3.1 percent of gross domestic product from 5.3 percent. The smaller current-account gap would benefit the rand, which has gained 12 percent against the dollar this year after losing 25 percent of its value against the U.S. currency in 2015.
“Even though this month number is not good, the trend in 2016 so far is definitely better than last year, which is supportive of the rand,” Christie Viljoen, an economist at KPMG LLP in Cape Town, said by phone. “It helps keep the current-account deficit lower.”
Cumulative Surplus
The cumulative surplus for the first eight months of 2016 is 7.4 billion rand compared with a shortfall of 35.1 billion in the same period last year.
Exports decreased by 5.5 percent to 90.2 billion rand as the shipments of precious metals and stones fell by 30 percent and vehicles and transport equipment declined by 10 percent. Imports rose by 9.2 percent to 98.8 billion rand as the purchases of mineral products, which include oil, increased by 24 percent.
The rand strengthened 0.7 percent to 13.7920 per dollar as of 3:57 p.m. in Johannesburg. Yields on rand-denominated government bonds due December 2026 fell one basis point to 8.66 percent.
Monthly trade figures are often volatile, reflecting the timing of shipments of commodities such as oil and diamonds.
The South African Revenue Service (SARS) has released trade statistics for August 2016 recording a trade balance deficit of R8.56 billion. The cumulative trade balance surplus (01 January to 31 August 2016) of R7.41 billion is an improvement on the deficit for the comparable period in 2015 of R35.10 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).
Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The R8.56 billion trade balance deficit for August 2016 is attributable to exports of R90.24 billion and imports of R98.80 billion. Exports for the year-to-date grew by 9.0% from R679.27 billion to R740.70 billion. Imports for the year-to-date of R733.29 billion are 2.6% more than the imports recorded in January to August 2015 of R714.37 billion.
On a year-on-year basis, August 2016’s R8.56 billion trade balance deficit is an improvement from the deficit recorded in August 2015 of R10.45 billion. Exports of R90.24 billion are 3.6% more than the exports recorded in August 2015 of R87.10 billion. Imports of R98.80 billion are 1.3% more than the imports recorded in August 2015 of R97.55 billion.
July 2016’s trade balance surplus was revised downwards by R0.18 billion from the previous month’s preliminary surplus of R5.22 billion to a revised surplus of R5.04 billion as a result of ongoing Vouchers of Correction (VOC’s).
Exports decreased from July 2016 to August 2016 by R5.29 billion (5.5%) and imports increased from July 2016 to August 2016 by R8.31 billion (9.2%).
Trade highlights by category
The main month-on-month export movements (R’ million):
Section: | Including BLNS: | |
Precious Metals & Stones | - R 5 567 | - 30% |
Vehicles & Transport Equipment | - R 1 408 | - 10% |
Machinery & Electronics | - R 544 | - 6% |
Wood Pulp & Paper | + R 1 039 | + 66% |
Mineral Products | + R 619 | + 4% |
Vegetable Products | + R 313 | + 5% |
Optical Photographic Products | + R 273 | + 36% |
The main month-on-month import movements (R’ million):
Section: | Including BLNS: | |
Mineral Products | + R 3 143 | + 24% |
Precious Metals & Stones | + R 1 571 | + 205% |
Machinery & Electronics | + R 1 044 | + 5% |
Chemical Products | + R 1 018 | + 11% |
Vegetable Products | + R 834 | + 29% |
Trade highlights by world zone
The world zone results from July 2016 (Revised) to August 2016 are given below.
Africa:
Trade Balance surplus: R14 663 million – this is a 4.4% decrease in comparison to the R15 339 million surplus recorded in July 2016.
America:
Trade Balance deficit: R4 574 million – this is a 442.6% increase in comparison to the R843 million deficit recorded in July 2016.
Asia:
Trade Balance deficit: R16 505 million – this is a 34.2% increase in comparison to the R12 303 million deficit recorded in July 2016.
Europe:
Trade Balance deficit: R6 660 million – this is a 0.3% decrease in comparison to the R6 677 million deficit recorded in July 2016.
Oceania:
Trade Balance surplus: R 83 million – this is an improvement in comparison to the R 542 million deficit recorded in July 2016.
Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The trade data excluding BLNS for August 2016 recorded a trade balance deficit of R18.09 billion. This was a result of exports of R77.67 billion and imports of R95.76 billion.
Exports decreased from July 2016 to August 2016 by R6.58 billion (7.8%) and imports increased from July 2016 to August 2016 by R7.89 billion (9.0%).
The cumulative deficit for 2016 is R62.11 billion compared to R104.40 billion in 2015.
Trade highlights by category
The main month-on-month export movements (R’ million):
Section: | Excluding BLNS: | |
Precious Metals & Stones | - R 6 109 | - 33% |
Vehicles & Transport Equipment | - R 1 628 | - 13% |
Machinery and Electronics | - R 657 | - 9% |
Wood Pulp & Paper | + R 1 013 | + 76% |
Mineral Products | + R 661 | + 4% |
Optical Photographic Products | + R 253 | + 42% |
The main month-on-month import movements (R’ million):
Section: | Excluding BLNS: | |
Mineral Products | + R 3 152 | + 24% |
Precious Metals & Stones | + R 1 543 | + 313% |
Machinery and Electronics | + R 1 071 | + 5% |
Vegetable Products | + R 828 | + 30% |
Chemical Products | + R 755 | + 8% |
Trade highlights by world zone
The world zone results for Africa excluding BLNS from July 2016 (Revised) to August 2016 are given below.
Africa:
Trade Balance surplus: R5 132 million – this is a 23.2% decrease in comparison to the R6 681 million surplus recorded in July 2016.
Botswana, Lesotho, Namibia and Swaziland (Only)
Trade statistics with the BLNS for August 2016 recorded a trade balance surplus of R9.53 billion. This was a result of exports of R12.56 billion and imports of R3.03 billion.
Exports increased from July 2016 to August 2016 by R1.29 billion (11.5%) and imports increased from July 2016 to August 2016 by R0.42 billion (16.1%).
The cumulative surplus for 2016 is R69.51 billion compared to R69.30 billion in 2015.
Trade Highlights by Category
The main month-on-month export movements (R’ million):
Section: | BLNS: | |
Precious Metals & Stones | + R 542 | +1631% |
Vehicles & Transport Equipment | + R 220 | + 16% |
Prepared Foodstuff | + R 132 | + 12% |
Machinery & Electronics | + R 114 | + 7% |
Vegetable Products | + R 79 | + 13% |
The main month-on-month import movements (R’ million):
Section: | BLNS: | |
Chemical Products | + R 263 | + 66% |
Live Animals | + R 103 | + 54% |
Textiles | + R 44 | + 10% |
Precious Metals & Stones | + R 28 | + 10% |
Machinery & Electronics | - R 27 | - 9% |
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New EAC rules of origin ‘will spur regional manufacturing industry’
The revision of rules of origin for products manufactured within the East African Community (EAC) have encouraged investment and boosted manufacturing sector within the region, the business community and officials have said.
In Article 1 of General Agreement on Tariff and Trade, rules of origin are defined as laws, regulations and administrative determinations of general application applied by any member to determine the country of origin of goods leading to the granting of tariff preferences.
Different stakeholders were speaking during the 7th session between the Ministry of East African Community and the Rwandan private sector, last week.
The meeting sought to learn from the private sector’s experience on the implementation of the revised EAC Rules of Origin, and to share updates ahead of another meeting later this month that is envisaged to carry out a comprehensive review of Common External Tariff (CET).
The 25 revised EAC rules of Origin (RoO) came into effect on January 23, 2015.
While expounding on the revised rules, Fred Nuwagaba, a senior customs officer at Rwanda Revenue Authority (RRA), said they are more flexible, clearer and more explanatory.
“They encourage investment in manufacturing, encourage investment in agriculture and aim at boosting processing industry in the region.”
He warned the business community that, recently, there have been problems with people from some EAC member states who export cooking oil to Rwanda after only purifying and packaging crude oil commonly imported from Asia, a practice he said does not qualify for the preferential treatment under the new rules of origin.
“If you want to bring cooking oil that qualifies, import seeds from outside EAC, crush them in EAC, refine them and then ship them into a member state,” he said.
“The new rules of origin seek to encourage people to invest in agriculture to plant these seeds where the cooking oil comes from. Invest in growing sunflower, soya, groundnuts, oil palms, etc and grow them on a large scale. Let’s make our own oil.”
The president of Private Sector Federation (PSF), Benjamin Gasamagera, said; “I think this is an opportunity to think of ways we can work locally so that the new rules benefit us further.
“This subject presents opportunities for local and regional manufacturers. It shows us that we have to change our thinking and operations so as to get prepared because these rules of origin help regional businesses work within the region so as to get the incentives compared to imported products,” he said.
The Minister for EAC Affairs, Valentine Rugwabiza, called for value addition on locally-manufactured products to benefit from the preferential tariffs.
“We should focus on adding value to our products, with a view to increase the exportation of high-end products and increase competitiveness. We want our manufacturing sector to grow, we want to be able to tap into the regional market, to consume more of what we produce,” she said.
According to the rules, the criteria for a product to be offered a certificate of origin include being wholly produced locally, meaning that the product with all its contents are 100 per cent originating from EAC.
The new rules also provides exemption from the certificate of origin to goods of less than $500 in value from any EAC partner state.
RRA commissioner-general Richard Tusabe said EAC is struggling in terms of imports vis-à-vis exports but that the new rules of origin are coming in to address some of the macroeconomic challenges that face the region.
Tusabe said CET guarantees zero per cent tax on raw materials, 10 per cent for intermediate goods and 25 per cent for finished goods.
In 2015, Rwanda’s total trade with EAC decreased by 9.03 per cent from $651.85 million in 2014 to $592.96 million, according to figures from National Institute of Statistics of Rwanda.
» Download: EAC Customs Union Rules of Origin rules, 2015 (PDF, 792 KB)
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Region urged to expedite Anti-Counterfeit Law
East African Community (EAC) member states should hasten the finalisation and enactment of the EAC Anti-Counterfeit Law in order to establish a regional framework to fight counterfeits, stakeholders have recommended.
This was raised at the end of the second regional anti-illicit trade conference in Nairobi, Kenya, recently which was organised by the East African Business Council (EABC), in partnership with the EAC Secretariat.
“Once done, there should be a framework through which the Community collaborates to combat illicit trade issues, similar to the EAC Standards Committee,” reads part of the recommended policies and action points.
Among others, the conference noted that Partner States without a regulatory framework to address illicit trade should complete on-going discussions on draft policies or legislations.
Meanwhile, Sunday Times has learnt that efforts to have such legislation finalised and enacted have dragged on for years, with the Council of Ministers largely blamed for the hold-up.
Patricia Hajabakiga, a member of East Africa Legislative Assembly (EALA) Committee on Communication, Trade and Investment (CTI), said the EAC Anti-Counterfeit Bill was still with the Council.
“It has been there for a long time. It is a big problem since the Customs Management Act cannot adequately deal with the magnitude of the problem. It was in the past tabled in the House but was withdrawn by the Council to make it more comprehensive,” the legislator said.
“The Assembly has reminded them [Council] several times,” Hajabakiga explained, recalling that the former withdrew the Bill during the second Assembly (2007-2012).
According to Rwanda’s ministry of EAC affairs, the matter was considered by the 16th Meeting of the sectoral council on legal and judicial affairs (SCLJA) in September 2014, in Arusha, Tanzania, which indicated that “the Bill ascribed some anti-counterfeiting functions” to the EAC Competition Authority which by then was not operational.
The SCLJA decided to reject the Bill and merged its contents with a section of the EAC Competition Act 2006.
“This means in effect that the Competition Act was amended. That’s what happened; the Meeting of legislative drafters prepared the EAC Competition (Amendment) Bill 2014 to incorporate Anti-Counterfeit matters,” reads an email from the ministry.
The ministry also says that in April 2015, the 31st meeting of the Council of Ministers considered this matter but “was sceptical” about the decision of the SCLJA.
“After consultations with EALA, it was noted that counterfeiting matters are linked to intellectual property protection and that was not the purpose of that particular chapter in the EAC Competition Act 2006.”
“Therefore, EALA suggested that counterfeiting was a serious issue that needed a stand-alone legislation to effectively combat it in the region. The Council took note of the above development.”
The EAC Secretariat and Partner States are listed as the responsible entities as per the Nairobi conference’s recommendations. Furthermore, June 2017 is the proposed timeframe for the task to be accomplished.
Regional ministers of justice are not members of the Council whose membership constitutes Ministers whose dockets are responsible for regional co-operation but, sooner or later, once Council has concluded its scrutiny of Bills, ministers of justice are informed so as to check legal aspects.
Thus, even though he was not aware of issues surrounding the delayed enacting of the legislation, Justice Minister Johnston Busingye told Sunday Times that such legislation would be a good thing for the region.
“I don’t know about this delay but I think it would be a good thing for the whole East African Community to agree on an Anti-Counterfeit Law that would be applicable across the region and put a stop to counterfeits,” Busingye said.
The Nairobi meeting is recommending that the judiciary in the region consider continuous capacity building, in terms of training and increased manpower to strengthen the ability of the judiciary to handle illicit trade cases.
“EAC Partner States should harmonise consequence management, both fines and jail terms, to curtail relocation of the vice to the more lenient States,” the conference noted.
Harmonise intellectual property laws
Furthermore, the Nairobi conference noted that by March next year, the EAC should harmonise Intellectual property (IPR) laws across Partner States to enable mutual recognition of IPR registered in any of the countries, and the EAC to be recognized as one IP territory for purposes of enforcement.
The private sector is, in so doing, required to carry out a study to establish the various IPR regimes across the EAC. The Kenya Association of Manufacturers (KAM) is already undertaking this study and EABC will team up with the former to take it forward.
When regional officials convened in Arusha for a meeting on the proliferation of anti-counterfeiting legislation, in March 2010, they concluded that the draft EAC anti-counterfeiting Policy and Bill go beyond the minimum requirements of the agreement on trade-related aspects of intellectual property rights (TRIPS) and provide for intellectual property rights enforcement beyond developmental interests.
The meeting observed that these documents fail to distinguish between various IPR infringements, contain overbroad and imprecise definitions and do not consider the impact of the foreseen measures on access to knowledge, agriculture and public health.
“The ambiguity and poor quality of the drafts evidently require revisions, but the more important question is whether the Policy and Bill are needed at all. The IP protection standards they aim to set are not adequate to the needs of the EAC countries, which are all LDCs, or developing countries,” the 2010 meeting concluded.
“If adopted, these documents will supersede national IP laws and will deprive the EAC states of their right to form flexible national policies that reflect the countries’ needs.”
The Organization for Economic Co-operation and Development (OECD) estimates that EAC governments lose over US$ 500 million in tax revenues annually due to the influx of counterfeit and pirated products alone.
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Tackling inequality vital to ending extreme poverty by 2030
Inequality reduction increasingly important to continued progress in helping the world’s poorest
A new World Bank study on poverty and shared prosperity says that extreme poverty worldwide continues to fall despite the lethargic state of the global economy. But it warns that given projected growth trends, reducing high inequality may be a necessary component to reaching the world’s goal of ending extreme poverty by 2030.
According to the inaugural edition of Poverty and Share Prosperity – a new series that will report on the latest and most accurate estimates and trends in global poverty and shared prosperity annually – nearly 800 million people lived on less than US$ 1.90 a day in 2013. That is around 100 million fewer extremely poor people than in 2012. Progress on extreme poverty was driven mainly by East Asia and Pacific, especially China and Indonesia, and by India. Half of the world’s extreme poor now live in Sub-Saharan Africa, and another third live in South Asia.
In 60 out of the 83 countries covered by the new report to track shared prosperity, average incomes went up for people living in the bottom 40 percent of their countries between 2008 and 2013, despite the financial crisis. Importantly, these countries represent 67 percent of the world’s population.
“It’s remarkable that countries have continued to reduce poverty and boost shared prosperity at a time when the global economy is underperforming – but still far too many people live with far too little,” said World Bank Group President Jim Yong Kim. “Unless we can resume faster global growth and reduce inequality, we risk missing our World Bank target of ending extreme poverty by 2030. The message is clear: to end poverty, we must make growth work for the poorest, and one of the surest ways to do that is to reduce high inequality, especially in those countries where many poor people live.”
Taking on Inequality
Contrary to popular belief, inequality between all people in the world has declined consistently since 1990. And even within-country inequality has been falling in many places since 2008 – for every country that saw a substantial increase in inequality during this time period, two others saw a similar decrease. Inequality is still far too high, however, and important concerns remain around the concentration of wealth among those at the top of the income distribution.
Noting “no room for complacency”, the reports finds that in 34 of 83 countries monitored, income gaps widened as incomes grew faster among the wealthiest 60 percent of people than among the bottom 40. And in 23 countries, the bottom 40 saw their incomes actually decline during these years: not just relative to wealthier members of society, but in absolute terms.
By studying a group of countries including Brazil, Cambodia, Mali, Peru, and Tanzania, which have reduced inequality significantly over recent years, and examining a wide body of available evidence, Bank researchers identified the following six high-impact strategies: policies with a proven track record of building poor people’s earnings, improving their access to essential services, and improving their long-term development prospects, without damaging growth. These policies work best when paired with strong growth, good macroeconomic management, and well-functioning labor markets that create jobs and enable the poorest to take advantage of those opportunities.
Early childhood development and nutrition: these measures help children during their first 1,000 days of life, as nutritional deficiencies and cognitive underdevelopment during this period can lead to learning delays and lower educational achievement later in life.
Universal health coverage: Bringing coverage to those excluded from affordable and timely health care reduces inequality while at the same time increasing people’s capacity to learn, work, and progress.
Universal access to quality education: school enrollments have grown across the globe, and the focus must shift from simply getting children into school towards ensuring that every child, everywhere benefits from a quality education. Education for all children must prioritize universal learning, knowledge, and skills development, as well as teacher quality.
Cash transfers to poor families: These programs provide poor families with basic incomes, enabling them to keep children in school and allowing mothers to access basic health care. They can also help families buy things like seeds, fertilizer, or livestock, and cope with drought, floods, pandemics, economic crises, or other potentially devastating shocks. They have been shown to considerably reduce poverty and create opportunity for parents and children alike.
Rural infrastructure – especially roads and electrification: Building rural roads reduces transportation costs, connects rural farmers to markets to sell their goods, allows workers to move more freely, and promotes access to schools and health care clinics. Electrification in rural communities in Guatemala and South Africa, for example, has helped increase women’s employment. Electricity also makes small home-based businesses more viable and productive, which is particularly of use in poor, rural communities.
Progressive taxation: Fair, progressive taxes can fund government policies and programs needed to level the playing field and transfer resources to the poorest, and tax systems can be designed to decrease inequality while at the same time keeping efficiency costs low.
“Some of these measures can rapidly affect income inequality. Others deliver benefits more gradually. None is a miracle cure,” said Kim. “But all are supported by strong evidence, and many are within the financial and technical reach of countries. Adopting the same policies doesn’t mean that all countries will get the same results, but the policies we’ve identified have worked repeatedly in different settings around the world”.
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Standard Chartered launches ‘Banking the ecosystem’ strategy to support global trade
Standard Chartered Bank has launched ‘Banking the ecosystem’, a global strategy that will connect business communities and facilitate increased trade, commerce and investments across Asia, Africa and the Middle East.
To support global trade effectively and foster greater sustainable economic growth, the banking industry will need to change the way they do business. Primarily, in the area of trade and commerce, banks will need to change the way they look at their clients’ supply chain relationships as they become more complex.
Standard Chartered envisions that the future of banking will be about “Banking the ecosystem.” This is a differentiated value proposition whereby Standard Chartered will deploy innovative and customised solutions that best suit its clients’ ‘ecosystems’ – the international and domestic network of suppliers, distributors and customers of all sizes that together drive global trade and commerce.
Alex Manson, Global Head of Transaction Banking at Standard Chartered, said: “At Standard Chartered, we create a new generation of banking solutions that integrate financial, informational and physical flows within clients’ ecosystems. We are aligned to deliver services to all client segments with a fully integrated offering, ranging from plain vanilla cash, trade and FX to complex supply chain and structured financing solutions. Standard Chartered continues to explore the applications of data analytics on generating client insights and has invested in leading distributed ledger technology as part of its digitisation agenda. Our role as a bank is to facilitate trade, commerce and investment and as we support our clients’ ecosystems, we connect business communities”.
In a recent white paper, Standard Chartered has drawn insights from a number of corporates in select industries and elaborate on how corporate supply chain landscapes are changing, what the implications are, and how to support the new era of global supply chain ecosystems. While the advances of technology enable numerous business opportunities, clients also acknowledge the importance of a sustainable supply chain and are taking steps to ensure theirs are fit for purpose and equipped for growth.
Banking the ecosystem
Business is done by communities – banks should recognise this, looking to serve beyond conventional single-client relationships
Typically, when a bank serves a large company, it focuses on that particular client, rather than how it can support the wider supply chain of businesses on which the company depends. The evolution in global trade, however, suggests this approach to banking may be missing a trick.
In recent years, corporate supply chains have become significantly more complex. Every connection in an industry supply chain – whether it’s a small or medium-sized supplier, a large international distributor or a local ‘mom and pop’ retailer – is critical. A delay or break at any point could interrupt production or result in a short term funding gap.
Consequently, corporates have begun to look beyond their organisational boundaries to assess whether their supply chain ecosystem is equipped to help them grow and compete in a challenging business environment.
What banks must do
Banks – if they truly want to support global trade – should do the same, adjusting their lens to focus on whole communities, rather than single clients.
A number of banks have introduced supply chain financing, but still focus on the needs of large corporate clients. Take supplier financing for example: banks’ engagement with suppliers is typically to onboard them to the programme, rather than working with them to understand their supply chain and financing needs – including how their growth is linked to that of their customer – and devising solutions accordingly.
But this will have to change. Treasurers and finance managers are now increasingly demanding solutions from their banks that integrate financing, automated processes, and efficient, data-rich transaction and information flows. They also need banks that have the footprint, capacity and appetite which matches the needs of their suppliers and buyers.
These supplier and buyers are typically small and medium-sized enterprises – a segment that is under-served. Why? Most global banks restrict their target customer base outside their home market to multinational corporations, while banks that support a wider spectrum of business customers, such as regional and local banks, typically lack the network to serve a global supply chain. Also, banks are often organised into silos to support different customer segments, blocking a more holistic approach.
Banking the ecosystem in practice
How does ecosystem banking work?
To take an example, a large manufacturer looking to expand production may be hindered by constraints in key suppliers’ capacity. It is more difficult and costly for some of these suppliers to access financing, than it is for the large corporate they supply to. As such, the solutions available to these suppliers are typically plain vanilla post shipment finance.
However, if the manufacturer’s bank took an ecosystem approach (not only to financing, but also to services such as payments and collections), it would overcome these obstacles and offer best fit rather than single-product solutions.
Positioning for growth
As each market, and industry, continue on their economic journeys, and commercial models evolve in line with new technologies and customer expectations, clients’ ecosystems will need to adapt. And for banks like Standard Chartered, this means delivering services to all customer segments in a client’s ecosystem and co-developing solutions for not just large corporates, but for their supply chains partners too, ultimately to facilitate trade and connect business communities.
The author, Alex Manson, is Global Head of Transaction Banking at Standard Chartered. This article originally appeared on the BeyondBorders blog.
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Now Kenya makes plans to produce industrial sugar
Kenya plans to relax rules for the production of industrial sugar in a bid to save the economy $90 million worth of forex spent annually on imports.
Kenya will thus become the first East African Community member to produce the commodity, but experts warn that the high cost of production could render industries such as confectionery that rely on refined sugar uncompetitive across the region. Under the EAC Rules of Origin, industrial sugar, as a raw material, is brought in duty-free.
The sugar is mostly used as in the making of sweets, biscuits, syrups and powders.
The Treasury said plans are underway to encourage investments in refinery plants by scrapping taxes.
“We are considering other incentives, including waiver of other levies once the relevant laws are reviewed,” Treasury Cabinet Secretary Henry Rotich told The EastAfrican.
Currently, regional confectionery firms import industrial sugar duty-free under the EAC duty remission scheme.
But there are questions about whether Kenya has the capacity to produce enough raw sugar to be used both for consumption and as an intermediate product, given that the country is a net importer of sugar and has high costs of production. The country would depend largely on imported raw sugar to sustain its factories.
Under the EAC rules of origin, Kenyan confectionery firms could export the end product to other EAC partner states if the raw sugar used in the manufacture of industrial sugar were sourced locally.
Trade experts said regional exports would suffer.
“It is a good move as it will facilitate the manufacture of confectionery in Kenya, but under the EAC rules of origin these products can only be sold in the local market if the raw sugar used in the production of industrial sugar has been imported under the duty remission scheme. If these products are exported to the region, they will attract a duty of 25 per cent,” said Eliazar Muga, managing director of MAP Advisory Services.
Kenya has sought and received a one-year stay for the importation of raw sugar for production of industrial sugar from the East African Council of Ministers. The window runs from June 5, 2016 to June 5, 2017.
Kenya has been hesitant to allow importation of raw sugar for the production of industrial sugar after two millers abused the facility by diverting the commodity into the local market.
“We are encouraging millers to diversify into other products, including refined sugar, but we want to put in place all regulatory mechanisms and controls to ensure that the sugar will not be diverted,” said Alfred Busolo, the director-general of the Agriculture, Fisheries and Food Authority.
The EastAfrican has established that the country has started issuing permits to local millers with the financial muscle to set up refinery plants in a bid to own a share of the regional refined sugar market estimated at 150,000 tonnes per annum.
Already, Kibos Sugar Miller has set up a Ksh2 billion ($19.4 million) refinery plant with a capacity of producing 150,000 tonnes of refined sugar per year. The millers have been licenced to produce only 30,000 tonnes of industrial sugar per annum.
“We encourage other millers to go that route,” said Mr Busolo.
Currently, companies using refined sugar import the commodity from Brazil, India and Thailand. The import price of refined sugar is estimated at $603.19 per tonne, compared with that of table sugar, estimated at over $716.88 per tonne.
Kenya produces raw sugar at $1,250 per tonne, thus refining it into industrial sugar would not be competitive. Sugarcane is bought from farmers at $350 per tonne.
According to the Kenya Association of Manufacturers (KAM,) the government should encourage millers to set up refinery plants.
“Incentives are offered by the government. We would encourage members to take them up to produce industrial sugar locally as there is a market for it in the EAC,” said Phyllis Wakiaga, the chief executive of KAM.
“Processing refined sugar will save the country some foreign exchange, but the issue is who will do it. Identifying the person to process the sugar is government policy and not an industry issue,” said Dan Ameyo, the chairman of Mumias Sugar Company.
Adverse weather conditions in key sugar producing countries of Brazil and India, and the increasing diversion of sugar stocks to ethanol production, inflated global prices by between nine and 10 per cent between January and September.
This has seen retail prices in Kenya soar, with some retail outlets being accused of rationing and hoarding the commodity.
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How and why to rethink data flow restrictions
Taking part in discussions on the latest developments in world trade at the World Trade Organization’s Public Forum in Geneva last week, the International Chamber of Commerce (ICC) has signalled increasing business concern regarding countries that impose restrictions on cross-border data flows without considering the impact on their respective economies and small- and medium-sized enterprises (SMEs) that make up 95% of enterprises globally.
In a new set of recommendations issued at the Forum, ICC calls on policymakers to consider the detrimental effects to GDP growth from applying blanket restrictions and highlights the importance of creating trusted environments to better enable use of information and communication technologies (ICTs), and related data flows, on which companies of all sizes rely.
The flow of digital information is a key driver of economic development and inclusive growth by raising productivity, increasing efficiency, broadening participation in and facilitating access to markets not least for developing-economy businesses.
Over the last 10 years data flows are estimated to have raised world GDP by at least 10% and today exert a larger impact on GDP growth than trade in goods.
“The Internet and Internet-enabled services, which rely on cross-border data flows, are vital for companies across all sectors of the economy and are particularly critical for small- and medium-sized enterprises,” the ICC paper says. “Access to digital products and services, such as cloud applications, provides SMEs with cutting edge services at competitive prices, enabling them to participate in global supply chains and directly access customers in foreign markets in ways previously only feasible for larger companies. ”
To help policymakers address negative implications for growth from blanket restrictions to data flows, the new ICC primer outlines seven steps that governments can take to ensure citizens and companies realise the full potential of the Internet as a platform for innovation and economic growth.
The recommendations are:
Build trust
This can be done by ensuring that users have appropriate control and practical mechanisms with regard to how personal data is used, and the companies to which they entrust their data should adopt recognised and applicable best practice to ensure that the data is appropriately secured as technology and services evolve.
Promote the establishment of a new trade principle
This should include the underlying objective of allowing the flow, storage, and handling of all types of data across borders, subject to privacy and security laws and other laws affecting data flow covered under GATS article XIV.
Be non-discriminatory
Certain compelling public policy issues - including privacy and security - are recognised as possible exceptions and may form a legitimate basis for governments to place some limits on data flows if they are implemented in a manner that is non-discriminatory, is not arbitrary, is least trade restrictive, and not otherwise a disguised restriction on trade.
Include relevant players and show consistency
Any limits on cross-border data flows for privacy and security objectives should be consistent with GATS obligations, and include all relevant players and are equally applied.
Promote coherence
This can be done through national rules and regulations that affect the movement of goods, services, and information across borders.
Support the Internet’s enabling role
Especially for SMEs to grow and participate in global trade.
Ensure any regulatory measures which limit data flows are necessary to accomplish the recognised and compelling public policy objective
Measures should be the least trade restrictive policy alternative needed to effectively address the issue, not be arbitrary or discriminatory, and not be disguised restrictions on trade in services.
Business issues recommendations on new global agreement to support e-commerce for SMEs
Business recommendations on a proposed World Trade Organization (WTO) agreement on e-commerce have been unveiled on 28 September 2016 at WTO headquarters in Geneva, as part of the on-going WTO business dialogue process launched in May this year.
The proposal echoes calls from business leaders for the WTO to play a central role in underpinning an open, reliable and secure global digital economy, and calls for the WTO to consider launching new talks on a holistic package of trade disciplines, rules and assistance to boost micro, small- and medium-sized business (MSMEs) e-commerce, with an overriding objective to promote inclusive growth.
The proposal from business is built around three pillars: connectivity and capacity building for e-commerce, enabling MSMEs to get goods sold online to consumers more efficiently (trade facilitation 2.0) and digital rules.
International Chamber of Commerce’s (ICC) Secretary General John Danilovich presented the proposal on behalf of the world business organization during a meeting of the ICC-led business focus group, established by the WTO to seek private sector views on new ways to strengthen the multilateral trade agenda.
The meeting took place during the WTO’s annual Public Forum.
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Deepening regional integration in Africa: Maximizing AGOA in ECOWAS for economic transformation
AGOA, the African Growth and Opportunity Act, is one of the cornerstones of the U.S.-Africa economic relationship. A trade program that includes 41 African countries, AGOA was renewed in 2015 for another ten years.
It helps African countries develop their export industries and open their markets, build jobs, and ultimately, build peace and human security through economic growth. But many African countries haven’t fully taken advantage of their preferential access to U.S. markets due to neglected AGOA utilization plans, small markets, underdeveloped sectors, and more.
In this paired paper and policy brief, Southern Voices Network Scholar George Boateng explores how regional integration through the West African economic community ECOWAS can help West African countries leverage regional advantages to become more competitive. He discusses policy options for using regional integration to maximize utilization of AGOA, drive economic transformation, and build peace and security.
A Viable Approach to Increasing AGOA Utilization in ECOWAS
ECOWAS could maximize its utilization of AGOA through a variety of scenarios, which are based on the product space approach (pioneered by Hausmann and Hidalgo). They define product space as a network of inter-relatedness between products. Relatedness is associated with the similarity in the inputs required by a certain activity including particular skills, institutional capabilities, and infrastructural and technological requirements. Economic progress will occur when countries move from what they are already producing to others products that are sophisticated; in other words, by producing and exporting more high-value but related products. Therefore, AGOA-eligible countries in West Africa can exploit economies of scale through integration and become more competitive in export-led manufacturing by moving goods to more productive spaces in the region. These productive spaces are countries which are more efficient in producing high-value goods; they have the skills and infrastructure as well as the technical capabilities.
For example, Burkina Faso, Mali, and Benin are significant producers and exporters of raw cotton, but they lack the business framework, supply chain, skills, large middle class, and industrial structure of some of their coastal neighbors such as Ghana and Senegal. These countries can benefit from the infrastructure, business frameworks, and skills of their neighbors by manufacturing textiles or apparel. This would add value to their cotton, increasing the value of exports and making the region more competitive. Similarly, Burkina Faso is a major producer of mangoes in West Africa, with over 250,000 metric tons per year, but the country lacks the processing capacity to move into the production of high-end produce like processed mangoes. An integrated agro-processing industry with a coastal neighbor such as Ghana or Côte d’Ivoire that has the competitive skills set and infrastructure for processing will be beneficial.
The World Economic Forum’s Global Competitiveness Index (2015-2016) assesses the competitiveness landscape of 140 economies, providing insight into the sources of their efficiency. Infrastructure and skills act as major constraints to competitiveness in West Africa. West Africa can, however, be more competitive as a region than individually. In developing a regional cotton textile and garment industry, or an integrated agro-processing industry, countries like Burkina Faso, Benin, or Mali that are not competitive in indicators such as infrastructure, business framework and skills can benefit from superior indicators of their neighbors such as Côte d’Ivoire, Ghana or Senegal with Global Competitiveness Index of 3.9, 3.6 and 3.7 respectively. This arrangement will move goods to more efficient countries in the region. But this concept would only be aided by faster progress in realizing reforms in the ECOWAS customs union, as well as by fully implementing sectoral policies such as the common industrial policy.
Not everyone agrees with the approach outlined above. There are concerns that agro-processing, apparel, and textile production are low-skilled manufacturing industries, and that AGOA beneficiaries should look to higher skilled manufacturing rather than concentrating on low-earning sectors. It is true that agro-processing, apparel, and textiles are low hanging fruit in the manufacturing sector. However, given the current levels of infrastructure and capacity within the region, these sectors are where West Africa needs to begin. Over time, it can learn and move into high-skilled manufacturing. This level of manufacturing will encourage the growth of similar support mechanisms like decent logistics, urban transportation, reliable power supply, and legal framework for hiring labor for industry, consequently enabling further diversification in exports.
Additionally, trade logistics will play an important role in increasing West Africa’s AGOA utilization. Efficient logistics connect firms to domestic and international markets through reliable supply chain networks. Countries faced with low trade logistics performance are less competitive because they incur higher transaction costs. The World Bank Logistics Performance Index (LPI) ranks West African countries at 2.3 on efficiency of logistics in facilitating trade, behind Southern African and Eastern African countries which each have a 2.7 score. To improve competitiveness, West Africa countries should aim to boost logistics in trade.
In a nutshell, if regional partnerships are strengthened and comparative advantage is secured in the product space by AGOA beneficiaries in West Africa, it will facilitate movement of goods from less efficient countries to more efficient ones, and increase value addition and export-led manufacturing, which will trigger further export diversification.
Policy Options
It is crucial for the U.S. government to continue expanding on its strategy and trade capacity-building in Africa. The most important need is assistance in deepening regional integration in ECOWAS (and other RECS), particularly in harmonizing the processes of the Free Trade Agreement and especially the removal of tariffs on industrial products. Moreover, it is essential that African governments establish effective dialogue with the private sector, civil society, and policymakers to chart new and robust ways to be relevant in the new trade policy environment.
One of the key outcomes of the World Trade Organization’s 2014 Bali meeting was the Trade Facilitation Agreement (TFA). Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce cost burdens and maximize efficiency. Studies suggest moving goods more quickly and efficiently would create $1 trillion in export gains, a $960 billion GDP increase, and 21 million new jobs. Hence harmonization of the customs union by all member states of ECOWAS will go a long way to increasing intra-community trade and learning to compete by upgrading into regional and global value chains. Industrialization, predominantly export-led manufacturing, remains vital for Africa’s economic transformation and human security, and for providing employment for millions of youth across the continent.
The sectoral strategy on the common industrial policy will be pivotal in enhancing export-led, competitive manufacturing in the region. In order for ECOWAS to be competitive and be able to export more under AGOA, it needs to increase its share of manufacturing in total global exports. A regional industrial trade base, which employs economies of scale and moves goods from less efficient to more efficient countries, will help maximize AGOA in ECOWAS.
For a set of policy options and recommendations related to harnessing regional integration to maximize AGOA utilization in West Africa, see the accompanying Africa Program Policy Brief.
George Boateng served as a Southern Voices Network Scholar at the Wilson Center from April to June 2016. He is a Research Analyst at the African Center for Economic Transformation (ACET) in Accra, Ghana, which is a member of the Southern Voices Network.
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Studies on West African corridors highlight improved performance and need for short term high impact projects to consolidate gains
Results from a performance analysis study, conducted on three West African corridors – involving consultation with actors such as countries, customs, corridor management organisations, transporters, etc., were unveiled at a regional coordination meeting convened on 30 September 2016 in Abidjan by the Economic Community of West African States (ECOWAS), the African Development Bank (AfDB) and the ATWA project.
The study, conducted in four countries – Côte d’Ivoire, Ghana, Togo and Burkina Faso – along the Abidjan-Ouagadougou corridors; Tema-Ouagadougou; Lomé-Ouagadougou, found that all three corridors have seen improvements in both costs and time. The average corridor costs have gone down by 16% and average corridor times by 6% over the last 4 to 8 years.
In terms of cost distribution, the survey indicated that trucking costs absorb about 65% of the total corridor transport costs; ports take 20% while border crossings and clearance at the inland terminal account for about 15% of the total corridor costs for import. The study found that export is generally less expensive and faster than import. Other indicators were also shared such as process and travel time to move goods along the corridors and rail versus road indicators.
In the views of Moono Mupotola, Director, NEPAD Regional Integration and Trade Department at the AfDB, “Regional integration is a development imperative and a priority for the Bank.”
“Integrating Africa is one of the five priorities of the Bank, High-5s – Light up Africa, Feed Africa, Industrialise Africa, Integrate Africa and Improve the living conditions of the people of Africa.”
She stressed that “We need to accelerate the integration of our markets and work harder to make trade easier, faster and cheaper on the continent. Reducing the cost of transporting goods along our corridors is vital to the development of trade to boost economic growth in West Africa and indeed on the continent,” she told participants from ECOWAS, government and corridor organisation representatives and ATWA.
The study also highlighted some challenges to address with a view to facilitating trade and reducing the cost of transport of goods. These challenges include, the absence of regular and coherent data on trade along the corridors, Non-tariffs barriers, lack of data sharing amongst the countries custom authorities and delays noted in the implementation of legal and regulatory texts and agreements were also cited as shortcomings.
To overcome these challenges, all stakeholders and development partners – the World Bank, the European Union, the Japanese International Cooperation Agency (JICA), Die Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the U.S. Agency for International Development (USAID), Denmark and the Netherlands, who attended the meeting reiterated their willingness to help consolidate the gains on the West African corridors.
ATWA takes inspiration from East Africa, where eight donors (Belgium, Canada, Denmark, Finland, the Netherlands, Sweden, United States and the United Kingdom) have pooled their support and established a single non-profit organisation working across the East African Community (EAC) to further its integration agenda. The organisation, TradeMark East Africa (TMEA) currently has a budget of 540 USD Million over 2011-2016 and works in the five EAC countries to reduce trade costs on major transport corridors and improve the business environment for trade and investment. TMEA is ATWA’s technical partner.
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tralac’s Daily News Selection
The selection: Friday, 30 September 2016
Ahead of next week’s third CFTA Negotiating Forum: tralac’s JB Cronje on What negotiating modalities should be adopted to achieve CFTA objectives?
Ahead of next week’s World Bank-IMF Annual Meetings: a guide
South Africa’s August trade statistics will be released later today.
Carlos Lopes will leave the UNECA on 30 October: update
Africa’s Pulse: African economies need deeper diversification and better policies (World Bank)
Trade diversification among established and improved performers (Box 2.2, p47): Figure B2.2.1 depicts the extent of market diversification as measured by the Herfindahl index of trading partners. It generally shows that improved performers tend to be more diversified across markets than established ones. Among the improved performers, Cameroon, Côte d’Ivoire, Kenya, and Senegal have increased the number of destinations for their exports over the past 10 years, while Rwanda is the only country among the established ones with significant progress in market diversification. In terms of product diversification, the Herfindahl index of export goods for the four groups of performers across Sub-Saharan Africa is depicted in figure B2.2.2. The improved performers not only have a more diversified export basket over the past two decades, but also the number of products exported has increased. For the established performers, product diversification has gradually increased since 2004, while the export basket has become more concentrated for the slipping countries in the post-crisis period. Zooming in on the established countries, Tanzania displays the greatest extent of product diversification over the past two decades.
Toward a continental African agribusiness apex body (Phase II): diagnostic and development plan (pdf, AgBiz)
The study, which surveyed all African countries to identify associations representing agribusinesses, showed that agribusiness apex bodies across Africa are a relatively recent phenomenon, with most being formed between 2001 and 2014. The study by ABG leveraged on work undertaken in 2014 by the AU’s New Partnership for Africa’s Development in a study entitled "Taking stock of agribusiness chambers in Africa: lessons learned, success factors, good practices". The work by ABG and AU-NEPAD is part of a broader initiative to form a Continental Agribusiness Chamber that will represent private sector stakeholders across the continent. [Lead consultant: Michael Sudarkasa]
Transit costs in East and Southern Africa: four major corridor routes (IRU)
Purpose and scope of the project: To analyse the cost comparison between the uses of a national bond, COMESA RCTG Carnet where applicable and the TIR Carnet for two types of cargo (containerised load and tanker transporting liquid bulk) along four major corridor routes; namely North South Corridor (Durban to Lubumbashi), Walvis Bay-Ndola-Lubumbashi Corridor (Walvis Bay to Lubumbashi), Dar Corridor (Dar es Salaam to Lubumbashi) and the Northern Corridor (Mombasa to Kigali). It is clear from the summary of findings that the regional or single bond system has distinct advantages in terms of cost and time savings over the traditional national transit bond system still being deployed along certain corridors. Regional or single bonds reduce transit time, simplify clearing, reduce documentation and reduce transit costs. As the systems are not universally available for all countries and corridors, there is still a high level of variation and doubt as to the reliability of the cheaper offerings. This leaves the import-export customer with uncertainty as to the level of risk inherent in each offering and could impact on the level of facilitation offered by customs. [The analyst: Michael Fitzmaurice]
North-South Corridor Management Institution: update (GCIS)
Cabinet approved South Africa’s revised position to SADC’s proposal for the development of a MoU regarding the establishment of the North-South Corridor Management Institution. The SADC Ministers of Transport agreed to establish an NSCMI to address operational inefficiencies and bottlenecks along the corridor. Cabinet also approved for the Minister of Transport to host the North-South Corridor Ministers of Transport meeting during 2016/17.
Kenya’s careful steps through tough EPA terrain (Business Daily)
Q: The Foreign Affairs ministry on Thursday deposited the ratified Economic Partnership Agreement with the EU, and it was interesting this coincided with the EU ambassador to Kenya Stafano Dejak’s statement that they may have to engage Kenya directly if the rest of the region does not sign. Answer (from Betty Maina): I saw the comment, he even sent me the brief, but I’m not sure what he means by a direct relationship because whatever relationship you may have must negotiated. So I’m also quite curious about that. [Brexit will blow a hole in EU-Africa relations]
Kenya joins campaign against America’s trade deal with Asia (Daily Nation)
Kenya is lobbying against the planned Trans-Pacific Partnership Agreement (TPP) between US and 12 Asian states for fear of losing the current preferential access under African Growth and Opportunity Act (Agoa). The country joined other trade ministers from African countries at this year’s Agoa forum in Washington to urge the US to reconsider the move as it will make the goods coming from Africa uncompetitive in the market. Trade Principal Secretary Chris Kiptoo told the Business Daily that the preferences that Kenya enjoys will be eroded once the US enters into trade agreements with other states outside Africa.
Zimbabwe records $1,82bn trade deficit, Jan-August 2016 (The Herald)
Zimbabwe recorded a trade deficit of $1,82bn for the eight months to August 2016, as imports made up mainly of consumption goods continue to outstrip exports. According to the Zimbabwe National Statistics Agency, the country imported goods worth $3,329bn for the period under review, against exports of $1,507bn. Notably, imports grew to $443m in the month of August from July’s $394m albeit Government measures to limit importation of certain goods to prop up local production. However, exports improved 10 percent from July’s $183 million to $202 million in August.
Zimbabwe: Govt gets tough on local companies (NewsDay)
Speaking at the commissioning of new machinery at Chloride Zimbabwe in Harare yesterday, Industry and Commerce minister Mike Bimha said only companies that had confidence in the country were assured of government support. “A number of companies come to government and say ‘give us support, give us protection’, but they do not in turn tell government what they are also going to give, not government, but to Zimbabwe. When we had meetings with Chloride, they said ‘give us support and we will do A, B and C’ and they did A, B and C. Let me stress the need for the private sector to heed the call to industrialise our country,” Bimha said.
Tanzania: Highlights for the Second Quarter GDP (pdf, NBS)
During the period under review, gross domestic product at constant prices for the second quarter of 2016 in absolute terms was TZS. 11.7 trillion compared to TZS. 10.9 trillion for the similar quarter of 2015. The quarterly GDP increased at a rate of 7.9% in the second quarter of 2016 compared to 5.8% observed in the corresponding period of 2015. The performance of selected economic activities observed in the second quarter of 2016 shows that transport and storage increased at the highest growth rate of 30.6% followed by mining and quarrying which recorded the growth rate of 20.5% and Information and Communication increased at a growth rate of 12.6%. However, Accommodation Services and Real Estate have recorded the lowest growth rates of 2.6% and 2.3% respectively for the quarter under-review. [Socio-Economic Atlas of Tanzania: Census 2012]
Zambia, Zimbabwe pick AfDB Advisers for $4bn Batoka plant (Zimbabwe Independent)
Zambia and Zimbabwe have appointed the African Development Bank as lead financial advisers for the construction of the 2400-megawatt Batoka Gorge hydro-power project that’s expected to cost $4 billion, an official said. Financial mobilization for the project is scheduled to start in 2018, but could begin earlier than that, he said. The dam will have a capacity of 1,2 billion cubic meters of water on completion. Kariba, the world’s biggest man-made reservoir by volume, holds 181 billion cubic meters of water.
RioZim chooses Chinese group to design US$2,1bln power plant (Zimbabwe Independent)
RioZim Ltd. chose a state-owned Chinese company to design a $2,1bn power plant it plans to build in Zimbabwe, which faces frequent blackouts, and is lobbying South Africa’s electricity utility to buy from the facility to help attract investors. State Nuclear Electric Power Planning Design and Research Institute, based in Beijing, “has already come in to design the generators” for the 2800-megawatt coal-fired Sengwa plant, RioZim Non-Executive Director Caleb Dengu said. RioZim has written to South African Energy Minister Tina Joemat-Pettersson asking that Eskom Holdings SOC Ltd. buy 2,000 megawatts, he said.
Trade facilitation and development: driving trade competitiveness, border agency effectiveness and strengthened governance (UNCTAD)
In the present study, trade facilitation is mainly reviewed in the context of development objectives. The discussion and literature review is combined with a quantitative analysis of the first 73 notifications made by developing countries concerning their trade facilitation implementation capacities in the context of the Agreement on Trade Facilitation.
Regional trade agreements and the multilateral trading system (WTO)
The book provides a greater understanding of whether RTAs are creating new standards different from the WTO’s and the possible implications these pose. Amid the growing number and complexity of RTAs today, the publication contributes to the current debate on the role of the WTO in regulating international trade. The contributors to the book look at RTA provisions liberalizing trade in goods and services as well as other provisions covering a range of issues, such as trade defence, trade facilitation, standards, intellectual property and dispute settlement. The chapters are based on all RTAs notified to the WTO up until 2014.
Roberto Azevêdo: It shows that in some areas RTAs are going further than multilateral rules and adding new layers of rules among the parties, while in others they tend not to change the existing WTO disciplines. Interestingly, in the areas where RTAs are introducing new rules, there appear to be common approaches taken by members. We can see this, for example, in services rules, dispute settlement, and intellectual property rights. This provides some reassurance to the recurring fear that RTAs represent a fragmentation of the global trading system. This may be good news for exporters, in particular SMEs, which find themselves at a disadvantage when faced with a proliferation of different rules. But, of course, RTAs could do more to assist such exporters. [Table of contents (pdf)]
Mozambique: IMF concludes visit
At the end of the mission, Mr. Lazare issued the following statement (extract): “Mozambique is facing a challenging economic environment. Growth has been on a declining path and is currently expected to be 3.7 percent in 2016 (down from 6.6 percent in 2015), which is significantly below levels observed in recent years. Inflation has risen sharply, reaching 21 percent on a year on year basis in August, fueled by a significant depreciation of the metical (about 40 percent since the start of the year). At the same time, a significant decline in imports has been more than offset by a weakening of exports, foreign direct investment, and donor financing. This has maintained pressure on international reserves, which have continued to decline. The discovery in April 2016 of previously undisclosed debt worth $1.4 billion (10.7 percent of GDP), combined with the impact of the exchange rate depreciation, has led to a substantial increase in debt ratios and the debt service burden.
World Maritime Day 2016: an UNCTAD feature
Ensuring Africa’s maritime security for development: sustainability and the blue economy (Chatham House)
Africa and World Tourism Day 2016: an AfDB feature, Memory Dube blog
Botswana: Pilane Mall opens without ‘barred’ SA retailers
Tanzania: REPOA study calls for govt role in sugar industry
Uganda to get East Africa’s first ever gold refinery by end of 2016
Tanzania: Govt finalizes local content policy for gas sector
Chris Blattman: More sweatshops for Africa?
Liam Fox: Globalisation needs to be championed more vigorously
Measure it to improve it: How benchmarking government capability for PPPs can help improve infrastructure delivery
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Africa’s economic growth continues to falter, yet some countries show signs of resilience
The countries of Sub-Saharan Africa present a diversified landscape of economic growth, according to the new Africa’s Pulse, the World Bank’s twice-yearly analysis of economic trends and data for the region.
After slowing to 3 percent in 2015, economic growth in Sub-Saharan Africa is expected to fall further to 1.6 percent in 2016, the lowest level in over two decades. The sharp decline in aggregate growth reflects challenging economic conditions in the region’s largest economies and commodity exporters. Many of these countries continue to face headwinds from low commodity prices, tight financial conditions, and domestic policy uncertainties. Economic activity has been notably weak across oil exporters. At the same time, economic growth in about a quarter of the region’s countries is showing signs of resilience.
Growth is far from homogeneous, suggesting that countries are growing at divergent speeds. While many countries are registering a sharp slippage in economic growth, some others – Ethiopia, Rwanda, and Tanzania – have continued to post annual average growth rates of over 6 percent. Several countries – including Côte d’Ivoire and Senegal – have become top performers.
A deeper analysis of economic growth patterns in the region shows that countries’ economies have performed differently in the years before and after the global financial crisis of 2008. Some countries, those categorized as “established”, have sustained strong performance in both periods. Several other countries are seeing strong performance in recent years, and are categorized as “improved”. Overall, these resilient groups of countries show more diversified export structures and have made more progress on structural reforms, business regulation, rule of law, and government effectiveness.
The weak aggregate economic performance is mainly a reflection of deteriorating economic performance in the continent’s largest economies: Nigeria and South Africa, which together account for half the region’s output. In Nigeria, GDP contracted during the first two quarters of the year due to low oil revenues and a fall in manufacturing, among other things. In South Africa, the economy contracted slightly in the first quarter, before rebounding in the second quarter, thanks to an increase in mining and manufacturing output.
Generally, oil exporters in Sub-Saharan Africa continue to experience slippages in economic growth due to shocks from the collapse of commodity prices. This underlines once more the limited diversification of their economies.
“Our analysis shows that the more resilient growth performers tend to have stronger macroeconomic policy frameworks, better business regulatory environment, more diverse structure of exports, and more effective institutions,” says Albert Zeufack, World Bank Chief Economist for Africa.
Despite a recent pickup, commodity prices are expected to remain largely below their 2011-14 peaks, reflecting the weak global recovery. Faced with growing financing needs, commodity exporters have begun to adjust, but efforts have been uneven and remain insufficient. Against this backdrop, a modest recovery is expected with real GDP in Sub-Saharan Africa forecasted to grow 2.9 percent in 2017, then rising moderately to 3.6 percent in 2018.
“Adjustment to low commodities has been limited in several commodity exporters, even as vulnerabilities have mounted,” says Punam Chuhan-Pole, World Bank Lead Economist for Africa and the report’s author. “Adjustment efforts should include measures to strengthen domestic resource mobilization, so as to reduce overdependence on resource-based revenues.”
Outlook
With the external environment expected to remain difficult, deeper adjustment would be needed in some countries to contain fiscal and current account deficits and rebuild policy buffers. The Pulse further argues that along with adjustments to macroeconomic policies, countries will need to accelerate structural reforms to bolster medium-term growth prospects.
Against this backdrop, a modest rebound is forecast for Sub-Saharan Africa in 2017. Economic activity is expected to rise to 2.9 percent. Africa’s Pulse notes that the region’s economic performance in 2017 will continue to be marked by variation across countries. While the larger economies and other commodity exporters are expected to see a modest increase in GDP growth as commodity prices continue to stabilize, economic activity is expected to keep expanding at a robust pace elsewhere in the region, supported in part by infrastructure investments.
Looking ahead, increasing agricultural productivity on the continent is central to transforming Sub-Saharan Africa. Analysis shows that addressing the quality of spending and the efficiency of resource use is even more critical than addressing the level of agriculture spending. Rebalancing the composition of public agricultural spending could reap massive payoffs.
Enhanced agricultural productivity for poverty reduction
The decline in oil and commodity prices has hurt resource-rich countries and signals an urgent need for economic diversification in the region, including through improvements in agriculture. Agricultural productivity growth in Africa has lagged that in other regions. While production increases elsewhere were driven by better use of inputs and improvements in production technologies, in Africa they resulted mainly from expanding the area under cultivation.
Public agricultural spending in Africa has also lagged other developing regions yet agriculture accounts for a third of region-wide GDP and employs two-thirds of the labor force, with the poorest countries most heavily reliant on it. Investments and smart policy choices are needed to foster growth in the rural economy, accelerate poverty reduction, and foster inclusive growth. Improving agricultural productivity is key to fostering structural transformation and managing the urban transition, by increasing incomes and enabling more people to move out of agriculture.
“Improving the productivity of smallholder farms is central to lifting rural incomes and reducing poverty in Sub-Saharan Africa,” says Chuhan-Pole. “But unleashing this productivity requires investing in rural public goods such as rural infrastructure, agricultural research, and use of improved technologies, as well as in availability of good data and evidence.”
As African regional markets develop rapidly – to reach an expected trillion dollars by 2030 – the potential is enormous for increasing agricultural production and productivity. The Pulse finds that Sub-Saharan African countries underfund high-return investments, and that increasing the efficiency of current public spending in agriculture while rebalancing its composition could reap massive benefits.
In order to move forward, Africa’s Pulse recommends that countries take urgent steps to adjust to low commodity prices, address economic vulnerabilities, and develop new sources of sustainable, inclusive growth. By boosting agricultural productivity, countries will not only raise the incomes of farm households, but will also lower food costs and promote development of agro-industry.
The Report’s Key Messages
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After slowing to 3% in 2015, economic growth in Sub-Saharan Africa is projected to fall to 1.6% in 2016, the lowest level in over two decades.
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The sharp decline in aggregate growth reflects the challenging economic conditions in the region’s largest economies and commodity exporters as they continue to face headwinds from low commodity prices, tight financing conditions, and domestic policy uncertainties.
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At the same time, in about a quarter of countries, economic growth is showing signs of resilience. Some countries – Ethiopia, Rwanda, and Tanzania – have continued to post annual average growth rates of over 6%, exceeding the top tercile of the regional distribution; and several other countries – including Côte d’Ivoire and Senegal – have moved into the top tercile of performers.
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Risks to the outlook remain tilted to the downside. On the external front, old risks remain salient and include slower improvements in commodity prices, tighter global financial conditions, and security concerns.
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Post-global financial crisis performance in the region as a whole has not been as stellar as it was pre-crisis. However, there are some diverging growth experiences across countries.
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Increasing agricultural productivity is central to transforming Sub-Saharan African economies. Addressing the quality of public spending and the efficiency of resource use is even more critical than addressing the level of spending.
Drivers of growth: Moving beyond luck to policy
The previous section showed that the higher growth rate of established and improved performers has been supported by better macroeconomic policy frameworks – although these countries appear to have greater space on the monetary rather than the fiscal front. However, it is warranted to ask whether having sound macroeconomic policy frameworks guarantees sustained growth. Do good macroeconomic policies influence the sustainability of growth among countries in Sub-Saharan Africa?
A strand of the literature has questioned the role of macroeconomic policies as a force influencing growth over the long term. In this context, Fatas and Mihov (2013) summarize the main three pitfalls: (a) macroeconomic policy variables become insignificant when a large number of long-term growth determinants are included in the analysis; (b) the degree of persistence of macroeconomic policies is unambiguously higher than that of growth rates over time; and (c) the positive co-movement between good macroeconomic policies and growth is attributed to the fact that both are the outcome of robust institutions; hence, this relationship dissipates once we control for the quality of institutions.
This section looks beyond (exogenous) external factors affecting growth across countries in Sub-Saharan Africa, to domestic factors – and, notably, domestic policies – that help sustain growth over the long term. The section examines the role of policy-driven, long-term growth fundamentals in the economic performance of established, improved, slipping, and falling behind countries. These policy-driven, longterm growth drivers are classified into four groups:
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Structural policies. This focuses on the degree to which the legal, regulatory, and policy environment fosters private sector development by creating jobs, boosting investment, and unleashing productivity. Specifically, it looks at the business regulatory environment, depth of the financial sector, and trade diversification.
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Governance. This comprises policies to boost the effectiveness of the legal system and rule-based governance structure to enforce property rights and ensure the quality of the public administration in policy implementation and regulatory management. It also includes the extent to which the executive, legislators, and other high-level officials are held accountable for their use of public resources, administrative decisions, and obtained outcomes.
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Infrastructure. This evaluates the quality of and access to the different infrastructure sectors (rail network, air transport, and access to water, among others). In addition to the indicator of overall quality of infrastructure, this group focuses on the quality of the road network, and the quality and reliability of electricity supply.
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Rural sector. This focuses on public policies for the development of the agriculture and rural sectors, securing access to land and equitable user-rights over water resources for agriculture among the rural poor, and policies supporting the development of private rural businesses and commercially-based agricultural and rural finance markets.
In sum, this section aims at examining whether government policies provided an enabling environment for the private sector to develop and boost growth.
Structural policies
To assess the evolution of structural policies among established, improved, slipping, and falling behind countries, this section focuses on three dimensions: (a) the quality of the regulatory framework, (b) the depth of domestic banks, and (c) the diversification of exports. This categorization may also involve policies that boost human capital accumulation, open trade, and capital accounts, among others.
Quality of the regulatory framework
Private sector development can influence long-term growth to the extent that governments are capable of implementing policies and regulations that foster the contestability of output and factor markets. The quality of the regulatory framework across countries in Sub-Saharan Africa is proxied by two indicators: (a) the CPIA score on business regulatory environment, and (b) the index of regulatory quality from the World Bank’s World Governance Indicators (WGI).
On the quality of the business regulatory environment of the four groups of performers, the evolution of the CPIA scores over 2005-15 shows that: (a) the established and improved performers have the highest level of business regulatory environment, and (b) the gap between established and slipping performers has increased since 2009, given that the quality of regulation has declined in the latter group.
Among the established performers, Rwanda is the only country in the group with notable improvement in this area. For improved performers, this is the case of the Democratic Republic of Congo – although coming from low levels.
The WGI index of regulatory quality shows two opposite trends since 2007: (a) an increase in the quality of regulations among established and improved performers, although the former group at a faster pace, and (b) a decline in regulatory quality among slipping countries. By the end of the period, established and improved performers exhibited the highest quality of regulations (namely, those governing market contestability). The average of established and improved groups of economies in Sub-Saharan Africa is still below the average of developing countries (excluding Sub-Saharan Africa).
The biggest reformer, among established performers, is Rwanda, whose WGI index of regulatory quality is higher than that of other developing countries. Cote d’Ivoire and Senegal experienced some increase in regulatory quality among improved countries. However, the group of improved performers shows greater cross-country variability in regulatory quality than the established performers.
Export diversification
A strand of the literature shows that trade openness is conducive to long-term growth under certain circumstances. However, greater trade integration can lead to greater volatility, as countries become more exposed to external shocks – and this is the case of commodity-exporting nations or countries with concentrated structures of production. Haddad et al. (2013) find that product diversification – rather than market diversification – protects an economy against the deleterious impact of idiosyncratic global shocks on volatility.
Figure 2.8 depicts the inverse of the Theil index using disaggregated exports at the four-digit level following the Harmonized System, rev. 2. These scores were standardized into a 0-100 scale, with greater scores implying more diversified export structures. The first feature that emerges from the figure is the low degree of diversification among groups in Sub-Saharan Africa – notably, slipping and falling behind performers. Second, improved performers have the most diverse export structure among the four country groups, with an index that is about 50 percent greater than that of established countries. Third, Tanzania and Senegal are the best performers in export diversification among established and improved countries, respectively.
Leaders gathered at the OECD call for tapping cities’ potential to foster Africa’s economic transformation
As the world prepares to adopt a new urban agenda for the next 20 years at the Habitat III United Nations conference in Quito next month, Africa’s mix of demographic boom and fast urbanisation grabs the attention of its leaders and partners.
The number of people living in African cities, which nearly doubled in 20 years, from 237 million in 1995 to 472 million in 2015, is expected to double again in the next 20 years. By the mid-2030s, more than half of Africans will be city dwellers.
Such rapid urbanisation represents immense opportunities for accelerating Africa’s economic transformation: growing cities provide new markets for food producers, create enabling conditions for industrial development and foster social innovation. Besides, two thirds of the investment needed by 2050 to bolster Africa’s urban infrastructure have yet to be made: this is a huge economic prospect for domestic and foreign investors, and could create millions of jobs.
Moreover, as they develop, African cities can avoid past missteps – such as car-centred urban sprawling – and promote more ecological models of service delivery. All African development partners and actors including multinational companies operating in Africa should collectively integrate these concerns in their programmes notably by prioritising the use of green technology with an inclusive access to affordable, reliable, sustainable and modern energy (goal 7 of the Sustainable Development Goals).
And yet, because it is often coupled with slow economic transformation, insufficient planning and inadequate investment, Africa’s fast urbanisation generates too many of the disadvantages – such as pollution, slums, lack of productive jobs, unequal access to public goods – and not enough of the advantages. Seizing Africa’s urbanisation dividend therefore requires bold and ambitious policy reforms. National urban strategies should foster rural/urban linkages, prioritise the development of intermediary cities and promote the participation of urban communities in city planning.
Rising up to the challenge of turning African cities and towns into engines of growth and sustainable development will not come cheap. In sub-Saharan Africa alone, the financing needs for basic urban infrastructure and services delivery today is estimated at USD 29-60 billion per year, and at least twice more by 2035. Municipal governments of African cities do not have the resources to tackle the challenges of rapid urban growth by themselves. Bridging the gap requires harnessing innovative financing instruments while strengthening local tax collection capacities and access to credit.
These topics are at the heart of Thursday’s 16th International Economic Forum on Africa: “African cities for Africa’s development”, which was opened by Angel Gurría, Secretary-General of the Organisation for Economic Co-operation and Development (OECD) and Dr Rene N’guettia Kouassi, Director of Economic Affairs Department, African Union Commission.
High-profile leaders from Africa as well as from OECD and other partner countries, including Marcel Alain de Souza, President of the Commission of the Economic Community of West African States (ECOWAS), and Jean Pierre Elong Mbassi, Secretary General of United Cities and Local Governments for Africa (UCLGA), gathered in Paris to share their experiences and visions with more than 500 Forum participants.
Co-hosted for the first time by the OECD Development Centre and the OECD Sahel and West Africa Club in partnership with the African Union Commission (AUC) for the third consecutive year, the Forum also provided the occasion to renew the 2014 Memorandum of Understanding between the OECD and the AUC, with a view to deepening high-level dialogue and co-operation on a citizen-driven pan-African agenda of integration and transformation. Areas of co-operation include a continent-wide, geo-localised dataset on African cities, known as Africapolis; increased comparability of African revenue statistics; innovative policies for making the most of natural resources and insertion in global markets; and promoting Africa’s sustainable urban development.
The debates build on the conclusions of the African Economic Outlook 2016, a joint report by the African Development Bank (AfDB), the OECD Development Centre and the United Nations Development Programme (UNDP).
Further reflecting the OECD’s commitment to supporting better policies for better lives in Africa, the OECD Emerging Markets Network (EMnet) is holding a meeting on “Investing in Growing African Cities” on Friday, 30 September and the Development Centre’s publication Education and Labour Market Togo: How to upgrade the skills? was launched in Lome on Thursday in the presence of Mr. Octave Nicoué Broohm, Togo’s Minister of Higher Education and Research.
Africa Forum 2016: African Cities for African Development
Opening remarks by Angel Gurría, Secretary-General, OECD in Paris, 29 September 2016
It is a great pleasure to open the 16th International Economic Forum on Africa. Your presence here testifies to the importance of this event, where we will discuss the key role of African cities for African development. A special word of gratitude goes to the African Union for their commitment and support in making today’s Forum possible.
Africa: A rapidly urbanising continent
We are living in a rapidly urbanising world. In the next five years, it is estimated that the world’s population will increase by more than 400 million. 90% of this increase is projected to occur in urban areas and Africa is a crucial part of this unprecedented story. The continent will become more urban than rural in the next 15 years, and some 55% of African city dwellers will reside in towns and cities of less than one million people.
These trends have far-reaching implications for policymakers in Africa, which is why we’ve decided to have this timely conversation with you. As the world prepares to meet in Quito for Habitat III, urbanisation is already part of Africa’s agenda for achieving the Sustainable Development Goals. The objective of sustainable cities and communities is covered by SDG 11 but is very closely linked to the SDGs for sustainable water management and sanitation, clean energy, decent work, industry, innovation and infrastructure. The issue of sustainable cities is also about sustainable livelihoods.
That is why African urbanisation is also at the centre of our attention here, as we develop the OECD Initiative for Africa. On that basis, allow me to offer the OECD perspective on five key considerations to make Africa’s urbanisation more sustainable.
African cities can be engines of sustainable growth
First, we need to adopt a territorial approach to development that goes beyond the classic rural-urban dichotomy, and instead thinks of urban-rural linkages. Distances between cities are decreasing and the interdependence between urban and rural areas is growing. Cities of all sizes are now centres of intense mobility and trade, and engines of growth and development for entire regions. When it comes to policymaking, we can no longer think of the urban and the rural separately.
Second, urbanisation must translate into greater decentralisation of government services. African mayors – of which we have some representatives here today – need the authority to further mobilise fiscal resources locally, as well as the capacity to plan, implement, supervise and evaluate the policies that they are putting in place. Mayors need to report back to their constituencies with hard facts and figures. For this to happen, central governments must support local authorities with funds, human resources and autonomy. Africa’s partners must also make decentralisation and devolution a key development theme, in order to strengthen accountability and transparency and bring policymaking closer to local needs.
Third, central governments need higher revenues to be able to devote resources to the local level. With local taxes representing hardly 1% of national revenues in many African countries, and with only 10% of national revenues on average going to local administration versus some 26% in the European Union, we should do more.
However, government resources alone, even if increased, are insufficient to address complex challenges such as inadequate urban infrastructures, erratic access to electricity and limited basic services. This year’s African Economic Outlook estimates that some USD 205 billion will be required for sub-Saharan Africa to increase its electrification rate from 30% today to 70% by 2040.
What will make a difference is the push by African countries themselves to create the conditions – from business-friendly reforms to stronger rule of law and a more effective public governance – to attract and retain private investments, both domestic and foreign.
Fourth, governments, both at the central and local levels, must pay greater attention to the supply of basic services, including to the informal sector. The informal economy dominates the African urban context. It accounts for some 61% of all urban employment and informal settlements shelter some 62% of the urban population. Creative solutions are being engineered every day by those living in informal settlements to access basic services. We must help them. Improving access to basic services and enlarging the coverage of social safety nets are key to reducing poverty for better livelihoods but also to gradually reducing informality.
Fifth, investments in urban infrastructure should aim at being green investments. Two-thirds of the urban infrastructure needed by 2050 in Africa has yet to be built. We must get it right, and avoid past mistakes made by industrialising countries in the 20th century. For example, African cities cannot afford to let car-centred urban sprawling be the model for their growth. Recent projects providing mass transportation systems have been promising. Inaugurated in 2015, the Addis Ababa Light Rail has the capacity to transport 60,000 passengers per hour over 31.6 km for the two lines. In Lagos, the Bus Rapid Transit system carries as many as 200,000 passengers per day who pay on average 30% less in fares and spend 40% less time travelling. And there are other benefits: the infrastructure has provided 2,000 direct jobs and as much as an estimated 500,000 indirect jobs.
The OECD is ready to help
The OECD is ready to support Africa’s way forward. I am pleased to announce that, today, the OECD and AUC signed a new Memorandum of Understanding that will further cement our co-operation. This new MOU is a starting point for a rejuvenated and broader co-operation, and I am counting on both the OECD and the African Union to maximise the joint opportunities ahead.
The OECD has already strengthened its collaboration with African institutions, from the African Union, to the African Development Bank and several other regional economic commissions. We are ready to support these institutions in measuring the implementation of the SDGs as well as Agenda 2063. We are already contributing to the development of comprehensive and homogenous sets of data. We intend to strengthen our partnership on a wide array of issues, such as industrialisation, the informal economy, and decentralisation. And, last but not least, I am proud to announce that we will provide a comprehensive data set on African cities – Africapolis – in the next two years.
Ladies and Gentlemen, through this commitment to co-operation, we can better understand and plan for the opportunities Africa faces and the challenges it must meet, without forgetting that the specific solutions must be designed by Africans, for Africans. You can count on the OECD to boost dialogue, exchange best practices and share knowledge to advance Africa’s sustainable development. The OECD is ready to design and implement better policies for more inclusive, safe, resilient and sustainable African cities.
Thank you!
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New book examines provisions in RTAs and their impact on WTO rules and members
A new publication on regional trade agreements (RTAs) and how they can potentially affect rules of the WTO and its members was launched at the WTO on 29 September, Day 3 of the Public Forum. The collection of studies uses what is perhaps the largest dataset yet on RTAs.
“Regional Trade Agreements and the Multilateral Trading System”, edited by Rohini Acharya, Chief of the RTA Section, and authored by staff of the WTO Secretariat, examines provisions contained within these reciprocal trade deals to see to what extent they reflect or diverge from the WTO’s legal texts. The book thus provides a greater understanding of whether RTAs are creating new standards different from the WTO’s and the possible implications these pose. Amid the growing number and complexity of RTAs today, the publication contributes to the current debate on the role of the WTO in regulating international trade.
The contributors to the book look at RTA provisions liberalizing trade in goods and services as well as other provisions covering a range of issues, such as trade defence, trade facilitation, standards, intellectual property and dispute settlement. The chapters are based on all RTAs notified to the WTO up until 2014. Thus, in contrast to other publications, the studies in this book set out to capture all the different approaches and standards developed by RTAs rather than just those taken by the world's largest traders. A final chapter presents views on the implications of these studies' findings for the multilateral trading system and suggests next steps to further enhance understanding on this issue.
In launching the publication, Director-General Roberto Azevêdo highlighted the importance of the book’s findings to the ongoing conversation about RTAs and ways these agreements could be further improved. He noted how the WTO will continue efforts to improve the trading environment on the multilateral track while also seeking to improve coherence with other initiatives.
He said: “More can be done to promote coherence. We have been building a record of success here in Geneva. After a long period when RTAs were at the forefront of the trade debate, I think we are starting to see a shift.
“We will continue our efforts at the multilateral level. And while we seek to improve coherence between different initiatives, I have absolutely no doubt that RTAs will continue to coexist with the multilateral trading system and will in fact reinforce the multilateral system in the future as they have always done in the past.”
Also speaking at the launch, Rohini Acharya said that the book brings together work done by staff members of the WTO Secretariat and adds to the existing literature on RTAs. It had also benefited from a seminar held for WTO members in September 2014 and she hoped it would be useful in the current debate in the WTO on the systemic implications of RTAs for the multilateral trading system.
Bernard Hoekman, Professor and Director for Global Economics at the Robert Schuman Centre for Advanced Studies, European University Institute, was also on the speaking panel at the book launch along with Ambassador Daniel Blockert (Sweden), who chairs the WTO Committee on RTAs.
“This book looks at all agreements out there and sheds a lot of light on issues that are debated often without evidence. It opens the black box of preferential trade agreements,” Mr Hoekman said. “This is a wonderful piece of work and I look forward to the next one which will hopefully help us understand how these things are implemented.”
Mr Blockert said: “We are having this discussion on RTAs everywhere else but not at the WTO. And I do hope that will change. I think there are signs that interest and engagement is increasing.”
Book Launch: “Regional Trade Agreements and the Multilateral Trading System”
Opening remarks by DG Azevêdo
Good afternoon everyone, and welcome.
I am pleased to be with you today, and to be launching this new WTO publication on RTAs and the multilateral trading system.
These agreements existed before the GATT and they continue to grow in number today. So this is a very old relationship, but it continues to evolve.
There are 267 RTAs notified to the WTO and currently in force.
And with the notification of an RTA between Japan and Mongolia earlier this year, all WTO members are now party to at least one RTA.
The publication we are launching today is a further step in improving our understanding of what RTAs are doing and also what we could do at the WTO.
The chapters were first presented at a seminar at the WTO in September 2014 and they have been developed since then, drawing on comments from members.
But the genesis of this publication was a decision taken by the WTO General Council in December 2006, almost 10 years ago, to establish a Transparency Mechanism for RTAs. This Mechanism has allowed the Secretariat to build up an impressive database of information on RTAs – not just how many RTAs are in force today but also the detail of their key provisions.
The information gathered has allowed us to carry out a more detailed analysis of many of these provisions and that is presented to you in this book today.
It covers a broad range of provisions, including: market access and rules of origin in goods, trade defence, trade facilitation, standards, services rules, intellectual property rights and dispute settlement.
A very important feature is that the book doesn’t just examine these provisions in selected RTAs, as others have done. It examines the provisions in all RTAs notified to the WTO. That's quite a formidable task, and I pay tribute to everyone involved.
It shows that in some areas RTAs are going further than multilateral rules and adding new layers of rules among the parties, while in others they tend not to change the existing WTO disciplines.
Interestingly, in the areas where RTAs are introducing new rules, there appear to be common approaches taken by members. We can see this, for example, in services rules, dispute settlement, and intellectual property rights.
This provides some reassurance to the recurring fear that RTAs represent a fragmentation of the global trading system.
This may be good news for exporters, in particular SMEs, which find themselves at a disadvantage when faced with a proliferation of different rules. But, of course, RTAs could do more to assist such exporters.
For instance, rules of origin, which often determine whether an exporter is able to use preferences in an RTA, have become more complex over the years.
One way in which this complexity could be reduced would be to allow cumulation among a larger group of countries. For example, the Pan-Euro-Mediterranean rules of origin allow cumulation among over 20 trading partners – counting the EU as one partner. In this way it allows traders to benefit from regional value chains.
Of course more can be done to promote coherence.
We have been building a record of success here in Geneva. After a long period when RTAs were at the forefront of the trade debate, I think we are starting to see a shift.
I attended my fourth G20 meeting as Director-General earlier this month, and the WTO was at the heart of the conversation in a way that I haven't seen before.
Achievements like the Trade Facilitation Agreement, the decision to eliminate agricultural export subsidies, and others, have clearly been noticed.
Both of these issues are also dealt with by RTAs, but it is clear that a multilateral agreement between 164 WTO members has a much bigger impact.
So we will continue our efforts at the multilateral level. And while we seek to improve coherence between different initiatives, I have no doubt that RTAs will continue to coexist with and reinforce the multilateral system in the future as they have always done in the past.
In closing, I would like to pay tribute once again to all those who have been involved in the publication, especially the contributors who undertook the task of examining every single RTA notified to the WTO. Congratulations on a fantastic publication – as well as on your endurance!
Particular thanks go to Rohini who has been the driving force behind this project.
The book adds important elements to the literature on RTAs and I am sure you will find it to be an interesting and enlightening read.
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Trade facilitation and development: Driving trade competitiveness, border agency effectiveness and strengthened governance
Trade facilitation reforms improve a country’s trade competitiveness and the effectiveness of border agencies. In addition, they can directly help advance development goals such as strengthening governance and formalizing the informal sector.
The present study identifies policies to help reap the full development-related benefits from trade facilitation reforms. UNCTAD research and experience with technical assistance programmes has shown that such reforms should be comprehensive and ambitious and advance the trade and development objectives of countries. Trade facilitation should be linked to investments in transport infrastructure, information and communications technologies and broader trade-supporting services. Since many trade facilitation challenges and solutions are regional, their implementation should be included in regional integration schemes.
Given the linkages between trade facilitation reforms and implementation capacities, development partners need to ensure that their support does not leave out the most vulnerable economies, and should make full use of the promises and possibilities for technical and financial assistance provided for by the Agreement on Trade Facilitation of the World Trade Organization (WTO), reached in Bali, Indonesia in 2013.
Introduction
As trade has become more liberalized through lower tariffs and quotas, the focus of policymakers has shifted to other impediments to the cross-border movement of goods, particularly to those of an administrative and logistical nature. Transport connectivity, the quality of logistics services and border management all play growing roles as determinants of international trade flows. Trade facilitation in particular has been identified as a tool for increased and smoother trade between countries.
It was against this background that WTO included the topic of trade facilitation in its negotiating agenda in 2004. After 10 years of negotiations, the Agreement on Trade Facilitation was reached and in November 2014, a Protocol of Amendment to insert the Agreement into annex 1A of the WTO Agreement was adopted.
UNCTAD has promoted trade facilitation reforms for many decades, dating to its mandate from the first session of the United Nations Conference on Trade and Development (UNCTAD I) in 1964. The organization’s extensive work in this area resulted in the adoption of the Ministerial Declaration on Trade Efficiency in Columbus, United States of America, in 1994, which was, in turn, instrumental for the inclusion of trade facilitation in the agenda of the first WTO Ministerial Conference, held in Singapore in 1996. UNCTAD was thus among those who took the first steps that led to the conclusion of the Agreement on Trade Facilitation.
Today, UNCTAD continues to support broad and ambitious trade facilitation reforms. This support is driven by the following three main motivations:
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Trade facilitation implementation is good for trade. It is particularly relevant for the participation of developing countries in global value chains, trade in manufactured goods and regional integration. Small and medium-sized enterprises, especially, as well as perishable, time-sensitive and intermediate goods sectors in the least developed countries and in landlocked developing countries, benefit from reduced transaction costs and times. The last mile – land transit for landlocked country trade or the journey between a port or airport and the premises of small and medium-sized enterprises – remains in many developing countries the area where trade facilitation can make a difference for small businesses.
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Many specific trade facilitation measures help ensure revenue collection and the enforcement of health, safety and other relevant regulations. A frequent misconception is that there exists a balance or trade-off between trade facilitation on the one hand and risks to public interest on the other. Yet trade facilitation and the protection of the public from lost revenues or health hazards are not competing policy objectives. On the contrary, a large number of specific trade facilitation measures clearly help both the ease of doing business and the fight against undervaluation, counterfeit trade and smuggling. Well-designed trade facilitation measures improve the effectiveness of control agencies. As such, they not only reduce the need for physical inspections, but also increase the likelihood of detecting fraud.
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Trade facilitation reforms are positive steps towards human, enterprise and institutional development. They help small traders, who are often women, enter the formal sector, make economic activities more transparent and accountable, promote good governance, generate better quality employment, strengthen information technology capabilities and generally help modernize societies by bringing benefits related to administrative efficiency. Many trade facilitation measures directly help informal businesses better participate in foreign trade, thus supporting target 8.3 of the Sustainable Development Goals on the formalization and growth of micro, small and medium-sized enterprises.
Important challenges remain. The full benefits of the Agreement on Trade Facilitation can only be realized if the least developed countries and developing countries are in a position to actually implement the measures in the Agreement. The least developed countries require more technical assistance than other developing countries. They also tend to have lower trade volumes; their return on investment for trade facilitation reforms may therefore be lower than for countries with more trade. The least developed countries also often have less absorption capacity for comprehensive technical assistance programmes, such as the institutional reforms required to implement some of the more complex trade facilitation measures.
The challenge for UNCTAD and other development partners is to design implementation-related assistance in a manner which ensures that aid and efforts reach all the countries that need them. This must be a coordinated effort by all bilateral and multilateral development partners, and UNCTAD continues to play an important role in supporting member States in such endeavours.
In the present study, trade facilitation is mainly reviewed in the context of development objectives. The discussion and literature review is combined with a quantitative analysis of the first 73 notifications made by developing countries concerning their trade facilitation implementation capacities in the context of the Agreement on Trade Facilitation. The study examines the potential impact that trade facilitation reforms can have on trade competitiveness (chapter 1), revenue collection and public policy objectives (chapter 2) and human and institutional development, including a number of the Sustainable Development Goals (chapter 3). The implementation of trade facilitation reforms is discussed in chapter 4, and the concluding chapter presents policy implications and considerations for the way forward.
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New IRU study shows how TIR can radically reduce trade costs in Africa
The IRU report, “Transit costs in East and Southern Africa” clearly demonstrates how African countries implementing the TIR Convention can reduce the costs of trade in southern and eastern Africa by hundreds of dollars per container, thus saving billions of dollars and increasing GDP in African countries.
The report unequivocally concludes that the TIR system is the most cost effective transit bond method and could be deployed on all trade corridors in Africa.
Umberto de Pretto, IRU Secretary General said: “The results show that TIR is up to 16 times less expensive than the national bond system on the Northern Corridor between Walvis Bay and Lubumbashi, and is also substantially more cost efficient on the three other African trade corridors in the study.”
He continued: “Some of the world’s highest trade costs can be found in Africa and the world’s road transport organisation, IRU, is working to support governments and the private sector to reduce these costs.”
TIR, the world’s only universal customs transit system and one of the most successful international transport conventions, has a big role to play in reducing the costs of trade. TIR makes border crossings faster, more secure and more efficient, reducing transport costs, and boosting trade and development.
The TIR Convention is gaining momentum with government authorities and businesses on African’s trade corridors. IRU is working closely with stakeholders in Kenya, Uganda, Tanzania, Zambia and Namibia to analyse the potential benefits of TIR and to work towards accession and implementation.
Clive Smith from Walvis Bay Corridor Group said: “Implementing TIR along the Walvis Bay Corridor could have a huge impact on reducing the cost of moving goods between the port and the hinterland. It makes total sense to be looking at implementing a trade facilitation solution that is already proven and successful.”
“TIR fits with Namibia’s vision to become a logistics hub for Southern Africa and we are really keen to see concrete steps taken towards implementation in the region,” he added.
The IRU report provides detailed cost comparisons between the three different methods of acquiring guarantees for goods in transit to meet the requirements of the different revenue authorities. TIR is the most harmonised system that reduces transit costs and time, reduces documentation and simplifies the clearing process.
The report analyses the comparative costs of using a national bond, the Common Market for East and Southern Africa (COMESA) Regional Customs Transit Guarantee (RCTG) Carnet, and the IRU TIR Carnet, for two types of cargo (containerised load and tanker transporting liquid bulk).
The comparisons are along four major transit corridor routes; namely North South Corridor (Durban to Lubumbashi), Walvis Bay-Ndola-Lubumbashi Corridor, Dar Corridor (Dar es Salaam to Lubumbashi) and the Northern Corridor (Mombasa to Kigali).
Transit costs in East and Southern Africa
IRU commissioned a study to analyse the comparative costs of using a national bond, the Common Market for East and Southern Africa (COMESA) Regional Customs Transit Guarantee (RCTG) Carnet where applicable, and the IRU TIR Carnet, for two types of cargo (containerised load and tanker transporting liquid bulk) along four major corridor routes; namely North South Corridor (Durban to Lubumbashi), Walvis Bay-Ndola-Lubumbashi Corridor, Dar Corridor (Dar es Salaam to Lubumbashi) and the Northern Corridor (Mombasa to Kigali).
The report describes the methodology and approach adopted by the consultant in undertaking the analysis and provides detailed cost comparisons between the three different methods of acquiring guarantees for goods in transit to meet the requirements of the different revenue authorities. The study methodology included contacts with reputable clearing agents who were approached for information on how national transit bonds are applied and costed along the different corridors.
The two categories of cargo used for comparisons in each case were;
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1x 40ft container of tyres with value USD 100,000
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1x road tanker of diesel fuel with value USD 30,000
From the discussions and analysis, it is clear that there are no common processes that work for all corridors and the pricing is highly variable. There is intense competition between large numbers of agents with the result that RITs (“RIT” is common terminology for a transit bond in southern Africa) are offered by agents from as low as USD 60 and as high as USD 200 depending on the agent and the agent marketing pressures.
This differential unfortunately raises questions about the reliability of some of the insurance companies used. In other words, some users are concerned that the lower cost bonds may be backed by less reliable insurance companies who are potentially unable to pay any duties and taxes that might be owing to customs.
It is clear from the summary of findings that the regional or single bond system has distinct advantages in terms of cost and time savings over the traditional national transit bond system still being deployed along certain corridors. Regional or single bonds reduce transit time, simplify clearing, reduce documentation and reduce transit costs.
As the systems are not universally available for all countries and corridors, there is still a high level of variation and doubt as to the reliability of the cheaper offerings. This leaves the import-export customer with uncertainty as to the level of risk inherent in each offering and could impact on the level of facilitation offered by customs. The existing regional and national offerings are by definition limited in their application. Importers therefore do not have freedom of choice purely on the basis of efficiency and cost effectiveness. Rather, their choice is prescribed by the route they are taking.
There is clearly a need for a system that can be implemented in all regions and along all corridors. The system should include optimum features and benefits, with the least possible risk. It must be cost-effective to implement and should offer large reductions in the transit time and costs which are caused by the delays in current transit regimes.
The system should offer a standardised methodology with minimum variation in pricing so as to simplify transactions and give maximum efficiency, as these are the primary objectives of import/export operators and makes the most business sense. It is also critical that any proposed system can show the revenue authorities evidence of wholesale international usage and advanced systems for monitoring and control, to give assurance of reliability and security.
From the integrated cost and complexity comparisons described in this study there is only one single transit bond system that meets all the above criteria and could be deployed throughout the region on all corridors and that is the TIR System.
This final report is submitted by Michael Laurence Fitzmaurice, a consultant based in Port Elizabeth (South Africa), for IRU, the world’s road transport organisation based in Geneva, Switzerland.