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Agricultural research in Africa: Investing in future harvests
Africa south of the Sahara (SSA) has seen unprecedented economic growth since the turn of the millennium: poverty rates have steadily declined, and rural livelihoods have improved in many of the region’s countries.
Nevertheless, numerous countries face serious challenges – such as rising and volatile food prices and the adverse impacts of climate change – that require an immediate acceleration of agricultural productivity.
Agriculture is the economic mainstay of many African countries and provides a significant source of employment and staple food requirements. The need to increase agricultural productivity makes agricultural science and technology a key priority for the region’s policymakers and donors.
In Agricultural Research in Africa: Investing in Future Harvests, researchers and other development specialists examine the state of agricultural research and development (R&D) in the region and how such R&D can be improved. The research is an output of Agricultural Science and Technology Indicators (ASTI), led by the International Food Policy Research Institute within the portfolio of the CGIAR Research Program on Policies, Institutions, and Markets. ASTI is recognized as the authoritative source for information on the structure, financing, and capacity of agricultural R&D in low- and middle-income countries.
Overview of agricultural research and development in Africa south of the Sahara
Despite substantial growth in agricultural research capacity across Africa over the past 50 years, most countries still appear to be underinvesting in agricultural R&D and have limited human resource capacity (Figure 1). This combination of low investment and limited capacity hinders their ability to generate the technological innovations needed for agricultural productivity growth. Investments in agricultural research need to be drastically increased, but the effective use of these resources is equally important. Weak organization and management continue to be widespread among African agricultural research organizations, and further capacity building is warranted. A promising opportunity for agricultural research is stronger collaboration among African national agricultural research systems (NARSs) in the form of joint research programs and regional centers of excellence.
The accumulation of new knowledge and improved agricultural technologies and farming practices from research has significantly contributed to improving agricultural productivity. Studies on SSA confirm that agricultural total factor productivity – a comprehensive measure of how efficiently a country’s agricultural inputs generate agricultural outputs – either stagnated or declined during the 1960s and 1970s in most countries but turned positive during the mid-1980s. While not all countries achieved productivity improvement, the ones with a rising stock of knowledge capital from agricultural research were more likely to be in the growth category. A critical strategy for all SSA countries is maintaining collaborative relationships with regional and international agricultural research networks, as well as maintaining a policy environment that enables countries to take advantage of technologies developed elsewhere.
Financial investment
SSA has benefited less from agricultural R&D than other regions of the world because both investment in the development of new technologies and the potential for technology spillovers from elsewhere are low. Overall, agricultural R&D investment levels in most countries still fall well below the minimum target of 1 percent of agricultural gross domestic product recommended by the African Union. Further, agricultural R&D agencies in SSA are more dependent than their counterparts in other developing regions on funding from donors and development banks. Such donor funding has shown greater volatility over the past decade compared with government funding. Halting this volatility requires a long-term commitment from national governments, donors and development banks, and the private sector.
Policy prescriptions to address underinvestment in agricultural R&D should create incentives for nonstate actors to raise their investments. At the same time, one way to create political incentives for agricultural R&D investments is to improve information symmetry between citizens and politicians on the relative costs and benefits of different types of agricultural (and nonagricultural) investments. More in-depth research and diagnostic analysis can also inform development interventions and policy dialogue.
Moving forward, greater transparency of donor contributions is needed to ensure accurate and constructive analysis of development assistance levels, trends, priorities, destinations, and uses, especially for new funding sources. Greater ownership of the development assistance agenda in support of agricultural R&D by leaders, agricultural ministries, research organizations, farmers’ associations, and other constituencies in SSA is necessary.
SSA has entered a phase of rapid commercialization of its food and agricultural system, which provides major new opportunities for privately conducted R&D. Private R&D is currently constrained by small markets, weak public-sector research programs, a shortage of scientists and technicians, and a difficult business environment, including competition with government corporations and weak intellectual property rights. Nevertheless, a more open policy environment in the 2000s is stimulating strong private investor interest in Africa that could spur private R&D. Governments are working to create a better business environment and reduce barriers to trade and foreign investment.
Human resources
Many low-income countries have not been able to keep pace with rapid developments in science and technology because of a lack of appropriate human resource capacity. This is especially the case in the field of agricultural science in SSA countries. Major challenges include lack of staff training and experience, inequitable salary levels and benefits, and resulting high rates of staff attrition. Although the absolute number of agricultural researchers employed in SSA has grown continuously in recent decades, researcher numbers and qualification levels are among the more serious constraints facing NARSs.
Fundamental to building strong human resource capacity in agricultural research is the development of comprehensive recruitment, training, and succession plans to fill existing and anticipated medium- to long-term staffing gaps. Such plans should assess gaps in specific skills and disciplines, the distribution of staffing by age and gender, and degree-level and short-term training needs. An implementation plan is also required for the management and provision of training and mentoring.
Investment in faculties of agriculture, and in particular in postgraduate programs in agricultural sciences, is critical to enhancing agricultural research and innovation and hence agricultural development across Africa. Growth in funding of higher-education institutions (including faculties of agriculture) should be increased considerably, at least to match growth in undergraduate student enrollments. Collaboration between national and regional faculties of agriculture is warranted to streamline, through clustering and specialization, the range of postgraduate programs offered. Such cross-institutional and cross-border collaboration has the potential to facilitate emergence of centers of leadership.
One way to build a strong human capital development infrastructure and to harness gains from innovation in the research process is investment in networks. These types of networks are critical mechanisms for building the next generation of innovation-minded agricultural scientists in Africa. In the long term, a successful professional network needs to provide the incentives to keep researchers employed and actively engaged in Africa and provide the necessary environment for them to succeed in making measurable contributions to the broader system of agricultural innovation.
Measuring effectiveness
Over time, research evaluations have increasingly focused on identifying a causal relationship between agricultural research and outcomes. Policymakers, funding agencies, and implementers of agricultural research need tools to monitor and evaluate aid effectiveness in order to (1) reduce the risk of decisionmaking; (2) provide accountability to government and funding agencies by demonstrating that their investments had impact; and (3) enable implementers to identify problems, flexibly adjust activities, and readjust goals in real time. The “institutional architecture” for such monitoring and evaluation is largely in place. Many countries, however, lack strong articulation of a national agricultural innovation system to bring research, higher education, extension, and the private sector together. Compacts facilitated by the Comprehensive Africa Agriculture Development Programme (CAADP) seek to close these gaps while committing governments to a meaningful funding target to support the system. The adoption of the Science Agenda for Agriculture in Africa (S3A) in Malabo by the African heads of state is encouraging. These heads of state should address the inadequacy of data for planning and monitoring Africa’s agricultural growth and development.
Institutional structures
In the 1970s and 1980s, national agricultural research institutes (NARIs) were created by consolidating disparate agricultural research units across various ministries into autonomous parastatals, which had the unintended side effect of isolating these new entities. This lack of organizational connectivity has continued to the present. To ensure the effectiveness of agricultural research, NARIs in SSA need to be more outwardly focused and develop better linkages with principal actors in the agricultural sector.
Encouraging innovation within the broader agricultural sector, primarily through improved communication, market integration, and institutional linkages across the different actors in the sector, has been formalized in what has become known as agricultural innovation systems (AIS). Organizing research within an AIS requires developing new capacities and skill sets, reviewing internal organization, and expanding field-level operating capacity. The challenge in moving this agenda forward will be in progressively demonstrating pilot-level impact to justify funding for expanded implementation. The most important factor in moving AIS approaches forward, however, will be testing and comparing implementation options in terms of innovation platforms, innovation brokers, and scale.
Although national governments hold the primary responsibility for the organization and funding of agricultural research, these issues have inherent international dimensions because most agricultural research challenges extend beyond national borders. A key concept in the discussion of these issues is what economists call “technology spillovers,” whereby the benefits of advances in knowledge and technology developed in (and paid for by) one jurisdiction spill over into another. Technology spillovers have great potential and can be purposefully created by constructing centers of excellence at the regional level.
The high dependence on donor funding makes the overall design of the African agricultural research system – and in particular its supranational component – quite vulnerable. Both stronger national governments and further political and economic integration at the supranational level are needed to create a local funding base for cross-border agricultural research.
Increasing agricultural productivity in SSA will require the involvement of a large range of actors, including CGIAR. The ongoing CAADP process, the implementation of the S3A, and the recent redesign of the CGIAR Research Program portfolio present important opportunities for CGIAR to collaborate closely with African R&D systems to support agricultural transformation in Africa. These partnerships and new scientific approaches will enable existing gaps to be addressed. The subregional organizations (SROs) and Forum for Agricultural Research in Africa are central coordinating mechanisms to rationalize joint planning and priority setting between CGIAR and NARSs; the CGIAR system needs to recognize the SROs’ role and empower them to fulfill it.
Synthesis
Agriculture in SSA is at a prospective tipping point. Shifting to a growth path based on increased productivity is essential if Africa is to increase rural incomes and compete in both domestic and international markets. Such a growth trajectory depends on deepening rural innovation capacity, which requires a continuous supply of improved agricultural technologies and management practices stemming from an effective and efficient agricultural research system.
The design of the agricultural R&D system in Africa must take into account issues such as the wide scope of research needs and heterogeneity in agroecological and socioeconomic conditions. These factors affect the efficiency of agricultural research, especially in the context of limited government budgets and reliance on highly variable donor aid flows. The basic architecture of such an agricultural R&D system is essentially in place in SSA, but it has not yet coalesced into a fully interactive and integrated system with clear divisions of labor and effective subsidiarity. A significant reason for this is the underinvestment in national systems. Increasing national agricultural R&D investment remains a critical prerequisite for achieving balanced agricultural growth in Africa.
What SSA needs is rural capacity that incentivizes the delivery and uptake of new technologies and motivates the adaptation and innovation of these technologies across the extraordinary heterogeneity of African smallholder farming systems. Such an evolving rural innovation system will enable farmers, agribusiness firms, input and service suppliers, research institutes, and other public-sector institutions to continuously identify technology bottlenecks and to generate adequate solutions to overcome them. Improvements in education and training, better access to markets and information, and more fully developed links between farmers and service providers are also needed to increase productivity – in particular, to encourage the adoption of productivity-enhancing technologies.
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ISO standards help meet SDGs, says World Bank Group expert
Trade and standards are key for meeting the United Nations Sustainable Development Goals (UN SDGs), said Cecile Fruman, World Bank Group Director, Trade and Competitiveness Global Practices. Fruman was speaking at the opening of the annual meeting of the ISO Committee on developing country matters (DEVCO), which took place in Beijing, China, on 11 September 2016.
The SDGs are a priority for the World Bank Group. “We are proud to have recently signed a Memorandum of Understanding (MOU) with ISO, and it’s heartening to note that ISO addresses a number of the SDGs directly.”
Fruman cited ISO 26000 on social responsibility as an example of a standard contributing to sustainable development. “It is the most comprehensive guidance of what an organization should do to contribute to sustainable development. More broadly, ISO’s portfolio of more than 21 000 standards provides practical tools for all three dimensions of sustainable development: economic, environmental and societal.”
For Fruman, a number of key global trends will impact our collective capacity to meet the SDGs’ ambitious targets: demographic change; urbanization; pressure on resources; climate change; and the evolution of globalization. “All of them are likely to both shape the environment for standards and also be shaped by standards,” she said. But standards’ contribution to trade is particularly important.
According to Fruman, trade addresses all SDGs. Take, for example, SDG Goal 2 to end hunger – trade barriers have meant that only 5 % of African food staples are sourced from the continent itself, even though the potential is there to meet their own food security needs. Trade can also boost gender equality (Goal 5) through the creation of economic opportunities, and drive innovation (Goal 9).
“South-South trade is a key feature of the new international trade landscape. As evidence of this, global-value chain-related trade between developing countries has quadrupled in the last 25 years,” explained Fruman. “When I say ‘trade’, it is really shorthand for many of the issues central to the international standards agenda: not just trade of goods and services, but also investment, as well as flows of technology, ideas and people.” In Fruman’s view, standards build the confidence that underpins these different exchanges. “ISO standards have established themselves as the ‘passport’ of international trade.”
She emphasized two powerful ways in which ISO standards contribute to achieving the SDGs. First, by helping to increase developing country participation in trade – failing to do this is one of the greatest barriers to investment and outsourcing. Second, as a vessel for practical solutions to implement the SDGs.
Promoting standardization is therefore an important goal for the World Bank Group. “As we intensify our work in the area of standards, together with ISO and many of you represented here today... closer cooperation and support, especially for developing countries, will be needed to maximize the opportunities that exist.”
From the World Bank Group perspective, there are three pillars key to meeting the SDGs. Standards can contribute to all of them.
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The first is data. We need a more rigorous and systematic approach to collecting and utilizing data to make fact-based decisions, diagnose problems and monitor progress.
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The second is financing. Official development support is not enough; it needs to be complemented by a much greater focus on domestic resource mobilization. Standards can draw private investment.
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The third pillar is implementation backed by partnerships. There is a need to strengthen existing partnerships and form new ones. ISO and the World Bank Group partnership is key.
The ISO DEVCO committee brings together national member bodies from around the world to look at how international standardization can meet the needs of developing countries. Opening their 50th meeting, ISO President Dr Zhang Xiaogang drew attention to the new Action Plan for developing countries 2016-2020, which sets the strategic directions for the next five years.
“This new Action Plan is ambitious. It’s visionary. Its targets are fully aligned with the Sustainable Development Goals set by the United Nations.
“This is very exciting because ISO’s future, our future, is strategically linked with that of developing countries. They make up the majority of our members. And of the world. To progress, we need them to progress.
“There are members who are struggling because of limited resources or complex national situations. They need our help the most. But we also need to support members from emerging economies. They are the ones that can make important contributions to international standardization in the short term.”
Achieving the SDGs and the role of Standards, A World Bank Group Perspective
Keynote Speech by Cecile Fruman at ISO 50th DEVCO Meeting
It is a pleasure to join you today to deliver remarks on behalf of the World Bank Group. My remarks will focus on the Sustainable Development Goals and the role standards play in achieving them. I will begin by outlining the importance of the SDGs and will then turn to the links between trade, international standards and the achievement of the SDGs.
World Bank Group and the SDGs
For those asking what the Sustainable Development Goals, or SDGs, are – they are a set of seventeen aspirational “global Goals” with 169 targets between them which was spearheaded by the United Nations, through a deliberative process involving its 193 Member States, as well as global civil society. The SDGs provide all the key international, regional and national development institutions with a clear focus and mandate to address sustainable development by 2030.
Achieving the ambitious targets articulated in the SDGs is a high priority for the World Bank Group, and our senior management has been heavily engaged in all the different international summits related to preparation of the 2030 agenda. The SDGs are closely aligned with the World Bank Group’s twin goals of ending extreme poverty within a generation and boosting shared prosperity by improving the incomes of the poorest 40% of the world.
Our experience in supporting the implementation of the Millennium Development Goals (MDGs), the precursors to the SDGs, leads us to focus our work on three pillars that we believe are essential.
The first of these pillars is data. To achieve the SDGs, we need a more rigorous and systematic approach to collecting and utilizing data to allow government policymakers and development agencies and practitioners to make fact-based decisions. We need better data to diagnose problems, design policies and programs for local conditions, monitor progress, make mid-course adjustments, and scale up the approaches that work.
The second pillar is financing. Official development assistance (ODA) is still important, especially for the poorest nations, but it’s not enough to achieve the targets set in the SDGs. As part of the 2015 Addis Ababa Action Agenda, the multilateral development banks have agreed to a collective mobilization of $400 billion over a 3-year period. But even that amount falls far short of what is needed.
Development financing will need to be complemented by a much greater focus on domestic resource mobilization. Attracting productive private investment will be essential. Here standards will have a key role to play. Countries that can develop a standards infrastructure that facilitates the adoption of international standards by their firms will be more attractive destinations for investment – and standards will also have a role to play in ensuring that the investments made by such firms are able to contribute to national sustainability objectives.
The third pillar of the Bank Group’s support for the SDGs is implementation at the country level, backed by partnerships. As the world’s leading multilateral development agency, we need to build a shared commitment to the 2030 Development Agenda at the country level. At the same time, we need to help countries leverage global partnerships to deliver on these commitments. Existing partnerships must be strengthened, new partnerships must be formed – and the private sector must be an integral part of these new arrangements.
In the context of partnerships, we are proud to have recently signed a memorandum of understanding (MOU) with the International Organization for Standardization (ISO), and it is heartening to note that ISO addresses a number of the SDGs directly. For instance, the ISO 26000 on social responsibility addresses sustainable development in a coherent and complete way on core subjects and issues such as human rights, labor practices, the environment, fair operating practices, consumer issues and community involvement. It is the most comprehensive guidance of what an organization should do to contribute to sustainable development. More broadly, ISO’s portfolio of more than 18,000 standards provides practical tools for all three dimensions of sustainable development: economic, environmental and societal.
Trade and the SDGs
A number of key global trends are likely to impact on our collective capacity to achieve the ambitious targets. These include: demographic change; urbanization; pressure on resources; climate change; and the evolution of globalization. Without dwelling on these trends in detail, it’s important to note that all of them are likely to both shape the environment for standards and are also be shaped by standards.
For example, the evolution of globalization, with the ongoing increase in participation in trade by developing countries, has created the need for a far wider number of firms to adopt accepted international standards. And at the same time, the adoption of standards has facilitated an ever-increasing participation by developing countries in global value chains, feeding further the evolution of globalization.
Take for example the experience of our host country, China. As its capacity to meet the high standards required to sell in international markets has grown, this has sustained an ever-increasing involvement in trade and global value chains. It has, at the same time, created new opportunities for other countries to supply goods and services to meet the demands of a growing Chinese domestic market. This is part of a much wider shift toward developing country participation in trade serving both developed and developing countries. South-South trade is a key feature of the new international trade landscape. As evidence of this, global value chain-related trade between developing countries has quadrupled in the last 25 years.
It is clear that trade will have a central role to play in achieving the SDGs. When I say “trade” it is really shorthand for many of the issues central to the international standards agenda: not just trade of goods and services, but also investment, as well as flows of technology, ideas, and people. Central to this is the role international cooperation on standards plays in building the confidence that underpins these different exchanges.
Trade will enable the achievement of all the SDGs – not just those where it is specifically mentioned. Let me focus on a few:
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Goal 1 on ending poverty. Trade is a critical driver of growth and poverty reduction as underlined by the experience of countries in East Asia. Trade contributes directly to poverty reduction by opening up new employment opportunities, for example for agricultural producers, with the expansion of export sectors, and by bringing about structural changes in the economy that increase employment of low-skilled, poor workers.
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Goal 2 on hunger, food security, nutrition and sustainable agriculture is clearly linked to trade. Target 2.a – which focuses on limiting agricultural export subsidies – is an objective that is shared by the international community. But achieving Goal 2 will also require a reduction in barriers and distortions that still heavily impact on international trade in agriculture. For example, in Africa, trade barriers have meant that only five per cent of the continent’s food staples are sourced from within Africa itself – while there is potential for African agricultural production to meet the continent’s food security needs.
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Goal 8 on economic growth, employment and work will be supported by efforts to lower trade costs. According to World Bank Group research, low-income countries face trade costs that are around three-times higher than those faced by advanced economies. These high trade costs essentially mean that many firms that might otherwise invest in developing country markets simply go elsewhere, cutting many of the world’s poorest off from investment needed to achieve the SDGs.
There are several other SDGs that highlight the critical role of trade – for instance, in boosting gender equality through the creation of economic opportunities (Goal 5); about the importance of global value chain-based trade in fostering innovation (Goal 9); about the role an equitable multilateral trading system can play in removing inequalities within and among countries (Goal 10); or the way trade can help spread standards that promote responsible production and consumption (Goal 12). However, I think the idea is clear – that trade is relevant to the SDGs not just in those places where it is directly mentioned, but through the way it enables the achievement of a sustainable future.
Of course, this will not happen automatically. We will need to work hard to ensure that an increasingly integrated global economy contributes to the vision of a sustainable future set out in the SDGs. For the International Standards community, assembled here today, this has real significance. Once we understand the centrality of international trade to achieving the SDGs, we know that standards will have a key role to play in this.
The role of standards in trade and the SDGs
To restate points that we are all well aware of, international standards can have a big impact in that they:
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Support sustainable economic growth and productivity gains. Enterprise-level surveys conducted by the World Bank Group in developing economies found that ISO 9000 certification achieved average productivity gains between 3% and 18% for three Central American economies and 5% in China.
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Help to facilitate the adoption of good regulatory practice and create economies of scale that are particularly beneficial for small and medium enterprises;
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Promote open international trade by reducing technical barriers and building confidence in the quality and safety of traded products, and increasingly also services;
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Promote innovation and technology diffusion;
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Level the playing field on environmental and societal issues, and codify international agreements;
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Provide common ground for understanding and agreement on difficult issues – for example, social responsibility;
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Help to protect communities and consumers from unsafe and harmful products and practices.
Boiling these many issues down, I think there are two main ways in which standards help trade make the greatest positive contribution possible to achieving the SDGs.
First, standards have a direct role in enabling greater developing country participation in trade – and greater participation in higher value segments of trade. ISO standards have established themselves as the “passport” of international trade.
However, the capacity to meet standards is one of the leading challenges for developing countries wanting their firms to participate more in trade. A 2013 OECD-WTO survey of lead firms in agribusiness global value chains asked multinationals to identify the key barriers to greater investment and sourcing from developing countries. The clear leading response was “Ability to consistently meet product specifications” (in other words, to comply with standards). This was seen as the top barrier to greater investment in, and sourcing from, developing countries.
The majority of firms in developing countries are small and medium enterprises with limited management capacity, knowledge and financing available to meet the standards required to supply to lead firms or to export directly. The testing and certification they face are often burdensome and costly. A survey of firms in developing countries showed that 44% of firms had to conduct significant duplication of testing procedures to meet foreign requirements after domestic requirements had been met, while 30% of firms had to conduct complete duplication of testing procedures. Close to 70% of firms cited testing and certification costs as an important reason for not exporting.
It is for this reason that the World Bank Group has been expanding its support to building the capacity of SMEs, enhancing linkages between foreign direct investors and SMEs, and strengthening, at the national level, the capacity of governments and private sector organizations to adequately test, inspect and certify products and services. We do this by supporting National Quality Infrastructure (NQI) programs focused on developing solid legal and regulatory frameworks and supporting NQI agencies to achieve excellence. We do this in countries as diverse as Peru and the Kyrgyz Republic.
Second, standards can be used in a targeted way to support the implementation of specific SDGs, with trade playing a key role in supporting the dissemination and adoption of standards internationally.
Specific standards relate to particular goals and targets including, for example: on women’s participation in the economy; on labor standards; and on environmental protection. Through the participation of global networks of firms and suppliers in trade, the use of specific standards can support the achievement of these goals.
To provide a few examples of World Bank Group support in this area, we are implementing a pilot initiative with ISO in Egypt, as part of the MOU that our two organizations signed. We will assist the Ministry of Trade and Industry of Egypt through “STEP Egypt”, a program that will contribute to the country’s path towards energy efficiency through a Standards and Labeling Program as well as a Clean Technology Promotion Program. Both of these will include implementing ISO standards. There is strong interest from many of our clients and partner governments in this kind of approach.
Our project in Turkey on green industrial zones is exploring how ISO standards on energy management can boost performance of firms and lower emissions in industries. We are also exploring ways in which ISO standards can help developing countries increase their ability to export their products.
I would like to reiterate that at the World Bank Group, we stand firmly behind the achievement of the Sustainable Development Goals. While I have focused my remarks today on the central role of trade and standards in achieving the SDGs, I also want to reinforce that the World Bank Group is addressing the SDGs in many other ways by focusing on specific solutions in health, education, infrastructure, etc. Globally, we are intensifying our work, in collaboration with our partners, in the three core areas of data, financing and, most importantly, implementation.
As we also intensify our work in the area of standards, together with the ISO and many of you represented here today, we will be looking for ways to strengthen partnerships. Standards will have an important role to play in achievement of the SDGs – but closer cooperation and support, especially for developing countries, will be needed to maximize the opportunities that exist. I look forward to our discussions on this topic today and in our future work together.
Thank you.
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Sand in the wheels: Non-tariff measures and regional integration in SADC
The Southern African Development Community (SADC) comprises 15 countries with the common objective of regional integration. Member countries have been successful in reducing tariffs since 2000, but intra-regional trade has not increased as expected. One likely reason is that significant non-tariff measures (NTMs) remain.
NTMs are policy measures, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both. The most common NTMs in SADC are sanitary and phyto-sanitary restrictions, certification procedures, quantity control measures, other technical regulations, government procurement, investment restrictions and intellectual property rights.
Some measures are legitimate, such as those relating to food safety and the introduction of invasive species, but other measures may be used to limit trade to protect domestic producers or trade restrictiveness unintentionally exceeds what is needed for the measure’s non-trade objectives.
It is relatively simple to list the numerous non-tariff measures, but assessing their impact is more difficult. Two methods involve trying to measure the effect on quantity using a gravity model or by looking at the gap between world and domestic prices.
Data on NTMs for the SADC region is incomplete and a greater effort at data collection is needed. However, to illustrate the methodology and potential impacts of reducing barriers, we assume SADC countries have similar NTMs as the average for Africa.
The impacts on trade, output, employment and incomes of reducing these barriers are assessed using a global general equilibrium model. Depending on the initial trade flows and the magnitude and scope for removing the trade distorting effects of non-tariff measures, the increases in national exports are up to 2.2 per cent. National output, employment and incomes will also increase in all SADC countries.
Introduction
SADC comprises 15 countries with the common objective of regional integration. Most members eliminated or reduced their tariff barriers between the member countries by 2012. Compared with other regional economic communities in Africa, the share of intra-SADC trade at 10 per cent of the region’s total trade is relatively high, but this has not increased as the tariffs were reduced. Non-tariff barriers remain and their reduction or removal would make a significant contribution to trade within the region.
What are Non-Tariff Measures?
Non-tariff measures (NTMs) are policy measures, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both. NTMs may be legitimate, relating for example to food safety. Non-tariff barriers (NTBs), as distinct from non-tariff measures, refer to impediments that are designed to restrict trade for the benefit of domestic producers. NTBs may take the form of import quotas, subsidies, customs delays, technical barriers, or other systems preventing or impeding trade.
The UNCTAD MAST classification of NTMs is useful in assisting transparency. The distinctly neutral definition of NTMs does not imply a direction of impact nor a judgement about the legitimacy of a measure.
It notably comprises Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT), which primarily have important objectives related to health and environmental protection and which may equally apply to domestic producers. Requirements include tolerance limits for additives or contaminants, quarantine requirements to eliminate pests, performance requirements and conformity assessments such as inspection or certification. These measures are referred to as “technical measures”, as they define mandatory product characteristics rather than taking a quantitative or price-based approach. Technical measures still have an impact on trade and can become substantial barriers. Furthermore, the application can be abused to protect the local industry from competitive imports. SPS measures require ‘scientific justification', according to WTO regulations, but this is somewhat subjective.
Countries are usually setting their own standards for SPS according to their particular environment. This leads to many disputes.
“Non-technical” measures comprise the instruments of trade policy that specifically aim to change quantities or prices of imported goods, such as quotas, price controls or contingent trade-protective measures (anti-dumping, safeguard and countervailing duties). These measures are often termed NTBs due to their unequivocally discriminatory and protective nature.
SADC NTMs
The most common NTMs in SADC are sanitary and phyto-sanitary restrictions (SPS), nonautomatic licensing requirements, export restrictions and technical regulations, according to Kalaba and Kirsten (2012) (see figure 1). Most of the SPS measures apply to agricultural products. In terms of products, the most common application of NTMs appears to be to fruits (over 400 measures), meat (over 250), and dairy products (over 200). Fruits are prone to be carrying insects such as fruit fly whereas meat and dairy products can contain bacteria (e.g. salmonella and listeria) that are dangerous to human health. In addition, food can also contain contaminants such as lead, mercury or pesticides. There are also a large number of measures applying to livestock. These are to restrict the spread of debilitating diseases, such as Foot and Mouth Disease in cattle or the spotted stemborer (Chilo sacchariphagus) in sugar cane. Hence, it is obvious that the appropriate applications of NTMs have significant benefits.
The SADC region was scheduled to develop a Customs Union by 2010, but this has not yet occurred. The next step, a SADC common market, is one of the primary objectives. A common market would remove the need for internal border controls, the source of many complaints impeding trade. The most common complaints when crossing borders include unrecorded fees (bribes) and the discriminatory application of regulations regarding weights and measures on roads.3 Other complaints relate to labelling and standards. Angola requires for example that all imports into the country are labelled in Portuguese. Other examples include a ban in Zambia on dairy imports from neighbouring countries, and a requirement that sugar imports be fortified with Vitamin A.
There is not much trade between SADC members. It is possible that the reason the shares of trade between members is low is because the NTMs are prohibitive or very restrictive, and removing them may increase trade greatly. However, in computable general equilibrium models, low levels of initial trade may imply that reducing NTMs will little impact on trade, particularly if the ad valorem equivalent of the NTMs is in the order of 10-20 per cent.
SADC tariffs have practically been eliminated with the exception of Zimbabwe, Angola and Democratic Republic of the Congo. Zimbabwe has an average tariff of around 16 per cent on imports from South Africa. However, the share of intra-regional trade has not increased in proportion as the tariff have been reduced. It is currently around 10 per cent. An obvious candidate restricting trade is NTMs.
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Major reforms improve ease of doing business in many counties across Kenya, WBG report finds
Following Kenya’s national commitment to devolving local government, its newly-formed counties are enacting significant reforms to improve the investment climate, in a bid to spur economic growth and reduce poverty, says the World Bank Group’s Doing Business in Kenya 2016 report, released today.
The establishment of one-stop shops for multiple government services – known as Huduma Centers; streamlined business start-up requirements; and increased transparency in property registration are among new measures being taken at the national and county level, finds the latest Doing Business in Kenya report, which covers 11 counties. The report examines business regulations affecting domestic firms across 4 indicators: starting a business; dealing with construction permits; registering property; and enforcing contracts.
National-level reforms noted in the report, which covers a four year period from 2012-2016, include the 2015 Companies Act. The Act eliminated the requirement to have registration documents notarized before the Commissioner of Oaths, thus reducing the procedural complexity and time for starting a business. The year 2016 saw another major improvement with the abolition of the stamp duty on the memorandum and articles of association and the statement of nominal capital.
Meanwhile, the Ministry of Land, Housing and Urban Development made its service charter available online this year, increasing transparency in registering property and giving clients access to critical information about the transactions they undertake at the Lands Offices.
These reforms have been matched at the county level with, for example, the opening of a Lands Office branch in Isiolo to facilitate property registration, and with the establishment of an electronic construction permit platform in Kisumu to speed up the process of obtaining a construction permit. By far, the boldest county-level initiative is the Huduma Kenya Program, which has opened one-stop shops in 10 of the 11 counties measured. Huduma Centers offer a myriad of services, some of which facilitate local company registration and property transfers.
Kenyan counties present a mixed picture of performance so far for entrepreneurs, who face an array of obstacles depending on where they do business. The report finds that no county does equally well in all four areas. It is easier to start a business in Uasin Gishu, deal with construction permits in Kisumu, register a property in Nairobi and enforce a contract in Busia.
With the exception of Narok and Kakamega, all counties rank in the top half and bottom half on at least one indicator. In Kiambu, for example, starting a business is easy because it is relatively fast and inexpensive to obtain a business permit but the county ranks near the bottom on enforcing contracts, mainly because the trial and judgment and enforcement phases combined take 14 months. Nonetheless, even in counties with lower rankings, good practices can be found to learn from.
The report finds no clear correlation between size (as measured by population) and the rankings. For example, Nairobi, the country’s capital and most populous county, ranks first on the registering property indicator but last on dealing with construction permits. Similarly, Mombasa, the other urban county, is doing well on registering property and enforcing contracts, but – like Nairobi – ranks in the bottom quarter on dealing with construction permits. Meanwhile, the much smaller Busia ranks first on enforcing contacts, but 7th on starting a business.
However, not all changes have made life easier for entrepreneurs, with seven counties introducing regulations or practices that have increased either the cost, time or complexity to do business. Busia, Isiolo and Kakamega significantly increased business permit fees for starting a business, while dealing with construction permits became more difficult in Busia, Kiambu, Mombasa, Nairobi and Uasin Gishu. This is despite the establishment of an electronic construction permit platform in Nairobi and Mombasa.
“The new initiatives in Kenya are encouraging but challenges remain. The success of reforms hinges on better implementation, coordination across tiers of government and sustained capacity building to empower counties to make it easier to do business,” said Augusto Lopez Claros, Director, Global Indicators Group, Development Economics, World Bank Group.
Doing Business in Kenya was carried out by the World Bank Group at the request of the Kenyan government, notably its Ministry of Industry, Trade and Cooperatives and the Kenya Private Sector Alliance. The study was funded by the Dutch and UK governments. It is the third such report, with previous editions published in 2012 and 2010.
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Senior UN officials highlight importance of South-South cooperation for sustainable development
Senior United Nations officials, including UN Secretary-General Ban Ki-moon and Director-General of the International Labour Organization (ILO) Guy Ryder on 12 September 2016 highlighted the importance of South-South Cooperation in their respective messages on the occasion of the UN Day for South-South Cooperation.
“A manifestation of solidarity amongst developing countries, South-South cooperation continues to significantly drive progress,” said Mr. Ban in his message.
“Despite worldwide market volatility, South-South foreign direct investment is increasing,” he added, highlighting that countries of the South have become important actors in the global socioeconomic arena.
In his message, the Secretary-General also noted the need to further strengthen cooperation among developing countries to improve the lives of billions of people around the world.
Recalling that the role of South-South cooperation was emphasized in the 2030 Agenda for Sustainable Development, the Sendai Framework for Disaster Risk Reduction, the Addis Ababa Action Agenda, the Paris Agreement on climate change and the Agenda for Humanity, Mr. Ban said that that these commitments now need to be translated into actions.
“This is essential to rising to the many grave challenges we face,” he said, noting that though living standards have risen across the global South, developing countries continue to struggle due to numerous and complex challenges that stall progress.
Making particular reference to combatting climate change, Mr. Ban pointed that South-South and triangular cooperation can play an important role in keeping global warming to well below 2 degrees Celsius.
In recognition of this potential, the Secretary-General said that his office, in partnership with the UN Office for South-South Cooperation, launched the Southern Climate Partnership Incubator, last April, to foster and support collaboration for climate action.
“Let us reaffirm our commitment to this invaluable means of achieving sustainable development and improving the lives of billions of people in the global South and beyond,” stressed the Secretary-General.
Similarly, in his own message on the Day, ILO Director-General Guy Ryder noted that traditional aid flows will not be enough to address development challenges.
Mr. Ryder also underlined the need for new partnerships with and among developing nations as one of the best ways to meet the Sustainable Development Goals (SDGs) and the 2030 Agenda, within which the goal of decent work for all is deeply embedded.
To mark the importance of South-South Cooperation, the UN General Assembly decided to observe this Day on 12 September annually, commemorating the adoption in 1978 of the Buenos Aires Plan of Action for Promoting and Implementing Technical Cooperation among Developing Countries.
We Must Seize New Opportunities to Boost Cooperation Among Developing Countries
Secretary-General’s Message for the United Nations Day for South-South Cooperation
The countries of the South have established themselves as indispensable participants in the global socioeconomic arena. Despite worldwide market volatility, South-South foreign direct investment is increasing. There are more and more institutionalized forms of South-South cooperation in the political and economic spheres. These trends prove that collaboration among developing countries is beneficial and thriving.
Now we must seize new opportunities to boost cooperation among developing countries, especially at this time of great promise as the international community carries out the 2030 Agenda for Sustainable Development and aims to realize its bold vision of a life of dignity for all people.
A manifestation of solidarity amongst developing countries, South-South cooperation continues to significantly drive progress. Its role has been emphasized in the 2030 Agenda, the Sendai Framework for Disaster Risk Reduction, the Addis Ababa Action Agenda, the Paris Agreement on climate change and the Agenda for Humanity. Now it is time to match these commitments with actions.
This is essential to rising to the many grave challenges we face. While living standards have risen across the global South, developing countries continue to struggle in the face of numerous and complex challenges that stall progress. Collective action is crucial.
On combatting climate change, South-South and triangular cooperation can contribute to keeping global warming to well below 2 degrees Celsius. In recognition of that potential, last April my office, in partnership with the United Nations Office for South-South Cooperation, launched the Southern Climate Partnership Incubator. This new initiative will foster and support collaboration for climate action.
As we mark the United Nations Day for South-South Cooperation, let us reaffirm our commitment to this invaluable means of achieving sustainable development and improving the lives of billions of people in the global South and beyond.
South-South co-operation has a key role to play in promoting decent work for sustainable development
Traditional aid flows will not be enough to address development challenges. New partnerships with and among developing nations are both the right thing to do and one of the best ways to meet the Sustainable Development Goals, says ILO Director-General, Guy Ryder.
The ILO welcomes South-South cooperation, which supports development based on the principles of equality, mutual benefit, national ownership, non-conditionality and non-interference.
It is equally welcome that new institutional actors have come to the stage, both at the global and regional levels, sharing their experience and supporting other countries on their way towards sustainable development.
The emergence of the South has also opened up new opportunities for countries in the South to participate with a stronger voice in the global development debate, actively shaping the course of change rather than being passive receivers.
We face tremendous global challenges: Persistent poverty and increasing inequalities, both within and among countries, energy and food insecurity, environmental risks and climate change and unemployment affect today northern and southern countries alike. These issues can only be successfully addressed through a global commitment to coherent action.
The Sustainable Development Goals are that global commitment. And all countries, irrespective of their level of development, have resolved to implement the 2030 Agenda for Sustainable Development in which the goal of decent work for all is deeply embedded.
Development can no longer be framed simply as a matter of foreign aid, but as a collaborative path towards these globally defined and nationally-owned objectives. Diverse forms of cooperation and innovative partnerships are needed, both with and among developing countries.
It is not by chance that the targets set for SDG 17 make explicit reference to South-South Cooperation as an instrument to enhance access to technology and innovation for developing countries, to build national capacity and, more broadly, to support the overall implementation of the 2030 Agenda for Sustainable Development.
Reflecting its commitment to South-South and Triangular Cooperation, the ILO is involved in a wide range of projects ranging from establishing gender-sensitive Social Protection Floors in countries in Africa and Asia to the activities of the South-South network against child labour in Latin America. And earlier this year, recognizing that capacity development is key to the success of South-South cooperation, the ILO organized – at its International Training Centre in Turin – the first South-South and Triangular Cooperation Academy, attended by participants from 55 countries.
Stepping up our support for South-South cooperation is not just the right thing to do. It is also the smart thing to do. The ILO is committed to facilitating such cooperation to promote decent work for sustainable development.
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WB expert calls for inclusive green growth
As Rwanda moves to implement green growth strategy and build green secondary cities across the country, World Bank Group chief economist on sustainable development Marianne Fay has advised the country to observe inclusive green growth agenda.
Inclusive green growth is a concept through which countries can make strategic investments and farsighted policy changes that acknowledge natural resource constraints and enable the world’s poorest and most vulnerable to benefit from efficient, clean, and resilient growth.
For this matter, Mariane advises that the sustainable development strategy of building secondary cities must be implemented without putting at stake the development opportunities of the poor.
Speaking to The New Times, last week, in Jeju Island, South Korea, Fay also hailed Rwanda Housing Authority’s new system to manage building permits in secondary cities across the country. Fay believes the move is a breakthrough in achieving green growth and sustainable development.
Fay spoke on the sidelines of Global Green Growth Week 2016, which closed last week in South Korea.
The forum was themed “Maximising Impacts for Inclusive and sustainable Green Growth.”
“It is fantastic that Rwanda is now focusing on secondary cities and not just the big city; because the structures of the cities of tomorrow are being planned today. However, the policy community needs to understand which policy works better for the people and also bring the evidence from different countries on what is there,” she said.
Fay noted that sustainable development is the one that increases the wellbeing of the people without putting at stake the development opportunities of the poor and that of future generations.
In order to do that, there’s a need to have development that is economically, socially and environmentally sustainable, Fay said.
She added that some of the biggest challenges in ensuring that green growth policies are equitable and inclusive are because such policies tend not to go well with the poor.
“We have to make sure that these policies are accompanied by measures that will really help the poor—policies that will be equitable and inclusive. Going green is just not enough; the challenge is to make sure that inclusive green growth is built from the beginning so that we don’t get excited about how growth is green alone,” Fay said.
She said for developing countries such as Rwanda to achieve Sustainable Development Goals (SDGs) on climate change and to successfully implement the Paris Agreement on Climate change, the country has to do so in a way that both mitigates climate change but also allows people to achieve their economic and social ambitions.
“The implementation of these policies should be designed in a way that creates fiscal growth and allow the people to achieve what they aspire to, which is a comfortable life, where we can raise our children in safety and security both from health and from disturbances and without destroying the environment around us,” Fay said.
Fay said inclusive is about including people.
“If, let’s say, people live in or around the forest and you are discouraging them to cut trees, you should be able to involve everyone in the green growth process and encourage them to do something else that relates to their environment in a sustainable way—without destroying the environment. The easiest way we can convince people to go green is to make them see the benefits,” she added.
Private sector vital to green economy
Fay said without the involvement of the private sector, green growth will remain a wishful thinking. She said it is upon the government to design policies and put incentives that would facilitate the development of a green economy.
“Without business community on board, green growth is not going to happen,” Fay warned. “The role of the policy-makers is to create incentives and frameworks within which the business community works. The business community is not going to do something that will make them lose money, at the same time they want to do something that makes them happy and proud; they want to do work that makes money but also improves people’s life.”
She noted that as developing countries aspire for middle class lifestyle, they should do so with consideration of the current status of life, land and population.
“A middle class lifestyle doesn’t have to be the California Vision with a mansion in the suburbs and a nice view in front. It can be a nice apartment in the city or town, and the ability to recycle everywhere; it can be the ability to send your kids to play outside without them having an asthma attack—those are the kind of things we need to think about,” Fay said.
Green growth; what does it actually mean?
Green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which people’s well-being relies.
To do this, it must catalyse investment and innovation which will underpin sustained growth and give rise to new economic opportunities. Green growth is not a replacement for sustainable development. Rather, it provides a practical and flexible approach for achieving concrete, measurable progress across its economic and environmental pillars, while taking full account of the social consequences of greening the growth dynamic of economies.
The focus of green growth strategies is ensuring that natural assets can deliver their full economic potential on a sustainable basis. That potential includes the provision of critical life support services – clean air and water, and the resilient biodiversity needed to support food production and human health. Natural assets are not infinitely substitutable and green growth policies take account of that.
What does it aim to achieve?
Green growth policies are an integral part of the structural reforms needed to foster strong, more sustainable and inclusive growth. They can unlock new growth engines by:
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Enhancing productivity by creating incentives for greater efficiency in the use of natural resources, reducing waste and energy consumption, unlocking opportunities for innovation and value creation, and allocating resources to the highest value use.
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Boosting investor confidence through greater predictability in how governments deal with major environmental issues.
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Opening up new markets by stimulating demand for green goods, services and technologies.
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Contributing to fiscal consolidation by mobilising revenues through green taxes and through the elimination of environmentally harmful subsidies. These measures can also help to generate or free up resources for anti-poverty programmes in such areas as water supply and sanitation, or other pro-poor investments.
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Reducing risks of negative shocks to growth due to resource bottlenecks, as well as damaging and potentially irreversible environmental impacts.
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The scale of the UK’s involvement in Africa’s resources is staggering. So too is its disregard for the rights of those affected
Africa’s natural resources are being appropriated by foreign private interests who are leaving a devastating trail of social, environmental and human rights abuses in their wake.
Over the past few decades, there has been a new scramble for African resources as foreign governments and companies have sought to control the continent’s reserves of minerals, oil and gas.
As documented in The New Colonialism: Britain’s scramble for Africa’s energy and mineral resources, a new War on Want report, 101 companies listed on the London Stock Exchange (LSE) now have mining operations in Africa – and combined, they control resources worth in excess of $1 trillion.
As in the colonial period, the UK government has used its power and influence to ensure these British mining companies have access to Africa’s raw materials, though it is not alone. Much of the Global North takes advantage of a global economic system – made up of regional, bilateral and international trade agreements – that opens up countries in the Global South for exploitation.
Under the guise of helping Africa in its economic development – a mere continuation of the colonial paternal narrative – $134 billion reportedly flows into the continent each year in the form of loans, foreign investment and aid. But at the same time, an estimated $192 billion is extracted from Africa mainly in the form of profits by foreign companies, tax dodging, and the costs of adapting to climate change.
In short, the continent is a net creditor to the rest of the world to the tune of as much as $58 billion a year.
The case of the Western Sahara
While the scale and scope of the UK’s involvement in the exploitation of Africa’s resources is staggering, so too is the complete disregard for the rights of the people involved. A key example of this can be found in Moroccan-occupied Western Sahara.
Morocco has occupied much of Western Sahara since 1975. Most of the population has been expelled by force, many to camps in the Algerian desert where 165,000 refugees still live.
Morocco’s occupation is a blatant disregard for international law, which accords the Saharawi people the right to self-determination, which includes the way in which their resources are used. The International Court of Justice has stated that there are no ties of sovereignty between Morocco and Western Sahara, and no state in the world recognises Morocco’s self-proclaimed sovereignty over the territory. Furthermore, over 100 UN resolutions call for this right to self-determination, though UN efforts to settle the conflict by means of a referendum have been continuously thwarted by Morocco.
Despite the Saharwi people’s right to self-determination, however, six British and/or LSE-listed companies have been handed permits by the Moroccan government to actively explore for oil and gas resources, making them complicit in the Western Sahara’s illegal and violent occupation.
Cairn Energy, based in Edinburgh and listed on the LSE, is one such company. It is part of a consortium, led by US company Kosmos Energy, that in December 2014 became the first to drill for and later discover oil off the coast of Western Sahara.
Saharawis have consistently protested against the exploration activities of oil companies, but by doing deals with the Moroccan government, oil companies such as Cairn have gained access to these reserves and are now directly undermining the Saharawis’ rights.
Foreign oil investment boosts Morocco’s frail veneer of international legitimacy, finances the expensive occupation, and undermines the UN peace process. As oil is developed, the economic implications for Morocco are huge, further cementing its resolve to hold on to its lucrative colony.
British foreign policy
Instead of reining in companies such as Cairn, the British government has actively championed them through trade, investment and tax policies. Successive British governments have been fierce advocates of liberalised trade and investment regimes in Africa that provide access to markets for foreign companies. They have also consistently opposed African countries putting up regulatory or protective barriers and backed policies promoting low corporate taxes.
Furthermore, British governments have continually promoted voluntary rather than legally binding mechanisms to address corporate human rights abuses committed abroad. Such voluntary mechanisms are effectively meaningless.
And let’s not forget the revolving door between the UK’s public and private sector. Many senior civil servants leave their posts for directorships on the boards of these mining companies, and Kosmos Energy is no exception. The former director of Britain’s Secret Intelligence Service MI6, Sir Richard Dearlove, has been a member of the Kosmos Board of Directors since 2012.
The current phase of the scramble for African resources is a clear continuation of British foreign policy goals since 1945. Then as now, access to raw materials is a major factor – often the major factor – in British foreign policy towards the continent. Today, Africa’s natural resource wealth is being appropriated by foreign, private interests whose operations are leaving a devastating trail of social, environmental and human rights abuses in their wake.
In response, communities affected by mining in sub-Saharan Africa are calling for mining revenues to stay in the countries where they are mined; for raw materials to be processed in the countries where they are mined, thereby adding value; and for governments to act to protect people affected by mining rather than protecting the profit margins of corporations exploiting them.
As Chris Molebatsi of Mining Affected Communities United in Action (MACUA) in South Africa, says: “We want to see ethical mining that has respect for the land rights of the people on whose land they are mining. Our demands are for royalties and/or compensation to be paid to communities affected and in particular prior and informed consent to be obtained from those communities, not just from traditional authorities.”
Tom Lebert is Senior International Programme Officer (Africa) at War on Want.
» Download: The New Colonialism: Britain’s scramble for Africa’s energy and mineral resources (PDF, 7.12 MB)
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Singapore flagged as major transit point for illegal ivory trade
Although the domestic market for ivory is small, Singapore has, for the first time, been named “a country of primary concern” by wildlife monitoring network Traffic, for its role as a transit point for illegal ivory trade from Africa to other Asian countries.
The Republic was grouped with Malaysia, Malawi and Togo for their role as a major transit hub in the illegal ivory trade in a report Traffic produced for a Convention on International Trade in Endangered Species of Wild Fauna and Flora (Cites) conference to be held in South Africa this month. Singapore’s inclusion on the list of countries of primary concern will be discussed at the conference, where proposals to increase or decrease controls on international trade in wildlife and wildlife products are also on the agenda.
Using data from 2012 to 2014, Traffic found that Singapore and these countries rarely made ivory seizures and were seldom implicated in seizures made by others. But where there were seizures, the cases tended to involve large quantities. This group had the greatest proportion of seizures that weighed 800kg or more, suggesting that the bulk of the illicit ivory traffic was part of a “higher-level organised criminal activity”, said Traffic.
This group of countries also had a “rather poor” mean law enforcement ratio, which suggested that “considerable quantities of illicit ivory traffic probably move through these countries without being detected”, said Traffic. The figure was calculated by taking the number of seizures each country makes, and dividing it by the total number of seizures the country is implicated in.
The sale of ivory was banned worldwide in 1989. In places like China and Hong Kong, ivory is used in ornaments, jewellery and at times, in traditional Chinese medicine.
Assessing the results, Traffic said that shipping ivory through Singapore – which became more prominent between 2012 and 2014 – is possibly an alternative to Malaysia. The latter remains a leading transit destination for large ivory consignments.
Speaking to TODAY, Traffic’s ivory expert Tom Milliken said Singapore is being “used against its will as a trans-shipment point” so that ivory can reach destinations such as Vietnam and China.
“They are also banking on the fact that 30 million containers move through Singapore every year so the odds are in their favour that their shipment will pass through without its contents detected,” he said.
In response to TODAY’s queries, the Agri-Food and Veterinary Authority (AVA) said it has handled 12 cases of illegal ivory import or transshipment in the past decade. About 10 tonnes of ivory from countries such as Congo, Kenya, Nigeria, and the United States were seized. On top of efforts at regulating trade and public education, the AVA said it also collaborates with international, regional and national enforcement agencies on intel-sharing, risk assessment or profiling to target high-risk shipments, border inspections and investigations.
Asked about the report, the AVA said it has reviewed it and the proposal to list some countries as a “country of primary concern” will be discussed at the upcoming Cites meeting.
Dr Milliken suggested that the AVA commit more resources to stop illegal wildlife trade. “The criminal syndicates are using Singapore because they know that the emphasis is on the interdiction of drugs, but not wildlife contraband. They are exploiting that situation,” he said.
For example, sniffer dogs here are used only to detect drugs and not ivory and rhino horn.
“It would be good to expand the capabilities of the canine units to address wildlife crime – this has been very effectively done in a lot of other countries,” said Dr Milliken. Despite this, he noted that Singapore has been doing a “good job” and important seizures have been made, he added.
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tralac’s Daily News Selection
The selection: Monday, 12 September 2016
Today is UN Day for South-South Cooperation: Will the world’s largest single market transform Africa fortunes?
Opening today, in Beijing: the 39th ISO General Assembly
China has made remarkable progress in international standardization in recent years. China led in the formulation of 182 international standards between 2001 and 2015. The figure was 13 between 1947, when the ISO was founded, and 2000, Zhang Xiaogang, president of International Organization for Standardization said. Despite this progress, China still lags far behind developed countries in international standardization. Around 95% of international standards are made led by Western countries, he said. Only 0.7% of international standards were led by China, and these standards are mainly limited to industries in which China enjoys traditional advantages, such as fireworks, he said. [ISO Week www]
More harmony needed in ASEAN food standards (East Asia Forum)
The food sector has the potential to benefit greatly in the new ASEAN Economic Community. But because food products attract higher levels of regulation, which often varies between member countries, a significant number of non-tariff measures remain. Such regulatory heterogeneity creates challenges for increasing food trade, harmonising standards and ultimately creating an integrated ASEAN single market. For trade purposes, ASEAN members have begun to recognise the desirability of a common set of regional regulations for food companies to adhere to, instead of adjusting to a diverse array of national standards.
Opening today, in Washington: the Ronald H. Brown African Affairs Series
The theme of this year’s Constituency for Africa series is: Setting the US–Africa Agenda for the Next Administration. For the first three days (12-14 Sept) we will convene roundtables on a range of critical issues that we expect to be part of the agenda of the next US administration. We will review the work of the Obama Administration, as well as challenges and opportunities going forward. On Thursday, CFA will convene a senior-level, bipartisan US-Africa Policy Forum to hear the outcome of the various roundtables, and to debate and agree on specific recommendations that CFA will make to the next US administration.
Today, in Stockholm: Migration within and from Africa seminar
More than 31 million Africans have moved to countries other than their birthplace. How can this migratory trend best be described and managed? This question is addressed in a study by Prof Aderanti Adepoju, one of Africa’s leading migration scholars, and Chief Executive of the Human Resources Development Centre in Lagos. The study will be discussed by a distinguished panel: the panel will address how the EU can assist African countries to find long-term solutions for cross-border mobility. For instance, how can the EU support regional migration governance structures in Africa? [The report is available for download] [Blog: EU should focus more on regional governance in Africa]
AU reforms ‘major tool for new funding model success’ (New Times)
The success of a new funding model for the African Union based on collecting taxes on imports and transferring the money to the body’s coffers will depend on whether the organisation will be reformed to bring about its ability to implement the decision, a prominent analyst on the AU affairs has said. In an exclusive interview with The New Times in Kigali last week, Dr Mehari Taddele Maru, assistant professor of Law and Governance at Addis Ababa University and member of the AU High Level Advisory Group, said reforms at the 50-year-old institution are closely tied to its success in collecting contributions from member states under the new funding model. [Ibrahim Mayaki: To fast track regional integration, let’s involve African Presidents!]
China’s BRICS trade pact idea finds no takers (The Hindu)
India and three others in the BRICS bloc - Brazil, Russia and South Africa - have cold-shouldered China’s attempt to bring to the negotiating table a proposal for a Free Trade Agreement between the five major emerging economies. While Beijing’s proposal for a ‘BRICS FTA’ is aimed at boosting trade ties in the grouping through binding commitments on eliminating tariffs, BRICS members barring China are not keen on such a pact. Their apprehensions about the plan include the fear that it could lead to a surge in imports of Chinese goods into their territory — in turn, hurting local manufacturing. The development comes amid hectic preparations for the BRICS Trade Ministers Meeting on 13 October 13 ahead of the BRICS summit on 15-16 October. [Services, trade-barriers to figure in BRICS Trade Ministers meet]
China and World Bank form firm to fund Africa projects (Business Daily)
China and the World Bank have formed an infrastructure firm with an initial Sh50bn ($500m) investment to help fund projects in Africa. Its shareholding comprises China Development Bank, China-Africa Development Fund and China Gezhouba Group Overseas Investments. Others are China Telecom Global Limited Changjiang Survey, Planning, Design and Research, China ENFI Engineering Corporation and HCIG Energy Investment. It expects to rope in more partners next year. Its deputy boss, Nicholas Mitsos, said they want to show that Chinese and entities from the West can team up to underwrite and construct essential public infrastructure in the developing world. [Is global finance adapting to the renminbi? (East Asia Forum)]
Kenya: Parliamentary memorandum on the EPA agreement between EAC partner states and the EU (GoK)
Kenya and Rwanda signed the EPA on 1 September 2016. However, Kenya has to sign and ratify the EPA and inform the EU of its decision by 30th September 2016 to avoid losing its duty-free, quota-free market access to the EU. Pursuant to section 8 of the Treaty Making and Ratification Act, 2012, the National Assembly shall consider the Treaty, ensuring public participation, and may approve the ratification of the Treaty with or without reservations. To meet this deadline, the Speaker of the National Assembly has appointed Tuesday, 20 September, as a day for a special sitting of the House to consider the proposal to approve the ratification of the Agreement. [The 11 page memorandum can be downloaded] [Tanzania to lose Sh1.7 trillion through EPA - Zitto]
The Esibayeni Declaration (Southern Africa Business Forum)
In Swaziland on August 24 2016, SABF convened for its second annual meeting in the context of the SADC Industrialization Week which took place from 23-26 August 2016. The aim was to place these proposals on trade, investment, industrial development and infrastructure in relation to each other and to identify catalytic actions that could drive progress across the board. Four common messages emerged in these discussions:
SADC: youth innovation, entrepreneurship and leadership assessment EOI
The overall objective of the assignment is to conduct an assessment and analysis to establish the situation of the participation and empowerment of youth (aged between 15 and 35 years) as innovators, leaders of business and social enterprises and stakeholders in the priority sectoral areas of the Revised SADC RISDP 2015 – 2020 and the Industrialisation Strategy and Road Map 2015-2063. Specifically, the assignment seeks to:
Zimbabwe: The domestic and external implications of Zimbabwe’s economic reform and re-engagement agenda (Chatham House)
A deepened crisis in Zimbabwe is a risk that Southern Africa cannot sustain, and regional interdependence makes contagion unavoidable. The West is well aware that further economic collapse in Zimbabwe is liable to put further stress on neighbours such as South Africa and Mozambique that are already overburdened with poor economic performance, unpredictable politics and drought. It is time for fresh thinking on ‘least-worst’ options, and on how to incentivize pro-poor change in Zimbabwe that is not predicated solely on economic collapse or narrowly focused on the ageing President Mugabe and his state of health. [Mid-Year Fiscal Policy Review Statement (pdf, MoF)]
In tiny Lesotho, evidence of US trade deal’s success, and its limits (Christian Science Monitor)
“If you look at the economic effects of AGOA, they are easily traced and dramatic, but there are also real changes happening in our social dynamics as well,” says Lehlohonolo Chefa, executive director of the Policy Analysis and Research Institute of Lesotho. “We see, for instance, that AGOA has empowered women by giving them economic freedom and the ability to make financial decisions for their families. This is a basic thing, but it means a lot.” But Lesotho’s case also illustrates how fragile and precarious Africa’s industrial strides under AGOA have been. A decade and a half into the trade deal, Lesotho’s garment industry remains entirely foreign owned – much of it by highly mobile Taiwanese investors – and heavily dependent on its preferential trade position for survival.
Chirundu one-stop border post fostering development (Zambia Daily Mail)
“This year, we decided to commemorate SADC Day here in Chirundu by focusing on the role and importance of the OSBP and other facilities in boosting trade and other economic activities not only between Zambia and Zimbabwe, but SADC as a whole. It is government’s expectation that the media tour undertaken here will result in wider visibility of the strategic cooperation in the SADC region,” Ministry of Information and Broadcasting Services permanent secretary Godfrey Malama says. Cross Border Trader Association secretary Lason Sichulu says the introduction of the OSBP has minimised smuggling to a great extent.
Egyptian firm looks for buyers for 85% stake in Rift Valley Railways (Daily Nation)
Barely two years after Kenyan equity firm TransCentury exited the Kenya-Uganda railway concessionaire Rift Valley Railways, the firm is again on the verge of a major change in shareholding, with reports indicating that Egyptian majority shareholder Qalaa Holdings is looking for buyers. Qalaa is talking to several suitors with a view of selling either part or its entire 85% stake in the concession that still has 17 years to go. Although officials at RVR refused to comment on the reports, sources familiar with the developments say there have been exploratory talks with firms from the US, Russia and South Africa.
Ghana: Port of Tema upgrade (IFC)
If you’re eating a chocolate bar in Malaysia, Belgium, or the United States, odds are the cocoa bean flavoring was harvested in Ghana. Cocoa is one of Ghana’s top exports. Its globe-spanning journey typically starts at the country’s main seaport: the Port of Tema, 30kms east of Accra. The port is about to get a lot bigger and more efficient thanks to an over $1bn project to build and operate a new container terminal. IFC is supporting the expansion by leading a $667m financing package. The project is a joint venture between the Ghana Ports and Harbors Authority, APM Terminals, and Bolloré Transport & Logistics. By increasing the revenues of Ghana’s import and export companies, the boost in trade is expected to lead to as much as a $1.1bn rise in value added to the Ghanaian economy and as many as 450,000 new jobs. [Nigeria: Govt seeks collaboration among African ports, Opportunities and constraints for East African ports]
Kenya: New fisheries law will enable tapping of Kenya’s massive marine resources (Business Daily)
The assenting to the Fisheries Management and Development Act, 2015 by President Uhuru Kenyatta marks the country’s long journey to tap into the massive marine resources that have been unde-utilised for years. The fisheries sector has been faced with several challenges including a weak policy framework, limited access to markets, low productivity (yields) and outputs (quantities), weak institutional capacity, weak monitoring and evaluation and lack of use of informational technology, which have limited the sector’s contribution to food security and wealth creation.
World Development Report 2017: an invitation to comment on the ‘Green Cover’ draft (World Bank)
The World Development Report 2017 seeks to shed light on how a better understanding of governance can bring about more effective policy interventions to achieve sustainable improvements in development outcomes. The Report makes three main arguments. For this purpose, the team is sharing a “Green Cover" of the Report for public consultation. The WDR 2017 goes through 4 stages of drafting and reviews, traditionally referred to by different colours. The “Green Cover" refers to the third stage of this drafting process. The draft will be available in WDR 2017 site until Friday, 16 September.
Promoting agriculture, climate and trade linkages in the EAC – Phase 2: CUTS International, SEATINI workshop documentation
The revenue implication of trade liberalisation in Sub-Saharan Africa: some new evidence (pdf, Lanre Kassim, University of Kent)
Tete Province to have a 4500 hectare, $770m, duty free industrial zone
ITC’s SheTrades Initiative launched in Nigeria
Flower farms targeted by Ethiopia anti-government protesters
Ethiopia’s Renaissance Dam talks put off
China exports Sh2bn cement to Kenya in first half of year
Can China help Mozambique fight deforestation?
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Will the world’s largest single market transform Africa fortunes?
Getting just a sliver of the global trade in goods and services worth more than 70 trillion dollars, Africans have every excuse to decide to trade among themselves.
Many argue that it is the only way to leverage trade to secure a better life for the continent’s more than a billion people who need food and jobs.
The Africa rising narrative might be getting the much needed validation to tackle widening inequality, joblessness, generalized poverty, food and nutritional insecurity that eclipse successes in meeting some of the development targets included in the newly agreed Sustainable Development Goals (SDGs).
A rich but poor Africa
The narrative of a poor Africa is about to change. That is, if Africa stands together as much as it did in fighting for its political independence. This time the fight is for a place on the global trade stage. After years of negotiations and the establishment of several free trade blocs, the signing of the Continental Free Trade Area (CFTA) agreement targeted for December 2017 could set Africa on a new development path.
Africa has more to gain than lose in creating the CFTA, which will rival trade agreements like the EU-US Transatlantic Trade and Investment Partnership (TTIP) and the 16-member Regional Comprehensive Economic Partnership (RCEP). Africa already has the Tripartite Free Trade Area (TFTA) signed in June 2015 combining three largest trading blocs: The East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC).
The three regional economic communities have a combined GDP in excess of 1.3 trillion dollars and a population of 565 million. However, the TFTA, which has been signed by 16 of the 26 member countries, is yet to be ratified to come into force, a blow for the journey to the CFTA.
In their paper on the adoption of the TFTA, Calestous Juma, Professor of the Practice of International Development and Director of the Science, Technology, and Globalization Project at the Belfer Center for Science and International Affairs at Harvard University, and Francis Mangeni, COMESA Director of Trade, Customs and Monetary Affairs, view regional trade as part of a broader strategy for long-term economic transformation.
They argue that African trade integration measures combine the facilitation of free movement of goods and services, investment in infrastructure, and promotion of industrial development as part of the long-term political vision to unleash the continent’s entrepreneurial potential through regional trade culminating in the African Economic Community by 2028.
Global trade is an undisputed source of economic development and a decider between the rich and the poor as it facilitates wealth creation and spurs innovation in every sector.
According to United Nations Conference on Trade and Development, global trade is on the rise but developing countries, many in Africa, account for a small share of this global commerce. Foreign direct investment has gone up in Africa from 9 billion dollars in 2000 to 55 billion in 2014, but rich countries have benefitted more, a situation the first target of the expired Millennium Development Goal 8 sought to address through the development of an open, rule based, predictable and nondiscriminatory trading and financial system.
While an equitable trade system is a global ideal, Africa has the potential to turn the trade tide in its favour by transforming political will into action. Africa has a wide range of natural and mineral resources making beneficiation industries a viable investment option that will help cut unemployment and eliminate poverty which dog many countries in Africa.
Prospects and problems
The prospects of a single market are appetizing: 54 countries, over a billion people and a combined GDP in excess of 3.4 trillion dollars, nearly double the current annual value of traded goods and services in Africa.
“The proposed Continental Free Trade Area will expand the continent’s regional investment to West Africa which is currently not covered by the tripartite consolidation of COMESA, EAC and SADC,” Juma told IPS. “This will enlarge investment opportunities for Africans to invest across the continent. A larger continental market will also make African more attractive to foreign investors.”
Juma, who is writing a book on the CFTA to be published to coincide with signing of the agreement in 2017, believes that a larger single market will enable African factories to operate at full capacity, which will in turn stimulate greater technological innovation.
“The impact on innovation will include greater movement of skills to the continent from outside and across the continent between countries. Africans will be able to learn new skills from their foreign counterparts which will help to strengthen the continent’s technological base,” he said.
Africa has as many trade opportunities as it has obstacles to realizing the free movement of goods, services and people. One of the major obstacles to the CFTA identified by Juma is adjusting national laws and practices to enable countries to implement the agreement. Resistance will come from firms that have been previously protected from external competition. A solution, Juma is convinced, lies in balancing corrective measures with incentives.
“The agreement needs to include remedies and incentives that help countries to adjust to the new regime,” he said. “In this regard, the agreement should not be about free trade but it should also have provisions for infrastructure and industrialisation. It should be an economic development agreement, not just a free trade arrangement.”
Africans not trading with Africans
Statistics from COMESA indicate that inter-Africa trade is a paltry 12 percent compared to trade with Europe and Asia, at nearly 60 percent. At the heart of the poor intra-African trade are prohibitive national trade measures. It is easier to buy products from Europe than for African countries to sell to each other.
Trade policy harmonisation and reducing export/import duties are critical to freeing the movement of goods and people. Last month, the African Union launched the electronic Pan African passport, paving the way for free movement across borders and an important step towards a free trade zone. The passport, initially for African heads of state, foreign ministers and diplomats, will be available to African citizens by 2018.
African governments under the African Union have established the Continental Free Trade Agreement Negotiating Forum which has met several times to hammer out modalities of the continent wide free trade zone mooted in 2012. African Union Commissioner for Trade and Industry, Fatima Haram Acyl, told the first meeting of the negotiating forum in February 2016 that the Continental Free Trade Area will integrate Africa’s markets in line with the objectives and principles of the Abuja Treaty.
It remains for Africa to up investments in road, rail and air infrastructure, communications and seamless service delivery and agriculture which are disproportionate among the 54 member states creating unease as to what a single market will mean for both poor and rich economies.
Economic disparities present a hurdle Africa must overcome as many of Africa’s 54 countries are small, with populations of less than 20 million and economies under 10 billion dollars. National markets would be insufficient to justify investments as adequate supply of inputs and sufficient demand would be too expensive or out of reach that a bigger market will achieve.
The consulting firm McKinsey predicts consumer spending in Africa will rise from 860 billion dollars to 1.4 trillion by 2020, potentially lifting millions out of poverty should a single market be inaugurated.
The United Nations Economic Commission for Africa (UNECA) has calculated that the CFTA could increase intra-African trade by as much as 35 billion dollars per year over the next six years.
Concluding CFTA negotiations this year in good time for the 2017 deadline could open a new chapter in African trade and chart a new path towards economic independence and growth. The only question that remains is, will it happen?
This story is part of special IPS coverage of the United Nations Day for South-South Cooperation, observed on September 12.
Related News
Zimbabwe trims 2016 growth forecast, budget deficit balloons
Zimbabwe’s economy is expected to slow even further this year, the finance minister said on Thursday, worsening financial difficulties that have triggered a series of anti-government protests.
In his mid-year budget speech, Finance Minister Patrick Chinamasa told parliament the economy would grow by 1.2 percent in 2016, from the 1.4 percent forecast earlier in the year.
He said the budget deficit had already overshot the target in the first half of the year at $623 million, and that the shortfall for the whole year could rise above $1 billion.
President Robert Mugabe’s government is also expecting a slightly lower revenue of $3.76 billion for 2016 from an earlier target of $3.85 billion, Chinamasa said.
In the grip of its worst drought in a quarter century that has left 4 million people facing food shortages, the southern African nation is also running out of cash, forcing the central bank to impose limits on imports and withdrawals from banks.
Economic woes are feeding into frustration among Zimbabweans who have turned to social media to organise anti-government protests against cash shortages, high unemployment of above 80 percent and delays in payment of public sector salaries.
“The fiscal position remained under pressure during the first half of the year due to underperfoming revenues and high expenditures that exceeded the target,” Chinamasa said.
“It is imperative Mr Speaker Sir that we urgently address the wage bill, a major contributor to the growing fiscal deficit that is threatening financial sector and economic stability.”
The 2016 Mid-Year Fiscal Policy Review Statement
“Improving Investor Confidence to Enhance Productivity”
The Mid-Year Fiscal Policy Review allows us to take stock of developments during the first half of the year, and progress with implementation of the National Budget, a key instrument in the realisation of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, Zim Asset.
Accordingly, the Review provides Honourable Members opportunity to consider necessary Budget interventions to re-align our fiscal policy thrust, informed by indications from the current and projected state of the economy, as well as anticipated public resources for the entire fiscal year.
The Review also gives progress on our on-going re-engagement process with the international financial community, including such international financial institutions as the International Monetary Fund, the World Bank and the African Development Bank, as well as bilateral cooperating partners.
This Review shall be complemented by the Monetary Policy Statement to be presented soon by the Governor of the Reserve Bank.
The 2016 National Budget Thrust
Under the theme “Building a Conducive Environment that Attracts Foreign Direct Investment”, the 2016 National Budget primarily focuses on continued implementation of Zim Asset over the period 2013-2018, with the goal of transforming Zimbabwe into an industrialised State, capable of affording its people better standards of living.
The framework for this was provided by His Excellency the President in his State of the Nation Address to Parliament on 25 August 2015, as outlined in the Ten Point Plan.
As Honourable Members will recall, the Ten Point Plan highlights the following:
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Revitalising agriculture and the agro-processing value chain;
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Advancing Beneficiation and/or Value Addition to our agricultural and mining resource endowments;
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Focusing on infrastructure development, particularly in the key Energy, Water, Transport and ICTs sub-sectors;
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Unlocking the potential of Small to Medium Enterprises;
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Encouraging Private Sector Investment;
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Restoration and building of confidence and stability in the financial services sector;
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Promoting joint ventures and public private partnerships to boost the role and performance of State owned companies;
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Modernising Labour Laws;
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Pursuing an Anti-Corruption Thrust; and
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Implementation of Special Economic Zones to provide the impetus for foreign direct investment.
Furthermore, His Excellency the President also reiterated “the importance of strengthening re-engagement with the international community … and that … the current re-engagement efforts with both bilateral and multilateral partners, including the African Development Bank and the World Bank under various initiatives should see improvement of relations and the opening up of new financing avenues for long overdue reforms and development cooperation”.
Similarly, His Excellency the President also buttressed on the importance of implementing “policies that will improve the business environment” in order to promote and attract both domestic and foreign investment, necessary for sustaining economic growth.
In this regard, drawing from Zim Asset and His Excellency the President’s Ten Point Plan, Government’s undertaking in its Strategies for Clearing External Debt Arrears and the Supportive Economic Reform Agenda, as outlined to cooperating partners in October last year in Lima, focussed on:
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Strengthening financial sector confidence.
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Accelerating re-engagement with the international community.
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Re-vitalising agriculture and the agro-processing value chain.
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Advancing beneficiation and/or value addition to the agriculture and mining resource endowment.
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Focusing on infrastructure development.
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Unlocking the potential of small to medium enterprises.
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Improving the investment climate.
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Accelerating public enterprises reform and improving public finance management.
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Modernising labour laws, aligning of laws to the Constitution and adhering to the rule of law.
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Pursuing an anti-corruption thrust.
While there are still some hurdles militating against our socio-economic transformation agenda, some milestones were achieved in a number of areas, including advancement of the re-engagement process.
Implementation Progress
Notwithstanding the challenges, allow me to outline some of the policy implementation areas where considerable progress has been noted during the first half of 2016, drawing from commitments in Zim Asset and our re-engagement programme with cooperating partners.
While details are outlined later, the achievements are summarised as follows:
Improving Public Finance Management
In the area of improving on the management of our public finances, the major gain has been the onset of implementation of measures towards sustainable fiscal consolidation.
This is anchored by measures to re-orient expenditures away from employment costs and more towards the development Budget, complemented by introduction of expenditure efficiency measures through decentralisation of public procurement, as well as savings on expenditures on public enterprises.
In this regard, public enterprises reform interventions are benefitting from establishment of dedicated monitoring and follow-up Treasury units for various entities, with a view of enhancing performance and accountability.
Focusing on Infrastructure Development
With regards to infrastructure development, interventions during the first half of 2016 focussed on water and sanitation, power generation and transmission, and ICTs.
As alluded to above, I will highlight the details in the section on developments in Budget expenditures during the six months to June 2016.
Improving the Investment Climate
The on-going review of a number of legislation, together with the removal of regulatory, transactional and administrative hurdles are also positive milestones on improving the ease of doing business environment, as well as strengthening Zimbabwe’s competiveness.
This has seen the country improving its Ease of Doing Business ranking from 171 last year to 155 this year.
Advancing Beneficiation and/or Value Addition to Resource Endowments
The economy is also set to benefit from interventions during the first half of 2016 to advance beneficiation of our domestic resource endowments.
The benefits from value adding our minerals and agricultural products as businesses re-invest into import substitution ventures are much larger over the medium term, with higher growth in contributions to GDP and decline in the current account deficit.
Already, some notable decline has been experienced in the current account deficit during the first half of 2016.
In the mining sector, the value addition of our minerals, such as gold and diamonds is already under way, and the objective is now to ensure implementation of the beneficiation plan developed by platinum producers.
Already, notable gains were registered in the gold sector during the first half of 2016, also benefitting from capacitation of small scale miners through the US$100 million mechanisation facility organised by Government and the Reserve Bank of Zimbabwe.
Increased gold sales to Fidelity Printers and Refiners also benefitted from the designation of gold millers as buying agents.
In agriculture, notable successes are also being experienced in the promotion of hides-to-leather and cotton-to-clothing value chains, among others.
Strengthening the Financial Sector
In the financial sector, we have also been able to deepen financial stability, with banks’ non-performing loan portfolios lowered, and cost of borrowed capital reduced.
Honourable Members will also be aware of recent initiatives by the Reserve Bank to ease tight liquidity constraints through promotion of plastic money, e-banking services, and broader use of multi-currencies, among other measures.
Pursuing an Anti-Corruption Thrust
I am also pleased to report on progress with Government’s anti-corruption drive, now benefitting from pursuit of coordinated Inter-Ministerial interventions, overseeing review of legislation, institutional and other administrative requirements.
These are seeing strengthening of systems of transparency through automation and introduction of online services across the entire spectrum of public service provision, including at our Ports of Entry.
Government also stepped up efforts to plug illicit financial flows as part of promoting anti-money laundering and countering the financing of terrorism.
Aligning of Laws to the Constitution
As Honourable Members will recall, out of the 299 Statutes in our books, Government has identified about 200 Statutes requiring alignment.
Work on the alignment of Laws to the Constitution is progressing well.
In this regard, out of the 200 Statutes identified as requiring alignment, 159 have been completed and processed through this August House, under the General Laws Amendment Bill and other Independent Statutes.
Realising the target of completing the remaining pieces of legislation during the remainder of the year will require that line Ministries accelerate processing timeously respective Statutes that fall within their mandates.
Unlocking the Potential of Small to Medium Enterprises
Resource mobilisation efforts and other business management supportive measures for Small to Medium Enterprises (SMEs) are sustaining their contribution to the economy in terms of employment creation, GDP and poverty alleviation.
The first half of 2016 witnessed the creation of the Small and Medium Enterprises Revolving Fund, which is administered by the Ministry of Small and Medium Enterprises through the Small and Medium Enterprises Development Corporation.
This was complemented by various banking sector SMEs windows, as well as value chain programmes linking SMEs to large established companies.
Notable examples include the Infrastructure Development Bank of Zimbabwe, with an SME Loan Facility of US$30 million, and a US$10 million Localised Empowerment Accelerated Fund co-managed by three banks, namely CBZ, CABS and POSB.
Re-vitalising Agriculture
You will be aware of various Government initiatives to empower the new farmer to fully utilise allocated land, following our Land Reform and Re-distribution Programme.
Central to this, is enhancing productivity and accountability of farmers over effective land utilisation.
In pursuit of this objective, Government intensified implementation of market based facilities as part of empowering and capacitating the new farmers.
During the first half of the year, Government introduced a US$500 million Special Maize Production Programme which targets utilisation of 400 000 hectares of land, with registration of interested qualifying farmers currently underway.
This complements such other facilities as the US$98 million More Food for Africa Programme supported by Brazil, under which farmers’ access, on a cost recovery basis, farm equipment and implements. This includes tractors, disc harrows, fertilizer spreaders, boom sprayers, among other equipment.
With regards to livestock, focus during the first half of 2016 was to control the spread of diseases, as well as rebuilding of the national herd, also prioritising dairy.
As a result, livestock numbers were on the increase in all categories, notwithstanding the drought situation during the 2015/16 season.
Way Forward
Mr Speaker Sir, notwithstanding the above achievements, the economy is still faced with a number of challenges, which cannot all be fully addressed over the short term.
Economic Developments
Growth
The economy is facing strong headwinds, with major challenges being experienced in the economy and business activity during the first half of the year than what the 2016 National Budget anticipated.
This primarily reflects downside risks associated with:
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The impact of the drought on our agriculture, with attendant supply challenges along the agro-processing linkage value chain;
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Depressed international commodity prices, particularly for our minerals;
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Limited domestic and foreign direct investment, also associated with our debt overhang;
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The growing fiscal deficit, also impacting on the liquidity of the financial system, as well as on business activity; and
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The resultant overall fall in incomes and weakening of domestic aggregate demand.
The above challenges are undermining performance of our key productive sectors, inclusive of agriculture, mining, manufacturing, tourism, construction and services.
Revenue Performance Enhancing Measures
Second quarter revenue improvement has been sustained through implementation of a number of measures geared at strengthening tax and customs administration, and the plugging of leakages.
Under the ambit of the Ease of Doing Business programme being coordinated by the Office of the President and Cabinet, Government has put in place an Inter-Ministerial Committee to oversee implementation of systems that improve on efficiency at our Ports of Entry. The Committee is further carrying out a needs assessment for all the relevant agencies operating at our Ports of Entry.
Allow me, therefore, Mr Speaker Sir, to acknowledge efforts being made by ZIMRA and other Government Agencies in plugging revenue leakages, which also contributed to collections rising by 9.4% during the second quarter of 2016.
The initiatives being targeted at improving ZIMRA operational efficiency and effectiveness included:
Automation
Enhanced full automation of ZIMRA systems is underway for improving various operations and plugging of loopholes on tax obligations.
Through the ICT systems – Systems Application Products (SAP) and ASYCUDA World, ZIMRA is strengthening its automation, including introduction of online services, which allow online lodgement of returns, application and verification of tax clearance certificates, improvement of compliance levels and the reduction of compliance costs.
The Systems Application Products (SAP) is also providing ZIMRA with an automated enterprises management resource platform covering tax and revenue management, human resources management, materials management and financial management.
Furthermore, during the first half of 2016, the automation of the sending of automatic reminders on due dates and an upgrade on the calculation of interest and penalty on late returns in the Tax and Revenue Management module was done.
This has seen an improvement in the compliance levels on return submission and payment.
On the other hand, the ASYCUDA World system is providing an internet based platform for the clearance of goods.
During the first half of 2016, the E-state warehouse management module, which provides an automated solution for the management of goods detained in the state warehouse, was piloted at Plumtree Border Post. The system will be rolled out to cover other State warehouses.
The increased use of the E-payments facility has provided convenience to clients and organisational operational efficiencies have also been enhanced.
Fiscalisation
In 2010, Government introduced the VAT fiscalisation recording of taxable transactions in order to create an interface between taxpayers’ fiscal devices and the ZIMRA platform so as to enable real time monitoring of transactions by ZIMRA.
To date, ZIMRA has set up a platform for receiving data. This is performing to satisfaction and is able to receive reports from devices that have been connected.
With regards to progress on the part of operators, two suppliers of fiscalised electronic devices have successfully managed to connect with the ZIMRA platform and are in the process of rolling out to their clients.
In addition, two operators have already started fully transacting their sales data through the fiscal devices.
Authorised Economic Operator
ZIMRA is also implementing the concept of the Authorised Economic Operator (AEO), which entails prioritising tax compliant operators who clear commercial goods through simple customs clearance procedures.
Beneficiaries of the AEO have a good tax record, hence, are subject to less stringent physical examinations.
The AEO concept became effective from 1 January 2016, hence, registered operators are now enjoying the privileges due to them.
Debt Collection
Increased debt collection efforts by ZIMRA through implementation of client tailored payment plans, appointment of agents, debt set offs, among others, have resulted in the recovery of US$326.53 million during the first half of 2016.
This exercise will be pursued on the back of other fiscal measures relating to set offs.
Review of Duty Free Allowances
In order to complement efforts to resuscitate the local industry, the travellers’ rebate, which is granted on goods imported by a traveller once per calendar month, was reviewed downwards from US$300 to US$200.
The remission of duty granted on goods imported by a person returning to the country on the same day that they departed was also reviewed downwards from a free on board value of US$50 to US$10.
Furthermore, consignments transported on behalf of third parties are now compelled to be cleared as commercial importations instead of private importations.
Automated Verification of Travellers for Rebate of Duty
Furthermore, under the auspices of the Single Window System, ZIMRA is also installing an automated travellers’ verification system to curb the rampant abuse of the travellers’ rebate in clearing commercial consignments.
Strengthening General Customs Administration
For purposes of enhancing tax compliance by all potential tax payers and, thus, increasing the tax base, ZIMRA is undertaking street mapping, spin-offs from tax audits, customs post clearance audits, which have increased the number of registered taxpayers in the first half of 2016 by 8 525 new registrants compared to 8 649 new registrants in 2015.
This is being implemented alongside tax payer segmentation according to size – and categorised as, large companies, medium-sized companies, and small-to-medium companies – and along sectors, which include mining, agriculture, wholesale and retail, services, among others.
Each segment was divided into portfolios which are being managed by dedicated focal persons.
Closed Circuit Television
Some of the measures that have already been put in place at the Beitbridge Border Post in order to promote order, transparency and improve efficiency include installation of a Closed Circuit Television System (CCTV).
The CCTV monitors adherence to border procedures by ZIMRA and other agencies.
Currently, Phase 1 of installation of CCTV has been completed. Indoor cameras have been installed, both in offices and sheds, where traffic passes through.
ZIMRA has already procured 2 imaging laptops which will be used to trace the activities undertaken at the border post.
The Second stage, to set up the CCTV in the outdoor area, is being spearheaded by the Ministry of Home Affairs.
Implementation of the above measures aims at attaining, in the end, the ZWS ISO 9001: 2008 Quality Management System certification, which is expected to be completed by December 2016.
Cooperation with other Agencies
Apart from the above initiatives, ZIMRA also received support from other Government Agencies under the following areas:
Electronic Single Window System
In view of the multiplicity of Government agencies stationed at the Ports of Entry and Exit, Government is implementing an Electronic Single Window System which entails co-ordination and co-operation of all agencies involved in regulatory requirements at the Border Posts.
Some of the functions normally exercised by Government agencies, which include collection of fees and levies and enforcement of regulations, prohibitions and licence validations, among others, are being assigned to ZIMRA.
The Memorandum of Understanding to empower ZIMRA to collect fees or perform other necessary functions on behalf of respective Government agencies has been drafted by the Attorney General’s Office.
Advance Cargo Manifest
The advance cargo manifest requires transport carriers to provide in advance, information pertaining to the list of passengers and cargo.
The advance passenger and cargo manifest was extended to other road carriers and the rail transport operators, with effect from 1 January 2016.
Electronic Cargo Tracking System
Transit fraud is increasingly becoming a major source of revenue leakage, which has a negative effect on the growth of the local industry.
Transit fraud occurs where goods destined for the domestic market are cleared through ZIMRA as transit goods for other countries, that way avoiding payment of duty.
In order to curtail transit fraud, Government is introducing Electronic Cargo Tracking, with the State Procurement Board inviting tender submissions from potential service providers.
Monitoring and Enforcement of Regulations
The proliferation of vendors, beggars and unlicenced clearing agents who solicit for business from travellers, has fuelled congestion and corruption at ports of entry.
Efforts are ongoing to decongest the Customs Controlled Area through the removal of Unauthorised Persons from the Customs Controlled Area. The Ministry of Home Affairs, as the lead agency, ensures order and security at the ports of entry.
This is further supported by other enforcement efforts, including road blocks, tax audits and customs post clearance audits.
The provision of 24 vehicles for use by security agencies, and 10 motor bikes has also facilitated monitoring of the border post and the border area by the police and army.
In addition, metal detectors have been procured by the Ministry of Mines and Mining Development for purposes of detecting any minerals being carried illegally by travellers.
Enhancement of Border Efficiencies
Beitbridge Border Post, being one of the busiest inland ports, which links the Northern and Southern Africa corridor, requires rehabilitation in terms of infrastructure and additional human resources in order to adequately cater for the high traffic volumes.
In order to enhance movement of cargo and travellers, Government will engage an independent border post expert to reorganise the Beitbridge Border Post.
The hiring of the consultant is funded under the Capacity Building for Finance and Economic Management Project, being funded by the African Development Bank.
New Border Post
Government has opened the new Mlambapheli/ Mmamabaka Border Post with Botswana. This should also facilitate trade and the convenience of travellers.
Fighting Corruption
Revenue leakages at the country’s border posts remain a major challenge, depriving the country of much needed revenue.
These leakages are through connivance among ZIMRA and other Government agencies’ officials, travellers and other individuals.
The use of fake documents, tampering of scanners by some security personnel in order to facilitate false declarations, connivance between ZIMRA officials and touts to allow entry of goods without paying the requisite duty levels, false declaration of cargo as being in transit to other countries, but ending up being sold in Zimbabwe are some of the methods being applied to circumvent legal requirements.
In its concerted effort to fight corruption and enhance revenue collection, ZIMRA, in conjunction with other Government agencies, has undertaken the following:
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Utilisation of a hotline and social media access points such as WhatsApp, Facebook and Twitter to enable the general public to report corruption;
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Client education through various media channels;
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Whistle-blower facility; and
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Implementation of National Data Processing Centres, thereby reducing face to face interface between officers and clients.
Disciplinary and criminal prosecution of perpetrators of corruption during the first half of 2016, saw 22 cases of suspension being dealt with, of which 13 cases were finalised with 4 dismissals and 9 given final written warnings.
In addition, Mr Speaker Sir, all border control agencies are redeploying their personnel who had served at the border post for more than 10 years.
In order to ensure deployment of officials of good standing, newly deployed employees are required to undertake lie detector tests.
Staff development through training of both ZIMRA and agency personnel is also being prioritised in order to instil expertise, professionalism and integrity among other essential qualities.
Outlook
In the outlook, revenue is projected at under US$3.7 billion by year end. This represents decline from the initial projection of US$3.85 billion.
External Sector
Mr Speaker Sir, the external sector is also characterised by unsustainable trade and current account imbalances, reflecting declining exports, low foreign direct investment flows, and limited offshore lines of credit, against high current account outflows, primarily in the form of imports.
Exports
As at end of June 2016, exports, which contribute over 60% of the liquidity flows into the country, totalled US$1.124 billion.
In comparison with the corresponding period in 2015, exports declined by 9% from US$1.232 billion.
Exports (US$)
2015 | 2016 | |
January | 267 020 357.00 | 249 187 245.97 |
February | 260 732 005.80 | 209 589 639.89 |
March | 188 435 836.28 | 166 595 684.91 |
April | 185 714 488.01 | 157 875 383.79 |
May | 137 501 649.41 | 165 325 205.30 |
June | 192 897 024.92 | 176 418 990.37 |
Total | 1 232 301 361.42 | 1 124 992 150.23 |
Source: ZIMSTAT
The decline in export performance is a reflection of the overall slowdown in real economic activity in 2016, weighed down by the following factors.
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Drought-induced contraction in agriculture;
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Declining global mineral prices;
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Weakening of regional and other trading partner currencies;
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Suppressed capacity utilisation in the manufacturing sector; and
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Lack of affordable external lines of credit.
Imports
The import bill for the first half of 2016, though down 14% on the US$2.9 billion for the corresponding period in 2015, remains unsustainably high at US$2.5 billion
Imports (US$)
2015 | 2016 | |
January | 519 568 574.97 | 395 364 970.01 |
February | 474 425 593.24 | 427 727 110.01 |
March | 499 402 078.04 | 478 066 878.36 |
April | 438 407 700.50 | 356 493 195.37 |
May | 452 935 239.34 | 408 364 622.32 |
June | 532 342 522.07 | 430 555 618.58 |
Total | 2 917 081 708.16 | 2 496 572 394.65 |
Source: ZIMSTAT
The decline in imports is also beginning to benefit from a combination of the Priority list put in place by the Reserve Bank in May 2016 to ensure effective utilisation of foreign exchange and the recently gazetted Statutory Instruments, which removed goods that are locally available from Open General Import Licence exemption.
The still relatively high import level has also meant a high current account deficit, which is estimated at US$2.5 billion during the first half of the year, and constituting 12% of GDP.
This represents a significant and unsustainable outflow of liquidity from the domestic economy.
The containment of over dependency on imports should limit the overall balance of payments projection to a deficit of US$397.6 million for 2016.
Hence, Government will take advantage of the forthcoming 2017 National Budget to propose some of the necessary measures to address any emerging gaps in order to remain on course towards the realisation of the further advancement of our Zim Asset agenda.
Policy Review Thrust
Policy Priorities
Notwithstanding the prevailing depressed economic activity, Government remains focussed on ensuring that the Zim Asset programmes and targets remain on track, with relentless efforts being directed, first and foremost at stimulating production in all key sectors of the economy.
This should be complimented by demand side measures, critical for building a conducive operating environment for our productive sectors and macro-economic stability.
Urgent priorities under the 2016 Mid-Year Policy Review, therefore, relate to the following:
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Poverty reduction;
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Stepping up efforts on stimulating productive sectors;
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Improving the investment/ease of doing business environment;
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Restoring fiscal discipline in the public sectors;
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Rebuilding confidence in the financial sector;
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Advancing the re-engagement process in order to fully normalise relations with the international financial community, that way eventually opening access to new financing;
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Enhancing efforts on mobilising domestic resources for our Zim Asset programmes; and
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Maintenance of the multi-currency regime.
Multiple Currency Arrangement
The multi-currency arrangement remains central to our policy thrust as already enunciated in the Zim Asset.
I, therefore, also want to further allay fears and concerns of re-introduction of the Zimbabwe dollar through ‘the back door’.
As I have on many occasions previously reiterated, and as has also been stated by the Governor of the Reserve Bank, the economy is not yet ready to adopt its own currency, and will remain with the multiple currency regime, until such a time when our economic fundamentals are capable of supporting a local currency.
Hence, our efforts should be directed at building reserves in the different foreign exchange reserve multi-currencies, that way also mitigating against risks associated with using one currency.
This is also in view of difficulties, on the part of traders, in accessing other currencies owing to heavy reliance on the US dollar.
Indeed, some cooperating partners are preferring to be paid in other currencies beside the US dollar.
Government has, therefore, agreed to take steps to move away from sole reliance on the US dollar and encourage the use of other currencies such as the euro and the rand.
Promoting increased use of the euro and the rand will also boost investment and trade relationships between Zimbabwe and the European Union and South Africa, which both present huge markets for our various agricultural commodities.
Stimulating Production
Allow me now to turn to respective proposals on urgent policy interventions to stimulate production across the various sectors. This will also entail me touching on some of the specific sectoral developments during the first half of 2016.
Manufacturing
Support for Local Industry
Honourable Members will be aware of the gazetting of SI 64 of 2016 which removed more goods that are locally available from Open General Import Licence exemption.
This expanded coverage of locally available goods removed from the Open General Import Licence exemption by the gazetting of SI 18-20 of 2014/15.
This implies that individuals and companies intending to import some of the specified goods would have to apply for licences and justify cause for importation of such commodities.
However, the overall objective is to support the local fragile industry from unfair competition, that way, facilitating employment creation and GDP growth.
The selection of goods that now require import licence was done after careful assessment of capacity of respective firms’ ability to supply.
The import licencing requirement, therefore, provides the necessary key leverage as there is huge underutilised capacity within the domestic economy.
Similarly, the supportive import substitution measures through SI 64 to promote domestic production of basic and essential commodities will also create scope for employment generation and enhanced industrialisation.
However, the import substitution measure being pursued by Government, should be viewed as a short term measure meant to protect the ailing industries in the face of economic shocks facing the economy and in line with the SADC Industrialisation Strategy and Road Map.
Hence, companies should take advantage of these temporary measures to grow and become resilient on both the domestic and global markets.
Consignment Based Conformity Assessment
It is also necessary that we protect local industry from the influx of sub-standard imports, some of which do not meet quality, safety, health and environmental standards in line with World Trade Organisation (WTO) Agreements.
In this regard, Government has engaged a French company, Bureau Veritas, to provide Consignment Based Conformity Assessment services, under the auspices of Statutory Instrument 132 of 2015.
The full implementation of this programme started on 1 March 2016, and only conforming listed products are being allowed to enter the country.
The programme has substantially reduced hazardous and sub-standard listed imported products, hence, protecting consumers and the industry from unfair competition.
Re-tooling
The measures Government is instituting in support of domestic industry will need to be complemented by new investments into companies to address challenges related to reliance on cost ineffective antiquated and obsolete machinery and equipment.
Over and above foreign direct investment initiatives to attract new partner investors, Government interventions in support of industry also include reviewing of customs duties on imported equipment, and lowering company costs on capital borrowed from financial institutions.
Pursuant to this, discussions on finalising the second phase of the Distressed and Marginalised Areas Fund (DiMAF) and the Zimbabwe Economic and Trade Revival Facility (ZETREF) are on-going.
With regards to partnering with other investors in industrial revival, I am pleased to acknowledge some of the new investments which were approved in 2015, and are now coming on stream, with some at advanced stages of implementation.
Total capital injection for these projects is about US$324 million, across sub-sectors such as food, drinks and beverages, transport and equipment, metal and metals products, pharmaceuticals, plastics, among others.
In addition, the Zimbabwe Investment Authority (ZIA) also processed 29 investment applications worth US$49 million for the manufacturing sector.
Value Chains
Mr Speaker Sir, allow me to also acknowledge the support we continue to receive from cooperating partners with regards to support for revival of our industries.
In this regard, in promotion of value chains, the African Development Bank is supporting the Beef and Leather Value Chain programme under the African Development Fund Technical Support Facility and Fund for African Private Sector Assistance to the tune of US$2 million.
This targets provision of resources to increase the overall competitiveness of the beef and leather value chains, targeting the dry areas of Matabeleland.
The respective agreement between Government and African Development Bank was signed on 21 January 2016 and the project implementation is expected to commence in the third quarter of 2016.
The project is expected to improve the competitiveness of the beef and leather value chain, primarily through building stakeholders’ production capacities and enabling them to access local, regional and international export markets.
Furthermore, value addition in the cotton and leather sectors is benefitting from a €4.2 million grant received from the COMESA Fund, supportive of development of the sub-regional integration agenda.
This targets the cotton-to-clothing value addition chain, as well as value addition in the hides–to–leather sub-sector. Resources from the grant are also benefiting capacity building programmes.
Export Promotion
Mr Speaker Sir, Government has also been making parallel efforts to boost industrial exports by consolidating and expanding existing markets, whilst also exploring new markets with the strategic focus on the regional markets.
In the context of deeper regional integration, the country is pursuing the industrial export promotion agenda through SADC, COMESA and the Tripartite Free Trade Area of COMESA-EAC-SADC.
Government is also involved in negotiations for the establishment of the African Union Continental Free Trade Area which is aimed at boosting intra-African trade.
Industry is, therefore, being called upon to look beyond Zimbabwe’s borders by exploring into regional export markets, taking advantage of the preferential trading arrangements the country has negotiated.
Improving the Business and Investment Environment
Investment Potential
Given our strategic geographical position, abundant natural resources, diversified industry, supported by well-developed infrastructure as well as a highly skilled labour force, we have much potential to attract foreign direct investment for rapid development of our economy.
In this regard, the rate and level of investment licence renewals also indicate high interest in investing in the country.
This requires that we concretise on all opportunities for investment, including all investment applications approved by the Zimbabwe Investment Authority (ZIA).
During the first half of 2016, most of the US$305.6 million investment applications were in manufacturing and mining.
Hence, initiatives to enhance investor confidence among existing as well as potential investors can, therefore, not be over-emphasised.
Empowerment Policy Framework
Government, in April 2016, provided clarification on the interpretation of the Indigenisation and Economic Empowerment Policy, for the guidance of Government Ministers, the business community and current and would be foreign investors.
Having clarified contentious issues around the indigenisation and empowerment policy, Government, as a matter of urgency, is now amending the respective Act in order to align the existing legislation to the pronouncements made by His Excellency the President, in April 2016.
Accordingly, I will be updating this August House on progress over this matter in the forthcoming 2017 National Budget.
Ease of Doing Business Reforms
Implementation of the Ease of Doing Business (EDB) Reforms to improve the investment climate as well as strengthening Zimbabwe’s competiveness in the global arena is advancing well.
The reforms have already begun to eliminate the disproportionate high regulatory, transactional and administrative burden that is mostly borne by businesses currently operating and wanting to operate in Zimbabwe.
The regulatory burden had left Zimbabwe ranked at 171 last year among 189 nations in the World Bank’s Doing Business indices.
Improvement in the country’s Ease of Doing Business ranking from 171 last year to 155 this year, therefore, bears testimony to the positive trajectory of our reform initiatives.
These administrative and legislative reforms were in the areas of starting a Business and Protecting Minority Investors, Enforcing Contracts and Resolving Insolvency, Getting Credit, Paying Taxes and Trading Across Borders, Construction Permits and Property Registration.
Legislative reforms are targeting the Companies Act and ancillary legislation, whilst the other facet deals with reforming the procedural, time and cost elements of doing business.
As the Ease of Doing Business initiative progresses, Zimbabwe’s ranking is targeted at below 100 by the end of 2016, with further ranking improvement anticipated in the medium term.
Impediments to Exporting
Mr Speaker Sir, the Ease of Doing Business initiative also targets removal of impediments to exporting, a major source for our liquidity.
This is more so as such impediments as border efficiency management systems often end up undermining whatever export promotion programmes and incentives we put in place.
Targeted for immediate removal are such impediments as bureaucratic export permit requirements, as well as the attendant levies and fees related to these regulations and requirements.
Other impediments relate to export documentation, required deposits, high costs of road infrastructure in view of limitations with rail transport and the multiple taxes and levies from different authorities.
Government, as part of the Ease of Doing Business reforms, is reviewing these constraints with a view of streamlining export documentation to reduce processing time, creation of one stop shop for processing of export and import documentation and the review of the related laws.
One Stop Investment Shop
As part of the Ease of Doing Business reforms, Government is pursuing operationalisation of the One Stop Investment Shop, capable of providing investors with adequate investment information and also facilitating investment licencing in a short space of time.
Mr Speaker Sir, I am pleased to report that relevant line Ministries and Departments have now seconded the respective staff capable of taking prompt decisions, at the ZIA One Stop Shop.
This arrangement is parallel to the development of an on-line investment licencing system.
This system brings benefits related to transparency, removal of travelling costs on the part of investors, speeds up the processing of investment applications, and access to information.
Special Economic Zones
Mr Speaker Sir, the set-up of the One Stop Investment Shop at ZIA to facilitate faster approval and licencing of new investments will also aid development of Special Economic Zones.
As indicated in my previous Budget Statement, Government is finalising the crafting of the necessary framework for the creation of Special Economic Zones (SEZs).
The Bill, which provides the incentive framework, has passed through Parliament and is awaiting Presidential assent to become law.
Consultations on the pilot project are ongoing and indications are that the Sunway City Integrated Industrial Park in Harare, the Victoria Falls Financial and Tourism Hub and the Bulawayo Industrial Hub would be used for trials before the SEZ initiative is spread to identified centres.
Successful implementation of Special Economic Zones will attract increased foreign direct investment, that way increasing capacity utilisation in the economy.
National Competitiveness Commission
Cabinet approved the National Competitiveness Commission Bill, which now awaits Parliamentary approval.
The Commission will be responsible, among others, for reviewing regulations on doing business in order to enhance the competitiveness and attractiveness of the country to investors.
Already, Board members comprising of captains of industry have been identified and are offering guidance on competitiveness.
In this regard, the Commission will spearhead the continuous scanning of the business environment, monitor the cost drivers and advise on measures needed to address emerging challenges.
Border Efficiency Management
In an effort to facilitate business and investment, Government has adopted a Border Efficiency Management System which seeks to promote trade facilitation and reduce congestion at the country’s border posts through encouraging efficient and joint clearances by Border Agencies.
In this regard, Government has put in place an inter-Ministerial Committee to oversee implementation of the border efficiency system.
Critical, will be success with regards to efficient and joint clearances by Border Agencies, including the rationalisation of their operations.
In the medium term, further improvements are envisaged as we transform such Ports of Entry as Beitbridge into One Stop Border Posts.
Trade Insurance
Trade insurance is essential to mitigate risks related to exporting and importing.
It is in this context that Zimbabwe applied for membership in the African Trade Insurance (ATI) Agency in 2010. The membership Agreement was signed in 2011, ratified by Parliament and is now awaiting instruments of ratification to be issued by His Excellency the President.
In the 2016 National Budget, I indicated that Zimbabwe would be expected to contribute a minimum capital subscription of US$15 million.
Of this, the AfDB pledged to support the country with US$5 million, while US$10 million was to be mobilised from local banks and the private sector.
In this regard, I am pleased to announce that Government, through the Reserve Bank, has paid US$10 million for Zimbabwe’s membership in ATI whilst the AfDB has availed UA2 080 000 (approx. US$2.9 million).
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AU reforms ‘major tool for new funding model success’
The success of a new funding model for the African Union (AU) based on collecting taxes on imports and transferring the money to the body’s coffers will depend on whether the organisation will be reformed to bring about its ability to implement the decision, a prominent analyst on the AU affairs has said.
In an exclusive interview with The New Times in Kigali last week, Dr Mehari Taddele Maru, assistant professor of Law and Governance at Addis Ababa University and member of the AU High Level Advisory Group, said reforms at the 50-year-old institution are closely tied to its success in collecting contributions from member states under the new funding model.
He says that the reforms have to be focused on implementation capability because that is the main problem for most of the organisation’s decisions on self-financing.
“AU has to have the capability to follow up with the member states to see whether they are respecting the decision and member states have to go beyond the capability to implement or collect the levies but also have the willingness and determination to pass on what they collect to the AU Commission,” he said.
The 27th African Union Summit, took place in Kigali in July, ended with a commitment to fast track initiatives designed to make the African Union Commission (AUC) financially independent.
That independence, leaders said, is key to making the body more efficient and would spur the continent’s ambition to become a truly peaceful, independent and prosperous bloc.
That’s why African heads of state and government at the summit decided to start a new funding model for the AUC, which would see all the 54 member countries contribute some $1.2 billion to the Union’s coffers every year through levying 0.2 per cent tax on eligible imports.
The funds will be directly sent to the AU secretariat, which would use it in financing operational costs as well as development programmes and peace support operations.
Not easy to implement
But Dr Mehari said that is a big assumption, and its implementation may prove challenging given the AUC’s inability to supervise member states and the likely lack of determination and capability among the latter to follow through with the collection of the money and hand it over to the AU.
“That member states will effectively collect the money; that they have the capability to collect, the willingness to collect, and the determination to transfer the money that they collect from importers to the AU is an assumption. This is the biggest assumption that this formula has,” he said.
The new funding model was introduced as a solution to the AU’s overreliance on foreign aid, which meant that the continent often intervened too late in conflict-torn regions while it also had little influence on the nature and extent of intervention.
Implementation of the new financing model is slated to start next year according to resolutions from the 27th African Union Summit.
For the plan to succeed, Dr Mehari said that reforms within the organisation, whose supervision was assigned to President Paul Kagame, have to be fast-tracked because they are closely tied to the success of collecting and properly using the money that will be obtained.
“President Kagame has been burdened with the highest possible responsibility that any head of state could have and that is reforming a 50-year old institution,” Mehari said.
At the Kigali summit, African Heads of State and Government tasked President Kagame to lead a new effort to reform the AU Commission and the Union to make them more efficient.
Addressing a post-Summit news conference, the President welcomed the task, saying that he will consult with his colleagues throughout the restructuring process.
Economic downturn threatens prospect to end extreme poverty by 2030, study finds
Global downturn to cause 38 million more people to remain in extreme poverty than previously thought, jeopardizing prospects for first UN Sustainable Development Goal
Robust economic growth in developing countries – which has far outpaced that of most high-income countries – contributed mightily to achieving the United Nations Millennium Development Goal of cutting extreme poverty by half five years ahead of its 2015 deadline. But efforts to eradicate extreme poverty by 2030 – the first UN Sustainable Development Goal (SDG) – are now jeopardized by a deteriorating global economic outlook, according to a new study released on 6 September.
The study by the International Food Policy Research Institute (IFPRI), conceptualized and financed by the International Fund for Agricultural Development (IFAD), takes into account changes in projected growth rates in both key driver economies such as the United States, Europe, and China and in many developing countries. It estimates that the extreme poverty rate in 2030 will be 5.2 percent, not the 4.8 percent projected without the global economic downturn. This will leave an additional 38 million people still living on less than $1.90 a day, the benchmark for extreme poverty, in 2030.
“The economic slowdown doesn’t mean that the poverty rate won’t decline substantially between now and 2030,” said David Laborde, senior research fellow at IFPRI. “But the economic downturn is hindering the effort to fight extreme poverty. And if we are serious about completely eliminating absolute poverty, we’ve got to identify the right policies and investments to raise the incomes of poor people and reduce their vulnerability to shocks, especially in rural areas.”
Rural areas, where most of the world’s 900 million poor people live, will be hit hardest, with poverty both higher than in urban areas and more adversely affected by the slowdown, the study finds.
“This study shows that the gains we have made in rural poverty reduction in the past 25 years are seriously jeopardized by the recent economic slowdown,” said Rui Benfica, Lead Economist with the Research and Impact Assessment Division at IFAD.
“If we want to eradicate extreme poverty, we have to focus our investments on rural areas where the majority of poor people live. Through the right investments, policies and programs, we need to sustainably increase agricultural productivity – a key contributing factor to rural income growth. Promoting economic diversification and trade will also be critical to continue to move rural people out of poverty.”
The IFPRI researchers used economic modeling and built on projections from the International Monetary Fund to assess the impact of a projected global economic slowdown through 2030 on poverty. They analyzed key impacts of the economic downturn on the poor – especially declining productivity, reduced saving and investment, and changes in wages and consumer prices.
The projections offer a gloomy look at the world’s struggle to eliminate poverty, its prospects complicated by an unstable global economic environment, including events such as Brexit, large-scale migrations due to wars or climate shocks, and other problems that threaten growth.
Almost all of the countries with large numbers remaining in extreme poverty in 2030 will be in sub-Saharan Africa or South Asia, the study shows. Worldwide, more than 130 out of 189 countries will experience reduced income growth, the projections show, with the average global GDP growth rate falling from 4.1 percent to 3.1 percent between 2011 and 2030. That one percentage point per year difference will effectively trap tens of millions of people in extreme poverty, unless additional steps are taken to address their predicament.
“Growth alone may not be enough to meet the SDG goals of eliminating poverty and hunger,” said Will Martin, senior research fellow and co-author of the study. “With the deterioration in the economic outlook, an even stronger focus on policies for poverty reduction will be vital for achieving the first Sustainable Development Goal of eliminating poverty.”
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Sigh of relief as Europe gives East Africa four months to sign EPA
Kenya has received a four-month reprieve to ratify the trade agreement it signed with the European Union in Brussels on August 29, providing a ray of hope for exporters whose shipments to the EU market would have started attracting duty after October 1.
The European parliament extended the deadline to withdraw Kenya’s preferential market access to the EU market to February 2, 2017 after the country signed the Economic Partnership Agreement (EPA), demonstrating its commitment to the trade pact.
“We remain committed to the Economic Partnership Agreement reached with the East African Community, which we still expect can be signed and applied by all concerned countries. The signature process is ongoing with the region desirous to move ahead in unison. Meanwhile the free market access of Kenya, which has signed the EPA, is extended beyond 1 October until the beginning of January 2017,” said Stefano A Dejak, European Union Ambassador to Kenya.
However, some EU Members of Parliament said Kenya has been given up to February next year to have the deal signed by all EAC countries.
European Union MPs who revealed the four-month extension are Helmut Scholz and Marie Arena. The deadline to remove Kenya’s preferential market access privileges had been set for October 1, meaning that from October 2 Kenyan exports to the EU would have been subject to duties, which would have made them less competitive.
The EU is Kenya’s biggest export destination, taking up cut flowers, French beans, fruit, fish, textiles, coffee and tea.
“We persuaded the EU parliament not to lock us out of the preferential terms and our request was accepted. We will now take the document to the Kenyan parliament for ratification so as to make it legal,” said Dr Chris Kiptoo, Kenya’s Principal Secretary in charge of Trade.
Lawmakers from the EU parliament also told an ongoing conference in Arusha that the deadline for signing the EPA has been extended from October 2016 to February 2, 2017.
The deadline for the EAC member states to sign the trade agreement as a bloc was set for October 1, 2016 but there has been resistance from some countries.
Kenya and Rwanda have already signed the agreement while Uganda has expressed a commitment to append its signature.
Tanzania has refused to sign, saying the agreement would have serious consequences for its revenues and the growth of its industries.
Burundi, which has been sanctioned by the EU following political unrest, said it would not sign the trade deal, given its currently deteriorating relationship with Europe.
The trade deal requires that all EAC states commit to it for it to take effect.
The EPA negotiations have been undertaken by the EAC as a bloc in line with Article 37 of the Protocol on the Establishment of the East African Community Customs Union and the Summit decision of April 1, 2002.
The Protocol provides that EAC partner states negotiate as a bloc on matters pertaining to participation in the World Trade Organisation and ACP-EU arrangements (under the Cotonou Partnership Agreement between the ACP Group of States and the European Community).
The EAC heads of state last week requested a three-month extension to deal with the concerns of some of the remaining partner states before signing EPA as a bloc.
The 17th Extraordinary Heads of State Summit called upon the the EU not to punish Kenya and directed the EAC Secretariat to communicate to EU on this matter.
However, The EastAfrican has learnt that it is unlikely that Tanzania will relax its hardline stance during the three months and the EAC Council of Ministers is considering a proposal for variable geometry, where member states would be allowed to sign the agreement at different times.
“I think we will request the Summit to consider a proposal for countries to sign the agreement at different times if some are not ready. There is a need to adopt a flexible approach if people are not ready,” Betty Maina, Kenya’s Principal Secretary in charge of East African Affairs, said.
“It is unlikely that after the three-month period we shall have a fundamental change of country positions,” she added.
Kenya has been exporting products to the EU market under the Market Access Regulations (MAR) since 2007, but this was to be abolished on October 1.
It is feared that failure to sign EPAs as a bloc would give rise to partner states operating in different trading regimes.
Kenya is classified as a developing country, while Uganda, Rwanda, Burundi and Tanzania are considered Least Developed Countries. Failure to sign EPAs would mean that Kenya’s exports to the EU market would now start attracting duty under the Generalised Scheme of Preference granted to developing countries.
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Kenya: Parliamentary Memorandum on the Economic Partnership Agreement between EAC partner states and the EU
On Wednesday, September 7, 2016, Parliament received the final version of the Economic Partnership Agreement (EPA) as signed by the Government Republic of Kenya on 1st September 2016.
The EPA is a contract between the Member states of the African, Caribbean and Pacific regions on the one part, and the European Community and its Member States on the other part. The Economic Partnership Agreement is intended to address regional and national market concerns as well as promoting trade opportunities through regional integration and enhancing access to global markets.
Africa has been negotiating its terms with the European Union (EU) as a bloc, with the different regional blocs in the West, South and East required to sign the EPAs. As such, Kenya has been negotiating the EPA with the EU and other East African Community (EAC) Partner States, since October 2007, pursuant to the EAC Summit directive of 2002 and 2007 for the EAC to negotiate the EPA as a bloc. The Executive has explained that, by ratifying the EPAs, the country is assured of enjoying export tariffs to the EU and guaranteed duty-free quota-free market access of specified items to the EU market.
Kenya and Rwanda signed the EPA on 1st September 2016. However, Kenya has to sign and ratify the EPA and inform the EU of its decision by 30th September 2016 to avoid losing its duty-free, quota-free market access to the EU. Pursuant to section 8 of the Treaty Making and Ratification Act, 2012, the National Assembly shall consider the Treaty, ensuring public participation, and may approve the ratification of the Treaty with or without reservations. To meet this deadline, the Speaker of the National Assembly has appointed Tuesday, 20th September, 2016 as a day for a special sitting of the House to consider the proposal to approve the ratification of the Agreement.
Objectives of the Memorandum
The objectives of this Memorandum are to:
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Inform both houses of Parliament on the finalisation of the Economic Partnership Agreement (EPA) negotiations
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Inform both houses of approval by Cabinet in June 2016 for signing and ratification; and
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Seek Parliament’s ratification of the EPA in good time to allow for notification of the ratification to the EU Council before 30th September 2016, the deadline that Kenya needs to meet in order to avoid trade disruption in the EU market.
Background
The Economic Partnership Agreement (EPA) negotiations begun in 2002 at the all-ACP Level. This phase was aimed at setting the principles and objectives of the negotiations. The substantive negotiations started in 2013 at the regional level. The negotiations were finalised in October 2014, with the initialing of the agreement to signify conclusion of the negotiations.
Trade between Kenya and the EU for over 30 years until 31st December 2007 has been conducted under a non reciprocal preferential Trade regime under Lome Conventions (1975-2000) and later under the Cotonou Agreement (2000-2007). Most of Kenya’s (and other ACP countries) exports entered the EU market on duty free under this arrangement.
The main objective of the preferential trade regime was to promote industrial development in the ACP countries. However, the preferential trade regime did not achieve its overall objective, since the share of Kenya’s exports in the EU market remained very low and scarcely diversified.
The legal scrubbing of the EPA has been concluded and currently undergoing translation into the 23 EU languages and Kiswahili. The agreement is expected to be signed in June, once the translation has been finalised to pave way for the ratification process. Ratification, according to the EU roadmap, should be completed by October, 2016. The Agreement will enter into force when all the EU Member States and the EAC Partner States have deposited the instruments of ratification. However, there is a possibility to start implementing the agreement on provisional basis once it has been signed.
Problem analysis and justification
The overall objective of the ACP-EU preferential trade regime, of promoting ACP countries exports to the EU faced challenges that could not be addressed by the regime. For instance the objective of promoting the industrial development in the ACP countries failed due high tariffs, tariff escalations and tariff quotas that affected some agro-processed products. The share of Kenya’s exports in the EU market remained very low and scarcely diversified and most of it in primary form/raw materials. The total imports from the ACP into the EU decline from 6.7% in 1976 to 2.0% by 2007. Even where trade volume improved, the value did not follow suit.
At the same time, the regime faced additional challenges at the WTO. The non-reciprocal preferential market access extended to Kenya and other ACP countries was often challenged by other WTO member countries for being discriminatory to WTO developing countries who were not members of the ACP Group and therefore incompatible with the WTO rules. Brazil, Australia and Thailand challenged the regime, at the WTO Dispute Settlement, on the EU-Sugar Subsidy issue (ACP Countries under the Sugar Protocol); Similarly the ACP-EU Banana regime was challenged twice (Banana I and II) by the Latin American Countries for the same reason of being a discriminatory regime.
Additionally, ACP continued to face obstacles in accessing the EU market due to the supply side constraints, and technical and health standards that were imposed unilaterally by the EU.
Consequently, the ACP and the EU agreed to address these concerns through the Economic Partnership Agreement which is compliant with WTO rules and as well as promoting South-South trading opportunities through regional integration and enhancing ACP countries’ access to the global market.
The commitment by the EU and ACP to enter into EPA arrangement is enshrined in the Cotonou Partnership Agreement which was signed in June 2000. The legal basis of EPA therefore is the Cotonou Agreement, which Kenya is a signatory State.
Way forward
Given the fast approaching deadline of 1st October 2016, the Parliament needs to ratify the EPA by 20th September 2016 in order to allow for the notification of the ratification to the EU Council by 30th September 2016. This is the only option that Kenya has in order to save over KES125bn EU export market, which has potential to be lost overnight if the ratification is not notified to the EU by 30th September 2016.
Other negative ramifications to the economy that need to be avoided is threat of about 4million people working directly or indirectly with companies or ventures that are exporting to the EU, losing their livelihoods. Further, investments worth over KES2bn in floriculture, horticulture, agro-processed products, fisheries, among others is also at stake, come 1st October 2016.
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Services, trade-barriers to figure in BRICS Trade Ministers meet
Member countries would also deliberate on increasing cooperation in IPR related matters to promote innovation and entrepreneurship.
Non-tariff barriers, ways to promote services sector and cooperation in intellectual property rights (IPRs) are the key issues to be discussed in the meeting of trade ministers of BRICS on October 13 in New Delhi. Besides, trade ministers of Brazil, Russia, India, China and South Africa (BRICS) would also deliberate on enhancing collaboration among small and medium enterprises (SMEs), an official said.
“Before this meet, senior officials of these five countries would meet on October 11 and 12 to work out the details about ways to boost commerce and investments,” the official added.
The officials of the group are also expected to work on an outcome document which could find place in the communique released after the meeting of the trade ministers. Member countries would also deliberate on increasing cooperation in IPR related matters to promote innovation and entrepreneurship.
Experts stated that India should raise the issue of non- tariff barriers which domestic exporters are facing in Brazil, Russia and China.
“Exporters face lot of issues related to registration of pharmaceutical products, sanitary and phytosanitary matters in agri goods and certain mandatory norms in IT sector. These acts as barriers which needs to be removed to boost trade among BRICS members,” said Ajay Sahai, DG of Federation of Indian Export Organisations (FIEO).
Trade Expert and Professor at Jawaharlal Nehru University, Biswajit Dhar, said member countries should enhance their cooperation not only at regional level but also at multi-lateral forums like WTO.
“Currently there is lack of coordination among BRICS members on trade related matters. Close coordination is required in that front at the WTO related matters also,” Dhar said.
There will also be a meeting of BRICS Business Council, which would deliberate on ways to increase investments, and a three-day trade fair, starting from October 12 in New Delhi. These meetings are part of the eighth annual Summit of BRICS. India is hosting summit from October 15-16 in Goa in its capacity as chair of the influential bloc comprising five countries with 42 per cent of the world population and combined GDP of over USD 16 trillion.
Related News
Farm boost of $30 billion aimed at helping Africa “feed itself”
African farmers set to benefit from major investments to increase production over next decade
African farmers are set to benefit from tens of billions of dollars pledged by African leaders, development banks, the private sector and international donors at a conference in Nairobi last week.
Commitments of more than $30 billion have been made so far at the African Green Revolution Forum, to transform agriculture on the continent over the next decade - said by organisers to be the largest package of financial commitments to Africa’s agriculture sector to date.
Kenya’s President Uhuru Kenyatta pledged $200 million to help 150,000 young farmers and agricultural entrepreneurs gain access to markets, finance and insurance in the next five years.
“I challenge fellow heads of states in Africa to accelerate their investment in agriculture for the benefit of the continent as a whole,” he said.
Around 70 percent of Africa’s population depends on agriculture for food and income, but many farmers are still struggling with poverty and poor nutrition.
A report released on Tuesday by the Alliance for a Green Revolution in Africa (AGRA) said African countries that took early action in the past decade to invest in agriculture had reaped the rewards, enjoying higher economic growth and a bigger drop in malnutrition.
But much more funding was needed to expand progress across sub-Saharan Africa, it said.
The African Development Bank (AfDB) answered that call, saying on Thursday it would invest $24 billion in African farming over the next ten years, a 400 percent increase over its previous commitments.
“I want Africa to feed itself and develop with pride,” said AfDB president Akinwumi Adesina.
Part of the bank’s funding will support an international programme to get modern agricultural technologies to millions of small-scale farmers in Africa. The bank will also help them access commercial loans.
The Bill & Melinda Gates Foundation pledged to contribute at least $5 billion to African development over the next five years, of which around a fifth will be used to expand crop and livestock research, strengthen data, and improve systems to deliver better tools, information and innovations to farmers.
In the next six years, the continent will also benefit from $3 billion pledged by the International Fund for Agricultural Development (IFAD), in keeping with its policy of allocating at least half of its annual $1.1 billion spending to Africa.
Most of its investments are targeted at creating jobs in farming and food production, particularly for youth and women.
“Those of us who have been fortunate to achieve so much over a rich and full lifetime must now do everything in our power to provide our young people with opportunity and hope,” said IFAD president Kanayo F. Nwanze, who was awarded the new Africa Food Prize this week.
Less waste, more fertiliser
A further $180 million was pledged by the Rockefeller Foundation, including $130 million for AGRA’s Yieldwise initiative to strengthen crop storage, handling and processing capabilities to reduce significant post-harvest losses on African farms due spoilage or pests.
“Food loss and waste across the value chain threatens farmers’ livelihoods,” said Rockefeller Foundation president Judith Rodin, noting that 40 to 50 percent of some staple crops are lost after harvest.
Fertiliser firm OCP Africa will invest $150 million over the next five years to support local fertiliser distribution, storage and blending, while Kenya Commercial Bank Group will channel $350 million into business opportunities that could reach some 2 million small-scale farmers.
The World Food Programme, meanwhile, promised to purchase at least $120 million each year in agricultural products from smallholder farmers through a partnership called the Patient Procurement Platform, which will expand into Kenya and three other countries next year.
Africa should take lessons from Asia, which rapidly expanded public investment in the agricultural sector to achieve a green revolution, said AfDB’s Adesina.
“In order to unlock the potential of African agriculture, we need a stronger role for the governments,” he said.
In addition to boosting investment, he and others noted the need for sound policies that are not subject to political whim.
“We should not waste time in reversing policies whenever there is change in governments,” said Adesina. “We need good policies which are consistent.”
Related News
tralac’s Daily News Selection
The selection: Friday, 9 September 2016
The headline analysis in this week’s tralac newsletter: Flexibilities in safeguard measures - possible options for the CFTA
EAC heads put off EPA signing for three months (Daily News)
According to the EAC Chairperson, President John Magufuli, it was not an easy job to reach to the decision and for delaying the signing of the EU pact. “Our discussions took a lot of time but as usual when we have any sensitive matter, we agree collectively to reach at a collective consensus in the best interest of our people,’’ he said at a press briefing after the closed door meeting. Uganda’s President Yoweri Museveni said the three-month extension of signing and ratifying the EU-EAC agreement was meant to synchronise their understanding on the pact that has 146 articles. “The EU should wait until January when we shall convene again so that we give a collective answer than giving fragmented ones,’’ he added.
Multinationals are preparing for strong compliance headwinds (Business Day)
Vodacom tax director Shane Govender says they are dealing with about 35 taxes that relate to the telecom industry in the DRC. In Tanzania, they have to deal with 25 different taxes. "That is a huge compliance burden and to remain on top of everything, especially if one does not have someone who has knowledge of the tax system in that particular country, is a major challenge." PPC tax director Sebueng Mthembu says language remains a barrier to understanding regulations to be fully compliant. Legislation in some African countries is not as comprehensive as in SA. "In the DRC, legislation is grey — and that is putting it politely. We have to deal with around 70 different taxes in the DRC." Mthembu says they have to employ a tax professional in every country in Africa, no matter how small the operations.
Mills Soko : ‘The do’s and don’ts of doing business in Nigeria’ (The Conversation)
South African business investments in Nigeria are under the spotlight again after hotel and casino group, Sun International, announced it is pulling out of the country. The company cited poor economic conditions and regulatory challenges. It joins a growing list of high profile South African business failures in Africa’s second largest economy. The Conversation Africa business and economy editor Sibonelo Radebe asked Professor Mills Soko to unravel the complexities of the Nigerian market.
East Africa govts urged to set up regional arbitration centre (The EastAfrican)
As East Africa embarks on major infrastructure projects in oil and gas industry, roads and railways, arbitrators in the region are calling for the creation of a dispute resolution centre. The arbiters, at the 4th East African International Arbitration Conference in Kampala on September 8, also debated on whether the tribunal should be independent from the regional governments or based on a public-private partnership.
Investing in Africa Forum: World Bank and China scale up support for Africa
The Investing in Africa Forum saw the launch of the Africa Think Tank Alliance (IATTA), a groundbreaking platform promoting knowledge sharing and partnerships among think tanks in Africa, China and worldwide. “The establishment of the Africa Think Tank Alliance is a win for all,” says Albert Zeufack, the World Bank’s Africa Region Chief Economist. “One of the major objectives of this initiative is to strengthen the research and analytical capacities of research institutes in Africa and to increase their influence on the international scene.” The IATTA will also inform capital-investment decisions by developing guidelines, investment plans and policy suggestions to client countries. [Address by WBG President Jim Yong Kim]
The impact of the UK’s post-Brexit trade policy on development (ODI)
This collection of essays (pdf) offers a number of perspectives on how a new UK trade policy towards developing countries and regions could be designed and implemented, in both the short and longer term. It also conveys the concerns, opportunities and expectations from a group of leading trade specialists from academia, international organisations and think tanks in the UK and elsewhere. The essays and this introduction are structured into five sections: Principles for a new UK trade policy and the relationship with developing countries; The potential effects of a new UK trade policy on developing countries: some scenarios; The value of preferential access to the UK market for developing countries; A new UK trade policy: opportunities beyond tariffs; Regional perspectives on a new UK trade policy.
Katarzyna Kaszubska: ‘A BRICS-only arbitration forum will not be the panacea imagined’ (The Wire)
Arbitration institutions are facing a number of challenges when it comes to ensuring long-term stability for themselves. Most recently, the London Court of International Arbitration (LCIA) decided to close its Delhi office due to an insufficient number of cases. Another example is the BRICS Dispute Resolution Centre Shanghai, which was established by the Shanghai International Economic and Trade Arbitration Commission last year for hearing commercial disputes between partners from BRICS countries. It has not received a single arbitration application since its inception. Finally, the existence of other reputed and well-trusted arbitration forums such as the International Court of Arbitration, LCIA or SIAC, poses a major challenge to these new institutions. [The author is a fellow at Observer Research Foundation]
Trade trends: China and Portuguese-speaking countries trade contracts 12%, Jan-July (MacauHub)
China’s trade with Angola amounted to $9bn (-27.69%), as a result of Chinese sales of $942m (-60.64%) and imports of Angolan products in the amount of $8.05bn (-19.84%). Chinese trade with Mozambique totalled $995m in the period (-28.92%), with Chinese exports worth $755m (-33.49%) and Mozambican exports of $239m (-9.23%).
Zambia mulls tit for tat (Financial Gazette)
Zambian exporters are piling up pressure on their government to come up with retaliatory measures to block imports from Zimbabwe, in what could be a big blow to Harare, which counts Zambia among its biggest export destinations. Last week, the Zambia National Farmers Union reported on its website that Zambia was toying around with the idea of restricting importation of key products from Zimbabwe in response to the imports ban. Zambia Association of Manufacturers executive director, Maybin Nsupila, told the Financial Gazette this week that after Zimbabwe’s moves, their country might have no option but to retaliate.
Zim, SA cross-border dialogue pays dividends (The Herald)
The harassment of Zimbabwean immigrants in South Africa by authorities or employers has been declining in the last five years following the launch of the Cross-Border Migration Management Stakeholders’ Forum, an official has said. Zimbabwe’s Consul-General to South Africa, Mr Batiraishe Mukonoweshuro, said in an interview yesterday that the forum had been useful in addressing challenges on labour disputes and harassment of Zimbabweans during deportations. The forum was launched in 2011.
Tanzania: Govt caves in, admits to 42% business slump at Dar port (IPPMedia)
After push came to shove, the government finally caved in and admitted that recent introduction of the Value Added Tax on transit goods and the single customs territory was hurting business at the Port of Dar es Salaam. Tanzania Ports Authority director general, Eng Deusdedit Kakoko, said the port was now trying to lure back traders, especially from the DRC, who shunned the port following the introduction of the two services. Briefing a parliamentary committee on Industry, Trade and Investment and the ports’ stakeholders, Eng Kakoko said intensified cut-throat competition in DRC has led to cargo diversion to other regional competing ports. He said to lure the customers back the government would engage local stakeholders with Congolese businessmen through a one –on-one sharing of experience and dissemination of right information, including measures being taken to improve services offered at the port. [Update: DRC, Rwandan traders to revert to Dar es Salaam Port]
Horn of Africa livestock export trade: a business at a crossroads (EA Business Journal)
The livestock export industry is the lifeblood of the 17 million pastoralists throughout the HoA region. The greater HoA region with its vast livestock population of nearly 300 million head (including Sudan) shows enormous promise for development and value addition, bringing billions of dollars and supporting millions pastoral livelihoods in HoA nations, provided the export trade in livestock and meat can be responsibly and professionally managed so that we protect our importing partner countries. Returns on an investment to ensure disease-free trade and add value to livestock in the Horn of Africa are robust with IRRs running 30 – 40%. In addition, there is a strong social bottom line so this represents an exceptional opportunity to do well by doing good. [The author: Dr Chip Stem]
Africa and Asia/South East Asia Air Corridor: update (GoM)
The launching in March 2016 of the Air Corridor between Africa and Asia/South East Asia using Mauritius and Changi Airport as hubs has led to an increase in total traffic during the period April to July 2016, as compared to the same period in 2015, with three direct flights to Singapore. The Mauritius-Singapore Air Corridor concept is based on the use of Mauritius and Singapore as hubs with a view to promoting origin and destination traffic flows between Africa and Asia/South East Asia.
Africa Green Revolution Forum: address by Akinwumi A. Adesina (pdf, AfDB)
I know the power of mobile phones very well. As Minister of Agriculture in Nigeria, I supported the launch of the electronic wallet system that allowed farmers to access subsidized farm inputs via their mobile phones. It was built on a public-private partnership. Farmers paid for inputs themselves, bought them directly from the private sector, and Government simply provided targeted subsidies. The system linked farmers, mobile phone companies, banks and input suppliers. Within four years, close to 15 million farmers in Nigeria accessed farm input through their mobile phones, allowing the country to boost its food production by an additional 21 million metric tons. The e-wallet system also helped to substantially curtail corruption in the fertilizer and seed distribution system, empowering farmers. A silent revolution on mobile phone payment system for farm inputs across Africa is on its way, through public-private partnerships. Some 30 countries have approached the African Development Bank to support the rollout of the e-wallet input distribution system.
De-risking, renminbi, internationalization, and regional integration (Brookings)
This paper takes a close look at sub-Saharan Africa’s (SSA) trade and payment integration with the rest of the world as well as its regional integration. Using a unique dataset of cross-border payments (MT 103 messages from the Society for Worldwide Interbank Financial Telecommunication, SWIFT) as well as bilateral trade data from the IMF (Direction of Trade Statistics-DOTS) from 2003 to 2014, we find a number of stylized facts: [Lucy Corkin: Kenya’s mobile money story and the runaway success of M-Pesa (ORF)]
Services and performance of the Brazilian economy: analysis and policy options (pdf, Working Party of the Trade Committee, OECD)
Compared to countries of similar development, Brazil has a large services sector and has experienced significant growth of business and government services. Services inputs also account for nearly two fifths of Brazil’s manufacturing value added and an even larger share in the sectors prioritised for industrial development. However Brazilian services are oriented towards serving domestic demand and underperform in export markets. Services inflation has been surging fuelled by a distorting tax system and productivity levels lagging behind other sectors of the economy. The growth of Brazil’s services exports has not kept pace with other large emerging economies, leading to a widening services trade deficit.
WCO supports finalization of SACU’s Preferred Trader Programme external procedure manual
EIU forecasts Angolan economy to grow 0.6% in 2016
Rwanda, Singapore in new drive to boost trade ties
‘Singapore could be largest commodity trading hub in the world: IE Singapore’
South Africa: FirstRand has R7bn for Africa deals
Zimbabwe: Cotton industry on verge of collapse?
African Development Forum: Abdalla Hamdok preview of the theme, Migration and Africa’s transformation
UNU-WIDER’s Responding to Crises conference: Tony Addison preview
UN Peacekeeping Defence Ministerial: London communiqué, conference summary
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World Bank and China scale up support for Africa
The World Bank Group is strengthening its partnership with China in support of African development through two major initiatives launched during the second “Investing in Africa Forum (IAF)”, a two-day international forum aimed at boosting investment across Sub-Saharan Africa. The Forum was held in Guangzhou, China, a region home to a large African business community.
On September 7th, on the opening day of the Forum, the World Bank, the Chinese National Energy Administration (NEA) and Chinese Ministry of Finance (MOF) signed a memorandum of understanding (MOU) to strengthen energy cooperation in Africa in clean and renewable power including solar, wind, geothermal, hydro, natural gas as well as power grid and off grid solutions.
“The World Bank welcomes China’s commitment to energy development in Africa, which will help increase the level of industrialization and support the continent’s aspiration for prosperity and inclusive growth. Africa also has large untapped potential for renewable energy, which if developed will help close a critical infrastructure gap and address climate change at the same time,” said Jim Yong Kim, President of the World Bank Group.
The MOU, signed by World Bank Group President Jim Yong Kim, Nur Bekri, Administrator of China’s National Energy Administration, and Shi Yaobin, Vice Minister of Chinese Ministry of Finance represents an important step in deepening tripartite collaboration between African countries, China and the World Bank.
“China is more than ever committed to Africa’s development and we value our partnership with the World Bank Africa Region in joint support for Africa,” said Hu Haibang, Chairman of China Development Bank, who co-hosted the Forum along with the People’s Government of Guangdong Province of China.
The Forum also saw the launch of the Africa Think Tank Alliance (IATTA), a groundbreaking platform promoting knowledge sharing and partnerships among think tanks in Africa, China and worldwide.
“The establishment of the Africa Think Tank Alliance is a win for all,” says Albert Zeufack, the World Bank’s Africa Region Chief Economist. “One of the major objectives of this initiative is to strengthen the research and analytical capacities of research institutes in Africa and to increase their influence on the international scene.”
The IATTA will also inform capital-investment decisions by developing guidelines, investment plans and policy suggestions to client countries, he added.
This year’s Forum – attended by Patrice Talon, the president of Benin, and Jacob Zuma, the president of South Africa – brought together about 300 policymakers, private sector representatives and development partners, who shared experiences and explored opportunities to accelerate investment in Africa. A number of projects in African countries with committed or prospective investment from China were signed at the Forum including a manufacturing cluster project with Ethiopia and an ethanol and biomass project with Sierra Leone.
“This Forum has created new opportunities for Guangdong’s entrepreneurs to invest in Africa,” says Zhu Xiaodan, Governor of Guangdong Province. “We share our experience in development and investment in Africa which will result in win-win outcomes for both Guangdong Province and Africa while fostering cooperation in complementary sectors.”
During the closing session of the Forum, Senegal’s Minister of Economy, Finance and Planning, Amadou Ba announced that his country will host the next Investing in Africa Forum in 2017.
About IAF
IAF was established in 2015 as platform for multilateral cooperation to promote Chinese investments in Africa. The Forum consists of a partnership between the World Bank Group and the China Development Bank (CDB), with the strong support of the Chinese Ministry of Finance. The IAF is intended to be an annual multi-stakeholder gathering, bringing together representatives of the public and private sectors from China and African countries, international and continental institutions, development partners and think tanks to deepen policy dialogue, share experience and discuss business opportunities to promote investment activities in Africa.
The first IAF was co-organized with the Government of Ethiopia, CDB and UNIDO in Addis Ababa on June 30 and July 1, 2015. This year’s edition of the Forum, the first to be held in China, was co-organized with CDB and the People’s Government of Guangdong Province of China.
Related News
Esibayeni Declaration of the Southern Africa Business Forum
On 24 August 2016, during the inaugural SADC Industrialisation Week, held in Swaziland, over 200 private sector representatives from across the region gathered for the Second Annual Southern Africa Business Forum (SABF) Conference.
As a response to the business community interests to have more input in the Southern African regional trade and industrial policy formulation, the Southern African Business Forum (SABF) was established as a coordinating platform to encourage and facilitate public-private development activities within the SADC region against the backdrop of regional industrialisation.
Launched in August 2015 on the margins of the SADC Heads of State Summit in Botswana, the SABF has since established a secretariat that resides at the NEPAD Business Foundation. The SABF Conference was the highlight of the SADC Industrialisation Week and took place on the margins of SADC’s 36th Ordinary Summit of Heads of State (31st August and 1st September 2016) where King Mswati III is taking on the responsibility as Chairperson of SADC.
Esibayeni Declaration
of the Southern Africa Business Forum (SABF)
to the 2016 SADC Summit of Heads of State and Government
In the SADC Industrialization Strategy and Roadmap, Member States acknowledge “the central role of the private sector as the driver of industrialization.” In August 2015, to engage with SADC and its Member States on the implementation of a shared vision for economic transformation, private sector representatives from across the region convened in Botswana for the first Southern Africa Business Forum (SABF).
After noting issues which limit investment and stall progress, SABF focused its subsequent work on documenting private sector experiences and challenges, identifying priorities, and developing proposals for action.
In Swaziland on August 24 2016, SABF convened for its second annual meeting in the context of the SADC Industrialization Week which took place from 23-26 August 2016. The aim was to place these proposals on trade, investment, industrial development and infrastructure in relation to each other and to identify catalytic actions that could drive progress across the board. Four common messages emerged in these discussions:
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Hard and soft infrastructure shortcomings must always be addressed together. Hard infrastructure is only as useful as the regulatory environment that surrounds it, and either permits or hampers its utilization.
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Policy certainty, including stability, predictability, consistency and transparency is a prerequisite to attract investment for regional industrialization, regardless of sector or scale. Large companies and SMEs from all sectors demand policy certainty regarding the use of tariffs, fees and levies at borders; mining houses and agro-processors called for stable and predictable export regimes; and infrastructure developers and agro-enterprises raised the need for consistent and transparent land use rights.
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Prioritization and sequencing is the key to successful implementation. Prioritization should take into account geographical links, opportunities for incremental implementation to allow for short-term gains, and industry-specific requirements to support priority value chains.
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Enabling trade through the removal of non-tariff barriers, coordinated border management and a solid regional transit system is a prerequisite for industrialization in all sectors.
These four points result in the following concrete calls for action.
Call for Action
Enabling Factors
Infrastructure
Demand for infrastructure, a critical enabler of industrialization in the SADC region, continues to grow. While stakeholders acknowledge that private sector input for project planning, investment and implementation is required for any large-scale infrastructure development in the region, challenges remain. The lack of an appropriate enabling environment, a shortage of well-prepared and costed projects in the implementation pipeline, and human capacity deficits within implementing agencies still impede private sector engagement.
SABF notes with approval a number of SADC initiatives, including the SADC-PIDA Acceleration Programme on the Beira and North-South Corridors and the SADC PPP Network, and proposes that SADC Member States take the following actions to further advance these efforts and address the impediments:
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Provide regulatory and legal certainty and transparency around infrastructure projects, especially regarding long-term land access and property rights, procurement policies (including public-private partnership frameworks) and dispute resolution and arbitration. Governing frameworks for all projects must be readily available and consistently implemented.
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Address the lack of coordination between authorities, and improve their competencies around design and execution of projects, which must include considerations on use of modern technology and best practice. Engaging first rate transaction advisors for all major projects should become the regional standard.
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Ensure regular consultation between the public and private sectors using regular, cost-efficient, and swift means from the outset of project planning. This will allow both to jointly prioritize projects, develop fit-for-purpose and cost-effective project plans, and solve issues that otherwise impede private sector investment. It is also important that national documents such as Integrated Resource Plans are prepared and shared with the private sector.
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Ensure that promising approaches such as those tested under the SADC-PIDA Acceleration Programme are continued, extended and replicated across sectors.
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Soft issues, especially along major trade corridors, need to be addressed alongside planning and implementation of hard infrastructure projects. Resolving trade facilitation issues at key border posts must be a priority for action, especially regarding the inconsistent application of customs frameworks including tariff codes and customs valuations.
SABF notes with approval that SADC is developing regional approaches for challenges such as energy generation and transmission, water efficiency, ICT connectivity and multi-modal transport solutions for regional industrialization. In this context, SABF notes that:
- For any such plan to be practical and implementable, clear national responsibilities and integration with national plans is vital. Furthermore, as SADC Member States identify and implement projects, they must be coordinated with other initiatives within the country and the region to develop and expand geographic linkages.
Corridor Development
Spatial development initiatives that unite industrial and infrastructure developments and related regulatory reform can serve to focus, accelerate and mutually reinforce impact. Corridor development is a case in point. It can connect key industrialization drivers such as transport routes, energy generation sites, water treatment plants, special economic zones, and region-specific research and development in centres of excellence.
SABF welcomes that SADC has prioritized Transport Corridor Development and notes that industry can only make use of infrastructure, if hard infrastructure and soft issues such as trade facilitation are addressed simultaneously. In order to allow for prioritization of projects to achieve rapid change and work in synergy with other initiatives across the region, SABF calls on Member States to:
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Implement trade facilitation measures that focus on already-identified corridors and that speak to hard infrastructure projects (and vice versa).
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Implement a functional regional transit system.
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Prioritize projects which do not require lengthy processes or legislation, which may include alignment of border post operating hours, interconnectivity, and coordinated border management. In the case of more complex measures, sequence each step to take advantage of impact and efficiency gains even in the short-term. For instance, in the case of Single Windows, sequence implementation by focusing first on automation, then national level coordination and IT connectivity.
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Prioritize work on regional ‘hot spots’ along corridors, for instance, the border posts of Beitbridge and Kasumbalesa, and prioritize the work itself by conducting needs assessments for hard and soft infrastructure simultaneously.
Non-tariff barriers are another factor that drives up the cost of trade and of doing business in the region. These must be addressed, with priority placed on 1) major cost-driving barriers, which are transport-related, and 2) those that affect priority industries in the SADC region. Specifically, SABF calls upon Member States to:
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Prioritize the swift removal of non-tariff barriers in transport. A particularly important issue is the swift national implementation of the regional approach to labelling of hazardous goods transport, based on the global harmonized system.
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Prioritize the removal of technical barriers, and phytosanitary and sanitary-related barriers by identifying and targeting those most relevant to key industries and value chains in the region.
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Prioritize the simplification and streamlining of import and export documentation required in individual Member States by first focusing on those that impact priority industries.
Movement of Skills & Innovation
Skills development and research and development for innovation are another critical enabler that ensures that industrialization increases competitiveness within industries, allowing a shift from comparative to competitive advantage and to high-value added industries. To this end, SABF calls upon Member States to:
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Facilitate the movement of businesspeople and skilled personnel across the region. The draft agreement on the Movement of Business Persons reached between SADC, COMESA and EAC Member States has proven insufficient.
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Prioritize mutual recognition of qualifications, including on a bilateral basis and between professional associations. SABF particularly notes the need for harmonizing and recognizing mining and engineering qualifications in the region given significant demand and the need to facilitate movement of skills in this sector.
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Invest in centres of excellence and adopt a regulatory environment that encourages innovation and up-skilling to ensure that industries have access to the human resources required for moving into higher value-added activities. Again, this is especially critical for the mining sector.
Sector-Specific Proposals
SABF is also aware that the growth paths identified in the SADC industrialization strategy are also impaired by sector-specific challenges. Beginning with the priority industries identified by SADC Member States (Pharmaceuticals, Agro-processing, and Mining Beneficiation), SABF have developed proposals to overcome these challenges and support the development and growth of specific sectors in the region.
Pharmaceuticals
SADC has established a regional Pharmaceutical Programme, a Pharmaceutical Business Plan for its implementation, and a Strategy on Regional Production. The Business Plan identifies key strategic policy areas for the 2015-2019 period, prioritising harmonization of standards and regulatory capacity, and the development of a regional pharmaceutical industry.
Two key initiatives of the SADC Pharmaceutical Business Plan are the SADC collaborative process in medicines registration (Zazibona) and the SADC Medicines Databank, a regional database to harmonize procurement and standards, and benchmark prices. Zazibona is a work-sharing mechanism that facilitates the review of common products. However, final registration is still a responsibility of national registration authorities for medicines, which hinder the application of the process. The two initiatives are making progress but require further support and engagement at the national level.
- SABF commits to encourage private sector actors to make use of the Zazibona process, and will report back to SADC Secretariat on the progress.
Statutory instruments for regulation of pharmaceuticals are not on the same legal level in each SADC Member State, and in some cases product labelling and formats can only be changed by parliament. In addition, the inconsistent and at times unpredictable nature of some tender and procurement processes also leads to delays in access to medicines. Worse, these processes, which often award contracts too short to justify major investments, prevent the private sector from investing in local factories or research and development facilities, as well as investing more into local content. To encourage value-adding investment, SABF proposes that Member States:
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Review national legal frameworks for medicine regulation, and update and implement regulations that are aligned with the AU model law and facilitate regional collaboration (e.g. inspections and labelling). SADC must then ensure that this is filtered down to relevant national authorities and technical staff.
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Foster national capacity building to better roll-out the agreed regional standards and the Zazibona process. Member States must also drive the implementation of Pharmaceutical Procurement and Supply Management harmonization standards and practices across the region.
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Ensure that the implementation of regulatory and legal frameworks is predictable and stable.
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Create a competitive pharmaceutical manufacturing industry by supporting productive development, facilitate affordable funding, sector development strategy, Good Manufacturing Practice upgrades and skills training.
Agro-processing
All SADC Member States currently intervene in their agricultural sectors, with varying objectives such as increasing food security and helping smallholders grow to become SMEs. Unfortunately, more often than not, such interventions create market distortions with negative results.
These distortions and disincentives limit investment in agro-processing, and a lack of policy certainty has led to withdrawal of investment in some Member States. Empirical research by SABF has identified which incentives and regulatory interventions are prone to unintended consequences, and which are particularly promising.
SABF also notes that the region now has a comprehensive, evidence-based implementation plan (the Regional Agricultural Investment and Implementation Plan, or RAIP) for Agricultural Investment. Against that background SABF calls upon SADC Member States to:
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Increase policy stability and predictability by separating, where possible, food security-informed interventions from other agri-business regulations, and by consulting with private sector representatives before new regulations are implemented. This is particularly important where regulation aims to limit or even prohibit exports.
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Facilitate the implementation of promising spatial initiatives, including by developing clusters and ensuring predictable and accessible land tenure rights.
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Increase private sector awareness of the RAIP initiative, the private sector role, and the co-financing opportunities it presents.
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Involve the private sector in the implementation of extension services either as service providers or through collaboration, and link these with mentoring programmes and capacity building. This approach is particularly promising for schemes that aim to empower smallholders and for those that aim to link SMEs with investors.
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Engage with the private sector when designing and implementing financing and insurance schemes, and where possible, to link such programmes to credit schemes and facilities run by the private sector.
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Consult with the private sector and other stakeholders when designing input subsidies to avoid negative consequences, especially harmful market distortions that are often associated with input subsidies.
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Promote warehouse receipts systems (preferably linked to finance schemes) including storage, cold chains, warehouses and silos as a means to avoid post-harvest losses and allow smallholder farmers to access regional and global export markets.
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Strengthen farmers’ associations and build intermediate service providers that can cater to the special needs of SMEs, through capacity building aiming at improved governance and access to institutional finance.
Mineral Beneficiation
The upstream and downstream minerals industries hold great potential for industrialization in the SADC region, but are confronted by numerous regulatory challenges. These include a lack of predictability and transparency, especially regarding export and import regimes, regulation on local sourcing and beneficiation, and land and resource ownership and tenure. In addition, infrastructure and essential services constraints drive up costs for the sector. SABF therefore calls upon SADC Member States to:
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Harmonize national regulations and initiatives, especially regarding regional and national value addition and sourcing requirements, in order to capitalize on the region’s market size. SABF especially encourages relevant Ministers in the region to convene high-level discussions on policy and regulatory challenges for the sector and to develop a joint and coordinated approach. This may include the reconstitution of the Regional Committee of Mining Ministers, and should be matched with appropriate structures at the SADC Secretariat, which may form part of the ongoing SADC restructuring process and the future Industrialization Directorate.
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Ensure a stable regulatory environment in the region, especially regarding import and export regimes, and commit to consultations with private sector when changes in export regimes are considered. The detrimental effects of export bans, export quotas and prohibitive investor performance requirements must be scrutinized when designing new regimes.
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Harmonize regional tariff regimes and local content and rules of origin requirements regimes for mining equipment to support the development of a regional mining equipment value chain.
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Collaborate on initiatives to protect security and accountability, for example a regional gold fingerprint system, a regional strategy to implement the OECD Guidelines on Due Diligence, and a regional approach to combat transfer pricing.
Future Engagement
While many regional programmes coordinated by the SADC Secretariat, are already working to advance these priority actions, private sector collaboration is a critical element of success. To build strong and open relationships between SADC Member States and the SADC Secretariat, SABF urges Member States to:
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Explicitly mandate private sector input in the development of key regional plans and policy documents, including the SADC Industrialization Action Plan, to guide the implementation of the SADC Industrialization Strategy, the SADC Investment Policy Framework, the Regional Energy Generation and Transmission Plan, and corresponding national strategies. To ensure the success of SADC’s industrialization efforts, it is critical that private sector-specific experiences and project proposals are considered.
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Engage the private sector in the development of SADC Value Chain Strategies and related processes. Private sector input and collaboration ensures that these plans are aligned to investment priorities, and are thus implementable. Value Chain Strategies must, where possible, incorporate existing third-party value-chain strengthening initiatives and studies, and be informed by global outlook scenarios to ensure their long-time viability and success.
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Allocate private sector-focused responsibilities to Senior Officers as part of the reform and reorganization of the SADC Secretariat. Each industry/sector should have access to a responsible Officer, and Member States should be actively involved in making required financial resources available.
SABF can play an important role in this regard as it unites companies, enterprises, associations and chambers from the region and is informed by principles of inclusiveness and transparency. The Forum is currently structured into a coordinating taskforce, a steering committee chaired by the SADC Deputy Executive Secretary on Regional Integration, and working groups consisting of stakeholder representatives from the private and public sectors.
We as SABF pledge to continue our work in thematic groups and will endeavour to meet annually. We call upon Development Finance Institutions and International Cooperating Partners to continue supporting the activities of SABF.
SABF greatly welcomes the opportunity to meet the Ministerial Task Force on Regional Integration (MTF) alongside the 2016 SADC Summit of Heads of State and Government and to discuss this Declaration. To further build on this exchange, we call upon SADC Member States to consider:
- Formally integrating SABF into SADC’s private sector outreach strategy, regularly welcoming input from the Forum, facilitating annual exchanges between SABF private sector representatives and the MTF, and submitting SABF Declarations to the annual SADC Council and Summit of Heads of State and Government.