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Industrialization in Africa and least developed countries: A report to the G20 Development Working Group by UNIDO
In the run-up to the 11th G20 Summit taking place in Hangzhou, Zhejiang, China, on 4 and 5 September, the United Nations Industrial Development Organization (UNIDO) published a new report on Industrialization in Africa and Least Developed Countries: Boosting growth, creating jobs, promoting inclusiveness and sustainability.
The report was prepared at the request of the G20 Development Working Group (DWG), which has been meeting during the year. The G20 DWG has been working to achieve a wide consensus on issues including promoting the implementation of UN 2030 Agenda for Sustainable Development and a comprehensive evaluation of G20 development commitments, strengthening the coordination between the DWG and the other working groups, strengthening policy consistency, supporting the industrialization of African and least developed countries, and strengthening inclusive business cooperation.
The UNIDO report, which benefited from contributions from other international organizations and financial institutions, highlights the important benefits of inclusive and sustainable structural transformation and industrialization for diversifying the economy, creating jobs and building equitable societies. It also shows the benefits to Africa and least developed countries (LDCs) of leveraging trade in intermediate goods, investment, and regional and global value chains.
In order to further its development agenda, the report recommends that the G20 group of leading economies promotes inclusive and sustainable structural transformation and industrialization in Africa and LDCs through various mechanisms, such as knowledge-sharing platforms for peer-to-peer learning; the sharing best of practices, policies, measures and guiding tools; and multi-stakeholder discussions.
Other recommendations include calls for the G20 to support agriculture and agribusiness development; to deepen, broaden and update the local knowledge base; to encourage industrialization through trade and deeper regional integration; and to promote the New Industrial Revolution, including the Internet of things, big data, cloud computing, 3D printing, nanotechnology and biotechnology, in order to improve productivity, reduce energy and resource consumption, and thus protect the environment and increase resource efficiency and effectiveness.
UN Secretary-General Ban Ki-moon, who spoke on 5 September at the G20 Summit session on Inclusive and Interconnected Development, said: “The G20 Initiative on Supporting Industrialization in Africa and LDCs will strengthen their inclusive growth and development potential. The UNIDO report provides a comprehensive framework in this regard. Increased investments in infrastructure and industry, access to finance, sharing and transfer of technologies, trade facilitation, capacity building and improving enabling environments can support the transformation needed.”
Executive summary
There are four main reasons for Africa, and least developed countries (LDCs) in particular – 34 in Africa, 13 in Asia and the Pacific, and one in Latin America and the Caribbean – to industrialize:
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Without industrializing, it is unlikely that Africa and LDCs can meet the Sustainable Development Goals by 2030, particularly SDG 9 on industry, innovation and infrastructure.
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Inclusive and sustainable industrial development is associated with job creation, sustainable livelihoods, innovation, technology and skills development, food security and equitable growth – some of the key requirements for eliminating poverty by 2030.
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Rarely has a country evolved from poor to rich without sustained structural transformation from an agrarian or resource-based economy towards an industrial or service-based economy. This transformation is important to ensure wealth creation through increased economic integration and productivity.
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Millions of young people enter the labour market in Africa and LDCs every year. Industry, by providing decent jobs and by expanding the fiscal revenues needed for social investments, can boost capacity for the much-needed inclusive development.
This report highlights the important benefits of inclusive and sustainable structural transformation and industrialization – for diversifying the economy, creating jobs and building equitable societies. It also shows the benefits to Africa and LDCs of leveraging trade in intermediate goods, investment, and regional and global value chains. Such chains can be served by micro, small and medium-sized enterprises, using their relative advantages in flexibility, innovativeness, personalized contacts, quality of products and creating new opportunities for the international sourcing of scarce specialized skills. Enterprises from Africa and LDCs may be able to learn from the experience of other developing countries, especially in Asia.
Africa and LDCs should move away from the “generalized” industrial policies that have proved ineffective over the last three decades. They also need to build strong institutions and viable investment climates. And they need to realize the full potential of public-private partnerships (PPPs) and the opportunities for collaboration among industry, governments and other stakeholders. The report offers recommendations for national policy as well as regional and global collective actions to advance industrialization and end poverty and hunger.
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G20 wraps with world leaders agreeing to use trade to boost global economy
China has agreed to co-operate with trading partners on volatile steel exports
China agreed to co-operate more closely with trading partners on its politically volatile steel exports as leaders of major economies ended the G20 summit on 5 September 2016 in Hangzhou, China, with a forceful endorsement of free trade and a crowded agenda that included the Koreas, Syria and refugees.
In a joint statement Monday, Chinese President Xi Jinping, U.S. President Barack Obama, and the leaders of Canada, Britain, Japan, Russia and other Group of 20 nations pledged to boost sluggish global growth by promoting innovation.
“The global recovery lacks momentum,” Xi told reporters after the meeting. “We need to do more to unlock the potential for medium and long-term growth.”
There was no mention of a global stimulus or other joint action, which officials said earlier was unworkable because economic conditions vary widely from country to country.
In a statement issued Monday, Prime Minister Justin Trudeau called for the implementation of growth strategies and increasing the collective gross domestic product by two per cent by 2018.
Trudeau also said it’s important that the benefits of free and open trade are shared by all citizens.
In an effort to shore up public support for trade, the G20 leaders promised “inclusive growth” to spread the benefits to people left behind by wrenching change. That reflects a recognition that economic strains are fuelling political tensions and a growing clamour to raise barriers against foreign competition.
The statement expressed “opposition to protectionism on trade and investment in all its forms.”
The governments pledged to avoid devaluing their currencies to boost exports. They called for co-operation to reduce tax avoidance.
They appealed for stepped-up aid for surging global numbers of refugees and their host countries.
China hopes for influence boost
Chinese leaders hope the two-day meeting will increase their influence in managing the global economy.
They want the G20, created to respond to the 2008 financial crisis, to take on a longer-term role promoting trade and economic growth. The joint statement reflected that ambition by calling it the “premier forum” for economic co-operation.
Beijing made trade a theme of the gathering in Hangzhou, a lakeside city southwest of Shanghai, but faces complaints that a flood of low-cost Chinese steel into global markets threatens U.S. and European jobs, propelling the rise of political movements that promise to curb trade.
The joint statement calls for formation of a steel forum under the Organization for Economic Co-operation and Development (OECD) to study excess production capacity.
In a concession to Beijing, the statement doesn’t mention China by name and says excess steel capacity is a global issue. However, U.S. and European officials say the vast Chinese state-owned industry, which accounts for half of worldwide output, is the root of the problem. Washington has hiked import duties by up to 500 per cent on Chinese steel to offset what it says are improper subsidies.
‘The market is distorted by subsidies’
Beijing promised in January to reduce steel production capacity by 100 million to 150 million tons (90,718,474 to 136,077,711 tonnes) by 2020. But that is half of China’s estimated excess capacity of 300 million tons (272,155,422 tonnes), so deeper cuts would be required to bring it in line with demand.
“The market is distorted by subsidies and other support measures, and that is the fundamental problem,” said Japanese Prime Minister Shinzo Abe, according to broadcaster NHK.
The president of the European Union’s governing body, Jean-Claude Juncker, called Sunday for the G20 to take action on steel. He said the trade bloc will look at Beijing’s response when deciding whether to grant China market economy status, which would make it harder to bring anti-dumping cases.
The steel forum could help to ease strains with Beijing’s trading partners, said economist Rajiv Biswas of IHS.
“It may help to reassure countries about tangible steps China is taking,” he said.
Defending free trade
Obama, Xi and other leaders called during the meeting for governments to defend free trade.
“The benefits of trade and open markets must be communicated to the wider public more effectively,” the joint statement said.
The World Trade Organization is forecasting global trade growth this year at just 2.8 per cent – its fifth year below three per cent.
The International Monetary Fund has cut its outlook for global economic growth to 3.1 per cent.
The G20 as a group is unlikely to be able to do much to boost trade or economic growth, Biswas said. He noted that talks on Obama’s TPP initiative for Asia-Pacific governments and a
U.S.-European pact have slowed or stalled. Britain is wrestling with the effects of its June vote to leave the EU. Russia, Nigeria and other economies are in recession.
“I would say it is hard for the G20 to come up with a co-ordinated action plan because many of the countries are caught up in domestic issues,” Biswas said.
The summit was frequently overshadowed by other concerns.
On Monday, North Korea added to the drama by firing three ballistic missiles off its east coast. At about the same time, Xi was in Hangzhou telling his South Korean counterpart, Park Gyun hye, that China opposes plans to deploy a U.S. anti-missile system outside Seoul.
China has warned South Korea’s capital against installing the Terminal High Altitude Area Defence, or THAAD, system. But Monday marked the first time Xi raised the issue directly with Park.
Beijing complains THAAD will allow the U.S. military to peer deep into northeastern China.
Business says G20 action must match words to tackle trade crisis
The International Chamber of Commerce (ICC) has issued the following statement in reaction to the G20 Hangzhou Leaders’ Summit final communiqué.
ICC Secretary General John Danilovich said:
“We’ve been adamant in recent months that G20 must do more to tackle the worrying slump in world trade. The Hangzhou Summit represents a major step forward in establishing a credible, action-oriented agenda to drive inclusive growth through trade.
“G20 leaders must now put words into action. There is often a divide between summit commitments and real-world policies when it comes to trade. With protectionism rising at an unprecedented rate there is no room for the G20 to fall short of its latest commitments to keep markets open.
“We commend the G20’s focus on strengthening the multilateral trading system. We believe that with the right global policies in place there is an opportunity to unleash a new era of “inclusive trade”: one in which all companies-regardless of size, sector or location-can benefit from equal access to international markets. A central focus must be on ensuring small businesses can access cost-effective finance and make full use of e-commerce opportunities.
“We agree with the G20’s analysis that the benefits of trade and open markets must be communicated to the wider public more effectively. It’s vital that business and governments work together to explain how and why trade matters for all.”
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Kagame, Museveni push for more intra-Africa trade, investment
Rwandan President Paul Kagame and Uganda’s Yoweri Kaguta Museveni have decried the existing hurdles that hamper trade between African countries and continued export of raw materials from the continent.
The two leaders, speaking at The Global African Investment Summit (TGAIS) which opened in Kigali, Rwanda on Monday, said that African countries need to break barriers and begin trading more amongst themselves if the continent must meet its development aspiration and live up to the “Africa Rising” adage.
The investment summit organised by the Common Market of Eastern and Southern Africa (Comesa) in partnership with the Government of Rwanda has brought together over 1,000 delegates to discuss investment opportunities on the continent.
Presidents Kagame and Museveni pointed out that integration on the continent and removal of trade and non-tariff barriers can spur growth in Africa and attract more investors.
Both leaders decried slow implementation of development projects and bureaucratic tendencies which discourage foreign direct investments (FDI).
“Progress in any endeavour is about valuing time very highly and using it well. We know integration is profoundly in Africa’s interest. What remains is to be doing what is necessary to make it reality,” President Kagame said.
“The slow pace of implementation is caused by failing to appreciate that speed is a driver of wealth creation. It is not too much to say that the habit of tolerating endless delay is one of the major causes of poverty,” the Rwandan leader added.
President Kagame said that if Africa starts to value time then the inequality gap between continent and the rest of the world will start to close rapidly.
“Perhaps there should even be a financial penalty of some kind when deadlines are not met by public sector institutions,” he noted.
Africa’s expensive mistakes
Giving an example of the proposed Tripartite Free Trade Area between the East African Community, Comesa and the Southern African Development Community, he said the continent’s ability to translate ideals and commitments to reality is lacking.
“Africa cannot just remain a story about huge potential that never materialises,” adding that “postponing our priorities and delaying our commitments are the most expensive mistakes that Africa can make.”
President Museveni said African leaders of yore were not able to figure out that integration was a stimulus for growth and transformation.
“There was quite a bit of wasted time until 1980 during the Lagos summit when they brought it up that Africa should be integrated,” Mr Museveni said, adding that more people today are aware that integration is the way to go.
The TFTA, which was proposed in Kampala in October 2008, is expected to come into force after being ratified by at least two-thirds of the 26 member states and thus pave way to market integration and the harmonisation of trade policies across the three regional blocs.
But last month, member states differed on the sensitive goods and services that should be accorded preferential treatment from each bloc.
Leaders gathered in Kigali are expected to address this issue as well as how to protect the continent from cheap imports from mainly Asia which hamper industrial growth.
“There are mechanisms to sort these concerns out. There is medicine for it. You put a common tariff for external goods. If the tripartite area becomes a reality, we can put in place the external barrier for cheap external goods,” President Museveni said.
External trade
President Kagame said that there is more trade going on between Africa and Europe or Asia than that going on within Africa itself, adding that this should be corrected.
“We are always looking at ourselves doing business with others yet we are not doing business amongst ourselves; yet if we increased intra-Africa trade, some of these problems would be addressed,” Mr Kagame said.
The investment summit seeks to maximise Africa’s investment potential and boost intra-Africa trade, which is below 15 per cent compared to trade with other parts of the world like Asia.
Address by President Paul Kagame at The Global African Investment Summit
Kigali, 5 September 2016
It is a pleasure to welcome you to Kigali for the third edition of the Global African Investment Summit, held for the first time in Africa.
I would like to thank all participants, many of whom have travelled great distances to be here. I invite you to feel at home to experience what Rwanda has to offer.
The best meetings focus on concrete results, as this one aims to do. Let me commend the organisers and sponsors for their hard work and for setting the right tone.
Progress in any endeavour is about valuing time highly and using it well.
So we do not need to dwell too much on reminders that investment and good governance are critically important, and that integration is profoundly in Africa’s interest.
We know it, we believe in it. What remains is just to be doing what is necessary to make it reality.
The slow pace of implementation often seen in various projects is not caused by a lack of knowledge, commitment, or resources, but rather by failing to appreciate that speed is a driver of wealth creation.
This is because the benefits of growth compound exponentially, year upon year, decade after decade.
It is not too much to say that the habit of tolerating endless delay is one of the major causes of poverty.
If we in Africa start to value time even more highly than our friends and competitors then the gap between ourselves and the rest of the world will start to close rapidly.
Perhaps there should even be a financial penalty of some kind when deadlines are not met by public sector institutions. Whatever the amount, it would certainly be much less than what we pay now by assuming that the price of time is free.
This summit’s special focus on integration is very important in this regard.
The Tripartite Free Trade Area is an initiative to join the East African Community, COMESA, and SADC into a single economic zone, composed of more than 600 million people, which is almost half of Africa and some of the world’s youngest and fastest-growing economies.
The stakes are high because this bold effort is a test of Africa’s ability to translate ideals and commitments into reality.
If the Tripartite Area succeeds there will be strong momentum to push for the Continental Free Trade Area, as directed by the African Union Summit last year.
But if we get stuck, then the cause of integration could be slowed by years or even decades, as confidence falters in the possibility of meaningful collective action amongst African states.
A strong and clear voice of support from the private sector will be very essential for sustaining the political will required.
By quantifying the benefits of integration compared to the status quo, in terms of increased jobs, profits, trade volumes, and tax revenues, we can more easily keep everyone moving in the same direction.
Let us work to address outstanding issues so that the Tripartite agreement can come into force as soon as possible.
If some parties are not yet ready, that is fine. Those who are, can move forward while always leaving the door open for others to keeping joining at their own pace later.
Good momentum and tangible results will do more to increase support for integration than any amount of closed-door negotiation among technical experts.
Africa cannot just remain a story about huge potential that never materialises. Something has to give.
Postponing our priorities and delaying our commitments are the most expensive mistakes that Africa can make.
There is nothing we are waiting for, and nothing we lack. Let’s work together across sectors and borders with the right mindset of urgency, and build the Africa we want.
I wish you productive deliberations in the coming days. Thank you very much for your kind attention.
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Africa may need $400 billion to improve agriculture, AGRA says
Africa may need as much as $400 billion of investment in food production over the next decade to meet the continent’s needs, a report showed.
“It could require $315 billion to $400 billion over the next 10 years in public and private sector investments in all aspects of food production, processing, marketing and transport,” the Alliance for a Green Revolution in Africa said in an e-mailed report Tuesday. The organization was founded in 2006 through a partnership between the Rockefeller Foundation and the Bill & Melinda Gates Foundation.
El Nino weather patterns damaged crops from South Africa to Ethiopia, leaving the continent’s countries fighting for supplies even as they have made strides to improve agricultural output and productivity. Malawi has declared a state of disaster and about 50 million people face hunger in the eastern and southern parts of the continent, the United Nation’s humanitarian affairs agency said earlier this year. Weak transport networks, access to energy, irrigation systems and stockholding facilities also inhibit farming, the organizations said.
“The food-import deficit currently in Africa is $35 billion annually and could grow to $110 billion in the next decade, if we do nothing,” AGRA President Agnes Kalibata said Monday in Kenya’s capital, Nairobi. “We need to bring our leadership on board to keep the momentum and move our farmers from subsistence farming to profitable business.”
Africa Agriculture Status Report 2016
Progress towards African Agricultural Transformation
Africa is making steady progress towards agricultural transformation. In the past decade there has been dramatic transformation in different countries and various localities. There is a noticeable upward shift in expenditure on agriculture by national governments in African countries. African governments have reaffirmed their commitment to prioritizing agriculture in their development agendas and are investing an increased proportion of their budgets in the sector from a growing national revenue base. There is evidence of faster growth in agricultural productivity, improved nutrition, and greater job expansion even in the non-farm segments of their economies. The private sector is increasingly investing in agriculture, and the foundations have been laid for a renaissance in Africa’s agriculture, one powered by the enormous progress increasingly evident in farmers who are gaining more options in the seeds they plant, in the fertilizers they use, and in the markets available to purchase their produce.
These glimpses of success offer an inspiring new vision of a future Africa in which farming as a struggle to survive gives way to farming as a business that thrives. The process by which an agri-food system transforms over time from being subsistence-oriented and farm-centered into one that is more commercialized, productive, and off-farm centered is taking place in Africa. Much more remains to be done to sustain these gains and truly drive the agricultural transformation needed for Africa’s development, and to ensure a better life for all of its people as laid out in the Malabo Declaration and in the Sustainable Development Goals (SDGs).
This is the fourth volume of the Africa Agriculture Status Report series focusing on, “Progress towards African Agricultural Transformation”. The 2016 Report has tracked the progress made in the last decade with the MDGs and the Maputo Declaration as critical benchmarks, through to the current status, considering the Malabo Declaration and the projection and trajectory towards 2030 in line with the SDGs. The Report has maintained the original objective of producing an annual series that provides an in-depth and comprehensive analysis of emerging issues and challenges being faced by Africa’s smallholder farmers. The series allows African scholars and development professionals, and their colleagues in non-African countries, to contribute practical and evidence-based recommendations and share knowledge that contributes to Africa’s food security. The publication has also maintained its two section format: a detailed narrative that addresses various facets of the publication’s theme, and a data section that presents country-level agriculture and economic growth data which reveal important trends in African agricultural development.
The 2016 Agriculture Status Report has as its main objective to: (i) highlight major trends in African agriculture, the drivers of those trends, and the emerging challenges that Africa’s food systems are facing in the 21st century; (ii) identify policies and programs that can support the movement of Africa’s farming systems from subsistence-oriented towards more commercialized farming systems that can raise productivity, increase incomes, generate employment and contribute to economic growth; (iii) identify areas that enable better targeting of investment resources to increase agriculture productivity; (iv) identify the necessary conditions, appropriate technologies, and institutions that can propel and catalyze African agricultural transformation; (v) examine the past and the present role of public and private sector investment in agriculture, and the success factors that can be scaled up to accelerate transformation; and (vi) explore how agricultural transformation can contribute to solving the reality of rural poverty, low productivity, food insecurity, malnutrition, unemployment, and lower income among the population in countries in sub-Saharan Africa. These objectives have been addressed in the 11 chapters of the Report.
The role of Africa agricultural transformation is to change today’s rural poverty in sub-Saharan Africa into tomorrow’s prosperity, through sustainably and significantly increasing the productivity of smallholder farmers, and the power and transformative effect of agriculture to sustain broad-based, inclusive and equitable sustainable economic growth. This is the aspiration of this 2016 Report.
» Download: Africa Agriculture Status Report 2016 (PDF, 10.89 MB)
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BRICS leaders raise issues at G20 meeting
Brics leaders met on the margins of the G20 Summit in Hangzhou, China on Sunday, according to a statement issued by the Brics counties.
President Jacob Zuma and Finance Minister Pravin Gordhan are both attending the G20 Summit.
At the meeting of Brics leaders at the G20 Summit, they welcomed the progress in the functioning of New Development Bank (NDB) and expressed satisfaction at NDB’s approval of the first set of loans to member countries in the renewable and green energy sectors as well as the successful issuance of the bank’s first bond, a green bond denominated in RMB. They stressed, in this regard, NDB’s potential to bridge the gap in financing infrastructure projects.
According to the statement, the Brics leaders exchanged views on a wide range of global political, security, economic and global governance issues of importance and mutual concern.
The Brics leaders underlined the importance of establishment of a just and equitable international order based on international law. They expressed full confidence in the successful outcomes of the Hangzhou Summit and appreciated the emphasis by the China on the development agenda.
The Brics leaders encouraged G20 members to strengthen macroeconomic cooperation, promote innovation, robust and sustainable trade and investment growth. They agreed to pursue issues of global and mutual interest to the Brics countries at the G20.
They reiterated their commitment to enhance dialogue and cooperation with other emerging market economies and developing countries. They stressed the importance to foster an innovative, invigorated, interconnected and inclusive world economy to usher in a new era of global growth and sustainable development.
The Brics leaders concurred that the global economic recovery remains uneven with significant downside risks. They, in this regard, underlined the significance of macroeconomic policy coordination among G20 member countries, including in order to avoid negative-spillovers and to achieve strong, sustainable and balanced growth.
Innovation
According to the statement, the Brics leaders recognised that innovation is a key driver for mid and long term growth and sustainable development. In this regard, they welcomed the G20 Blueprint on Innovative Growth.
They underscored the centrality of the World Trade Organisation (WTO) as the cornerstone of a rule based, open, transparent, non-discriminatory and inclusive multi-lateral trading system and the continued need for development to be at the centre of the work of the WTO.
They also urged the G20 member countries in collaboration with International Monetary Fund (IMF) to step up efforts to increase the institution’s quota resources and review the distribution of quotas and votes to ensure fair reflection of emerging and developing economies.
Corruption
The Brics leaders stressed that corruption, illicit cross-border financial-flows, and ill-gotten wealth derived from illegal activities, stashed in foreign jurisdictions, adversely impact institutional capacities and effectiveness and called for enhanced cooperation and effective measures among G20 economies.
They also reiterated their commitment to the implementation of the 2030 Agenda for Sustainable Development, including through strengthening cooperation among Brics countries in this process.
Lastly, they reiterated the importance of international cooperation in countering the threat of terrorism.
The 8th Brics Summit will take place in Goa, India, in October.
BRICS Leaders’ Informal Meeting on the Margins of the G20 Summit
The BRICS Leaders met on the margins of the G20 Summit in Hangzhou, China on 4 September 2016.
The Leaders exchanged views on a wide range of global political, security, economic and global governance issues of importance and mutual concern.
Cognizant of global growth challenges, the Leaders recognised that BRICS countries are confronted with new challenges in their respective economic growth. In this regard, they recognized that the economic growth prospects and momentum of BRICS countries will continue to be a critical engine for global economic growth.
The Leaders underlined the importance of further strengthening BRICS strategic partnership guided by principles of openness, solidarity, equality, mutual understanding, inclusiveness and mutually beneficial cooperation.
The Leaders underlined the importance of establishment of a just and equitable international order based on international law.
The Leaders congratulated and supported Chinese G20 Presidency for 2016 and expressed full confidence in the successful outcomes of the Hangzhou Summit. They appreciated the emphasis by the Chinese Presidency on the development agenda. They encouraged G20 members to strengthen macroeconomic cooperation, promote innovation, robust and sustainable trade and investment growth.
The Leaders held wide-ranging discussions on the G20 Summit Agenda and agreed to pursue issues of global and mutual interest to the BRICS countries at the G20. They reiterated their commitment to enhance dialogue and cooperation with other emerging market economies and developing countries. They stressed the importance to foster an innovative, invigorated, interconnected and inclusive world economy to usher in a new era of global growth and sustainable development. They expressed expectation that with the Hangzhou Summit, the G20 will embark on a new journey for a strong, sustainable, balanced and inclusive economic growth.
The Leaders concurred that the global economic recovery remains uneven with significant downside risks. They, in this regard, underlined the significance of macroeconomic policy coordination among G20 members countries, including in order to avoid negative-spillovers and to achieve strong, sustainable and balanced growth.
The Leaders agreed that G20 members need to focus on the implementation of respective national growth strategies. They stressed their determination to work together with G20 members to continue contributing towards a strong, sustainable, balanced and inclusive growth.
The Leaders recognized that innovation is a key driver for mid and long term growth and sustainable development. In this regard, they welcomed the G20 Blueprint on Innovative Growth.
They underscored the centrality of WTO as the cornerstone of a rule based, open, transparent, non-discriminatory and inclusive multi-lateral trading system and the continued need for development to be at the centre of the work of the WTO. They reaffirmed their commitment to strengthen the role and negotiating function of the WTO and expressed concern at rising protectionism in the context of declining global trade and concurred to strive to facilitate market inter-linkages and an inclusive, rules-based and open world economy.
The Leaders emphasized the importance of an expedited implementation of the outcomes reached by the Ministers of Trade in Bali and Nairobi and called upon all WTO members to contribute to the early ratification and timely entry into force of the Trade Facilitation Agreement.
The Leaders stressed that an effective and efficient global economic and financial architecture is crucial for achieving resilient growth and are committed to continue to work in this regard. They underscored that the IMF quotas do not reflect present day’s global economic realities. They urged the G20 members countries in collaboration with IMF to step up efforts to increase the institution's quota resources and review the distribution of quotas and votes to ensure fair reflection of emerging and developing economies. They, in this regard, called for the completion of 15th General Review of Quotas, including a new quota formula, by the 2017 Annual Meeting.
The Leaders stressed that corruption, illicit cross-border financial-flows, and ill-gotten wealth derived from illegal activities, stashed in foreign jurisdictions, adversely impacts institutional capacities and effectiveness and called for enhanced cooperation and effective measures among G20 economies.
The Leaders supported placement of sustainable development high on the G20 agenda and in this context reaffirmed their commitment enshrined in the 2030 Agenda for Sustainable Development, the Addis Ababa Action Agenda on Financing for Development, and the Paris Agreement on Climate Change.
The Leaders reiterated their commitment to the implementation of the 2030 Agenda for Sustainable Development including through strengthening cooperation among BRICS countries in this process. In this regard, they welcomed the G20 Action Plan on the 2030 Agenda for Sustainable Development and the G20 Initiative on Supporting Industrialization in Africa and Least Developed Countries.
The Leaders recognized that sustainable development, universal energy access, and energy security are critical for shared prosperity of humanity and for the future of the planet. They acknowledged the imperative of affordable, clean and renewable energy access to all.
The Leaders appreciated India’s BRICS Chairpersonship and the good pace of implementation and expansion of BRICS cooperation agenda. The Leaders voiced their full support for India’s BRICS Chairpersonship for a successful hosting of the upcoming 8th BRICS Summit in Goa on 15-16 October 2016.
The Leaders exchanged views on further strengthening intra-BRICS trade, business, commercial, tourism and travel ties. They welcomed the progress in the implementation of the Strategy for BRICS Economic Partnership and underscored the importance of BRICS Roadmap on Trade, Economic and Investment Cooperation until 2020.
The Leaders appreciated the strengthening of people-to-people exchanges further in BRICS under India's Chairpersonship, including through organization of events across the cities and provinces of India.
The Leaders welcomed the progress in the functioning of New Development Bank (NDB). They expressed satisfaction at NDB's approval of first set of loans to member countries in renewable and green energy sectors as well as the successful issuance of the Bank's first bond, a green bond denominated in RMB. They stressed, in this regard, NDB’s potential to bridge the gap in financing infrastructure projects.
The Leaders strongly condemned the heinous acts of terrorism that continue to disrupt global peace and security and undermine social and economic confidence. They expressed deep sympathy and support to the innocent victims of terror acts and condemned recent terrorist attacks in various cities of the world.
The Leaders reiterated their wholehearted commitment to the fight against terrorism in all its forms and manifestations, with the United Nations playing a central role. They stressed that there can be no justification, whatsoever, for any acts of terrorism, whether based upon ideological, religious, political, racial, ethnic or any other justification. They emphasized the need for a united global effort to combat terrorism in accordance with norms and principles of international law, including the UN Charter.
The Leaders reiterated the importance of international cooperation in countering this threat and in this regard recommitted to strengthen cooperation among BRICS countries and with other nations.
Hangzhou, China
4th September 2016
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South Sudan deposits instruments of ratification on the accession to the EAC Treaty
The Republic of South Sudan on 5 September 2016 deposited the instrument of ratification on the Accession to the Treaty for the Establishment of the East African Community to the Secretary General of the East African Community (EAC) Amb. Liberat Mfumukeko at the EAC Headquarters in Arusha, Tanzania.
Depositing the instrument of ratification with the Secretary General of the East African Community means the Republic of South Sudan is now a new family member of the East African Community with full and equal rights, obligations and privileges.
“I would, therefore, like to seize this opportunity to commend President Salva Kiir, the Government and the entire people of the Republic of South Sudan for their tireless efforts and commitment that enabled them to achieve this important milestone,” the Secretary General said at a short ceremony attended by the Chair of the EAC Council of Ministers and Tanzania’s Minister of Foreign Affairs and East African Cooperation, Amb. Dr. Augustine Mahiga; Kenya’s Cabinet Secretary, Ministry of East African Community, Labour and Social Protection, Hon. Phyllis Kandie; Burundi’s Minister of Foreign Affairs, Hon. Alain Aime Nyamitwe, and the one in the Office of the President responsible for EAC Affairs, Hon. Leontine Nzeyimana; Permanent Secretaries/Principal Secretaries from Partner States, EAC Deputy Secretaries Generals, Counsel to the Community and members of media.
In addition, on the Republic of South Sudan were Secretary General, South Sudan EAC Secretariat, Mou Mou Athian Kuol, South Sudan Ambassador to Tanzania, Mariano Deng Ngor, Director of East African Community, Ministry of Foreign Affairs and International Cooperation, Amb. Agnes Oswaha and Legal Counsel, Ministry of Justice and Constitutional Affairs, Juba, South Sudan, Lawrence Loro Kamilo.
Amb. Mfumukeko disclosed that now that South Sudan have taken a step further, the Secretariat will seek guidance from the Council of Ministers on developing a detailed roadmap for integrating the Republic of South Sudan into the ongoing EAC projects and programmes. “We shall be informing the Leardership in Juba of every step we shall be taking in this regard.”
The EAC Chief called upon the media to fully participate in integrating the Republic of South Sudan in the EAC by reporting objectively on the issues at hand. He said EAC attaches great importance to the role of the Media in promoting awareness, discourse and involvement of the broad range of stakeholders in the East African regional integration process.
The EAC Secretary General also reiterated to both national, regional and International media on their role to get the region and the new Partner State to embrace regional integration with passion, dedication and commitment for the benefit of the present and future generations of the Community.
On his part, the Presidential Envoy of the Republic of South Sudan, H. E. Hon. Aggrey Tisa Sabuni said membership in EAC for Republic of South Sudan will henceforth mean that the country will never be the same again. “The EAC integration process is important for South Sudan. Currently, the EAC is the most advanced Regional bloc on the African Continent.”
He noted that South Sudan’s membership in the EAC is likely to provide concrete benefits to the country and the region as a whole, adding that “deep regional integration programmes that South Sudan shall soon undertake are likely to enhance overall EAC competitiveness which will lead to higher economic growth, employment creation and poverty reduction”.
Background
Republic of South Sudan applied to join the East African Community on 10th June, 2011. A Verification Committee from the EAC visited the Republic of South Sudan from 15th to 31st July, 2012 with the aim of establishing the Republic of South Sudan‘s level of conformity with the criteria for admission of foreign countries into the East African Community as provided under Article 3 of the EAC Treaty.
Based on recommendation of the report by the Verification Committee, the EAC Heads of State Summit in November, 2012 directed the Council of Ministers to negotiate the admission of South Sudan putting into consideration the provision of the EAC Treaty on the criteria of joining the Community.
As a result, the EAC Council of Ministers established a High Level Negotiation Team and negotiation process with the Republic of South Sudan commenced. To initiate this process on the side of South Sudan, His Excellency Salva Kiir Mayardit also appointed a High Level Committee on 13th March, 2014 to oversee South Sudan’s accession to the EAC.
Negotiations between the EAC and the Republic of South Sudan went smoothly culminating in its admission to the EAC by the 17th EAC Heads of State Summit held on 2nd March, 2016 in Arusha, Tanzania. At that Summit, the Heads of State designated the Chairperson of the Summmit, H. E. President Dr. John Pombe Joseph Magufuli to sign the Treaty of Accession with the Republic of South Sudan.
In this regard, H. E. President Salva Kiir and H. E. President Dr. John Pombe Joseph Magufuli signed the Treaty of Accession on 15th April this year in Dar es Salaam, Tanzania. The Republic of South Sudan was given up to 30th of September, 2016 to deposit the instrument of ratification with the Secretary General of the East African Community in Arusha.
tralac’s Daily News Selection
The selection: Monday, 5 September 2016
Today, in Kigali: the Global African Investment Summit. A preview; an interview with TGAIS programme director, Amanda Basi. Twitter updates: #TGAIS
Today, in Arusha: the EAC Council of Ministers meets in preparation for the EAC Summit, starting 8 Sept. A preview.
Betty Maina: ‘The EPA has been hammered out over 12 years; it safeguards all our interests’ (The EastAfrican)
I would like to respond to this critique. Firstly, the EPAs are not a unilateral decision by the European Union unlike its predecessor – the Lome Convention or the other much touted alternatives available – Everything But Arms (EBA) for Least Developed Countries and the generalised System of Preference (GSP) and GSP+. The EAC-EU EPA has been negotiated and agreed to by the EAC’s best trade negotiators over a period of 14 years! The negotiations were arduous and thorough. The EAC partner states, following a decision of the Heads of State Summit in 2007, have been negotiating the EPA as one bloc, in order to safeguard the Customs Union. As negotiations progressed, the technical teams paid close attentions to concerns raised by stakeholders including local industry and smallholder farmers. So, what has the EAC negotiated for itself? [Focus shifts to Magufuli in Kenya bid to secure trade deal with EU]
Anzetse Were: ‘Address emerging trends in EAC industries’ (Business Daily)
Last week I attended and made a presentation at a roundtable on manufacturing in Kenya hosted by the Overseas Development Institute. The roundtable was under ODI’s Supporting Economic Transformation Programme, which is supported by DFID. As part of the roundtable I developed a paper on manufacturing in Kenya and thought it would be useful to share some insights I unearthed during my research on manufacturing in East Africa:
Kenya: New local ownership rules hit Chinese contractors hardest (Business Daily)
Chinese contractors are the biggest casualty of new industry rules requiring foreign firms to cede at least 30% stake to local investors in all construction projects undertaken in Kenya. The National Construction Authority set 1 August 2016 as the commencement date for the ownership regulations that compel foreign contractors to form joint ventures with locals who must control at least a third of the value of the deal. The new rules apply to all new projects involving foreign firms, the agency said, warning that those who fail to comply risk being debarred and have their names expunged from the register of contractors. Chinese firms dominate the list of Kenya’s 60 top-tier foreign-owned contractors that are classified as Category 1. Other big foreign contractors in Kenya are largely from Japan, India, Dubai and a few from Europe.
African Ministerial Conference on Ocean Economies and Climate Change: communiqué
We, the Ministers and representatives of the participating countries: Call on...: African countries to promote sustainable resource use practices in a transparent manner and ratify the FAO Agreement on Port State Measures to Prevent, Deter and Eliminate IUU Fishing; African countries to implement their NDCs, in particular the actions designed to foster the resilience of oceans and coastal areas; International organizations to help African countries refine their NDCs to include oceans and coastal areas among their priority targets: [View all presentations, documentation]
Graziano da Silva: ‘Bringing the blue world into the green economy’ (FAO)
The FAO Director-General underscored the disproportionate impacts on Small Island Developing States, saying: "For SIDS countries, this has become a fight for survival." For this reason, FAO has been urging governments to sign on to the international Port State Measures Agreement that recently entered in to force and will play a key role in combatting illegal fishing and improving fisheries management. Currently, however, only 13 out of 34 SIDS countries are party to the agreement, of which only nine countries are in Africa, Graziano da Silva stressed as he urged governments to consider taking immediate action to implement the treaty. “At next 'Our Ocean’ Conference (15-16 Sept, Washington DC), I would like to present publicly the list of countries that have ratified the PSMA,” he said.
Related: Kenya: Uhuru signs bill regulating fisheries industry, Anthony Kleven: China’s fishing fleet plundering African waters, African Ambassadors meet in preparation for COP22
From the Indian Ocean Conference (1 Sept, in Singapore): SL’s Premier, Ranil Wickremesinghe: ‘Global power transition and the Indian Ocean’, ’India committed to building IORA’: Jaishankar
ECOWAS PPDU to validate study on Dakar–Lagos Corridor (ECOWAS)
The ECOWAS Infrastructure Preparation and Development Unit will validate the Draft Final Report for the study on the Dakar-Lagos Corridor missing links through a validation workshop involving experts from ECOWAS Member States and other stakeholders, 6-7 Sept, in Monrovia. The specific objectives of the study are to establish a complete inventory of the corridor missing links inhibiting the motorability of the corridor with the aim of focusing resources on the rehabilitation of the road corridor which supports regional and inter-regional traffic flow and promotes trade within the sub-region. The study will also determine an appropriate engineering solution for the upgrading of the entire corridor. The study will also undertake an economic, social and environmental appraisal for the consideration of various investment options. [The Abidjan-Lagos Corridor: an interview with Mamady Souaré]
Botswana, Zimbabwe, Mozambique: Port Techobanine Heavy Haul Rail Project update (The Chronicle)
Ministers representing the three governments have signed a Memorandum of Understanding committing themselves to the Port Techobanine Heavy Haul Rail Project. Dr Gumbo said each government is expected to contribute about $200 million to the project and due to its magnitude, the Government would engage the business sector in public private partnerships. “It is hoped and anticipated that the project will provide improved distribution of regional traffic among corridors in Southern Africa, increase regional integration and international cooperation and provide for fast implementation of a fundamental regional transportation network,” he said. Dr Gumbo said the deal would ensure easy access to ports in Mozambique which will decongest the South African ones. He said the country is facilitating the transportation of fuel from Mozambique to Botswana and if the project succeeds it will ensure cheaper passage of goods.
Ban haulage trucks: Zimra (The Chronicle)
The Zimbabwe Revenue Authority has urged the Government to consider banning long-haul road freight as it causes congestion at the country’s border posts and damages the road network. Zimra official Mr Robert Mangwiro, who was speaking on behalf of acting Commissioner-General Mr Happias Kuzvinzwa, said despite the implementation of the one-stop border system at border posts such as Chirundu, long queues of haulage trucks were still common. “Eliminating or reducing the number of haulage trucks on the road will help decongest our borders,” he said. “It will also be critical in boosting the role of the National Railways of Zimbabwe giving it significant business.” His sentiments were backed by the chairperson of the Parliamentary Portfolio Committee on Transport, Dexter Nduna.
Zimbabwe: The battle to keep imports in check (Sunday Mail)
There has been demonstrable success in the import restrictions. In July, there were no recorded statistics for bottled water, aerated water, jams, ice cream, edible ice and fruit jellies imports. A month earlier, imports of the same items had gobbled more than US$75 000. Similarly, there is no record of human hair, fresh cheese and yoghurt imports in the same month. Experts say as local industry recovers, there is need to tighten import restrictions to ensure that only critical goods find their way onto the local market. To enhance its re-industrialisation programme, Government is also mobilising fresh low-cost funding through the Distressed Industries and Marginalised Areas Fund (Dimaf) and the Zimbabwe Economic Trade Revival Facility. Following the positive impact of the $40 million Dimaf facility which helped revive the fortunes of companies such as Cairns Holdings, there is strong belief in Government that a bigger and more accessible facility could help re-position a number of firms. Added Minister Bimha: “Without Dimaf we wouldn’t have survived this far. SI64 is still in its infancy as far as the support of local industry is concerned."
South Africa commences with new livestock import conditions (Bernama)
SA's Department of Agriculture, Forestry and Fisheries has approved four facilities to receive cattle, sheep and goats intended for direct slaughter and feedlot purposes, Namibia Press Agency reported. SA implemented new livestock import regulations for Namibia, Botswana, Lesotho and Swaziland, as gazetted and announced by SA's minister of Agriculture Forestry and Fisheries, Senzeni Zokwana on 27 May. "We expect that this development will bring relief to the farming community and exporters as the new permit reduces the need for compulsory pre-export Brucella testing and double tuberculosis testing," Acting Permanent Secretary in Namibia's Ministry of Agriculture, Water and Forestry Sophy Kasheeta said.
Migration and development: a role for the World Bank Group
Ahead of the UNGA's Summit on 'Large movements of refugees and migrants' (19 Sept), and the Leaders’ Summit (20 Sept), the World Bank Group has released a paper Migration and Development: A Role for the World Bank Group (pdf). The objectives of the paper are (i) to describe three major drivers of international migration; (ii) to highlight the benefits and costs associated with global labor mobility in both sending and receiving countries; (iii) to sketch the global architecture for governance of migration; and (iv) to suggest areas in which the Bank could design context-specific solutions to migration problems.
Extract: In Sub-Saharan Africa, intraregional migration is larger (67%) than migration to other regions. The equivalent figure for Europe and Central Asia is 54%. Major destination countries within Africa are South Africa, Côte d’Ivoire, Nigeria, Kenya, and Ethiopia. Intraregional migration is also significant in the Middle East and North Africa (34%) and in East Asia and Pacific (23%).
Australia-Africa trade value hits $5.7bn (Financial Watch)
“[This] week, Perth is hosting the first Australia-Africa Week. The week is built around the nucleus of the Africa Down Under mining conference and brings together a range of events. These include the Australia-Africa Universities Network Forum, the Africa Oil, Energy and Gas Conference, and the Australia-Africa Technology and Infrastructure Conference.” Australian High Commissioner to Nigeria, Paul Lehmann, said at least 12 ministers of mining from Africa would participate in the event including Nigeria’s Minister of Solid Minerals Development, Kayode Fayemi. Lehmann said Australian companies had an estimated 23 billion dollars invested in extractive projects in Africa. He added that there were more than 200 Australian companies with about 700 projects in 35 countries in the African region.
South Africa’s trade with the Philippines up by 18% between 2015 and the year to June 2016. Now totalling $231m (@martinslabber)
ECOWAS to sensitize Nigerian media on international trade agreements, EPA
South Sudan submits documents today to officially join EAC (Daily News)
Rwanda satisfied with Dar port performance (Daily News)
‘Open sky’ policy to ease travel and boost EA tourism (Daily Nation)
Why did the EAC Secretariat shut the peace and security department? (New Times)
Africa scorecard on domestic financing for health (AU)
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Why China’s so keen on defending multilateral trade at G20 summit
President Xi Jinping no fan of US-led trade pacts
China has been fighting an uphill battle to revive global interest in a multilateral trade system at the G20 summit in Hangzhou, even though progress on the more selective trade pacts preferred by Washington has stalled.
Beijing’s preference for a multilateral trade system based around the World Trade Organisation is understandable as China is widely regarded as having been the biggest beneficiary of globalised trade in the 15 years since its accession to the WTO. Its gross domestic product is six times bigger than it was in 2001, its per capita GDP (in nominal US dollar terms) has surged from US$1,000 to US$8,000 and its annual merchandise exports have risen 850 per cent.
But workers in advanced economies have been growing disenchanted with the existing state of trade, saying that globalisation has been working against their interests, with jobs lost to emerging markets.
The United States has been trying to rewrite the trade rules by leading talks on a Transatlantic Trade and Investment Partnership (TTIP) with the European Union and the 12-nation Trans-Pacific Partnership Agreement (TPP) in Asia. The TPP, agreed to in February but still awaiting ratification, has been an especially thorny issue because China is excluded from it and Beijing views it as a move to check the expansion of its global influence.
The summit in Hangzhou has presented both sides with a platform to jostle for the upper hand in deciding the future of trade.
President Xi Jinping can barely contain his dislike of the US-led pacts.
“The multilateral trade system is facing a bottleneck problem in development, and regional trade arrangements are mushrooming, leading to fragmentation in trade rules,” Xi said in a speech ahead of the G20 summit.
He said China would try to strengthen the multilateral trade system in Hangzhou.
Trade between G20 nations
The G20 economies moved US$27 trillion worth of products among them in 2014, according to the International Monetary Fund.
Roberto Azevedo, director-general of the Geneva-based WTO, said on the sidelines of the summit that China’s “determination to include trade and investment in the conversation in Hangzhou” was “extremely helpful and important” while “many areas of the world are having a conversation on trade which is not very helpful”.
At the same time, Azevedo said the WTO was “very supportive” of talks such as the TTIP, but “unfortunately” could not help overcome difficulties such as French and German frustration with the US.
He Weiwen, an executive council member at the China Society for WTO Studies, said: “The US said earlier that it can’t let China set the rules, but it seems its own rule-setting isn’t wining hearts as it only sees its own interests.
“The G20 certainly offers a chance to bring a bit of momentum to multilateralism.”
In that context, China played up a trade ministers’ meeting ahead of the G20 summit, in addition to the usual meeting of finance ministers and central bankers.
On the other hand, China is also trying to make progress in investment treaty talks with its two most important economic partners, the US and EU, even though Beijing’s quest for recognition as a market economy under WTO rules is proving a tough battle.
Vice-minister of Commerce Wang Shouwen said in Hangzhou that China had made progress in drawn-out Bilateral Investment Treaty talks with the US. But hopes remain dim, with US business representatives complaining that China’s “negative list”, which limits market access, was too long, and it looks like the talks are going nowhere.
In Europe, China has been criticised for rising domestic protectionism and dumping products churned out as a result of industrial overcapacity.
AEGIS Europe, an alliance of manufacturing industries, said it hoped G20 leaders would tackle “widespread Chinese overproduction and overcapacities”.
“Leaders must support the use of legally robust trade defence instruments that effectively address flagrant and recurrent dumping by Chinese producers across many sectors in global markets,” it said on Friday.
In Asia, China aims to settle trilateral free-trade talks with Japan and South Korea, but that process has also been shadowed by geopolitical tensions.
“China is the beneficiary of free trade, but it needs to counter its neighbours’ suspicion in terms of political security, and such distrust, for example the tension between China and Japan, is the biggest hurdle to China’s push for economic integration in the region,” said Chu Yin, an associate professor at Beijing’s University of International Relations. “It takes time to dispel suspicion and we need patience.”
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Harnessing Africa’s blue economy: African Ministerial Conference on Ocean Economies and Climate Change
Diversifying economies beyond land-based activities and along coasts in a climate-smart way is critical to achieving the Sustainable Development Goals (SDG) and delivering sustainable and inclusive growth.
Success on the ocean economy frontier and climate change agenda at the United Nations Framework Convention on Climate Change (UNFCC) COP-22 in Marrakesh includes: (i) implement the commitments made in Paris, (ii) support adaptation to a changing climate and (iii) transition towards an inclusive, resilient and low-carbon trajectory, by maximizing ocean potential.
The goal in Marrakesh is to deliver transformational investment packages that build Africa’s capacity for climate-resilient ocean economies. Ocean-related action areas for Africa include sustainable fisheries and increased, healthy aquaculture, pristine coastlines, improved ports and shipping, renewable energy, tourism and innovative, sustainable finance.
Towards COP22: African Ministerial Conference On Ocean Economies and Climate Change
Building on commitments made on the Sustainable Development Goals (SDGs) in NY and at COP21 in Paris, the World Bank’s Africa Climate Business Plan as well as the WBG’s Climate Change Action Plan and AU’s Agenda 2063, this African Ministerial Conference on Ocean Economies and Climate Change (Mauritius, September 1-2, 2016) was intended to:
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Muster international political leadership and sustain momentum on the need for climate action in building sustainable ocean economies ahead of the COP22
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Place Mauritius as an African international center of ocean economic forum to attract and demonstrate African leadership, as well as institutional investors and donors and partners in the area of ocean economy and climate change
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Present an “African Ocean Economy and Climate Action Agenda” which will have as a key component an “African Oceans Finance Package” (entailing an investment agenda catalyzed by a number of government and company commitments and partnerships in pursuit of climate-smart investments in African ocean economies) for the benefit of African coastal and insular countries and to be announced at the UNFCCC COP22 in Marrakesh in November 2016, and
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Enhance the capacity of Sub-Saharan Africa to plan and implement climate-resilient and low-carbon development. A number of priority areas for action will be needed to enhance Africa’s capacity to build climate-resilient ocean economies such as fisheries and aquaculture, integrity of the coastline, ports and shipping, renewable energy, tourism, and horizontal themes such as capacity building and finance.
The Conference concluded with the adoption of the Mauritius Communiqué.
Mauritius Communiqué
We, the Ministers and representatives of the participating countries to the “Towards COP22: African Ministerial Conference on Ocean Economies and Climate Change” (hereinafter referred to as “AMCOECC”), held in Balaclava, Mauritius on September 1-2, 2016;
Recognizing that more than 60 percent of the world’s economic output takes place near coastlines, and that in some African countries, the ocean economy contributes one-quarter of revenues and one-third of export revenues;
Affirming that Africa relies on its oceans to feed its people, now and into the future;
Noting that coastal population growth, overfishing and illegal, unreported and unregulated (IUU) fishing, pollution, unsustainable tourism and other issues degrade marine and coastal biodiversity and ecosystems, cause coastal erosion and flooding, and reduce livelihood opportunities, and aggravate poverty;
Recognizing that one of the biggest threats to coastal and marine systems is climate change, the impacts of which are already being detected in many cases and areas of Africa;
Affirming that developing ocean economies in a sustainable fashion is possible in a number of areas, including fisheries, aquaculture, minerals, energy, transport and trade, tourism and recreation, and marine biotechnology;
Recalling the outcomes of several key international conferences pertaining to Africa and Small Island Developing States (SIDS) treating the issues of oceans and climate change, such as the UN Declaration of Barbados and the Programme of Action for the Sustainable Development of SIDS, the Nouakchott Declaration for the Fisheries Transparency Initiative, the UN High-level Review Meeting on the Implementation of the Mauritius Strategy for the Further Implementation of the Programme of Action for the Sustainable Development of SIDS, the UN Small Island Developing States Accelerated Modalities of Action (Samoa Pathway), the UN Conference on Sustainable Development (Rio+20), the Addis Ababa Accord Agenda, the African Union’s Agenda 2063 “The Africa We Want”, the African Union’s “African Decade of the Seas”, the Islands Declaration on Climate Change of Saint Denis de la Réunion, and the Declaration of the Indian Ocean Rim Association (IORA) on enhancing cooperation for sustainable development in the Indian Ocean region;
Recalling also the decision of the Intergovernmental Panel on Climate Change to prepare a special report on climate change and the oceans and cryosphere by 2018;
Building on the Lima-Paris Action Agenda which enhanced the implementation of climate action and which provided practical guidelines and orientations to both state and the non-state actors to implement the Paris Agreement and support the United Nations Framework Convention on Climate Change process, and also supporting the decision of the UN General Assembly to convene a high-level conference on the implementation of Sustainable Development Goal (SDG) 14 in New York, June 2017;
United in our common vision of a prosperous, resilient and inclusive Africa, in our belief that as a continent, we need to be part of the solution to climate change;
Convinced that we have demonstrated leadership through our Intended Nationally Determined Contributions (NDCs) made at the UNFCCC’s COP21 in Paris and that now, we are ready for business and will embed climate considerations in developing our ocean economies;
Supporting the implementation of the Agenda 2030 for Sustainable Development, which includes specific SDGs on the sustainable use of the oceans, seas, on food security and nutrition, on poverty reduction and climate change amongst others;
Alarmed that obtaining easy access to additional and predictable international finance, especially for African SIDS and Least Developed Countries remains a major obstacle for many African developing countries;
Encouraged by the efforts of the World Bank Group, the African Development Bank and other development partners to stimulate climate-smart ocean economies;
Urging the full promotion of collaboration and regional cooperation among African nations for sharing of capacity, data, and research for the sustainable management of marine resources;
Noting the importance of establishing regional centers of excellence to advance ocean economies, including in the Indian Ocean region, and commending those countries that have already taken steps in this direction, among which the Republic of Mauritius;
Thanking the Government of the Republic of Mauritius for its initiative to host the AMCOECC and the World Bank Group and Food and Agriculture Organization of the United Nations for their leadership in supporting the development of climate-smart ocean economies;
Call on
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All parties, including governments, private companies, development and other financial institutions, to factor sustainability and transparency into any investment program designed to develop ocean economies, and thus to conduct proper environmental impact assessments and foster the resilience of planned investments to likely climate change impacts, and their inclusiveness;
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African countries to promote sustainable resource use practices in a transparent manner and ratify the FAO Agreement on Port State Measures to Prevent, Deter and Eliminate IUU Fishing;
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African countries to implement their NDCs, in particular the actions designed to foster the resilience of oceans and coastal areas;
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International organizations to help African countries refine their NDCs to include oceans and coastal areas among their priority targets;
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Development partners, in particular the World Bank Group, the African Development Bank and the Food and Agriculture Organization of the United Nations, to prepare a package consisting of technical and financial assistance in support of ocean economies and the resilience of oceans and coastal areas to climate change, including through NDC implementation, and to present a proposal at COP22, meeting in Marrakesh in November 2016;
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African countries to include climate-smart ocean economies in the Green Climate Fund (GCF) Africa Dialogue in Cape Town in October 2016 and in the Africa Adaptation Initiative, and to promote new initiatives on climate-smart ocean economies;
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Accredited entities under the GCF to prepare program proposals on ocean economies and climate change in Africa for submission to the GCF;
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The international scientific community to work closely with regional centers of excellence and development partners, to assist African scientific, research and educational institutions in developing knowledge about the current and likely impacts of climate change in the future, and in building African capacity in support of climate-smart ocean economies;
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Sub-national jurisdictions to create a network to collaborate effectively, share knowledge and drive meaningful and sustainable action in support of climate-smart ocean economies;
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Leaders at COP22 to take action in support of climate-smart ocean economies, and the World Bank Group, the African Development Bank and the Food and Agriculture Organization of the United Nations, to convene a dialogue on African oceans and coasts during Oceans Day.
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The EPA has been hammered out over 12 years; it safeguards all our interests
Now that Kenya and Rwanda have gone ahead and signed the EAC-EU Economic Partnership Agreement (on Thursday, September 1), putting an end to a torturous nail-biting wait by Kenya’s exporters specifically.
The trade agreement, negotiated over 12 years, was concluded in October 2014. It was set to be signed on July 18 this year. However, some partner states indicated they were not ready to sign then. The reasons Tanzania gave for unwillingness to sign received great publicity.
On July 30, in an opinion piece in The EastAfrican, former Tanzanian president Benjamin Mkapa wrote a critique of the negotiated EPA, urging Tanzania and the EAC in general not to sign it. He argued that the EPA would set back industrialisation in East Africa and reduce government revenue from Customs tariffs due to liberalisation.
The essence of the argument is that the EU should offer market access to developing countries on a duty-free, quota-free basis without expecting these countries to liberalise their own markets regardless of their levels of development.
They present EPAs as arrangements forced upon partners by the European Union that are harmful to industrialisation and a threat to regional and continental integration.
I would like to respond to this critique.
Firstly, the EPAs are not a unilateral decision by the European Union unlike its predecessor – the Lome Convention or the other much touted alternatives available – Everything But Arms (EBA) for Least Developed Countries and the generalised System of Preference (GSP) and GSP+.
The EAC-EU EPA has been negotiated and agreed to by the EAC’s best trade negotiators over a period of 14 years! The negotiations were arduous and thorough. The EAC partner states, following a decision of the Heads of State Summit in 2007, have been negotiating the EPA as one bloc, in order to safeguard the Customs Union.
As negotiations progressed, the technical teams paid close attentions to concerns raised by stakeholders including local industry and smallholder farmers.
So, what has the EAC negotiated for itself?
First, limited additional market opening. The European Union has opened up 100 per cent of its market to EAC partners duty-free and quota-free. The EAC has opened up 82.6 per cent of its total trade – where duties will be reduced to 0 per cent over 25 years.
It must be remembered that by the time market access offers were exchanged, the EAC was already a Customs Union within a liberal framework. It had assigned 0 per cent duty to industrial inputs not manufactured in the region. So the market access offer was based on the duties in the Common External Tariff.
It is therefore incorrect to present the liberalisation as specific to Europe. These goods can be imported from anywhere in the world. Since no duties are paid on them, the argument of loss of revenue is greatly overstated.
Therefore, additional market opening is only about 13 per cent – consisting of mostly intermediate goods, which attract a duty of 10 per cent in the CET phased out over 15 years. Only 2.5 per cent are finished goods at 25 per cent duty.
Most critical, the EAC has not liberalised its market for agricultural goods and goods where it has a comparative advantage. This constitutes 17.4 per cent of its trade.
In addition, the negotiators extracted an agreement that similar European goods that benefit from subsidies will not be sold in the EAC.
The argument that EPAs threaten EAC’s smallholder farmers and agricultural sector is, therefore, not supported by the agreement negotiated.
Second, the EPA provides for flexible and asymmetrical rules of origin, guided by the industrial development levels of the EAC states.
Third, the EAC negotiators secured uniform market access for all the East African partners. The other market arrangements available to the partner states – EBA, GSP and GSP+, while offering duty-free, quota-free market access, are unilateral, are subject to rigid rules of origin and more importantly are “disciplined” by European rules should the exports grow to significant volumes. In effect, these are affirmative action arrangements that expire with the growth of the countries’ economies!
The EAC negotiators opted to provide for a growing bloc. All EAC countries have enjoyed positive growth rates over the past 10 years. Kenya is already a lower middle-income country while Tanzania, Uganda and Rwanda are not far behind and expected to cross the threshold over the next 5-10 years.
The unilateral market offers of EBA and GSP will not apply forever. It was important to secure an arrangement that would signal predictability to investors.
The European market is a significant one for the EAC states – for most it is the second largest after the bloc itself. For Kenya, at $ 1.5 billion, it represented 32 per cent of its exports in 2015.
For Tanzania, its EU-bound exports of $800 million represented 23 per cent of the total. These are not markets that can be easily replaced and represent critical investors in our nations’ economies.
Kenya and Rwanda’s signing of the EPA is a strong signal that the two countries consider the negotiated framework superior to other unilateral market offers available to those who wish to trade with Europe. It is hoped that the other EAC partner states will also conclude internal consultations and sign the EPA so all can benefit from the provisions of the agreement.
Betty Maina is Principal Secretary in Kenya’s State Department of East African Community Integration.
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The battle to keep imports in check
Government is grappling to keep the local insatiable appetite for imported products in check, with official statistics for July – the period when Statutory Instrument 64 of 2016 became effective – show that imports rose by more than US$7 million.
The Zimbabwe National Statistics Agency’s figures indicate that July imports rose to US$176 million from US$169 million in June.
The July import bill was the second highest of 2016 after the US$177 million spent in May as the influx of sundry items such as bubblegum and skincare products continues.
SI 64 of 2016 removed more than 42 products from the Open General Import Licence, which effectively means that the specified goods will have to be rigorously vetted before they are a granted a special licence for them to be imported.
The instrument, whose lifespan is not expected to be more than three years, is designed to give local industries the opportunity to recover and grow by keeping out unnecessary imports.
However, there is a discrepancy between the figures compiled by Zimstat and those published by South Africa’s department of trade and industry.
According to the South African authorities, Zimbabwe took in goods worth US$171,2 million (R2,5 billion) in June, compared to the US$169 million recorded by Zimstat. Exports from Zimbabwe to South Africa were estimated at US$9,2 million (R135 million) in the same period.
As such, Zimbabwe’s imports outstripped exports by a staggering US$162 million in July. Overall, imports between January and June this year soared to US$959 million (R14 billion).
Zimbabwe maintained its position as the fifth-largest consumer of South Africa’s goods on the continent after Botswana, Namibia, Zambia and Mozambique respectively.
South Africa is Zimbabwe’s largest trade partner.
The disproportionately large number of imports into Zimbabwe signifies the gulf between the two economies.
While the country has been grappling with American and European Union sanctions for 16 years, South Africa – Africa’s largest economy – has been expanding.
But the decline in the value of the South African rand against a basket of world currencies, especially in 2015, led to an unprecedented growth in imports.
It is suspected that the leap of imports from June to July could have been caused by pre-emptive orders that were made before SI 64 became effective, especially by individuals in Government who knew about the policy in advance.
In a recent interview with The Sunday Mail Business, the Minister of Industry and Commerce Mr Mike Bimha, said individuals who are undermining Government policy from within were destroying the economy.
“What surprises me is that we also have elements within the systems... probably across even to the border, who were very much involved in the importation to the point that (what I was surprised about is that) even before the SI was announced, there were people across the border who knew that it was coming and they had already taken measures to process some of the goods so that even when we said okay, look, we will allow goods that have been processed, we were surprised by the numbers.
“When you get someone bringing in thousands and thousands of wheelbarrows you then say it has never happened before, but because someone knew that there was this Statutory Instrument coming.
“And all these wheelbarrows coming in when we have Tregers which produces high quality wheelbarrows. That is how exactly we are killing our jobs,” said Mr Bimha.
Tightening the noose
There has been demonstrable success in the import restrictions.
In July, there were no recorded statistics for bottled water, aerated water, jams, ice cream, edible ice and fruit jellies imports. A month earlier, imports of the same items had gobbled more than US$75 000.
Similarly, there is no record of human hair, fresh cheese and yoghurt imports in the same month.
Interestingly though, the import of chewing gum rose from US$1 400 in June to US$3 000 in July. Also, prepared glues and adhesives jumped from US$107 000 to US$176 000, while preparations for sunscreen/suntan increased from US$5 400 to US$8 800.
Purchases of building materials such as tiles fell marginally from US$11 400 in June to US$11 100 in July.
Experts say as local industry recovers, there is need to tighten import restrictions to ensure that only critical goods find their way onto the local market.
Dimaf for industry
To enhance its re-industrialisation programme, Government is also mobilising fresh low-cost funding through the Distressed Industries and Marginalised Areas Fund (Dimaf) and the Zimbabwe Economic Trade Revival Facility (Zetref).
The funds will target industries whose goods are protected by provisions of SI 64 of 2016, with Industry Minister Bimha saying re-tooling of companies was a major Government priority .
Funding constraints reduce local companies’ competitiveness in relation to peers in the region.
“We have put in place some measures towards the re-tooling of the manufacturing industry of the selected critical areas under SI 64. Government is mobilising resources under Dimaf and Zetref to ensure that all those companies protected under the SI 64 will go a long way in resuscitating industry.
“In the past, the policy measures and capital assistance for re-tooling released by Government to distressed companies has had a positive impact on industry in Bulawayo, with some of the beneficiary companies now increasing production capacity.
“This time the funds will not be there for everyone, but will target critical sectors that are supported through SI 64,”said Minister Bimha.
It is Government’s anticipation that the resource envelope for the Dimaf facility will exceed the US$40 million that was initially set aside for the project in 2011.
Companies whose linkages with downstream activities have potential to broaden economic growth will also be targeted.
The Confederation of Zimbabwe Industries says companies in Bulawayo require between US$100 million and US$150 million for re-tooling and re-habilitation.
Following the positive impact of the US$40 million Dimaf facility which helped revive the fortunes of companies such as Cairns Holdings, there is strong belief in Government that a bigger and more accessible facility could help re-position a number of firms.
Added Minister Bimha: “Without Dimaf we wouldn’t have survived this far … SI64 is still in its infancy as far as the support of local industry is concerned.
“Critical sectors require serious funding for re-tooling and re-equipping. They also require working capital for raw materials as well as export orders. We are having meetings on the sidelines of Sadc meetings to explore opportunities on these matters.”
Since 2010, Government has been trying to reverse the decline in industrial production.
Statutory Instrument 126 of 2014 imposed restrictions on the import of tubes, pipes, conveyor belts and rubber hoses, among other products.
Local industrial capacity is estimated at 34 percent.
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Migration and development: A role for the World Bank Group
Ahead of the UN General Assembly’s Summit on “Large Movements of Refugees and Migrants” on September 19, 2016 and the Leaders’ Summit on September 20, 2016, the World Bank Group has released a paper “Migration and Development: A Role for the World Bank Group”.
The objectives of the paper are (i) to describe three major drivers of international migration; (ii) to highlight the benefits and costs associated with global labor mobility in both sending and receiving countries; (iii) to sketch the global architecture for governance of migration; and (iv) to suggest areas in which the Bank could design context-specific solutions to migration problems.
Two global compacts are to be discussed at the September 19 summit, one on safe, orderly, and regular migration; the other on refugees. The paper addresses the first of the two. It also acknowledges the common challenges and vulnerabilities faced by irregular migrants, smuggled and trafficked migrants, unaccompanied child migrants, stranded migrants, and migrants displaced by disasters and environmental change.
The drivers of migration
There are 250 million international migrants around the globe, of whom 21.3 million are classified as refugees. South-South migration is larger than in South-North migration. Intra-regional migration is large in Europe and Central Asia, the Middle East and North Africa, and Sub-Saharan Africa. Many of the Bank’s client countries – for example, India and South Africa – are large destination countries for migrants.
Income gaps and inequality, demographic imbalances, and environmental change suggest that migration pressures will continue for the foreseeable future. (Fragility, conflict, and violence are also drivers of migration. They are not the focus of this paper, but are briefly discussed.) In 2015, the ratio between the average income of the high-income countries and that of the low-income countries stood at 70:1. It will take decades before these gaps are closed.
A well-documented demographic divergence separates high-income countries and the developing countries, especially those in Africa and Asia. In Western Europe today we find one 20-year-old for every 65-year-old – and this ratio is projected to be halved by 2040. But the ratio is 4:1 in India and 7:1 in Nigeria. Population aging will produce large labor-market imbalances and fiscal pressures in high-income countries as the tax base narrows and the cost of caring for the old surges. On the other hand, developing nations with growing pools of young people will need to create large numbers of jobs to reach their targets for poverty reduction and growth. The working-age population (15+) in the developing countries will increase by 2.1 billion by 2050. If national employment is maintained at the same rate as in 2015, only 1.2 billion of those people will find employment in their own country, leaving nearly 900 million in search of work.
Presently, climate change and weather shocks exert only a minor effect on international migration, compared with labor market factors such as wage gaps. However, increased drought and desertification, rising sea levels, repeated crop failures, and more intense and frequent storms are likely to increase internal migration and, to a lesser extent, international migration.
Migration’s costs and benefits
Migration brings large benefits to migrants and to the countries involved. But it also brings challenges. Migrants from the poorest countries, on average, have experienced a 15-fold increase in income, a doubling of school enrollment rates, and a 16-fold reduction in child mortality after moving to a developed country.
In the origin countries, migration lowers unemployment, opening access to more-productive and higher-paying jobs. Migrants’ remittances offer tangible benefits to origin countries. In 2015, remittance flows to developing countries reached $432 billion, more than three times the size of official development assistance. Migration also facilitates trade, investment, and transfers of technology. But migration may also involve costs, including the so-called brain drain, especially associated with the migration of teachers, doctors, and nurses.
In the destination countries, immigration increases labor and skill supply, innovation, and entrepreneurship. A recent OECD report (2013) demonstrated that immigration provided a net positive fiscal effect. In the aging societies, immigration of young workers could ease the strained pension systems and the burden of caring for the elderly.
Despite the documented benefits of immigration, many people and policymakers in destination countries fear that immigration leads to loss of jobs, imposes heavy burdens on public services, erodes social cohesion, and increases crime levels. These negative perceptions are factually incorrect or overblown. The wage and employment effects of immigration are relatively small, since migrants and natives are not competing for the same jobs; in many countries, migrants have net positive effect on government budgets; and immigrants are less likely to commit serious crimes or be behind bars than the native-born. This paper does not address issues related to national security or national identity.
A role for the World Bank Group
Historically, the global architecture for governing migration is marked by a dichotomy between refugees and migrants. And migration has not been the focus of successful multilateral agreements; instead, it has been dealt with on a bilateral basis, with receiving countries playing the leading role.
Analysis of the World Bank Group’s past activities and consultations with partners and stakeholders suggest that the institution could contribute to the global migration agenda in four areas:: (i) financing migration programs; (ii) addressing fundamental drivers of migration; (iii) maximizing the benefits and managing the risks of migration in sending and receiving countries; and (iv) providing knowledge for informed policy making and improving public perceptions. In order to operationalize these roles, the Bank Group’s Sustainable Country Diagnostics and Country Partnership Frameworks should be viewed through a migration lens in countries or regions or sectors where outward migration, inward migration, or remittances are important. Finally, the paper provides a template for a migration diagnostic tool for origin and destination/transit countries. In the case of the receiving countries, solutions must address any impacts on local people.
The multi-faceted nature of migration will require partnerships with other UN organizations, multilateral development banks, civil society, and the private sector. Viewing migration through the lens of reducing poverty and sharing prosperity while respecting human rights can provide a unifying framework for operationalizing the Bank Group’s knowledge on migration and mobilizing its financial resources and convening power.
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Global investments meet opens in Kigali today
At least 1,000 delegates, including heads of government, representatives of multilateral organisations and members of the private sector, today convene in Kigali for the Global African Investment Summit.
The summit, which will be held at the Kigali Convention Centre, is taking place for the first time in Africa with previous editions held in London.
The two-day meet is convened and organised by the Common Market of Eastern and Southern Africa in partnership with the Government of Rwanda.
Organisers say the summit is tailored to serve the continent’s growing appeal among forward thinking investors who view the continent as an investment destination as opposed to a sole aid benefactor.
Speaking last week, Rwanda Development Board chief executive Francis Gatare said, at the summit, opportunities and partnerships will be showcased with an aim of maintaining a steady stream of investments in Rwanda and Africa in general.
“We will be hosting over 1,000 business leaders at the summit. Opportunities will be laid out to the delegations showcasing projects that are available for investment and partnerships. We are optimistic that the trend we are seeing with investments into the country will continue to act as testament for others to come on,” he said.
The forum comes at a time several African countries are working to create a conducive investment environment for the private sector.
Amanda Basi, the summit’s programme director, told The New Times that the forum will showcase policy improvements and adjustments as well as gather feedback from the private sector on what more governments can do to improve the business environment.
“We are not only going to have governments and politicians talking about what they are doing, it is also going to involve conversations with members of the private sector who will highlight what is working well for them and what is not,” she said.
Intra-Africa investments
The uniqueness of this year’s summit is the focus on investments by African investors as well as promoting intra-regional trade, which is quite low compared to other regions across the world.
Currently, the levels of intra-Africa trade remain at under 15 per cent compared to regions such as Asia where it is over 40 per cent.
“One of the things that this forum will be looking at is the creation of the Tripartite Free Trade Area aspiration. The key thinking is why we are not having a common market and why we are not trading enough with each other. Trade is very low and increasing it is the next step for growth for the entire continent,” Basi said.
Paul Sinclair, a member of the organising committee, said Rwanda was one of the nations changing opinions and perceptions by investing in infrastructure.
“Rwanda is actively changing opinions with its actions to improve its industrial, agricultural and social infrastructure. Heavy investment in Rwanda’s ICT has been crucial to helping the nation spearhead their long term growth strategies, allowing it to become a place of interest for investors,” Sinclair said.
Sinclair said investment opportunities in Africa are particularly strong due to its potential consumer base, along with the high adoption rate of various technological devices, such as smart-phones and the Internet.
Organisers say they will build on a Tripartite Free Trade Area (TFTA) that was launched in Sharm el Sheikh, Egypt, in June last year.
TFTA aims to economically integrate Africa’s three major regional economic communities – the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the East African Community (EAC).
Together, the three economic blocs will create the largest trading bloc in Africa, comprising 26 countries, about 620 million consumers and a combined GDP of almost $1.2 trillion.
The forum is an internationally recognised business platform that creates a unique meeting place for global investors and public and private sectors.
The last Summit took place in London, UK, in December last year, and attracted over 1,500 investors who manage over $425 billion in funds earmarked for Africa and other emerging markets.
Rwandan and Ugandan President’s launch The Global African Investment Summit COMESA & Government of Rwanda
African leaders, heads of state, senior policymakers and influential business leaders will be gathering at The Global African Investment Summit COMESA & Government of Rwanda (TGAIS – COMESA Rwanda). The summit, which begins on Monday, 5 September 2016, will be focused on accelerating African economic integration through trade and investment and will explore various topics that are crucial to the development and growth of the continent.
Hosted by His Excellence, President Paul Kagame, the prestigious summit has attracted heavyweight global investors, private sector project owners, government ministers and public sector representatives. They will meet to discuss foreign investment opportunities, agribusiness, ICT and energy development, amongst other topics. Also in attendance will be H.E. Yoweri Museveni, President of the Republic of Uganda. Both President Kagame and President Museveni will take part in the interactive opening thought leadership panel, discussing the main themes and issues around the challenges and opportunities presented by the African economic landscape.
The two day conference is intended to be a networking platform that will facilitate investment deals and transactions between bankable projects, businesses and high net worth investors.
Sindiso Ngwenya, Secretary General of COMESA, who will be in attendance at the summit comments: “The Global African Investment Summit COMESA & Government of Rwanda will be the rallying cry for investors to come together and trigger deals that will potentially herald a new era for Africa, one that stimulates social and economic development, and uplifts the living standards of Africa’s populace. This will transform and modernise the African economy and ultimately strengthen our union.”
His Excellency Paul Kagame, President, Republic of Rwanda states: “We do not need to dwell too much on reminders that investment and good governance are critically important, and that integration is profoundly in Africa’s interest. We know it, we believe in it. What remains is just to be doing what is necessary to make it reality. Africa cannot just remain a story about huge potential that never materialises. Something has to give. Postponing our priorities and delaying our commitments are the most expensive mistakes that Africa can make. There is nothing we are waiting for, and nothing we lack. Let’s work together across sectors and borders with the right mindset of urgency, and build the Africa we want.”
The conference will facilitate trade and investment across the COMESA region, and is expected to be pivotal in Africa’s economic and development journey.
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Burundi says will not sign EPAs; Dar mulls decision as Uganda backs Kenya, Rwanda
Tanzania has said that its decision on whether to sign a trade deal with the European Union will be known after Monday’s EAC Council of Ministers meeting in Arusha, as Burundi declared it will not sign since it still faces sanctions from the EU.
“The government of Burundi will not sign the EPAs because the EU stopped the partnership with Burundi,” said Minister of EAC Affairs Leontine Nzeyimana.
Kenya and Rwanda caught their East Africa Community partners by surprise on Thursday when they signed the Economic Partnership Agreements in Brussels, the seat of the EU, just before the regional ministerial conference was to take a common position on the matter.
Uganda has since said it will sign the agreements at the ministerial council which will prepare the position to be taken by presidents of the five partner states during a Summit starting September 9. The agreement can only be binding when ratified by all EAC members.
On Friday, Tanzania’s Minister for Industry, Trade and Investment Charles Mwijage, said he was not aware of any change in the country’s position.
He said he was travelling and he will comment upon return to Dar es salaam on Monday.
Mr Mwijage had told The EastAfrican in July that Dar es Salaam would not sign the EPAs in its current form because it would frustrate Tanzania’s budget, which relies heavily on import duty, and hurt the country’s nascent industries.
Earlier, a Burundi government official had said the country was to make its position known during the ministerial council after overtures by Kenya’s Deputy President William Ruto during a visit to President Pierre Nkurunziza in July.
Tanzania led the rejection of the agreement two months ago, saying its importance had been diluted by the exit of Britain from the European Union in June. Uganda soon followed with President Yoweri Museveni saying all concerns needed to be brought on board and addressed. The agreement had been scheduled to be signed on July 18 during the Unctad meeting in Nairobi.
Hours before Kenya and Rwanda signed the agreement, Uganda said it would sign too.
“We have made up our mind. The EU market is very important to us. It is actually our largest export market. We are going ahead to sign the EPAs,” Uganda Trade Minister Amelia Kyambadde said on the sidelines of the annual Co-operatives Sector Review Conference. It is understood the three countries agreed to sign when their top officials met during the Tokyo International Conference on African Development (Ticad) in late August in Nairobi.
The deal is expected to ensure continued duty-free and quota-free access to the EU for all EAC exports while in reciprocation offering partial and gradual opening of the EAC market to EU imports.
Brexit effect
The EU ambassador to Rwanda, Michael Ryan, said the action by Kenya and Rwanda was partial until all the five states were on board.
“Under the difficult political circumstances around the signing, this is beginning to close up on the final phase of the signing and ratification of the EPAs. We see significant momentum building up, so we just have to wait and see,” Mr Ryan told The EastAfrican.
However, the signing persuaded the EU international trade committee to propose that the EU parliament extend by four months the deadline to change the status of Kenya’s access to the EU market.
The deadline had been set for September 30, meaning that from next month, Kenyan imports would have been subject to duties, making them less competitive.
“We convinced the EU parliament not to lock us out of preferential terms and our request was agreed to. We will now take the document to the Kenyan parliament for ratification so as to make it legal,” Dr Chris Kiptoo, Kenya’s principal sectary at the Industrialisation ministry told The EastAfrican from Brussels.
Kenya hopes the market access extension will be in force until the EPAs is ratified by all parties.
Kenya, as a developing country, cannot access the market under the Everything But Arms provisions which is open for its EAC partners who are categorised as least developing countries.
Rwanda is understood to have signed with the foresight that in a decade or so it, Tanzania and Uganda will have graduated to a developing country according to World Bank projections.
The EU accounts for 31 per cent of Kenya’s export market, especially for cut flowers, tea, fresh vegetables and coffee. Kenya’s total annual exports to the EU amount to about $2.47 billion. Tanzania’s export to the EU was $1.18 billion while Uganda’s was at $547 million. Rwanda’s was at $212.1 million.
“Kenya has the urgency to sign. It is through the deal that they are able to safeguard their market access to EU under duty free access,” said Emmanuel Hategeka, Rwanda’s permanent secretary for Trade and Industry.
On the possibility of the EPAs being rendered useless for the bloc if one country rejects the deal, Mr Hategeka said all countries should be allowed enough time to assess before they commit to signing.
The United Nations Economic Commission for Africa has advised a cautionary approach to the EPAs which have been labelled as unfair across Africa.
“If the EPAs is not signed as a bloc, then one would hope that the EU will extend its existing preferential market access rather than start applying higher tariffs on African exports,” said Andrew Mold, the East African head of United Nations Economic Commission for Africa.
He said the difficulty in signing EPAs also arose from Brexit which meant the deals no longer included the UK, a major trading partner for African countries.
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Towards a G20 strategy for promoting inclusive global value chains
New OECD-World Bank-ITC report proposes measures to enhance developing country and SME integration into international production networks
Better policies, targeted capacity building and improved data and analysis could help developing country firms and small and medium-sized enterprises (SMEs) everywhere tap into and benefit from global value chains (GVCs), according to a new paper from the OECD, the World Bank Group, and the International Trade Centre (ITC).
Towards a G20 Strategy for Promoting Inclusive Global Value Chains, a joint paper by the three agencies, was presented to trade ministers from the Group of 20 leading economies at their July meeting in Shanghai, in preparation for the upcoming 4-5 September G-20 leaders’ summit in Hangzhou.
The paper points to policy reforms and technical assistance measures through which G20 governments could facilitate developing country and SME participation in multi-country production networks. It also proposes new initiatives to develop much-needed data and analytical capabilities in many countries, a prerequisite for making GVCs more inclusive.
Disproportionate constraints
The production of goods and services increasingly involves sourcing and co-ordinating tasks and inputs from multiple locations determined by competitive costs and quality.
The resulting regional and global value chains are typically led by large multinational enterprises (MNEs), generally from G20 countries. Developing-country firms and SMEs also participate in GVCs, but they must overcome disproportionate constraints both in the policy environment and in terms of firm-level capacity.
To tackle policy constraints, the paper identifies a number of priorities to reduce the costs of GVC participation for SMEs. G20 and other governments could ratify and implement the World Trade Organization Trade Facilitation Agreement, relax policies on rules of origin, eliminate all ‘nuisance’ tariffs that are below a to-be-defined low percentage, and raise the ‘de minimis’ levels below which goods shipments qualify for streamlined customs clearance. They could also work to improve the quality of hard and soft infrastructure and logistics services, expand access to trade information, and increase the ability of SMEs to comply with international and national standards.
The paper goes on to describe a wide array of potential capacity building initiatives that would strengthen developing-country and SME capacity to join GVCs. These include identifying factors that foster long-term links between MNEs and SMEs, empowering SMEs to take advantage of the digital economy, and creating financing instruments adapted to GVCs. Other such efforts could explore how best to design SME-friendly intellectual property systems, how to leverage spill-overs from foreign direct investment to increase SME productivity and boost innovative capacity, and how to strengthen collaboration and dialogue across countries to establish global platforms for information exchange, learning, and capacity support.
Increased efforts by international organizations such as the OECD, the World Bank Group, and ITC to enhance GVC-related data collection and analysis would bolster national and international initiatives to make GVCs more inclusive, the paper concludes.
Background
This paper has been prepared further to the first meeting of the G20 Trade and Investment Working Group, convened by China on 28-29 January 2016, and represents an initial step towards developing a G20 strategy for promoting inclusive Global Value Chains (GVCs). It was distributed by the G20 presidency at the G20 Trade Ministers Meeting in Shanghai on 9-10 July.
The paper draws on the Inclusive Global Value Chains report submitted by the OECD and the World Bank Group to G20 Trade Ministers in October 2015, refining and prioritising the options contained therein. The original report proposed a holistic approach to promoting more inclusive GVCs spanning: (i) trade, investment and domestic policies both in G20 nations and in trade partner countries; (ii) investment in expanding the statistical basis and technical analysis of participation in GVCs; and (iii) sharing knowledge on best practices on rules, policies and programs (see Annex). This paper also takes into account relevant policy documents published since October 2015, including insights obtained from recently published reports on Aid for Trade.
While maintaining this holistic approach, this paper also reflects the focus of the G20 Trade and Investment Working Group and elaborates priority actions in three key areas:
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Priority policies for improving SME and developing country participation in GVCs primarily in the area of trade and investment;
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Targeted capacity building initiatives for better GVC integration in developing countries;
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Priority actions to expand data and analytical capacity.
Concrete actions can be taken by G20 governments to facilitate more inclusive GVCs by removing current constraints on SME participation in G20 countries themselves, and by further demonstrating global leadership through political support to a range of technical assistance measures provided by international organisations for SMEs and for firms in developing countries, as well as new measures to develop much needed data and analytical capabilities in many countries and across many sectors.
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Despite high energy needs, industries can help reduce global greenhouse gas emissions
Industries and the products they make can play a considerable role in the global effort to tackle climate change. Making them part of the solution while helping them stay competitive is a key challenge for policy makers, according to a new report from the World Bank Group, CLASP and Carbon Trust.
The danger of inaction on climate change is real. In 2015, 195 countries signed the Paris Agreement, the first ever universal, legally binding global climate deal. But without urgently changing the path of global industrial growth, it will be impossible to meet the targets set in the agreement – specifically keeping the increase in global average temperatures to below 2°C above pre-industrial levels. The world has a very small window to stabilize greenhouse gas (GHG) emissions.
The global manufacturing industry is responsible for almost one-third of total GHG emissions and includes the highest carbon-emitting sectors in the world’s economy: the production of iron and steel, aluminum, chemicals and cement.
Although industry’s threat to climate and the environment is clear, the business case for decarbonizing manufacturing – making it greener – is not. A new report from The World Bank Group, CLASP, and Carbon Trust, A Greener Path to Competitiveness offers recommendations and guidance on how companies and countries can stay competitive while implementing more climate-friendly technologies and strategies. The report finds that making climate-critical changes in manufacturing is not solely the task of industry stakeholders or the private sector; governments and consumers also have important roles to play.
“There is currently a gap between global climate targets and the carbon reduction actions that businesses are willing to implement,” explains Etienne Kechichian, Senior Private Sector Specialist at the World Bank Group who led the project with Alexios Pantelias. “To date, there has been a good level of GHG emission reduction across industry, but there is a danger that targets set in Paris will be missed without action by government, industry, and consumers.”
“The unprecedented task presented at COP 21 in Paris to decarbonize globally introduces challenges but also enormous opportunities for industries as they seek a greener path to production while remaining globally competitive. Now is the time for companies and countries to act,” said Cecile Fruman, Director of the Trade & Competitiveness Global Practice at the World Bank Group.
Industries contribute more than one-third of direct and indirect global greenhouse gas (GHG) emissions. Certain sectors, including iron and steel, cement, chemical, and aluminum manufacturing, are the primary contributors to climate change due to their inherent requirement for large amounts of energy.
New technologies can be critical to industry efforts to reduce GHGs, but aren’t always cost effective. Technology solutions must be complemented by institutional frameworks and policies that counter competitive disadvantages.
“If we are to meet our global ambitions on climate change then we need a clean revolution in industrial production. Taking the long view, there is an incredibly strong business case for the transition to a low carbon economy. Many of the technologies we need to achieve this already exist today. But to capture this value, it is imperative that governments and energy intensive sectors work together to put in place a market framework that will help to maintain competitiveness at the same time as delivering the step change in carbon emissions from industrial output which is both possible and necessary,” said Michael Rea, Chief Operating Officer at the Carbon Trust.
A Greener Path to Competitiveness recommends that industries continue to focus on cost-effective energy efficient options that have short payback periods, low transaction costs, and easy-to-access finance. While many of these options have been implemented by leading companies already, it is estimated that significant economic potential, around 60 percent, for future energy efficiency savings still remains.
To decrease GHG emissions while remaining competitive, the report calls on industry, government and consumers to also focus on technologies and interventions that are on the cusp of cost-effectiveness. Energy efficiency standards and labeling are one solution to reduce energy usage and GHG emissions. According to the report, adopting the most stringent minimum energy performance standard could reduce 9% of the global total energy consumption.
The report also suggests that governments should pursue policies such as removing distorting production subsidies or trade tariffs and putting a comprehensive price on carbon. Technology incentive programs can also be developed to find solutions that currently have a weak business case, for example, in the adoption of large-scale and capital-intensive carbon abatement technologies.
“The report shows that appliance energy efficiency policies can simultaneously reduce energy use and improve competition,” said Christine Egan, Executive Director and CEO at CLASP. “CLASP knows from years of experience that these policies are powerful tools for reducing energy use and greenhouse gas emissions and, therefore, are an essential part of any climate change mitigation strategy.”
The Challenge
One of the most pressing climate challenges is for industries and governments to decarbonize production while still remaining globally competitive. A Greener Path to Competitiveness finds that there are climate-friendly solutions to industrial production, but uptake has been slow. Overall there is a perception that decarbonizing industry can harm competitiveness. Several barriers prevent industries from adopting greener production at scale:
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Cost. Traditional fossil fuels are currently relatively inexpensive, while using alternate sources of energy would imply capital costs. Decarbonizing industry requires high costs now for an uncertain amount of savings later. It can also be difficult to place a value on noneconomic benefits related to low-carbon options.
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Institutional and Market Barriers. Some of the most polluting manufacturing industries are highly sensitive to fuel and energy prices and energy subsidies distort competitiveness. In addition, there is a lack of consistent regulations that ultimately deter investment in new industry technologies.
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Technical Barriers. Industrial plants have long life spans, and as a result, older plants may not be compatible with new technologies – some of which are unproven. For some solutions, there is a lack of readily available experienced staff or raw materials that make using new technologies possible.
In order to be implemented at scale, greener industrial production must minimize its impact on competitiveness.
The Solution
There are well-understood business and societal benefits to being front runners in decarbonizing, ranging from increased energy security to less local pollution. Further, as traditional fuels become scarcer, transforming industry to be more sustainable will become a requirement of doing business. The good news is that, according to A Greener Path to Competitiveness, remaining competitive and implementing green strategies are not necessarily mutually exclusive.
“Energy efficiency interventions can reduce greenhouse gas emissions while enhancing the competitiveness of a company and reducing exposure to energy price risks,” notes Pantelias. “Best practice solutions already exist; some may become mainstream and others may not.”
For green solutions to successfully be implemented industry-wide, they should:
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Offer quick returns on investment;
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cause minimal operational disruption;
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offer a cost savings after implementation; and
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have easily accessible sources of financing.
Retrofitting existing plants with low-cost, quick-payback energy efficiency solutions is one of the most obvious solutions. Using the best available technology in the construction of new plants is another. Global policies that require competitors around the world to simultaneously implement green measures can help level the playing field and reduce any potential risks to competitiveness.
The aluminum industry is an example of a sector that has incorporated energy savings and GHG reductions while still increasing production. Recycling is at the core of this solution. About 70% of aluminum’s total cost is linked to energy. Producing recycled aluminum uses as little as 5% energy making it an attractive option for producers. In addition, recycled aluminum emits just 5% of the GHG missions compared to primarily produced aluminum. This makes it an attractive solution for cities, governments, and consumers. Since 1990, emission savings from aluminum have doubled while production continues to increase.
Although industry is at the crux of the climate change imperative, the private sector is not the only area with a role to play in preventing irreversible climate change. The path to greener competitiveness, according to the new report, requires action from industry, government and consumers:
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Industry should focus on cost-effective energy efficiency options that can be deployed today with short payback periods, low transaction costs, and easy-to-access finance.
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Industry, governments and consumers should focus on enabling technologies and interventions that are on the cusp of cost-effectiveness. Regulation or procurement policies can direct demand for low-carbon products. Making consumer demands more visible can encourage solutions that are not yet fully viable. Energy efficiency standards and labeling are both examples of solutions in this area.
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Governments should pursue framework policies such as removing subsidies and putting a comprehensive price on carbon. They can also make policies that are clear, credible, and long-term so that business have time to act effectively. Finally, they should also adopt technology-incentive programs for solutions that currently have a weak business case.
“Dialogue is also a critical component of maintaining momentum after Paris and achieving global climate change targets,” according to Pantelias. “Public-private partnerships, regional dialogues and long-term support for local energy and industrial entrepreneurs are all necessary to achieving successful outcomes at the Marrakech Climate Change Conference in November 2016 and beyond.”
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tralac’s Daily News Selection
The selection: Friday, 2 September 2016
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Rwanda signs deal to back Kenya’s quest for free EU market entry (Business Daily)
Kenya yesterday intensified its fight to retain free access to the European market after it rallied Rwanda to sign a trade pact with Europe that its EAC partners have recently declined to endorse. Industrialisation secretary Adan Mohamed said Kenya’s products are unlikely to face export taxes at the start of next month after he led his Rwandan trade counterpart, Francis Kanimba, in signing the Economic Partnership Agreement with Europe in Brussels. Mr Mohamed said his delegation had convinced Europe to suspend the vote as they await the signing of the agreement by other EAC member states.
Uganda makes U-turn, says ready to sign EPA (The EastAfrican)
Trade minister Amelia Kyambadde said the government has since made up its mind and was ready to sign the deal irrespective of whether all the other regional countries are on board or not. Speaking at the sidelines of the 7th Ministry of Trade, Industry and Cooperatives sector review annual conference in Kampala on Tuesday, Ms Kyambadde said “The EU is our major trading bloc and we are going ahead to sign the EPAs.”
African Ministerial Conference: Ocean economy a new frontier of economic growth (GoM)
Ocean economy is a new frontier of economic growth and financial assistance and technical support as well as realistic programmes and concrete actions are necessary for the development of the sector, said the Prime Minister, Sir Anerood Jugnauth, in his keynote address at the opening of the Africa Ministerial Conference on Ocean Economies and Climate Change which is being held at Westin Resort & Spa in Balaclava. For the Minister of Ocean Economy, Marine Resources, Fisheries, Shipping and Outer islands, Mr Premdut Koonjoo, since Mauritius manages a maritime zone of 2.3 million km2, the potential for economic advancement and prosperity that this resource can generate if developed in a sustainable way could take Mauritius to the next level – that of a high-income country, with a large geographic territory and the competencies, technologies and systems to manage this territory. [World Bank feature: Africa’s New Frontier]
Uhuru orders security agencies to end illegal fishing in Indian Ocean (Daily Nation)
Speaking when he officially opened the Mombasa ASK show at Mkomani Grounds, the President said despite the huge fish resources in the Indian Ocean, there was nothing to show for it due to illegal fishing. “The potential fish production from Kenya’s Exclusive Economic Zone is estimated to lie between 150,000 to 300,000 metric tonnes compared with current production of about 9,000. The impact of the unutilized potential is clearly colossal,” Mr Kenyatta said, adding that with proper exploitation of these resources, more jobs would be available.
Africa SPS forum: Kenya eyes bigger horticulture deals at Nairobi forum (Daily Nation)
The phytosanitary conference (12-16 September) will discuss plant health and issues including pests and exports control measures that are key to Kenya’s horticultural market. The country aims to seize the opportunity to showcase procedures that it has put in place to comply with international standards. The conference will be hosted by Kenya Plant Health Inspectorate Service, which is the body mandated with checking quality of the produce and compliance standards. Kephis managing director Esther Kimani says Kenya will use the conference to further its agenda in the export market that last year saw the country earn up to Sh100bn in foreign exchange. “Being the first conference on plant health to be held in Africa, we see it as an opportunity to grow our export market even further,” said Dr Kimani.
Mustafa O. Jibrin: Why Africa should boost regional plant surveillance (IPPMedia)
Recently, a tomato insect pest, Tuta absoluta, swept across Nigeria, devastating tomato fields, leading to immeasurable financial losses and emotional trauma. The emergence of this pest on the African agricultural landscape has rekindled pertinent questions regarding Africa’s capability to protect local agriculture and enhance international trade. Even before the WTO-SPS agreement, Africa’s protection of agriculture relied on the 1968 African Convention on the Conservation of Nature and Natural Resources and the 1985 protocol on protected areas and wild fauna and flora in the East African region. With the increasing volume of trade between the continent and its partners in an era of globalised trade, however, it is difficult to assess how national plant protection agencies have transformed to handle the unique globalisation challenges.
SADC Committee of Ministers of Trade: Malawi, SADC sugar exporters reach amicable position with Tanzania (Nyasa Times)
A Special Meeting of the SADC Committee of Ministers of Trade met last week Thursday in Swaziland as part of the SADC Summit to consider and resolve outstanding issues as regards Tanzania’s application for derogation to impose 25% and 10% duty on raw and refined sugar respectively originating from the region and 100% duty on sugar from third party countries. Tanzania had indicated that this was to enable its domestic industry adjust as it is undergoing restructuring. Ordinarily Tanzania was expected to commit itself to zero duty on sugar originating from SADC under the SADC Sugar Cooperation Agreement (Annex VII to SADC Trade Protocol). The CMT agreed that Tanzania be given a dispensation of 12 months to adjust while allowing SADC surplus producers, including Malawi, to export to Tanzania at 10 percent duty for refined sugar and 25 percent for raw sugar. The CMT urged Tanzania to adjust the duty of 10 % upwards for refined sugar originating from third parties. During the meeting, Tanzania also acknowledged the inconsistent tariff rate of 50 percent that Malawi was, in the past, subjected to. And it was reported that Zambia was subjected to an even higher import tariff rate of 100 percent for sugar exports into Tanzania. [Tanzania sorts out sugar tariff issues with SADC partners]
Second Kenyan trade and Investment Summit: pushing economic diplomacy to a new frontier (Wesgro)
South Africa is the 28th largest destination market for Kenya’s exports and the fourth largest source market for Kenyan imports. The Western Cape has had a positive trade balance with Kenya, sending R2.4 billion in exports (more than we did to China) and buying R190 million in imports during the 2013/14 financial year. In April this year Cape Town Air Access, a division of Wesgro, worked with Kenya Airways to secure a new direct flight from Nairobi to Cape Town - a route that will strengthen trade and tourism relationship between our countries and the rest of the continent. [Tweets by keynote speaker, @AMB_A_Mohammed: Trade between Kenya and South Africa has declined in the past years. The decline in trade is partly attributed to imposition of tariffs, levies and restrictive visa regimes, The Summit is an opportunity to address challenges, together exploit opportunities and form formidable friendships.]
Zimbabwe: Government to widen imports ban (Financial Gazette)
Industry and Commerce Deputy Minister, Chiratidzo Mabuwa, said controls were necessary to nurse a growing list of failing industries, thrown into crisis by a switch in consumer preferences towards cheap imported products. “We are still looking for more items so that we have another SI to protect our market,” said Mabuwa. “We want to lubricate the local market so that you increase your capacity utilisation and productivity and make money. Then you will lubricate the fiscus,” she added.
West Africa's Cheetah ICT platform: pilot project to facilitate transportation of goods (B&FT)
CHEETAH is an acronym for the Chains of Human Intelligence towards Efficiency and Equity in Agro-Food Trade along the Trans-Africa Highway - which is a dynamic new smart device application which aims to tackle trade obstacles, post-harvest losses and poor road conditions by collecting real time information, including non-tariff barriers and road conditions, such as potholes, as a person moves along the trade corridors. The Cheetah ICT platform consists of two components. The first focuses on food intelligence, entitled CHEETAH Food, which models post-harvest decay in vegetables and fruits during transport and displays this information to users of the app to increase awareness of postharvest losses. The second module, CHEETAH Infra, collects road conditions data and shares this in real-time with fellow road users. The data is, amongst others, used to enhance the accuracy of postharvest loss information as cargo transported over rough roads generally also deteriorates quicker. [Abridged Activity Appraisal Document (pdf)]
ECOWAS and China Development Bank explore areas of greater cooperation (ECCOWAS)
ECOWAS and China Development Bank have set machinery in motion to explore areas of greater cooperation with a view to realizing set integration targets across specific sectors which include transport infrastructure, maritime, energy, agriculture and health. Conferring with a delegation from the CDB, the ECOWAS Commission, President Marcel de Souza drew attention to the fact that West Africa currently enjoys just about 12% of inter community trade whereas road, rail, air and sea infrastructure are needed to fast track economic cooperation in the region. Specifically, the president cited the 1,028 kms Lagos-Abidjan road project linking five of the region’s 12 coastal countries and solicited for the help of CBD in the $15m feasibility studies being carried out while the total cost of the project is put at $8bn.
Chinese finance institutions immerse into Egypt’s economy, pump dollars into market (Daily News)
The Egyptian General Authority for Investment announced that China is ranked 24th in terms of investments in Egypt. There were 1152 Chinese companies making investments in Egypt in 2015—compared to 35 companies in 2005. The size of investments totalled approximately $506m. Daily News Egypt highlights the potential projects in Egypt that would be financed by main Chinese finance institutions, including China-Africa Development Fund, the Export-Import Bank of China, the Asian Infrastructure Investment Bank and the Silk Road Fund.
Corridors of trade and power in Somali East Africa (DIIS)
This seminar (5 September) provides preliminary insights into everyday economic activity and its linkages to state formation in Somali East Africa, which is the topic of the GOVSEA research programme run by Roskilde University and DIIS. Somali business is marked by strong, transnational dynamics. The seminar focuses on the distinct patterns of trade and power along three transnational corridors in the broader Horn of Africa region. The seminar also launches the publication of the first four Working Papers published in the GOVSEA Paper Series. Three are now available for download: (i) A gateway to recognition (ii) How to study economic governance in areas of limited statehood (iii) Collecting taxes in Somaliland.
Djibouti: 2015 Article IV Consultation (IMF)
Faced with scarcity of resources, Djibouti has pursued a strategy of developing infrastructure to exploit its strategic geographic location so as to foster rapid growth, reduce poverty and create much-needed jobs. Djibouti has had to resort to non-concessional financing, which has raised its external debt. Reform is crucial to generate the revenues needed to return to a sustainable external debt and fiscal path, achieve higher growth, and reduce widespread poverty and unemployment. [Selected Issues report]
East Africa: Regional police chiefs adopt tough measures against transnational crimes (New Times)
The three-day 18th AGM of the Eastern Africa Police Chiefs Cooperation Organisation (EAPCCO) ended yesterday with delegates taking a tough stance to deepen cooperation to effectively counter cross-border crime. Yesterday’s 16th Council of Ministers issued a 12-resolution communiqué that rotated mainly around strengthening cooperation between police forces in addressing security related challenges. [New regional cyber security centre set for Rwanda]
Structural and rural transformation in Africa: challenges, opportunities and implications for policy and investments (World Bank)
Comprehensive rural transformation in agriculturally dependent countries is constrained when not led by technical dynamism. With few exceptions, such dynamism is weak in African agriculture despite recent acceleration. In addition, mobility of factors (especially land) among alternative uses constrains rural transformation. So growth has not been as effective in reducing poverty, as it would have been had agricultural productivity grown faster. The impediments to structural and rural transformation are particularly hard on the young people who are, and will continue, entering the labour force in record numbers. Public policy and investment must focus on two elements: leveraging burgeoning demand emanating from urbanization and dietary diversification to deepen employment in the rural nonfarm economy, and developing inclusive food supply chains to provision ever-increasing numbers of consumers. Rural suppliers need to sell to sources of dynamic, growing demand, especially to domestic urban markets.
Nigeria: How N215bn import waiver was disbursed in 4 years, mostly during ‘night visits to President’ (Premium Times)
A total N215 billion in import duty exemptions was granted in four years, between 2011 and May 2014 under the leadership of ex-President Goodluck Jonathan, PREMIUM TIMES can report today. Most of the waiver deals, it was gathered, were sealed during midnight visits to the presidential villa. Data obtained from the Budget Office of the Federation detail a fiscal policy recklessness that made duty waivers in Nigeria synonymous with cronyism, racketeering, political patronage and outright brigandage.
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Rwanda signs deal to back Kenya’s quest for free EU market entry
Kenya yesterday intensified its fight to retain free access to the European market after it rallied Rwanda to sign a trade pact with Europe that its East African Community (EAC) partners have recently declined to endorse.
Industrialisation secretary Adan Mohamed said Kenya’s products are unlikely to face export taxes at the start of next month after he led his Rwandan trade counterpart, Francis Kanimba, in signing the Economic Partnership Agreement (EPA) with Europe in Brussels.
Mr Mohamed and Mr Kanimba had earlier made a technical appearance at the EU parliament when Kenya’s case came up for review on Wednesday but no conclusive decision was made on the matter.
Mr Mohamed said his delegation had convinced Europe to suspend the vote as they await the signing of the agreement by other EAC member states.
“We convinced the EU parliament not to lock us out of the preferential terms and they agreed to our request as we wait for the remaining member countries to come on board to enable us sign the EPA as a bloc,” Mr Mohamed told the Business Daily on the telephone.
It, however, remains to be seen what Kenya will do to convince reluctant Uganda, Burundi, South Sudan and Tanzania to append their signatures to the agreements by end of this month.
Failure to sign the EPA by September 30 means Kenyan goods entering Europe will be charged tariffs of between four and 24 per cent from October 1.
In Brussuels, Mr Mohamed was allowed to argue Kenya’s case before the EU Parliament’s International Trade Committee (INTA).
The minister affirmed the EAC’s commitment to signing the EPA and backed his case by signing it at a ceremony witnessed by Slovakia’s ambassador to EU, Peter Javorcik, and the European Commission’s Sandra Galina.
“The signing of the EPA sends strong signals to the EU on the EAC partner states’ commitment to the EPA,” he said.
However, Tanzania, Uganda, Burundi and South Sudan must sign the pact by end of this month to shield Kenyan from paying export taxes for goods entering the EU.
Guarantee EAC traders duty
Tanzania, Uganda and Burundi have been reluctant to sign the deal, arguing that it risks killing their young and weak manufacturing sectors.
The EPA is intended to guarantee EAC traders duty- and quota-free access to the EU market in exchange for a gradual opening of up to 80 per cent of the East African market to European products.
Kenya’s top exports to Europe include tea and horticulture, which rode on the free market access terms to generate nearly Sh300 billion in hard currency last year.
The country’s exports are expected to attract more than Sh100 million in taxes every week if it fails to secure the duty- and quota-free status by end of the month.
The rest of the members have alternative access to EU as they are all classified as least developed countries – a status that allows them to export everything but arms to Europe on tariff- and quota-free terms.
Mr Mohamed, however, expressed optimism that a deal will be reached during next week’s summit in Tanzania.
EAC members have been negotiating the EPA since 2007.
Kenya is estimated to have investments worth over €2 billion in more than 200 companies that are exporting to Europe.
Nearly four million people, most of whom are women and youth in rural areas, currently derive their livelihoods directly or indirectly from enterprises that are exporting to the EU.
The investments are mainly in floriculture, horticulture, agro-processing and fisheries
Higher taxes will make Kenyan goods more expensive to EU citizens, negatively impacting sale volumes and in turn reducing foreign exchange inflows to the country. Kenyan exports to the EU have since January 1, 2008 enjoyed preferential, duty-free access to European markets.
Kenya and other EAC countries have been using a special clearance form known as Euro 1 (EUR1) to access European markets. Presently the EUR1 is issued for goods originating from all Africa Caribbean and Pacific (ACP) countries (under a preferential trade arrangement) destined for the EU market.
In April, the EAC council of ministers agreed to sign EPAs as a bloc to safeguard the future of Kenya’s free trade arrangement with Europe. Three months later, Tanzania shocked the region when its officials took a U-turn and demanded further discussion on the EPAs.
Tanzania has argued that opening up to 80 per cent of the East African market to European firms will stifle industrialisation and accelerate poverty in the region.
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Uganda makes U-turn, says ready to sign EPA
Uganda has reversed its decision to delay the signing of the Economic Partnership Agreement (EPA) with the European Union.
Trade minister Amelia Kyambadde said the government has since made up its mind and was ready to sign the deal irrespective of whether all the other regional countries are on board or not.
On Thursday, Kenya and Rwanda Trade ministers signed the EPA pact in Brussels, Belgium, with the European Union, a deal the East African Community Council of Ministers had recommended earlier this year.
Kenya was desperate to have the agreement signed to safeguard unlimited duty free access of its exports to Europe after Tanzania and Uganda said the deal initialled in October 2014 needed to be renegotiated following Britain’s exit from the bloc.
Speaking at the sidelines of the 7th Ministry of Trade, Industry and Cooperatives sector review annual conference in Kampala on Tuesday, Ms Kyambadde said “The EU is our major trading bloc and we are going ahead to sign the EPAs.”
Burundi has also shown strong desire to sign the agreement in its current form, leaving Tanzania in its effort to seek further reassurance regarding the matter.
Tanzania’s refusal to sign the EPAs is due to fear of repercussions the deal would have on the growth of the emerging regional industries.
Without guarantees against the side effects, Tanzania says it is not prepared to commit itself into economic enslavement.
EPAs are trade and development agreements negotiated between the EU, African, Caribbean and Pacific (ACP) partners engaged in regional economic integration processes.
The EU is Uganda’s second leading exports markets destination.
Speaking at the conference, the assistant commissioner, External Trade, Mr Emmanuel Mutahunga, said: “We can’t afford to lose the EU market because it’s contributing a lot to our economy.”
He said Uganda coffee exports to the EU are worth $252 million while flowers exports to the region bring in $45 million.
Mr Mutahunga said a conclusive decision on the deal is expected to be discussed at the ongoing negotiations by the regional council of ministers who will make final recommendations to the heads of states next week in Arusha, Tanzania. The EAC states are expected to sign the deal before this month ends.
If the EPA is not signed and ratified by all EAC partner states by September 30, 2016, Kenya – being the bloc’s only developing state – stands to lose its market to the EU, having significant impact on her economy.
The rest of the members have alternative access to EU as they are all classified as least developed countries.
The Private Sector Foundation Uganda executive director, Mr Gideon Badagawa, said Uganda’s decision to sign the EPAs has been long overdue.
“EPAs will build our capacities as far as infrastructures are concerned which is an important gain,” Mr Badagawa said.
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Malawi, SADC sugar exporters reach amicable position with Tanzania
Malawi together with other major sugar exporters in the SADC region got a good deal for their industries with Tanzania committing to allow sugar imports from the region at preferential tariff rates.
Additionally, it was agreed that sugar imports from countries outside the region, like Brazil and Europe, which is heavily subsidized will be imported into Tanzania at 100 percent duty which is the Common External Tariff on the product for the East African Community (EAC) Group.
This follows Tanzania’s application for derogation to impose 100 percent duty on sugar outside SADC and 25 percent for sugar originating in the region.
Tanzania has an estimated annual sugar deficit of 100,000 metric tonnes for its local market that it fills with imports from the SADC region and beyond.
Malawi, South Africa, Zambia, Mauritius and Swaziland are the major sugar producers and exporters in the SADC region.
A Special Meeting of the SADC Committee of Ministers of Trade (CMT) met last week Thursday in Swaziland as part of the SADC Summit to consider and resolve outstanding issues as regards Tanzania’s application for derogation to impose 25% and 10% duty on raw and refined sugar respectively originating from the region and 100% duty on sugar from third party countries.
Tanzania had indicated that this was to enable its domestic industry adjust as it is undergoing restructuring. Ordinarily Tanzania was expected to commit itself to zero duty on sugar originating from SADC under the SADC Sugar Cooperation Agreement (Annex VII to SADC Trade Protocol).
The CMT agreed that Tanzania be given a dispensation of 12 months to adjust while allowing SADC surplus producers, including Malawi, to export to Tanzania at 10 percent duty for refined sugar and 25 percent for raw sugar. The CMT urged Tanzania to adjust the duty of 10% upwards for refined sugar originating from third parties.
During the meeting, Tanzania also acknowledged the inconsistent tariff rate of 50 percent that Malawi was, in the past, subjected to. And it was reported that Zambia was subjected to an even higher import tariff rate of 100 percent for sugar exports into Tanzania.
Minister of Foreign Affairs and International Cooperation, Francis Kasaila, who represented his Trade, Industry and Tourism counterpart, Joseph Mwanamveka, at the meeting said as a country Malawi was satisfied with the outcome of the meeting as the local sugar industry will now be able to export to Tanzania at preferential rates.
Said Kasaila: “As Malawi, we are happy with the outcome of the discussions and am sure our sugar industry will be happy too with this opportunity to export at preferential rates to a readily available market.”
Kasaila disclosed that the Malawi delegation’s negotiating position had been discussed in advance between government and the sugar industry players as close partners adding that the outcome of the meeting was therefore a win-win solution that was generally expected.
He expressed the hope that the local sugar industry would try to exploit the opportunities arising from the deal to increase its exports saying efforts to create market opportunities and to increase the country’s exports are in line with the vision of the government of President Prof. Arthur Peter Mutharika of turning Malawi from a net importer to a predominantly exporting country.
On the inconsistencies of overcharging Malawi and Zambia with 50 percent and 100 percent respectively on imports, Tanzania requested evidence relating to the overcharging. The Malawi delegation produced and submitted the necessary customs notes as evidence and it is now expected that Tanzania will either refund the money that was paid in excess of the preferential duty or will provide credits on future exports from Malawi and Zambia.
Tanzania had submitted applications in 2011 and 2015 for consideration by the SADC CMT for derogation or waiver from its trade liberalization commitment for sugar in terms of the provisions of the SADC Trade Protocol in view of the problems its industry is facing.
In 2016, at this Special Meeting of the CMT, Tanzania presented an application to extend the timeframe for the derogation for 3 years. However, the Committee approved the extension for only one year and on condition that preferences be given to SADC supplies and that world supplies be subjected to 100 percent as normally expected.
Ideally, Malawi and other major exporters in the region, especially Zambia and Swaziland, would have preferred a Tariff Rate Quota (TRQ) arrangement for access into Tanzania market. The TRQ arrangement was thought to be the best way, on one hand, to effectively manage the imports into Tanzania and therefore to help that country’s domestic industry and, on the other, to promote intra-SADC trade.
Kasaila, who was delegated by President Prof. Arthur Peter Mutharika to represent him at the Summit, was joined in the CMT negotiations by Malawi’s envoy to Mozambique Frank Viyazhi and his counterpart Annie Kumwenda who oversees respectively SADC and Botswana as well as technical officers Mufwa Munthali and Silas Sindi from the Ministry of Trade, Industry and Tourism.