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African Central Banks: Rethink role or stay the course?
The Joseph Mubiru Memorial Lecture at the Bank of Uganda’s 50th anniversary was delivered by Dr. Ngozi Okonjo-Iweala, former Finance Minister of Nigeria, on 2 August 2016.
This auspicious occasion is a good time to take stock of how far we have come and the challenges we confront as the journey continues. We meet even as global macroeconomic uncertainty is extremely high and politics is growing increasingly insular and populist, as witnessed by the recent Brexit vote and the divisive presidential election campaign in the USA.
In our ever more connected world, the African continent has not been without its travails. The most tangible factor has been the big drop in commodity prices starting in 2014. A combination of slowing growth, a big fall in the terms of trade for commodity exporters and large fiscal and current account deficits has tarnished the Africa Rising narrative: was it simply a product of a large windfall driven by China’s almost insatiable appetite for commodities until 2014? We know that this is not the whole story. That policies, institutions and governance have greatly improved in Africa over the last decade.
Yet, we must heed the warnings signs. The most recent forecast, from the IMF’s July Update of the World Economic Outlook, has drastically cut the growth projection for 2016 from 3% in April to just 1.6%, with a forecast of 3% for 2017. These would be the worst growth outcomes in 15 years, with oil exporters hit particularly hard. The shocks include slowing growth in China, a major trading and investment partner of Africa and prime driver of the commodity super cycle; a massive loss in income for commodity exporters, energy and non-energy; tightening financial conditions reflected in higher commercial borrowing costs; and severe drought in Ethiopia, Malawi and Zimbabwe. Angola, Mozambique, the Republic of Congo and Zambia have suffered credit downgrades.
The point I wish to stress is that slowing growth and falling terms of trade may not be just a temporary rough patch. The consequences could linger especially in countries where public and private sector balance sheets have been overextended in terms of rising debt levels, worsening dynamics and currency mismatches. This is the environment in which African central banks need to define their strategy in conjunction with fiscal policy and structural reform as they seek to control inflation and help promote inclusive growth.
But we now live in an age of unconventional monetary policy. This raises a fundamental question for African central banks. Do we need a change in paradigm, or should African central banks stay the course established over the last decade, when have been focusing on price stability? Recall that, in earlier decades, they had a much broader remit that included being a source of fiscal deficit and development finance. This is the question I will be addressing in this Memorial Lecture honoring the memory of the brilliant Joseph Mubiru, whose life was tragically cut short, but whose legacy of excellence endures.
In answering the question, I shall draw lessons for African central banks from recent central banking developments in the advanced countries, or developed markets, as well as in major emerging markets. The weight of the experience points to being highly circumspect about unconventional monetary policy. Indeed, the overwhelming priority for African central banks is to pursue low and stable inflation in order to make their currencies credible stores of value, thus promoting financial deepening and long run growth. In the last section, I shall focus on the situation in Uganda.
Just a decade ago, the Great Moderation held sway. Inflation targeting was viewed as the ultimate stage in the evolution of monetary policy. It was the logical destination for responsible, mature central banks. Monetary policy would be conducted in an idyllic setting: the capital account is open, the currency floats with little or no intervention and central bank independence is the cornerstone of credibility and good macroeconomic management. With long run growth assured, central banks would operate counter-cyclically to minimize fluctuations around the trend, ensuring low inflation and full-employment growth. Monetary policy had arrived.
Ten years later, the situation could not be more different as consequence of the Global Financial Crisis of 2008-9, which I shall refer to as the GFC. The US Federal Reserve Board has completed three rounds of Quantitative Easing, with QE3 brought to a close at the end of October 2014. By then, the balance sheet of the Federal Reserve System had swelled by 400%, from USD 0.9 trillion in August 2008 to $4.5 trillion. But last December, the normalization of US monetary policy began, with the Fed hiking the policy rate, the Fed Funds Rate, by 25 basis points, lifting off above the zero lower bound where it had stayed for seven years.
Meanwhile, “unconventional monetary policy” has become the order of the day in DMs. Massive ongoing QE is being carried out by two major central banks, the Bank of Japan (BoJ) and the European Central Bank (ECB). Negative nominal policy rates have been adopted by the ECB, BoJ, Swiss National Bank (SNB), and central banks of Denmark and Sweden; the “zero lower bound” has been breached. And sovereign bond yields are below or close to zero out to ten years for Japan, Germany and Switzerland.
Yet, in spite of the prompt and massive unconventional action by DM central banks, growth remains anemic and inflation is well below targets! As Mario Draghi has repeatedly stressed, monetary policy cannot do it alone. This is a lesson for Africa: if monetary policy is to deliver the goods, it must be formulated in concert with fiscal and structural policy and improved governance and institutions.
Why not Unconventional Monetary Policy in Africa?
The unconventional steps taken by DM central banks after the GFC begs the question: why can’t central bankers in Africa adopt unorthodox measures to lower long-term interest rates and spur growth? Let me now illustrate why unconventional monetary policy should be viewed with caution by Africa by citing significant examples from prominent emerging markets, including Brazil, China and India.
China
I shall next discuss China, a major trading partner and an important source of infrastructure loans for Africa. Big challenges have arisen for China after the GFC as the result of a massive increase in leverage and related financial vulnerability as the growth drivers switched from investment and exports to social housing, real estate and public investments in infrastructure. Let me give three examples of rising financial vulnerability: First, trust funds, which are part of the so-called “wealth management products” now account for some 20% of GDP and constitute the core of the “shadow banking” system. Some 50% of trust fund proceeds are invested in real estate, infrastructure, energy and mining, with companies in these sectors taking a big hit. Wealth management products had their genesis in financial repression: with household deposits in banks severely taxed via financial repression, wealth management products with their much higher guaranteed returns, became a natural, albeit much more risky, alternative. Second, local governments, which account for 80% of public infrastructure investments, have seen their debt skyrocket. Some 50% of local government revenues come from land sales. Third, the real estate sector, which has become a major engine of growth post GFC, is described by the IMF in China’s 2014 Article IV consultation, as being at the center of a “web of vulnerabilities”.
In this environment, the approach of the central bank, the Peoples’ Bank of China, PBoC, has been to support the financial sector through rate cuts, liquidity injections and regulatory forbearance. Various measures have also been taken to support the Shanghai and Shenzhen stock exchanges in view of last summer’s equity market rout. And the seeming lack of will to confront the problem of non-performing loans in commercial banks has fueled concern that PBoC may be supporting growth at the expense of rising financial vulnerability. While there is no doubt about China’s headline-making historic economic accomplishments over the past three decades, and I am a great fan of that, the indecisiveness about addressing rising vulnerability in the domestic financial system after the GFC has become a major concern and potential headwind to growth.
India
I come now to the case of India, which has clearly been doing things right while sticking to orthodoxy. Indian economic growth is one of the few bright spots in the global economy. India formally adopted an inflation targeting regime in March 2015, setting a target for CPI-based inflation of 4% with a band of plus or minus 2% beginning in the 2016/17 financial year. But this was preceded by meticulous preparation to build credibility under the Reserve Bank of India’s Governor, Raghuram Rajan. Rajan took the helm of India’s monetary policy in 2013, a year which saw the county bracketed together with Brazil, Indonesia, Turkey and South Africa as the Fragile Five.
The first challenge was to exit the Fragile Five by lowering the current account deficit, bolstering foreign exchange reserves by attracting dollar deposits from the Indian diaspora overseas and establishing RBI’s seriousness about lowering consumer price index- or CPI-based inflation, which was in double digits, by hiking rates; with wage awards being based on the CPI, India was rapidly losing competitiveness relative to China and other emerging markets. Rajan’s goal was simple: make the Indian Rupee a credible store of value, thus dulling the seduction of gold, and raise interest rates above CPI inflation, making rupee-denominated assets attractive. Intermediate targets were also set for inflation: less than 6% by January 2016, which was met, and less than 5% by January 2017.
Rajan reminds us of the reasons why low inflation is important in a speech made only a few weeks ago on June 20. First, low and predictable inflation makes the currency a credible store of value. Second, the ones who benefit from negative real interest rates are rich industrialists and the Government, with the inflation tax hurting the middle class savers and the poor. Inflation is a tax that hurts the poor. But what struck me most is Rajan’s call for staying the course and adopting tried-and-tested orthodoxy – because it works. It enables sustained growth and lowers volatility. To quote him – and recall that he is a former IMF chief economist – “Decades of studying macroeconomic policy tells me to be very wary of economists who say you can have it all if only you try something out of the box. Argentina, Brazil, and Venezuela tried unorthodox policies with depressingly orthodox consequences."
Summary of lessons from Emerging Markets
Now let me distil a few lessons. Brazil’s experience point to the risks and costs of letting central banks and public banks become fiscal agents and trying to promote growth through large amounts of subsidized lending. This is not to say that some amount of subsidized lending targeted at SMEs and managed fiscally through the budget is not important. As a carefully crafted and targeted instrument to lift up the small enterprises, it can work. At the same time, it is vitally important to avoid domestic corruption and political shocks of the type that have befallen Brazil.
China offers several lessons. Let me focus on three. First, a prolonged and excessive reliance on financial repression can lead to undesired and risky responses such as the rise of shadow banking and unregulated financial instruments promising high returns as people try to escape the financial repression tax. Second, the massive forex reserves China has built up may have to be used to absorb potential losses in the clean up of the domestic financial sector. Already, some US$775 billion have been used up to support the Renminbi in the six months August 2015 to January 2016. Building up forex reserves is not enough. Central banks have to be proactive in anticipating potential sources of vulnerability and heading them off, through macroprudential tools, for example. Third, China is held up as a stellar example of cleverly used industrial policy to grow rapidly. But remember: China is not your standard small, open economy, a description that would apply to much, if not all, of Africa. No multinational could ignore its domestic market of over one billion. China could exploit its bargaining power to transfer technology as a quid pro quo for access to its market. The lesson for Africa: create a good climate for private investment and FDI in manufacturing and agri-business. Couple this with structural reform to spur competition and innovation.
India’s experience is a wake-up call for getting the basics right and resisting opportunistic and costly experimentation. We cannot let monetary and exchange rate policy be captured by economic and political elites for their limited goals of personal enrichment.
Financial Sector Challenges
These are important policy lessons for us in Africa. We must also acknowledge that our financial sectors face severe challenges and let me say a few words about that. The challenges include dollarization in loans and deposits, concentration risks in bank lending and a preference in lending to the government. Furthermore, the ability to conduct monetary policy in an inflation-targeting regime requires that the financial infrastructure, including a well-functioning interbank market, be in place to facilitate monetary policy transmission. This would ensure that changes in the bank policy rate affect the marginal cost of funds for commercial banks and eventually, for borrowers and lenders. Such transmission depends on the depth of the financial system in terms of the ratio of bank assets and liabilities to GDP, bank sector private credit to GDP and the use of local currency bank deposits as a store of value by the general public. It also depends upon the competitiveness in the banking system, lowering the degree of informality in the economy and strengthening the legal protection of creditors.
Studies uniformly show that African countries lag other developing regions in indicators of financial development. A sustained effort is required to improve corporate and bank governance, manage volatility from external and domestic sources, remedy the informality reflected in weaknesses in registration, proper land titles and documentation, and so on. Such obstacles can be overcome through programs of financial inclusion and the gradual building up of the necessary financial infrastructure.
But there are other impediments not so easy to deal with, such as the fragmentation in Africa and small average country size, which makes it hard to reap economies of scale in providing a diverse menu of financial products such as insurance, mortgage loans and various savings products owing to limited demand. Once again, market-based solutions might arise and we are beginning to see these, such as cross-border banks and the development of financial conglomerates. But this naturally calls for more complicated supervisory and regulatory frameworks. Innovations may also emerge to enable low-cost payments, such as M-Pesa in Kenya; but while filling a vacuum in the payments framework, such innovations may not be an adequate substitute for long-term development finance because of their short-term transactional nature.
The lesson here is clear. African countries need to improve the infrastructure underlying the financial sector while also pursuing the needed financial deepening. This is an ongoing quest, which will obviously be aided by credible monetary and fiscal policy and continuing institutional reform to make local currency assets a desirable store of value.
But what about the challenges posed by the diminished medium term prospects for growth and the terms of trade? The IMF suggests a “Policy Reset”. In many countries, particularly oil and non-energy commodity exporters, fiscal space and foreign exchange reserves are running low. Besides, external financing conditions are tighter, including FDI prospects, and the terms of trade shock is likely to persist. The Policy Reset would center on keeping exchange rates flexible and market-determined in order to maintain competitiveness and preserve scarce foreign exchange reserves; and ensuring fiscal adjustment given the persistent nature of the external shock, combined with greater domestic resource mobilization (DRM) from non-commodity sectors. Keeping fiscal deficits under control would also lower current account deficits, which are exceptionally high in most African countries.
This bit of orthodoxy may grate on our nerves but remember Africa’s rise in the last two decades has occurred partly on the back of good macro-economic policy. We need to bear this in mind in light of all the unconventional monetary policy we have been exposed to since the GFC. Based on the disparate experiences of Brazil, China, India, Russia and Turkey, and given the present structure of our economies, I am convinced the continent still needs to stay the course of sound conventional macro-economic policies. That it is the right way to go. In fact, I see one overwhelming priority: make the domestic currency a credible store of value, which will facilitate financial deepening, help control inflation and create a strong foundation for long run growth. Clearly, part of this package includes a focus on financial stability through macro-prudential tools focused on real estate and external borrowing by private banks and corporates, which may develop currency mismatches.
So what about Uganda?
This brings me to the last section of my speech, which I shall start by making a few observations on Uganda. In a speech on April 16 marking the start of the Bank of Uganda’s 50th Anniversary celebrations, Governor Emmanuel Tumusiime-Mutebile noted: “In the coming decades, our monetary policy will continue to prioritise, above all else, the control of inflation. This is because low and stable inflation is a precondition for mobilising high levels of savings and investment and for efficient resource allocation, which are essential for sustained economic growth.” In a speech last November on the role of the central bank in the post 2015 era, the Governor had observed: “Sound monetary policy is a prerequisite for a stable macro-economy, with low inflation, although it is not always sufficient in the absence of sound fiscal policy.”
I am delighted to say that the Bank of Uganda practices what it preaches! Last year, in the face of a depreciating currency and rising inflation expectations, the Bank of Uganda hiked interest rates by 600 basis points, the highest by any central bank in Africa. This eventually stabilized the exchange rate, even leading to a nominal appreciation of the Ugandan shilling against the US dollar. The willingness to hike indicates clear resolve on the part of the Bank of Uganda to meet its medium term target of 5% for annual core inflation. It also preserves foreign exchange reserves at a time when these are a crucial buffer against global uncertainty and is definitely preferable to introducing restrictions to stabilize the exchange rate, which fuels parallel markets for foreign exchange, lowers central bank credibility and hurts the private sector and economic growth.
But one should be clear that the ability to hike rates in this fashion would be impossible without good economic governance and assured central bank independence. And so I also congratulate President Museveni and the political leadership of Uganda. In fact, the positive effects of last year’s prompt hikes have enabled the Bank of Uganda to cut its policy rate by 200 basis points this year. In addition, the scale of monetary policy tightening in 2015 would not have been feasible had pubic indebtedness been excessive, because this would have immediately worsened public debt dynamics. And in a sign of pragmatic self-confidence, Uganda has entered into an agreement with the IMF under the Policy Support Instrument (PSI) program, which enhances credibility by signaling that macroeconomic policies are sound and that the country does not need balance of payments support.
Where is Uganda’s Economy Now?
But good monetary policy needs to be supported by sound fiscal policy, sectoral and structural reform. We have seen some positives on this in Uganda but challenges remain. Uganda’s recent economic performance has been favourable. Its fiscal policy stance has focused on enhanced revenue mobilization and improved public spending efficiency with some success, creating room for priority social and infrastructure investment. GDP growth has been significant, averaging about 7 percent over the past two decades, which is higher than the average growth in Sub-Saharan Africa for the same period. Growth has also been broadly inclusive- creating about half a million jobs each year- just enough to absorb new entrants into the labour market. This has also been accompanied by a steady fall in poverty with the absolute poverty rate almost halving during this period.
But as I said earlier there are significant challenges. Growth has not resulted in a material shift in shares of economic sectors over the past 15 years and the economy has not created enough jobs in high productive sectors. In addition, current job creation levels would have to be hiked considerably in order to absorb the doubling of new labour market entrants predicted by the ILO in the next decade. This means that despite improvements, inequality and job creation remain as central concerns.
In addition, a tough external environment has already resulted in slowed growth for the last 3 years which poses policy challenges. Climate change has resulted in additional risks and according to the New Climate Economy, this could be costing Uganda up to US$3-6 billion per annum in the near future if not addressed. We are already seeing some of these risks manifested in agricultural production. For example you would recall that in 2010 Uganda 17 suffered crop losses estimated at 16 percent because of extreme weather conditions. Successfully implementing Vision 2040 with a primary goal of achieving “A transformed Ugandan Society from a peasant to modern and prosperous country in 30 years” would therefore require appropriate sectoral and structural reform that is climate conscious to complement sound fiscal and monetary policy.
Energy
First and foremost, even in this low oil price environment and in the context of the immense infrastructure challenges facing the sector, Uganda must manage its fledgling oil sector responsibly, transparently and in an environmentally sound manner. It should learn from the mistakes of sister and brother countries on this continent and elsewhere. Part of the potential revenues generated from this sector, estimated at US$3 billion per annum at current oil prices should be saved to cushion future volatility and support future generations. It should also be directed to finance much needed infrastructure to serve as a base for growth whilst avoiding the Dutch Disease and crowding out broader diversification. Uganda’s infrastructure deficit- particularly in energy and transportation- is a cross cutting constraint on economic growth. Per capita energy consumption at 3.7kWh is one of the lowest in the world. But this infrastructure deficit is also an opportunity. With three-quarters of Uganda’s infrastructure still unbuilt, Uganda has the opportunity to lead in investing in sustainable and low carbon infrastructure reaping its attendant benefits in the long term. The potential for renewable energy in Uganda is substantial especially for solar and hydro enabling a clean energy transition with limited additional costs.
Agriculture
Reforms in the agricultural sector are of vital importance because up to 76 percent of Ugandan households earn income from this sector. Agriculture has also played a pivotal role in Uganda’s positive growth story over the past couple of decades. Research by the New Climate Economy which is currently working with the Ugandan government and in partnership with the Economic Policy Research Center, estimates that increases in agricultural income accounted for about 77 percent of the poverty reduction seen between 2010 and 2013. However the productivity of the sector is significantly low – the average productivity of a Ugandan agricultural worker in 2012 was US$581. To put this in perspective, the industrial sector is almost ten times more productive with an average productivity of $5,106. This needs to be addressed with the appropriate policy in order to achieve the ambitious targets that the government has set for this sector including increasing marketed output by 50 percent by 2025.
Modernising Uganda’s agricultural sector with new technologies to increase productivity in the sector is an important first step. There is significant potential to do this. For example, investment in productive working capital is low with only 2 percent of farmers using tractors. The use of improved crop varieties is similarly low with estimates ranging between 13 percent and 22 percent. Uganda has successfully entered innovative markets such as horticulture and innovation along critical agricultural value chains needs to be encouraged. Unlocking the potential of Uganda’s agriculture sector would also require significant improvements to rural land rights which would simultaneously increase farmer’s access to credits and investments, which in turn, would raise productivity. Also, investing in the right kind of infrastructure is critical-access roads connecting rural farmers to urban markets at reduced costs, irrigation to increase crop yields, improved communication technology to give farmers access to information on improved farming practices etc.
The challenges in this sector are further complicated by climate change impacts, which are depleting natural capital and leading to significant crop losses. Almost 46 percent of all land in Uganda is being severely degraded and soil erosion averages over 5 tons per hectare per year. Therefore it is important that policy geared at stimulating the agriculture sector is also climate friendly and sustainable.
Business Environment
Reforms aimed at improving the business environment by cutting red tape are also important particularly in achieving Uganda’s industrialisation goals. This government has already done a good job in making improvements to the business climate over the years. Between 2015 and 2016, Uganda improved from 135/189 to 122/189 in the World Bank’s Doing Business report- a significant improvement in just one year! However challenges remain that still need to be addressed- for example, getting a business registered still takes on average 32 days. Addressing this along with access to credit for the private sector would be instrumental in achieving growth, particularly in the industrial sector.
Industry
With the right policies and investments, the industrial sector – manufacturing in particular – can play a key role in Uganda’s growth story in the coming years. Uganda’s growth in the past 15 years has not been accompanied by significant structural transformation. According to World Bank data, Industry’s share of GDP has actually declined in the last decade from 25 percent in 2005 to 20.5 percent in 2015 and the sector accounts for less than 5 percent of total employment. This needs to be addressed. In manufacturing, there is potential to scale up agro-processing in key agricultural products such as coffee, tea, sugar cane and cassava. Similarly, there is potential to develop a petrochemicals industry in light of Uganda’s budding oil sector. This process of industrialisation would enable Uganda create high productivity employment opportunities and increase incomes. In addition, the diversification into industry will also increase the economy’s resilience to climate change with fewer poor people and less dependence on the agricultural sector, which is the most climate vulnerable sector in Africa.
Conclusion
Let me conclude by stating that although Uganda’s Vision 2040 sets an ambitious development goal, it is one that I see as very much within reach. Stable institutions, good governance and investment in human capital would be integral to its success. Improved macro-economic policy has laid a good foundation to achieving this goal but as we have seen, this needs to be complemented with bold real sector reform targeted at the sources of growth. Such reform must focus on building for the next generation to ensure they are gainfully employed. Any nation that neglects to make employment of its youth and women a centerpiece of structural and sectoral reform is harbouring a ticking time bomb. I know that I am preaching to the converted here and I have spoken long enough. As Warren Bennis, a renowned American scholar on leadership, said – “Leadership is the capacity to translate vision into reality”. Uganda’s economic success in the coming decades is dependent on the eadership to translate a well-articulated vision into reality for the everyday Ugandan man and woman.
The Bank of Uganda can be justly proud of the foundation it is helping to lay for sustained long run growth although there is still a long way to go. But there is so much potential for Uganda – in the words of Kofi Annan: “Africa’s creativity and resilience are enormous… It is time for African leaders to unlock this huge potential.” Once again, please accept my hearty congratulations as we look forward to another 50 years! Thank you.
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SADC: Costed action plan for industrialisation to be finalised early next year
Southern African leaders will hold an Extra-Ordinary Summit during the first quarter of 2017 to finalise a costed action plan for the region’s industrialisation agenda.
The Council of Ministers of the 15-member Southern African Development Community (SADC) has instructed the SADC Secretariat to finalise the ongoing process to cost the Industrialisation Strategy and Roadmap.
“Council received a progress report on the indicative costs of the SADC Industrialisation Strategy and Action Plan, and directed the Secretariat to finalise the process in consultation with Member States for consideration by Council and Extraordinary Summit in February/March 2017 to enable the region to solicit investment in identified areas,” the incoming Council chairperson, Prince Hlangusemphi, said after a meeting in Mbabane, Swaziland.
Since the 35th Summit of Heads of State and Government held in Botswana in August last year, SADC has embarked on a process to develop a costed action plan for the pdf Industrialisation Strategy and Roadmap 2015-2063 (2.34 MB) , which was adopted in April 2015 to allow the region to harness the full potential of its vast and diverse natural resources.
The action plan seeks to establish a coherent and synergistic implementation scheme containing strategic options and general policies towards the progressive attainment of time-bound targets set out in the strategy and roadmap.
The plan will focus on the first 15 years of the strategy timeframe, and aims to create an enabling environment for sustaining industrial development as a driver of economic transformation; and establish an enduring alliance for industrialisation consisting of the public and private sectors as well as strategic partners.
The SADC Industrialisation Strategy and Roadmap was developed as an inclusive long-term plan for modernisation and economic transformation that should enable substantial and sustained economic development to raise living standards.
It is anchored on three interdependent strategic pillars: industrialisation, as a champion of economic transformation; enhanced competitiveness; and, deeper regional integration.
Strategic interventions for each of these pillars are proposed in the action plan.
These include an improved policy environment for industrial development, increased volume and efficiency of public and private sector investments in the SADC economy, creation of regional value chains and participation in related global processes, as well as increased value addition for agricultural and non-agricultural products and services.
In order to improve the operating environment, there are plans to develop and operationalise a Protocol on Industry by 2020, which should lead to the development of industrialisation policies and strategies at national level.
Where Member States already have such policies and strategies, these should be reviewed and aligned to the SADC Industrialisation Strategy and Roadmap.
Member States will be required to develop national Industrial Upgrading and Modernization Programmes (IUMPs) by 2018 and implement these by 2020.
These should be in line with the SADC IUMP, which provides the basis for a sector-specific approach to industrialisation in the region, focusing on upgrading existing manufacturing capacities, modernising productive facilities, reinforcing the institutional support infrastructure, and strengthening regional capacity for research and innovation.
There is also a target to progressively increase the share of gross domestic investment to gross domestic product to 25 percent by 2020 and to 30 percent by 2025.
To achieve these targets, there are plans to develop a SADC Investment Promotion Framework as well as a SADC Regional Action Programme on Investment to accompany it.
To encourage the creation of regional value chains and participation in global processes, the region has identified five priority areas in which the value chains can be established and for which regional strategies should be developed by 2020.
These are in the areas of agro-processing, minerals beneficiation, consumer goods, capital goods, and services.
A detailed value chain study is proposed for specific products or services in the priority areas.
As part of the process of promoting value-chain participation, there are plans to develop model legislation and regulations for intra-SADC agro-processing, minerals beneficiation and other manufacturing activities and services.
Reduction or removal of structural impediments to industrialisation is another target being pursued by SADC. In this regard, there is need to improve power generation capacity and facilitate an increase in the development and use of renewable sources of energy as well as ensure adequate water supply.
There is also need to reduce delays at ports and border posts and shorten the duration of movement of goods across borders in the SADC region. This will involve harmonization of border-crossing procedures in SADC by 2020.
The action plan also proposes an active role for Small and Medium Enterprises (SMEs) in the SADC industrialisation agenda. SMEs are an important variable in SADC development plans, representing 90 percent of all businesses and accounting for more than 50 percent of employment.
Interventions under the Competitiveness pillar are aimed at strengthening of both the macroeconomic and microeconomic environments in the region.
Initiatives proposed include the development of industrial investment programmes to support SMEs by 2018; training for skills, entrepreneurial and managerial development; and centres of specialization for priority sectors.
The regional Integration pillar aims to widen the economic space for development and create incentives for industry to expand, thus providing opportunities for economies of scale, clustering and economic linkages.
Specific interventions under this pillar include full implementation of the SADC Free Trade Area to cover all Member States; a common external tariff by 2025; gradual phase-down and abolition of rules of origin by 2025; liberalization of exchange controls to allow free movement of capital within SADC by 2030; and ratification of the pdf SADC Protocol on Trade in Services (1.39 MB) for implementation by 2020.
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How Rwanda can reduce the growing trade deficit
Rwanda’s trade deficit has been widening as the import bill continues to outpace export receipts. This has in turn continued to exert pressure on the local currency with the dollar gaining ground on the franc.
In fact, the local unit shed about 4.9 per cent of its value against the greenback in the first half of the year.
In 2015, the franc depreciated by 7.5 per cent, the highest depreciation recorded in Rwanda in last decade, according to the central bank. With export receipts dwindling and imports widening to fund mainly ongoing development projects, pressure on the franc seems unrelenting.
2016 first half performance
The central bank estimates indicate that the country’s formal imports grew by 3.3 per cent in value to $1,171.3 million, up from $1,134.1 million in the first half of the year. However, Rwanda’s exports revenue declined by 2.4 per cent to $268.6 million compared to $275.1 million recorded over the same period last year.
Export earnings had dropped by almost 6.3 per cent in the same period in 2015, driven by 36.6 per cent decline in mining sector export revenue, as well as tea and coffee, which shed 5.7 per cent and 9.2 per cent, respectively. According to the National Bank of Rwanda (BNR) monetary policy and financial stability statement released last week, the growing demand for imports has led to a 5.1 per cent trade deficit to $902.69 million in the first six months of the year, up from $858.98 million in 2015.
Experts say the poor performance points to hard times, the economic stability Rwanda has been enjoying over the past decade notwithstanding. Addressing this challenge as the country seeks to transform into a middle-income and self-sustaining economy in the medium-term.
How Rwanda can reduce growing import bill
The central bank attributes the mismatch between imports and exports to over relying on low-value export products, whose prices depend on the performance of the global market. The bank also says the growing demand for foreign goods, including capital and intermediate goods to sustain the ongoing economic growth, plays a big role in this mismatch.
Experts have now called for strategic measures to help reverse this trend, including increasing domestic production.
John Rwangombwa, the central bank governor, says there is need to increase local production of products, like cement, sugar, wheat and rice, as a matter of urgency to reduce imports of the said commodities.
“The contribution of such commodities to the import bill is high. Therefore, producing them locally could save the country up to $240 million in forex exchange,” Rwangombwa said while presenting the statement last week.
According to Emmanuel Ndahimana, a Nyamagabe District-based wheat production and processing expert, the country needs a two-pronged approach – increasing agriculture output and encouraging agro-processing to add value to local produce to “win customer trust”.
“We are currently conducting research on how we can maximise wheat production through value addition to reduce imports,” Ndhimana noted on Friday. Rwanda’s wheat production has been increasing at an average rate of 30.8 per cent annually since 2000.
Local producers, like Cimerwa, the country’s sole producer of cement, have already demonstrated how encouraging local production can greatly reduce the import bill. For example, the construction sector alone, the import bill is slowly reducing mainly due to the fall in importation of construction materials, which declined by 39.3 per cent and 40.2 per cent in volume and value, respectively.
This was thanks to a 135.2 per cent increase in the local production of cement during the first half of 2016 compared to the same period of 2015. The development saved the country almost $85 million in foreign revenue, according to BNR statistics. Cimerwa’s new plant in Rusizi District has the capacity to produce 600,000 tonnes of cement a year, up from 100,000 tonnes previously. This is enough to satisfy the growing local demand for cement that currently stands at about 450,000 tonnes, and the surplus exported to regional markets.
Other efforts
Government invested up to Rwf8 billion to boost rice production in Rwangingo marshland early this year. The project, covering 900 hectares of the marshland, is expected to increase output to 50,000 tonnes of rice per season when it is completed later this year. More so, Rwanda is expected to save up to $28 million (about Rwf20 billion) on sugar importation when Mauritian investor, Mauritius ACS Limited, starts production by the end of the year. The project is one of the priority investments the government is trying to ensure come on line this year.
Rwanda’s sugar demand is over 80,000 tonnes per year, but Kabuye Sugar Works, the country’s sole sugar maker, produces about 10,000 tonnes per annum though it has capacity to make 60,000 tonnes a year.
This has meant that the country has had to rely on sugar imports to meet demand. Therefore, a second sugar manufacturer will provide a huge relief to the country and greatly ease the widening trade deficit.
Alphose Nshimiyimana, a Kigali-based economist and entrepreneur, said encouraging local production should be complemented with increased local consumption. “It is through initiatives, like the Made-in-Rwanda campaign that can boost local consumption and help reduce on importation of goods that are produced in the country,” he said. He added that the campaign must target how to change people’s perception of locally-made products.
Last year, government launched a campaign to promote consumption of locally-made products. The Made-in-Rwanda campaign focuses on improving product quality, especially among small-and-medium enterprises (SMEs), to spur export volumes and receipts, besides encouraging local consumption.
Import substitution
The government has also launched a new initiative; the “Domestic Market Recapturing Strategy” that promotes the manufacture of some products, like medicine, shoes and fabrics, to recapture market that is fed by imports.
The initiative, according to Emmanuel Hategeka, the permanent secretary at the Ministry of Trade and Industry, is designed to encourage production and consumption of locally-made products.
“We have a comprehensive programme to intervene and encourage local production and consumption while we maximise on our exports through value addition,” he said. He added that streamlining informal cross border trade could also help reduce the country’s trade imbalance.
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Stakeholders meet to review the IGAD Regional Investment Plan 2016-2020
IGAD Member States representatives, regional and continental stakeholders, private sector actors as well as IGAD, FAO, AUC, and NPCA are attending a two day consultative workshop in Addis Ababa between 29-30 August 2016 to review the IGAD Regional Investment Plan (IGAD-RIP) 2016-2020.
This workshop is organized with the technical and financial support from the Food and Agriculture Organization of the United Nations (FAO), and in close cooperation with the African Union Commission (AUC). It will engage stakeholders in the review of the Investment Program Areas (IPAs) detailed in the IGAD-RIP and in the preparation of the official validation by Ministers of IGAD Member States on 31 August 2016.
The IGAD/CAADP framework was set up to strengthen capacities of the stakeholders by playing a key role in attaining the objectives of IGAD/CAADP as well as respect the principle of subsidiarity between the different levels of public action at regional, national and local levels with the guidance, involvement and support of IGAD.
The framework is in line with the AU Summit of Malabo Declaration of June 26, 2014, a follow up of the Maputo 2003 commitment to formation of the New Partnership for Africa's Development (NEPAD) and implementation of Comprehensive African Agriculture Development Programme (CAADP) that was later formulated to national CAADP Compact and Investment Plans through a mechanism for coordination and management of aid within the institutional and financial framework.
The workshop was officiated by the IGAD Chair, Ministry of Agriculture and Natural Resources of Ethiopia and CAADP Focal Person Mr. Zena Habtewold who appreciated the initiative to bring together experts and putting agriculture on the forefront for a food secure and agriculturally developed Africa.
Mr. Mohamed Moussa, Director of Agriculture and Environment Division on behalf of the Executive Secretary of IGAD, in his opening remarks noted that the IGAD region is well endowed with natural resources hence has great potential to develop and have economic growth through the revitalization of the agricultural sector for shared growth and improved livelihoods in the IGAD region and Africa as a whole.
The Sub-regional Coordinator for Eastern Africa and FAO Representative to AU and UNECA, Dr. Patrick Kormawa commended IGAD for its commitment to the CAADP framework and pledged their continued support and collaboration to touch and change lives of people on the African continent through the implementation of the IGAD-RIP at national and community levels.
The Acting Director of the Department of Rural Economy and Agriculture of the African Union Commission (AUC-DREA), Dr. Janet Edeme highlighted that the AU 2014 Malabo Declaration that later brought forth CAADP has the enhancement of investment finance in agriculture as one of the key commitments as well as boosting intra-African trade in agricultural commodities in order to halve poverty and end hunger in Africa by 2025.
The recommendations and final IGAD-RIP will be presented for validation by the Ministers from the IGAD Member States on August 31, 2016 in Addis Ababa in the presence of the State Minister of Agriculture and Natural Resources His Excellency Ato Wondirat Mandefro from the Federal Democratic Republic of Ethiopia and the Executive Secretary of IGAD Amb (Eng) Mahboub Maalim who will officiate the event. This event will be followed by a Business Meeting later in the year.
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ANRC case studies on maximizing human development outcomes from extractive industries
The African Development Bank’s (AfDB) African Natural Resources Center (ANRC) has published five case studies that look at the different ways in which countries are designing policies and partnering with investors to reap social and economic benefits from extractive industries.
The case studies were commissioned by ANRC to bridge the knowledge gap as relates to natural resources project-driven small and medium enterprise (SME) development, supply chain-based domestic linkages, extractives revenue management, public-private partnerships (PPP) and fiscal policy formulation. ANRC assists African governments maximize development outcomes from natural resources.
“These case studies form a crucial part in ANRC efforts to support countries achieve inclusive and sustained growth by providing decision-makers with evidence-based tools and opportunities to benchmark policies on natural resources management,” said ANRC Director Sheila Khama.
The case studies showcase a range of extractives project-related initiatives and policies deployed in four countries and the positive effects these have on local and national economies. The case studies include:
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A malaria prevention and treatment public private partnership program set up by Ashanti Gold Mining company in collaboration with the Government of Ghana, the World Health Organization and the Global Fund in 2006 aimed at delivering an efficient, cost-effective solution for containing malaria infections in the African countries where the company operates. The AngloGold Ashanti Malaria Control Programme is a study in corporate social responsibility in the fight against malaria, and its toll within communities where a company operates, and the viability of a business entity, including the broader safety of its staff. This case study demonstrates the positive impact of strategic public-private partnerships (PPPs) between extractives companies and governments on human development.
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The Anglo American Corporation of South Africa pioneered an innovative program of funds called Anglo Zimele to support aspirant entrepreneurs from historically disadvantaged communities in South Africa to develop small and medium enterprises (SMEs) by using Anglo American's sector expertise and procurement muscle as a catalyst for achieving wider, socially responsible growth. These SMEs in turn generate employment and drive social and economic development in economically marginal social classes. This report illustrates ways of leveraging the procurement muscle of extractives projects to promote SME start-ups and employment.
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Botswana has received widespread praise for the way in which it has managed mineral revenues and invested them in education, health care and other forms of assets. In some respects, it has managed to avoid what is commonly known in the literature as the “mineral curse” and “Dutch Disease” through appropriate macroeconomic, exchange rate and fiscal policies, as well as institutional design. This case study examines the experience of a resources-dependent country’s approaches to mining revenue management .
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Debswana Botswana’s partnership with the De Beers Group, through the Debswana joint venture, established a program for reducing HIV/AIDS infection to improve health service delivery and effectively minimize the adverse effects of the epidemic on employees and their families. This case study illustrates the positive effects of PPPs as a vehicle for directly impacting on human development by leveraging the human, financial and managerial resources capacity of mining companies.
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Resource-rich countries like Chile face the dilemma of how to manage this source of revenues. This report analyzes Chile’s fiscal policy implementation and mining revenue management, with an emphasis on the copper sector and its contribution to social development. The report focuses on the formal functioning of the rules and legal framework underpinning the policy.
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Statement of the Coalition for an Effective SADC Tribunal on Reinstatement of the SADC Tribunal
Statement of the Coalition for an Effective SADC Tribunal on Reinstatement of the SADC Tribunal (with access to individuals), addressed to the SADC member states, 17 August 2016
On the occasion of the 36th Summit of the Heads of State and Government of the Southern Africa Development Community (SADC Summit), we the undersigned members of the Coalition for an Effective SADC Tribunal, are raising serious concerns over state parties insistence in denying access to justice to the citizenry of this region as per the revised SADC Tribunal Protocol.
The Protocol strips the Tribunal of its jurisdiction to hear complaints from individual citizens of SADC. This is in spite of the guaranteed right for people’s participation in the SADC Declaration and Treaty under Article 23.
SADC remains an important sub-regional community though still characterized by varying atrocities and human rights violations with impunity, human and drug trafficking, violence against women and children, migration, mineral exploitation, election rigging and other concerns which the SADC Heads of State and Government committed to address in line with SADC Protocols.
However, the revised SADC Tribunal Protocol is in conflict with the SADC Declaration and Treaty and undermines human rights protection in the region. It further, limits citizens, civil society organizations and other non-states actors’ access to the Tribunal by only granting this access to state parties.
The SADC Tribunal was designed to be a fair impartial court where citizens could hold their governments accountable and seek redress for the violation of rights and the current Protocol threatens these important rights. Therefore we once again call on member states that have signed the revised SADC Tribunal Protocol to refrain from ratifying the revised Protocol as it violates and runs counter to the spirit and principles of the SADC Treaty, including the protection of human rights, rule of law, democracy and public participation.
In addition, the revised Protocol, by removing a forum for access to justice in the region, may be responsible for aggravating human rights violations in the SADC region. We further call on those who have not signed to refrain from signing and to advocate for an inclusive Tribunal that will serve the needs of the people of SADC.
Signed by Members of the Coalition for an Effective SADC Tribunal:
- Associação Justiça, Paz e Democracia (Angola),
- Auwal Socio-Economic Research Institute ( South Africa),
- Centre For Human Rights - Pretoria (South Africa),
- Centro de Estudos Moçambicanos e Internacionais (Mozambique),
- Centre for Human Rights and Rehabilitation (Malawi),
- Crisis in Zimbabwe Coalition (South Africa),
- Citizen Engagement Platform Seychelles (Seychelles),
- CIVICUS (South Africa),
- Lawyers for Human Rights - Swaziland (Swaziland),
- Malawi Law Society (Malawi),
- Human Rights Institute of South Africa (South Africa),
- Institute For Democracy and Leadership (Swaziland),
- South African Litigation Centre (South Africa)
- Southern African Christian Initiative (Namibia)
- SADC-CNGO (Botswana)
- Zimbabwe Human Rights NGO Forum (Zimbabwe)
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African Union calls for uniform fishing regime
The African Union is pushing for uniform fishing laws and increased investment in the sector to control the Sh250 billion worth of resources currently trawled away by advanced nations.
Mr Bruce Mukanda, a senior programme officer at the AU’s Animal Bureau said all member states need to adopt a framework already developed by the continental body.
“At the continental perspective, we are looking at individual country policies as we aim to harmonise them across the continent in order to harness this huge fisheries resource,” Mr Mukanda said in Nairobi during a Ticad VI side event.
Kenya is one of the countries that are yet to exploit their fisheries potential. Agriculture Cabinet Secretary Willy Bett said the country is losing a lot of its fisheries resources to illegal trade by aliens, depriving the country of much-needed revenue.
He said Kenya is making several strides in improving the sector and has passed the fisheries Bill that will address the challenges.
Kenya, for instance, has acquired a new ship to patrol its Indian Ocean territory as the country steps up the campaign against illegal fishing, which has seen it lose up to Sh10 billion every year.
The Sh3.6 billion ship, which has the ability to detect illegal movement of fishing vessels in Kenya’s territorial waters, is expected in the country in January.
“If well tapped, fishing is a great contributor to the economy of our country and we are trying our best to increase our potential by addressing the challenges facing the sector,” said the Mr Bett.
The country has a large exclusive fishing zone with potential to produce 300,000 tonnes of fish annually valued at about Sh75 billion. However, it is yet to utilise the opportunity optimally.
Kenyan fishermen are expected to fish up to 200 nautical miles from the Kenyan shores Under Exclusive Economic Zones rules, but they operate at below five nautical miles for lack of appropriate fishing gear to explore deep seas.
The forum brought together over 10 ministers of Agriculture who discussed how Africa can best benefit from its vast aquatic resources.
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tralac’s Daily News Selection
The selection: Monday, 29 August 2016
CFTA negotiations update: Kenya signs partnership to speed up intra-Africa trade (The Standard)
Kenya's Foreign Affairs Cabinet Secretary Dr Amina Mohamed led her counterparts of South Africa, Nigeria and Egypt to pen down the agreement that should see 'tangible' progress before the October 2017 deadline. These are Dr Rob Davies (South Africa), Dr Okechukwu Enelamah (Nigeria) and Amb Amgad Ghaffar (Egypt). The four leaders took advantage Ticad to address the stalled talks on the CFTA that was President Uhuru Kenyatta's proposal during the African Union summit held earlier in Kigali. "The four countries represent the four economic blocks. Also, they are the most active countries in the discussions on CFTA hence the importance of them spearheading the talks," said Amb Nelson Ndirangu Director Economic Affairs at Foreign Affairs ministry who noted that the talks have so far covered just 'basic grounds.'
African leaders agree to use Museveni’s paper on Africa’s problems as development guide (Daily Monitor)
The decision was reached at by the leaders meeting for the African Peer Review Mechanism chaired by President Uhuru Kenyatta on the sidelines of the Tokyo International Conference on African Development. President Museveni told the meeting that he had arrived at the 10 bottlenecks after watching the development scene in Africa for 50 years. “I have picked some ideas which are responsible for our lagging behind. The problem seems not to be addressing all issues in a comprehensive way.” The motion to adopt the paper and task the APRM secretariat to expand it into a blue-print for the continent was moved by South African President Jacob Zuma and was unanimously supported. The proposal had earlier been backed by Senegalese President Macky Sall of Senegal and Ellen Johnson Sirleaf of Liberia in their earlier presentations. [APRM Forum: communiqué]
TICAD VI: selected outcomes
The Nairobi Declaration: We affirm that TICAD is a unique process that has contributed remarkably to Africa’s development and regional integration agenda. It is a forum that promotes synergy with a candid and heart-to-heart communication among Africa, Japan and the international community and values the sense of equality and mutual benefit. We acknowledge the contribution made so far by all co-organizers to the TICAD process - the Government of Japan, the United Nations, the United Nations Development Programme (UNDP), the World Bank and the African Union Commission (AUC). Bearing in mind the high potential of this partnership, we reaffirm our strong commitment to continue to pursue the TICAD process with its distinctive elements stated below as its guiding principles: [Prime Minister Shinzo Abe's speech during opening session, President Uhuru Kenyatta's speech during official closing of TICADVI Summit]
AfDB President emphasises industrialising Africa plan to spur bond markets: AfDB President Akinwumi Adesina unveiled the elements of an African industrialisation strategy at an international meeting of African Heads of State and Government and their Japanese counterparts, and called for the linking of stock markets to enlarge Africa's domestic markets. The AfDB president said it was also important for countries to tap the locally available resources, including $334bn held by African pension funds, to enable investors to access affordable funding for long-term investments. "We must have a strong domestic bond market in Africa. We must work towards integrating the stock exchanges from Johannesburg to Cairo. This will create a bigger market for bonds. It would also allow African companies to cross-list in different areas," President Adesina said.
Profiled AfDB-TICAD linkages: AfDB, JETRO sign MOU on collaboration: The AfDB and JETRO intend to collaborate with each other in developing and implementing programmes and projects. Priority areas of such cooperation will include: power and energy, industrialization and private sector development, including quality infrastructure. AfDB and JETRO will further strengthen cooperation through knowledge partnership including research, staff exchange and knowledge sharing in the areas of common interest. Such partnership will include: region-wide partnership with regional economic communities and collaboration to foster systematic knowledge transfer between Japanese and African companies that creates significant value addition to African agricultural exports to Japan and the world. [Japan chooses AfDB to implement bold new infrastructure plan, Japan pledges investment in quality infrastructure in Africa, AfDB, World Bank strategic alliance positions Africa to attract Japanese investors, JETRO Global Trade and Investment Report 2016 (pdf)]
Record 73 deals signed in bid to boost Africa-Japan trade (The Standard): A total of 73 deals have been signed at TICAD VI in an unprecedented move to boost trade between Africa and Japan. This follows closely the Asian economic giant’s pledge to commit $30 billion (Sh3 trillion) in public and private support for infrastructure development, education and healthcare expansion in Africa. The 73 MOUs involve 22 Japanese companies and universities with African countries. Of the 73 MoUs signed at Ticad over the weekend, more than 20 of them involve Kenyan companies and State corporations across various sectors. [Kenya woos Japanese to sign deals on mega Lapsset corridor, China questions Japan’s ability to fulfil Ticad promises]
SA-JETRO MOU signed (dti): The MOU was signed between InvestSA Acting Head, Mr Yunus Hoosen, and JETRO Executive Director, Mr Hiroyuki Nemoto, on the sidelines of TICAD VI. “This MOU complements our investment relationship and the work done by the dti and Minister of Economy, Trade and Industry on the Joint Study on Economic Cooperation. The study recommended that South Africa and Japan should cooperate more in three areas: mineral beneficiation, agro-processing and automotive components. The number of Japanese companies have increased over the past 2 years in South Africa to 140, employing 150 000 people. Companies such as Toyota, Nissan, and Isuzu have retained and expanded their operations. The Japan Chamber in South Africa also reports an increase in its membership from 49 in 2013 to 64 in 2015,” added Minister Davies.
Zimbabweans strongly favour free cross-border movement but hold mixed views of SADC (Afrobarometer)
This dispatch uses Afrobarometer Round 6 data from 11 SADC countries to explore Zimbabweans’ views on some aspects of regionalization. Three-fourths (75%) of Zimbabweans think that people living in Southern Africa should be able to move freely across international borders in order to trade or work in other countries. This is the highest level of support for free movement in the SADC – twice as high as in Namibia and Botswana. Almost half (48%) of Zimbabweans say it is “difficult” or “very difficult” to cross international borders in order to work or trade in other countries. Regionally, Lesotho has the highest proportion of citizens (71%) who report difficulties in crossing borders.
Zimbabwe: CZI to submit value chains implementation proposals (The Herald)
The Confederation of Zimbabwe Industries is expected to submit to Government proposals on the implementation on value chains in line with the SADC Industrialisation Strategy and Roadmap. The move is in line with the industrialists' resolutions made at the CZI annual congress last month. The dossier, to be presented to Industry and Commerce Minister Mike Bimha, is expected to feed into the operationalisation of the SADC Industrialisation Agenda and Roadmap 2015-2063 by Zimbabwe. The CZI proposals include implementing the UNIDO value chains model as a tool for achieving competitiveness.
SADC launches new publications on tracking regional integration (SARDC)
The four publications that were launched deal with energy, gender, trafficking in persons, and managing economic transformation. The SADC Energy Monitor, the first of its kind in southern Africa, documents progress made by Member States towards implementation of SADC energy policies and initiatives, including the SADC Protocol on Energy. The SADC Gender and Development Monitor 2016, now in its sixth edition, presents an account of progress made towards implementation of regional commitments to achieve gender equality and equity in line with the SADC Protocol on Gender and Development. Adding Value: a policy toolbox for SADC Member States to manage economic transformation and value chain development is a publication that provides tools and guidelines to help regional stakeholders to promote value addition, thus increasing the benefits from their products. [Tanzania's JPM skips yet another SADC meet, Burundi, Comoros Islands eye SADC membership]
EALA calls for speedy uptake of Single Tourism Visa
In the report (pdf), EALA urges the Council of Ministers to fast-track and complete the study on the implementation of the EAC One Single Tourist Visa which commenced three years ago. EALA further wants the EAC Council to fast-track ratification of the Protocol on Tourism and Wildlife Management and for the EAC to provide additional resources for the Tourism and Wildlife Management Unit. The oversight report follows an on-spot assessment of selected hotels in EAC Partner States by the Committee on Agriculture Tourism and Natural Resources and a further workshop aimed at identifying progress made, existing gaps, challenges and charting a way forward in this respect in order to ensure sustainable development of the sector.
EAC: Draft SPS legal framework and measures
In a four-day regional stakeholders meeting (22-25 August, Nairobi) Partner States experts from ministries of agriculture, livestock and fisheries, Bureau of Standards, plant health inspectorates, and animal resources critically reviewed and provided comments to improve and enrich the draft EAC SPS legal framework and the measures. The meeting was also attended by officials from the Eastern Africa Farmers Federation, the Eastern Africa Grain Council, USAID Regional Economic Integration Office, USAID East Africa Trade and Investment Hub and EAC Secretariat officials. The EAC's Deputy Secretary General noted that many people in the Community were not yet aware of SPS measures and therefore the need for Partner States to take drastic measures to disseminate SPS information widely.
South Africa: Trade data likely to show another surplus in July (Business Day)
South Africa’s international trade balance is likely to have remained in surplus in July‚ according to Investec economist Kamilla Kaplan. Kaplan says the international trade account is forecast to have yielded a R5bn surplus in July‚ following surpluses of R18.4bn in May and R12.5bn in June. The trade balance data for July will be released on Wednesday.
Investors in Nigeria must learn how to navigate the potholes (Business Day)
A South African-developed mall opened in Lagos last week, attracting shoppers in droves, who took time off from their economic woes to visit more than 100 shops in the new centre. First-day trading at the centre was reported to be good, particularly at Shoprite and Game. Shoprite had to restrict access during the day because of the number of people in the store. The mall, on the Lekki Peninsula, serves a large catchment area that lacks shopping facilities, despite the fact that hundreds of middle class Nigerians are moving into new residential estates in the area. Developed by Cape Town-based Novare Real Estate Africa at a cost of R1.2bn, the Novare Lekki Mall, which covers 22,000m², is one of the two biggest malls in sub-Saharan Africa’s biggest city.
EADB urges strengthening of mining laws (IPPMedia)
EADB director-general, Vivienne Yeda, said the discovery and ongoing exploration of various minerals in the region have raised the expectation of host communities and governments that resource extraction will result in wealth creation and reduced budget deficits, and improve the conditions of the local people. “It is critical that host countries are able to derive tangible benefits from the exploitation of their natural resources,” Yeda told a regional seminar for judges from East Africa region, which ended in Nairobi on Sunday. The seminar, which was organised by EADB, was designed for judges from the East African region involved in arbitrating transactions and settlement of disputes in the extractive sectors.
Development co-operation for private sector development: analytical framework and measuring official development finance (OECD)
The aim of this report is to provide an analytical framework of development co-operation for private sector development and a measurement to capture relevant Official Development Finance. In general, PSD is regarded as an effective means to achieve the overall objective of boosting inclusive and sustainable growth. This paper considers PSD as development co-operation that addresses policies and institutions, market functioning and enterprise resources in order to improve the investment climate and the productivity capacity of the local private sector - particularly of SMEs - in developing countries.
Africa Human Development Report 2016: advancing gender equality and women’s empowerment (UNDP)
The report states that while 61% of African women are working they still face economic exclusion as their jobs are underpaid and undervalued, and are mostly in the informal sector. African women hold 66% of the all jobs in the non-agricultural informal sector and only make 70 cents for each dollar made by men. Only between 7 and 30% of all private firms have a female manager. In a key finding, the report estimates that total annual economic losses due to gender inequality in the labour market have averaged $95bn per year since 2010 in sub-Saharan Africa and could be as high as $105bn, or 6% of the region’s GDP in 2014.
Economics from space (G-Feed)
So why is it sensible to try to use satellite imagery to predict economic livelihoods? The main motivation is the lack of good economic data in many parts of the developing world. As best we can tell, between the years 2000 and 2010, one quarter of African countries did not conduct a survey from which nationally-representative poverty estimates could be constructed, and another 40% conducted only one survey. So this means that in two-thirds of countries on the world's poorest continent, you've got very little sense of what's going on, poverty-wise. And even a lot of the surveys that do get conducted are only partially in the public domain, meaning you've got to employ some trickery to even get the shape of the income distribution in these countries (and survey locations are still unavailable!). This lack of data makes it hard to track specific targets that we've set, such as the #1 Sustainable Development Goal of eliminating poverty by 2030. [The analyst: Marshall Burke]
Tree-based production systems for Africa’s drylands (World Bank)
Tree-based production systems have enormous potential to reduce vulnerability and increase the resilience of households living in dryland regions of Sub-Saharan Africa. Trees are key providers of biomass, which is critical for many livelihood needs. This report identifies some of the most promising investment opportunities at the level of tree-based systems, species (products), and well-defined management practices for accelerating rural economic growth in the drylands. [Companion report: Prevalence, economic contribution, and determinants of trees on farms across Sub-Saharan Africa, Companion book: Integrated landscape approaches for Africa’s drylands]
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In Nairobi Declaration, Japan and African nations vow to fight terrorism, stress rule-based maritime order
Japanese and African leaders on Sunday pledged to fight terrorism and emphasized the importance of rules-based maritime order as they wrapped up a Japan-led international conference on the continent’s development.
In the Nairobi Declaration adopted at the Tokyo International Conference on African Development (TICAD), the leaders also agreed to promote investment in infrastructure that leads to job creation in the fast-growing region.
“Japan’s public and private sectors will offer cooperation for the development that is led by Africa itself,” Prime Minister Shinzo Abe told a news conference after wrap-up of the sixth TICAD, convened in the Kenyan capital of Nairobi.
Kenyan President Uhuru Kenyatta told the same news conference that Japan does not press its own views on the continent and continues to be a force for African development.
The triennial conference was held outside Japan for the first time, as Tokyo seeks to strengthen its economic and political presence in the continent amid China’s increasing influence.
On the conference’s opening day Saturday, Abe pledged that Japan will mobilize a total of $30 billion in private- and public-sector funds to invest in Africa over three years to boost infrastructure-building on the resource-rich continent.
“We stress the importance of promoting regional and international efforts related to maritime security, including piracy, illegal fishing and other maritime crimes, maintaining a rules-based maritime order in accordance with the principles of international law,” the Nairobi Declaration said.
The reference to maritime security comes as tensions remain high in the South China and East China seas amid China’s growing assertiveness there. Japan has repeatedly called for the rule of law and opposed the use of force or coercion in maintaining maritime security.
The declaration also reconfirmed efforts to reform the U.N. Security Council, currently comprising five permanent veto-wielding members – Britain, China, France, Russia and the United States – and 10 elected members that serve two-year terms.
Africa is vital for Japan in its bid to become a permanent member of the Security Council. There are 54 countries on the continent, making up a large voting bloc among the world body’s 193 members.
As for investment in infrastructure, Japan hopes to distinguish its aid in the region from that of China through the promotion of “quality infrastructure,” Japanese officials said.
“We will promote investment in quality infrastructure which leads to job creation and transfer of expertise and know-how, as well as to capacity building of African countries and people,” the declaration said.
In the discussions at TICAD, Abe called on his African counterparts to take measures to create a favorable business environment in terms of safety and legal matters so that Japanese investments in the region can be promoted.
On terrorism, the declaration said: “We strongly condemn terrorism in all forms and manifestations, wherever and by whomever committed.… We call for enhanced international cooperation in strengthening counter-terrorism capacity in Africa.”
Abe was accompanied by around 200 officials from more than 70 Japanese companies during his trip to Nairobi, the first official visit by a Japanese prime minister in 15 years.
Sadayuki Sakakibara, chairman of the Japan Business Federation, the country’s most influential business lobby also known as Keidanren, also took part.
Noting that Africa faces challenges such as terrorism, infectious diseases and falling commodities prices, the Japanese and African leaders also vowed in the Nairobi Declaration to make efforts to create jobs for young people and women, promote structural reforms to diversify industries and enhance health care systems to improve the quality of life.
TICAD VI Nairobi Declaration
Advancing Africa’s sustainable development agenda
TICAD partnership for prosperity
1.0 Introduction
1.1 We, the Heads of State and Government and delegations of Japan and 54 African countries together with the representatives of 52 other partner countries, 74 international and regional organizations, representatives of the private sector and civil society organizations (CSOs) from both Japan and Africa met in Nairobi, Kenya, 27-28 August 2016, for the Sixth Tokyo International Conference on African Development (TICAD VI).
1.2 We welcome TICAD VI as the very first TICAD to be held in Africa. TICAD started in 1993 and has been serving as a pioneering multilateral forum for international cooperation on African development. Acknowledging the achievements made to date, we affirm that the first TICAD in Africa, which derives from a proposal from Africa itself, is a manifestation of African ownership of this process. We affirm that this occasion opens up a new chapter of the TICAD process.
1.3 We recognize that Africa is a dynamic continent that now hosts most of the fastest growing economies in the world. This has led to an increase in the number of countries that progressed from low income to middle income status. The continent is bestowed with rich natural resources and a fast growing population which is estimated to reach up to two billion in 2050. We especially acknowledge the growing middle class, which makes Africa a significant player in the global economy.
1.4 We affirm that TICAD is a unique process that has contributed remarkably to Africa’s development and regional integration agenda. It is a forum that promotes synergy with a candid and heart-to-heart communication among Africa, Japan and the international community and values the sense of equality and mutual benefit. We acknowledge the contribution made so far by all co-organizers to the TICAD process - the Government of Japan, the United Nations, the United Nations Development Programme (UNDP), the World Bank and the African Union Commission (AUC). Bearing in mind the high potential of this partnership, we reaffirm our strong commitment to continue to pursue the TICAD process with its distinctive elements stated below as its guiding principles:
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Open and inclusive forum: TICAD is an open and inclusive forum built on the twin principles of African ownership and international partnership that continue to be strengthened. It mobilizes global support for Africa’s development by promoting continuous dialogue, collaboration, and voluntary initiatives among a wide range of actors.
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Engagement of multi-stakeholders: TICAD engages multiple actors such as governments, international and regional organizations, private sector and CSOs, each with its own comparative advantages. TICAD process also promotes south-south and triangular cooperation within the framework of national and regional development programmes.
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Alignment with Africa’s own agenda: TICAD is anchored on the conviction that Africa’s socio-economic transformation is central to global stability and prosperity. It prioritizes the Africa’s agenda, respects the continent’s dignity, and uses a pragmatic development paradigm and modalities to bring concrete results to support Africa’s development agenda.
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Emphasis on human security and people-centered development: TICAD recognizes that the people of the African continent are the most precious resource and values each and every person’s effort. TICAD also recognizes that enhancing the capacity of each person and community is the key to sustainable development. This human security approach is aligned to Africa’s own aspiration for people-centered development.
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Effective implementation with integrated follow-up mechanisms: TICAD has the three-tier follow-up mechanism (Joint Secretariat, Joint Monitoring Committee and Follow-up Meetings) with clear reporting which enhances the mutual accountability.
1.5 TICAD continues to play a unique role in the development dialogues on Africa through its innovative, open, multi-stakeholder approach, which provides for ample potential for its further evolution and transformation.
2.0 Analysis of the current status
2.1 Progress of TICAD V commitments
We welcome AUC’s participation in the follow-up process, as a new co-organizer from TICAD V, which has further enhanced the African ownership of the TICAD process. We acknowledge with satisfaction the steady progress being made under the key strategic measures articulated at TICAD V. For instance, the progress recorded in promoting increased rice production under the multilateral initiative of CARD (Coalition for African Rice Development), and in advancing regional integration through region-wide transportation and trade corridor development is acknowledged. The giant strides achieved in enhancing the education and skills of young African men and women are also noted. We call on the various TICAD partners to accelerate efforts towards delivering the full implementation of the Yokohama Action Plan adopted at TICAD V, and confirm that it remains relevant.
2.2 Positive developments in Africa
2.2.1 We welcome the economic and social advancement and the progressing regional integration, such as the enhanced role of the Regional Economic Communities (RECs), the New Partnership for Africa’s Development Planning and Coordinating Agency (NPCA) and the African Peer Review Mechanism (APRM) in Africa’s development management. We acknowledge and praise the adoption of Agenda 2063 and its First Ten-Year Implementation Plan, as well as its several flagship projects, which have articulated the continent’s development vision, aspirations, goals and priorities. We also recognize and commend the adoption of the Common African Position on the Post-2015 Development Agenda by African Heads of State and Government, which facilitated global negotiations and culminated in the adoption of the 2030 Agenda for Sustainable Development at the United Nations.
2.2.2 We recognize that the goals and targets of Agenda 2063 and the 2030 Agenda for Sustainable Development are interrelated, and that we should shift from a silo to integrated approach of implementation with a commitment to leave no one behind. Further, we recognize the increasingly significant role of business in facilitating the continent’s development particularly in promoting fair trade and investments, supporting entrepreneurial development, promoting technology transfer and creating decent jobs.
2.3 Three major emerging challenges in Africa
In spite of the foregoing progress, we acknowledge and share concerns on three major emerging challenges that have been impacting the development landscape in Africa since TICAD V in 2013.
2.3.1 Decline of global commodity prices
Firstly, we recognize the decline of global primary commodity prices has exacerbated fiscal pressure and debt sustainability of many countries. We acknowledge that most African economies need further diversification to reduce dependence on the primary commodity sector, especially the extractive industries. We also acknowledge the need for value addition and beneficiation. In this context, we recognize that promoting structural economic transformation through diversification, including development of the blue/ocean economy, promotion of green economy, expansion of agriculture and industrialization are essential to creating resilient economies, stimulating decent employment opportunities especially for youth and women, minimizing income and wealth disparities, and eradicating poverty as articulated in Agenda 2063. We also recognize the urgent need for Africa to put together strategies to take full advantage of its financial and human resources tapping into the demographic dividend and promoting employment opportunities, social integration and sustainable socio-economic development. We stress the importance of combatting illicit financial outflows through concerted international efforts.
2.3.2 Ebola outbreak
Secondly, the outbreak of the Ebola virus disease not only caused a huge loss of life but also crippled socio-economic activities in affected countries and impacted the rest of the continent. This underscores the importance of resilient and sustainable health systems in achieving human security, maintaining and promoting national productivity, and generating shared wealth. While the Ebola virus pandemic was contained and affected countries declared Ebola-free in the end, the experience has shown that the continent’s health systems must be strengthened and have the capacity to respond to, better prepare for, and prevent pandemics and other public health crises. It has also highlighted the need for well coordinated swift international actions, including financial support, at the early stage of health emergencies. At the same time, in order to tackle the persistent burden of HIV/AIDS, tuberculosis, malaria, Zika, Yellow Fever and other communicable and non-communicable diseases, the continent requires increased access to health services, including those related to maternal and child health, immunization, sexual and reproductive health, non-communicable diseases, and nutrition, by all individuals throughout their lives. We recognize that concerted efforts are needed to improve health financing, procurement and supply chain management, and infrastructure for more effective service delivery as well as to close gaps in health workforce, information, governance, medical products, pharmaceuticals and technologies including affordable new vaccines. This will support the achievement of universal health coverage (UHC) in line with the Sustainable Development Goals (SDGs) and Agenda 2063, which will also enhance preparedness for and prevention of public health emergencies.
2.3.3 Radicalization, terrorism, armed conflict and climate change
Thirdly, the rising wave of radicalization, acts of terrorism and armed conflict impedes social cohesion, destroys livelihoods and deepens vulnerabilities. We reiterate the importance of social stability to address radicalization, terrorism and violent extremism through a multidimensional strategy encompassing political, economic, social and cultural dimensions. From this perspective, we acknowledge that promoting inclusive and sustainable livelihoods and managing shocks and vulnerabilities can foster shared prosperity, address the root causes of radicalization, and underpin social stability. Helping countries to develop and implement affordable social protection mechanisms that improve access to productive assets for poor households and reduce seasonal income fluctuations is equally central to enhancing resilience. It is estimated that Africa will be the continent most severely impacted by climate change and seriously vulnerable to climate variability. We acknowledge that addressing climate change, the loss of natural resources, desertification, El Nino, natural disasters, as well as forced displacement, in a timely manner is essential to achieve social stability. We also recognize the crucial role played by relevant government authorities in Africa for long-term institution-building which is a priority for peacebuilding, as recognized in relevant UN Security Council documents. We welcome the contributions of many countries in sharing key priorities for institution-building in Africa on the occasion of the Open Debate on Peacebuilding in Africa of July 2016.
2.4 Africa’s response to the emerging challenges
We applaud the efforts of African countries and African continental, regional and sub-regional organizations in addressing these challenges, and reaffirm our commitment to turning these challenges into opportunities for transformative development. We confirm that deepening the human and institutional capacities to address challenges, building on the continent’s past gains and leveraging the capacity of the private sector to unleash socio-economic transformation, quality of life and national prosperity, remain critical.
2.5 Developments in the international arena
We recognize and welcome the outcome of international events and initiatives including the 2030 Agenda for Sustainable Development, the Third UN World Conference on Disaster Risk Reduction, the Third International Conference on the Financing for Development, the Tenth World Trade Organization Ministerial Conference, the twenty-first session of the Conference of the Parties to the UN Framework Convention on Climate Change, the World Humanitarian Summit, the G7 Ise-Shima Summit and the fourteenth session of United Nations Conference on Trade and Development. These and other global initiatives, including the International Ebola Recovery Conference, have further galvanized our collective actions towards a better world. We affirm that TICAD VI comes at a critical juncture of translating global vision into concrete actions for Africa.
3.0 Priority areas of TICAD VI
We reaffirm that the Yokohama Declaration and Action Plan remain effective and their principles valid. We also reaffirm that actions therein, including boosting economic growth, accelerating infrastructure and capacity development, empowering farmers as mainstream economic actors, promoting sustainable and resilient growth, creating an inclusive society for growth, and consolidating peace, stability, democracy and good governance, will be duly implemented. TICAD VI builds on TICAD V, addresses Africa’s emerging development challenges, and responds strategically to pertinent continental and global agreements such as the Sendai Framework for Disaster Risk Reduction, the 2030 Agenda for Sustainable Development and the Paris Agreement on climate change. We affirm the alignment of TICAD VI to Agenda 2063 and its First Ten Year Implementation Plan, relevant NEPAD programmes, regional and national development plans and strategic priorities. Given the need to address the highlighted challenges and international development priorities mentioned above, and building on the TICAD guiding principles, including the imperatives of human security and engagement of multi-stakeholders, we affirm that the following pillars have been identified under TICAD VI.
3.1 Pillar 1: Promoting structural economic transformation through economic diversification and industrialization
3.1.1 Economic diversification and industrialization
We resolve to contribute in sustainable manner to economic diversification and industrialization by helping to accelerate the growth of industries including agriculture, livestock, minerals, blue/ocean economy, innovation and ICT-led economy, manufacturing and tourism. From this perspective, we will engage in energy issues, facilitate solutions to urban problems and create new markets by linking consumers, producers, farmers and economies through region-wide development. We will also promote value addition to and beneficiation of primary commodities, such as extractives and agricultural products by raising productivity in a sustainable way and developing national, regional and global value chains. We will also promote and support the role of African enterprises, including SMEs/SMIs, in such area as information and communication technology and tourism, and note the importance of free movement of goods, services and people.
3.1.2 Quality infrastructure
To further reinforce these efforts, we emphasize the importance of quality infrastructure, which ensures economic efficiency in view of life-cycle cost, reliable operation, safety, resilience against natural disasters, and sustainability, aligned with the development needs of African countries. We will promote investment in quality infrastructure which leads to job creation and transfer of expertise and know-how, as well as to capacity building of African countries and people, and that addresses social and environment impact and enhances connectivity at national, regional and continental levels.
3.1.3 Private sector development
We also emphasize the significant role played by the private sector and the importance of improving the business environment to promote trade and investment to create employment, especially for women and youth. We will take measures to enhance the role of private sector in development, including through increased private investment, entrepreneurship, business reform, innovation, public-private partnership and access to financing. We will encourage the introduction of incentives that would serve as an encouragement for industrialists to establish and enhance production capacities in Africa.
3.1.4 Human resource development
To promote and sustain structural transformation, we will also accelerate efforts to develop requisite skills through education, technical and vocational training, and to improve institutional capacity for economic diversification. We recognize that empowering youth and women is also central to achieving demographic dividends.
3.2 Pillar 2: Promoting resilient health systems for quality of life
3.2.1 Health system strengthening
We resolve to strengthen health systems to enhance their resilience, sustainability and inclusiveness. In so doing, we will aim to increase the continent’s capacity to respond to, better prepare for and prevent epidemics, pandemics, other public health crises as well as address various health issues including Ebola, HIV/AIDS, tuberculosis, malaria, neglected tropical diseases, other communicable and non-communicable diseases including cancer, as well as future threats such as antimicrobial resistance. Our efforts include, inter alia, strengthening institutions and building national and local capacities by reinforcing capable, efficient, responsible, transparent, equitable and accountable health systems to improve essential service delivery; promoting research and development; developing the capacity of health service providers; promoting hygiene and access to safe water, sanitation, immunization, affordable medicine, nutrition and primary health care including maternal and child health; promoting collaboration in pharmaceutical technologies. We will also accelerate actions to improve health surveillance, monitoring and evaluation at national, regional and continental levels, bearing in mind the importance of the African Centres for Disease Control, and by implementing the International Health Regulations (IHR) with self and external evaluations.
3.2.2 Response to public health crises
The efforts to strengthen health systems at various levels throughout the continent should be well-coordinated with the current international movement towards reinforcing the global health architecture to strengthen prompt and effective response to public health crises, including the WHO reform on health emergencies, relevant funding mechanisms under WHO and the World Bank to enable adequate and timely disbursement of financial resources at the early stage of health emergencies and effective collaboration among relevant international and regional organizations as well as between countries from different regions. We also put particular emphasis on enhancing prevention and preparedness against pandemics, including by mobilizing financial resources through relevant international organizations. We also stress the importance of building on Africa’s own experience in fighting against health crises to enhance networking of human resources within the continent.
3.2.3 Universal health coverage
We strongly believe that strengthened health systems will lay the foundation for achieving universal health coverage (UHC) which will contribute to strengthening preparedness for public health emergencies, as well as to improving the quality of life. We stress the importance of access to sexual and reproductive health and family planning, bearing in mind the reproductive rights and the rights of women and adolescent girls. We also welcome international and regional frameworks by multi-sectoral stakeholders including countries, international organizations, private sector and CSOs to promote UHC in a coordinated manner, such as “International Health Partnership for UHC 2030” and “UHC in Africa”. There should be particular emphasis on country and community-led resilient, inclusive, and sustainable health systems supported by effective policymakers and managers to ensure country ownership and by coordinated international assistance, including efforts to increase global funding for health system strengthening to ensure health services to all individuals throughout their lives. A greater use of enhanced country coordination mechanisms for health system strengthening should also be supported. In this regard, research, development and innovation for addressing diseases are indispensable.
3.3 Pillar 3: Promoting social stability for shared prosperity
3.3.1 Social stability and peacebuilding
We resolve to promote social stability by responding comprehensively to security concerns. In this regard, we emphasize that protecting and empowering individuals, especially youth, women and persons with disabilities, families and their communities by improving access to education, technical and vocational training, job creation and opportunity, and promoting social cohesion, are fundamental. We also emphasize that youth empowerment and capacity development are central to achieving demographic dividends, preventing forced migration and conflict, and promoting peacebuilding. We also resolve to support enhancing the capacity of national and local government authorities as well as international and African regional institutions for peace and stability on the continent, including the capacity for surveillance and containment, cross-border security, coordinated border management and peacekeeping operations. Furthermore, we are committed to addressing the shocks and vulnerabilities associated with armed conflict, political instability and economic downturns.
3.3.2 Terrorism and violent extremism
We strongly condemn terrorism in all forms and manifestations, wherever and by whomever committed. The spread of terrorism undermines international peace and security and endangers our ongoing efforts to strengthen regional and global security and economy as well as to ensure sustainable growth and development. We reaffirm our commitment to fight against terrorism and violent extremism. We call for enhanced international cooperation in strengthening counter-terrorism capacity in Africa.
3.3.3 Global issues and challenges
We commit to address climate change, deforestation and desertification, poaching, loss of natural resources, food insecurity, water and energy deficit and natural disasters as well as their impacts on migration and security. We also note the negative impact of poverty, debt burden, unilateral and coercive measures on social stability. We welcome the Paris Agreement, and stress the critical importance of its implementation for achieving sustainable development. We look forward to the twenty second session of the Conference of the Parties to the UN Framework Convention on Climate Change to be held in Morocco in November 2016.
3.3.4 Maritime security
We stress the importance of promoting regional and international efforts related to maritime security, including piracy, illegal fishing and other maritime crimes, maintaining a rules-based maritime order in accordance with the principles of international law as reflected in the United Nations Convention on the Law of the Sea (UNCLOS). We also underscore the importance of strengthening maritime security and safety through international and regional cooperation, as reflected in 2050 Africa’s Integrated Maritime Strategy (2050 AIM Strategy), in accordance with international maritime laws.
3.3.5 United Nations in the 21st century
We reaffirm our determination to urgently reform UN bodies, including the Security Council, and will maintain political momentum through enhanced dialogue to find the best approach.
3.4 Strategies for cross cutting areas
We acknowledge that in order to address effectively the issues under the aforementioned three pillars and achieve concrete results, we need to utilize and promote measures along the following cross-cutting areas as enablers:
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Empowering youth, women and persons with disabilities: We affirm that quality education and requisite skills for youth and women could be a driving force for structural economic transformation and industrialization. It is also a basis for sound health systems and a prerequisite for social stability.
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Promoting science, technology and innovation: Science, technology including ICT, and innovation are useful tools for realizing sustained quality growth in wide range of sectors including, not only in high value added industry but also in areas such as food security, health, climate change, other environmental issues as well as social stability. It could also be used to address security challenges.
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Human resource development: We reaffirm that human resource development is a key catalyst for economic transformation.
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Advancing public-private partnerships: We acknowledge that partnership between public and private organizations helps to maximize development results.
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Engaging private sector and civil society: We also recognize the crucial role the private sector plays in accelerating rapid economic growth, creating decent jobs and promoting human resource development and enhancing exchanges in the areas such as economy, education, culture, sport and science. Civil society engagement, including volunteer opportunities, needs to be further promoted.
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Strengthening institutions and good governance: Good governance, as well as democracy, respect for human rights, justice and the rule of law are fundamental bases of development. These are in line with the concept of human security which is one of the guiding principles of TICAD and are also advocated as aspiration 3 in Agenda 2063. Towards this end, we recognize the importance of the strengthening of the African Peer Review Mechanism (APRM) and the establishment of the African Human Security Index.
4.0 Nairobi Implementation Plan and way forward
4.1 Nairobi Implementation Plan
4.1.1 We reiterate the commitment to continue implementing measures under the Yokohama Action Plan 2013-2017. As we shed light on the recent emerging challenges and developments, we are also committed to promoting the measures, as described in Nairobi Implementation Plan, in support of the aforementioned priority areas under the three pillars; Promoting structural economic transformation through diversification and industrialization; Promoting resilient health systems for quality of life; and Promoting social stability for shared prosperity.
4.1.2 We reaffirm that the measures we take will be aligned with Agenda 2063 and its First Ten Year Implementation Plan, relevant NEPAD programmes, the 2030 Agenda for Sustainable Development as well as the Paris Agreement on climate change.
4.2 Follow-up mechanism
We affirm that effective implementation of the measures under the three pillars will call for an efficient follow-up mechanism, underpinned by robust monitoring and reporting systems. The Joint Secretariat, the Joint Monitoring Committee and the Follow-up Meetings have substantial roles to play in ensuring quality results within the timeframe of the partnership.
4.3 Way forward
4.3.1 Yokohama Action Plan 2013-2017 remains effective and will be valid until TICAD VII. Nairobi Implementation Plan will provide additional measures to address newly emerging priorities stipulated in Nairobi Declaration and form an integral part of extended Yokohama Action Plan. We are committed to steadily promote this process to effectively reflect Africa’s developmental needs based on overall ownership of its development agenda.
4.3.2 TICAD VII will be held in Japan in 2019. Follow-up meetings at ministerial and senior official -levels will be held before TICAD VII.
4.3.3 We express our sincere appreciation to H.E. Mr. Uhuru Kenyatta, President of the Republic of Kenya, for co-chairing and hosting TICAD VI in Nairobi. We further express our deep gratitude to the Government and the people of the Republic of Kenya for the warm hospitality extended to the participants of TICAD VI.
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No peace without freedom from want
At Kenya conference, FAO leader highlights role of agriculture in preventing conflict, enabling recovery
Food security and agriculture have an essential role to play in preventing conflicts and crises on the African continent, blunting their impacts and acting as engines for post-crisis recovery.
This was the central message of FAO Director-General José Graziano da Silva to African leaders and international development actors gathered in Nairobi, Kenya, today for one of the foremost summits on African development.
“Ending hunger and malnutrition, addressing humanitarian and protracted crises, preventing and resolving conflicts, and building peace are not separate tasks, but simply different facets of the same challenge,” Graziano da Silva said at a side-event on ‘Peace and Food Security’, hosted by FAO, at the sixth Tokyo International Conference on African Development (TICAD VI, 26-28 August 2016).
Graziano da Silva was among the high level delegations who attended in the opening ceremony of TICAD VI, this morning, launched by the President of the Republic of Kenya and the Prime Minister of Japan. The conference – which brings together policy makers, UN agencies and financial institutions, among others – aims to promote high-level policy dialogue between African leaders and their partners and mobilize support for African-owned development initiatives.
The link between conflict prevention and development is of particular importance in the region, which is host to nearly 60 percent of active UN Peacekeeping Missions. And whilst armed conflicts across Africa as a whole have decreased in recent years, this trend has been uneven across the continent.
“Much of FAO’s work aims at promoting sustainable development and building the resilience of rural populations,” Graziano da Silva said, giving concrete examples of countries where agricultural support helped secure the transition from wars to sustainable peace, including Angola and the Democratic Republic of the Congo.
“By supporting agriculture and rural development, we help create jobs, provide income and boost youth employment. This can help prevent distress migration and radicalization, as well as mitigate disputes over depleted resources,” he said.
No peace without freedom from want
In the Democratic Republic of Congo, FAO has worked with partners on the Disarmament, Demobilization and Reintegration (D-D-R) of former combatants by providing them with the agricultural skills, knowledge and supplies – an approach proven to lower the risk of ex-combatants rejoining militias once they are empowered with access to food and income-generating activities.
Graziano da Silva underscored the many opportunities to replicate this strategy in other post-conflict situations and stressed recent conversations with leaders in the Central African Republic aimed at putting agriculture at the center of the country’s recovery by providing food security and jobs for rural youth.
“Conflict prevention and resolution require secure and resilient conditions that meet the needs of rural people, both in terms of nutrition and livelihoods,” he said.
In two other examples, FAO and partners are working in Ethiopia, Kenya and Somalia to support the peaceful use of natural resources and prevent the spread of transboundary livestock diseases, while in the Sahel, pastoralism and the economic empowerment of rural women are central parts of the agency’s roadmap to increase resilience in the region.
Food security, stable livelihoods and peace are interdependent, Graziano da Silva argued, referring to the words of FAO’s founding fathers, who professed that “Progress toward freedom from want is essential to lasting peace.”
Launch of new nutrition initiative
In this context, FAO also welcomes the launch today at TICAD of the Initiative for Food and Nutrition Security in Africa (IFNA) to accelerate international efforts to alleviate hunger and malnutrition on the African continent.
Over the last 25 years, the proportion of Africans facing hunger decreased from 28 to 20 percent, despite a growing population – an achievement that can be largely attributed to a high level of commitment of the continent’s leaders to tackling the issue.
The new initiative, officially launched by the Deputy President of Kenya William Ruto and developed by the Japan International Cooperation Agency, aims to build on these achievements with inclusive, people-centered projects – projects that empower women and bring together the agriculture, health, education and private sectors to help build more resilient communities across Africa. This will be done with the collaboration of regional organizations including the New Partnership for Africa Development (NEPAD).
The initiative is also relevant in light of ongoing efforts to implement the recommendations coming out of the Second International Conference on Nutrition (ICN2) across Africa (Rome Declaration on Nutrition and Framework for Action), which will be boosted by IFNA. In this regard, FAO joins forces with the World Health Organization (WHO), the United Nations Children’s Rights & Emergency Relief Organization (UNICEF), the International Fund For Agricultural Development (IFAD) and other partners through the (ICN2) Steering Committee on Nutrition (SCN) for future action.
TICAD – which takes place every three years – is co-organized by the Government of Japan, the United Nations Office of the Special Advisor on Africa (UN-OSAA), the United Nations Development Programme (UNDP), African Union Commission (AUC) and the World Bank.
This year’s session marks the first time the conference takes place on African soil. FAO was enlisted by TICAD organizers to take the lead in organizing the conference’s third main theme: “Promoting social stability for shared prosperity.”
Japan, Africa teaming up to boost food security, nutrition
Opinion by José Graziano da Silva, Director-General of the FAO
Boosting agricultural productivity and food security in Africa will require collective efforts by African countries and their partners.
Japan already plays a significant role in boosting sustainable agricultural development on the continent. The country’s strong commitments, combined with the political will manifested by many African nations to eradicate hunger and malnutrition, will help to propel progress towards achieving zero hunger on the continent.
Sub-Saharan Africa represents the greatest food security challenge in the world today with the highest prevalence of undernourishment at almost 25 per cent, or almost one in every four people.
By 2050, the population in sub-Saharan Africa is expected to exceed two billion and even if food production grows as projected by about 170 per cent, this would still leave some 120 million people undernourished. Clearly, efforts to improve food security and malnutrition need to be stepped up.
Yet, climate change effects, such as higher temperatures and extreme weather events, will hamper food production in various regions. Countries acting alone cannot resolve these enormous challenges. Strong collaboration with other nations, international organisations, NGOs, civil society and the private sector will be key to find sustainable solutions.
Japan is an essential ally for the Food and Agriculture Organisation (FAO) in promoting rural development, food security and nutrition worldwide. The country is not only one of FAO’s major resource partner in Africa, it also provides skilled Japanese workers for various agricultural projects in the region.
Japan is also supporting FAO in building resilience in African countries, where threatening levels of food insecurity result not only from climatic hazards but also from ongoing internal conflicts. Civil unrest must come to an end to achieve food security and improving food security will in turn help build sustainable peace in Africa.
Japan and FAO believe that with a predominantly young and rural population and over 11 million youth expected to enter labour markets over the next decade – Africa’s agricultural sector should be a catalyst for inclusive growth and improved livelihoods in the region. Therefore, major efforts should focus on making agriculture attractive and profitable for young people.
Africa’s future depends very much on the development of its rural areas.
Strengthening the capacities of poor farmers by providing them access to modern technologies and best agricultural practices will enable them to increase their agricultural output and income, and contribute to rural economic growth.
In 2013, Japan committed to supporting African countries with $32 billion to boost agricultural production and productivity, especially for rice, and “empowering farmers as mainstream economic actors” including through the Coalition for African Rice Development (Card) initiative. Its aim is to double rice production in sub-Saharan Africa between 2008 and 2018, and disseminate the New Rice for Africa (Nerica) a high-yielding hybrid rice.
Another example of such co-operation is a closely related five-year $2.5 million project aimed at strengthening agricultural statistics in the Card countries.
Holding the Sixth Tokyo International Conference on African Development (TICAD VI) in Nairobi is strong proof of how determined Japan is to expand its partnership with African countries. For the first time the TICAD meeting is held in Africa.
The conference takes place at a very important moment – as 2016 marks the first year of the implementation of the 2030 Agenda for Sustainable Development, which recognises partnerships as a key mechanism towards international growth.
In this sense, TICAD VI provides an opportunity for Asian and African nations, as well as international stakeholders such as FAO, to work together towards Africa’s sustainable development. In addition, the Initiative for Food and Nutrition Security in Africa (IFNA) will be launched during the TICAD VI. IFNA is an ambitious initiative that aims to bring African governments together to swiftly implement food and nutrition security policies and programmes.
I would like to highlight Japan’s strong leadership in organising this important meeting together with the United Nations Development Programme, the World Bank and the African Union Commission, which will help to explore ways of leveraging the collaboration between Asian and African countries to end hunger once and for all.
I am convinced that this is the right moment for working harder than ever towards these objectives. FAO is committed to joining efforts for the success of TICAD VI, which ultimately must result in a more sustainable development for Africa and its people.
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Gender gap costs sub-Saharan Africa $US95 billion a year: new UNDP report
If development is not engendered, it is endangered
Gender inequality is costing sub-Saharan Africa on average $US95 billion a year, peaking at US$105 billion in 2014 – or six percent of the region’s GDP – jeopardizing the continent’s efforts for inclusive human development and economic growth, according to the Africa Human Development Report (AfHDR) 2016: Advancing Gender Equality and Women’s Empowerment in Africa, published by the United Nations Development Programme (UNDP).
“If gender gaps can be closed in labour markets, education, health, and other areas, then poverty and hunger eradication can be accelerated,” said UNDP Administrator Helen Clark at the launch on 28 August 2016, attended by Kenya’s President Uhuru Kenyatta at the Tokyo International Conference on African Development (TICAD) VI.
“Achieving gender equality and women’s empowerment is the right thing to do, and is a development imperative,” Helen Clark said.
The UNDP report analyses the political, economic and social drivers that hamper African women’s advancement and proposes policies and concrete actions to close the gender gap. These include addressing the contradiction between legal provisions and practice in gender laws; breaking down harmful social norms and transforming discriminatory institutional settings; and securing women’s economic, social and political participation.
The cost of gender inequality
Deeply-rooted structural obstacles such as unequal distribution of resources, power and wealth, combined with social institutions and norms that sustain inequality are holding African women, and the rest of the continent, back. The report estimates that a 1 percent increase in gender inequality reduces a country’s human development index by 0.75 percent.
The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living
While the continent is rapidly closing the gender gap in primary education enrolment, African women achieve only 87 percent of the human development outcomes of men, driven mainly by lower levels of female secondary attainment, lower female labor force participation and high maternal mortality.
The report states that while 61 percent of African women are working they still face economic exclusion as their jobs are underpaid and undervalued, and are mostly in the informal sector.
African women hold 66 percent of the all jobs in the non-agricultural informal sector and only make 70 cents for each dollar made by men. Only between 7 and 30 percent of all private firms have a female manager.
In a key finding, the report estimates that total annual economic losses due to gender inequality in the labour market have averaged US$95 billion per year since 2010 in sub-Saharan Africa and could be as high as US$105 billion, or 6 percent of the region’s GDP in 2014.
Social norms are a clear obstacle to African women’s progress, limiting the time women can spend in education and paid work, and access to economic and financial assets. For instance, African women still carry out 71 percent of water collecting translating to 40 billion hours a year, and are less likely to have bank accounts and to access credit.
African women’s health is also severely affected by harmful practices such as under-age marriage and sexual and physical violence, and high maternal mortality - the most at-risk women being those of childbearing age. According to the report, a 1 percentage point rise in adolescent birth rate increases the overall adult female mortality rate by about 1.1 percentage points.
“With existing gender disparities, achieving the Sustainable Development Goals and Africa’s Agenda 2063 would remain an aspiration, and not a reality,” said UNDP Africa Director Abdoulaye Mar Dieye. “Closing the gender gap would not only set Africa on a double-digit economic growth track, but would also significantly contribute to meeting its development goals.”
Pathways to gender equality and women’s empowerment
Addressing gender inequality requires an all-of-government and all-of-society approach, taking into account established linkages between women’s social wellbeing and economic opportunities for more productive lives.
The report proposes four strategic pathways to greater gender equality and women’s empowerment – adopting legal reforms, building national capacity to accelerate women’s involvement in decision-making, adopting multi-sectoral approaches in promoting gender equality and women’s empowerment, and accelerating women’s ownership of assets and management of resources.
The report further recommends six enabling actions to fast-track the achievement of gender equality and women’s empowerment, and by extension, the Sustainable Development Goals and Africa’s Agenda 2063:
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Using gender equality as an organising policy lens for all development planning and implementation to ensure that gender equality and women’s empowerment is a deliberate design feature.
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Directly tackling destructive social norms as African leaders can no longer abdicate from their responsibility to address harmful social norms in a straightforward and unambiguous manner.
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Planning and budget prioritisation for gender equality that foregoes short-term politically and economically expedient decision-making, and instead links immediate priorities to a long-term vision mapping out a more inclusive and empowering development trajectory.
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Ensuring adaptive national institutions to drive a strong, proactive and responsible social framework that develops policies, follows through implementation and readjusts in the face of shifting evidence and the changing needs of society.
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Giving value to data for improved decision-making and informed policy change and mid-course corrections. Data disaggregation beyond national-level is critical to gauge impact at regional and local-levels.
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Engaging in regional and South-South Cooperation in designing and implementing gender-focused policies and initiatives to share tools, strategies and experiences across sectors.
Achieving gender equality and women’s empowerment cannot be achieved without forging alliances among development actors – government, civil society, private sector and other development partners.
In this perspective the report proposes two major initiatives, the establishment of an African Women’s Investment Bank and the implementation of Gender Seal certification to promote gender equality standards in workplaces.
The report is clear that countries that invest more in gender equality and women’s empowerment are doing better on human development. To ensure Africa’s inclusive growth it is critical that half the continent’s population – girls and women – play transformative roles.
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TICAD: Record 73 deals signed in bid to boost Africa-Japan trade
A total of 73 deals have been signed at the sixth Tokyo International Conference on African Development (TICAD VI) in an unprecedented move to boost trade between Africa and Japan.
This follows closely the Asian economic giant’s pledge to commit $30 billion (Sh3 trillion) in public and private support for infrastructure development, education and healthcare expansion in Africa.
The package will be spread over three years from this year and includes $10 billion (Sh1 trillion) for infrastructure projects, to be executed through cooperation with the African Development Bank. Another $20 billion (Sh2 trillion) will be injected by private investors, and includes some of the MoUs signed yesterday.
The $30 billion is in addition to $32 billion (Sh3.2 trillion) that Japan pledged to Africa over a five-year period at the last Tokyo International Conference for African Development (TICAD) meeting in 2013. Kenya will get Sh10 billion grant for economic and social development.
According to President Uhuru Kenyatta, the grant will be crucial in enhancing the country’s food security, build sustainable agriculture and strengthen health systems.
In addition, Kenya and Japan signed an agreement to jointly develop Mombasa special economic zones.
Japan Prime Minister Shinzo Abe said he is committed to making Kenya an investment and cooperation model for Japan to the rest of Africa.
The two leaders also signed a document on promotion and protection of investment to spur Japanese investment in Kenya. Uhuru said the two leaders remain committed to concluding an agreement on avoidance of double taxation.
“I am confident that the presence of these CEOs who accompanied Prime Minister will be crucial in ensuring continued partnerships and translate into increased investment in Kenya and the region,” said the President.
He asked Japan to invest more in development of Lapsset corridor to help open Kenya to the rest of Africa. Abe said 67 per cent of the previous funds his country had pledged to Africa had already been put to use in various projects.
The MoU, signed yesterday, which will cover the sectors of infrastructure, education, health, agriculture, ICT and mining among others, is additional to measures taken by Japanese businesses as well as the governments of Japan and African countries and relevant organisations, to promote Japanese business activities in Africa.
The 73 MOUs involve 22 Japanese companies and universities with African countries.
Of the 73 MoUs signed at Ticad over the weekend, more than 20 of them involve Kenyan companies and State corporations across various sectors.
Speaking during the event at the Kenyatta International Convention Centre, President Kenyatta reiterated the importance of entrepreneurship as a key driver of economic growth, socio-economic transformation, job creation and social inclusion.
“I am also equally excited at the prospect of witnessing various MoUs emerging from Ticad VI,” said the President.
He urged the business community not to lose any opportunity to explore partnerships that would contribute to the efforts aimed at transforming economic productivity by reaching at least 50 per cent gross domestic product as a share of the manufacturing sector.
“The Government of Kenya is ready and willing to support partnerships that will ensure our youth not only get quality jobs but our farmers can earn more from their sweat and at least 90 per cent of their agricultural exports are processed locally,” said the President.
The Head of State also lauded the move to launch Japan-Africa Business Forum, saying it was a timely platform aimed at transforming the continent’s economies.
“We urge you to use Japan’s valuable experience and technical know-how to build an African private sector that is not only more dynamic but also effectively integrated into the global market,” he added.
Meanwhile, Kenya’s private sector yesterday hailed the successful sixth edition of Ticad as a new chapter of the country’s bilateral relations with the Asian giant.
“Japan is a strong global player and in the past our relationship has been somewhat distant but Nairobi’s hosting of the first Ticad has brought with it significant benefits to the Kenyan economy,” said Kenya Private Sector Alliance chief executive Carole Kariuki.
“Japan has made significant advancements in technology and we are looking to leverage on this strength because Kenya is increasingly a technology-driven economy and Japan’s expertise in this area comes in handy,” she added.
Kenyan software company Seven Seas Technology is one of the local firms that walked out of Ticad with a multi-million dollar deal after signing a partnership with Japanese car maker Toyota.
Seven Seas Technology CEO Mike Macharia confirmed that Toyota had bought into Seven Seas although he declined to give a value of the deal, pending an official release of a joint statement between the two parties.
“Toyota has put in a multi-million-dollar equity investment although at this time I cannot say the exact figure.
“This new capital will enable us to move into the Japanese market and benefit from knowledge exchange since Japan has a proven track record in technology for healthcare and security,” he explained.
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Kenya signs partnership to speed up intra-Africa trade
Kenya has signed an agreement with her three other counterparts to hasten the stalled talks on boosting intra-Africa trade.
On 27 August 2016 Kenya’s Foreign Affairs Cabinet Secretary Dr Amina Mohamed led her counterparts of South Africa, Nigeria and Egypt to pen down the agreement that should see ‘tangible’ progress before the October 2017 deadline. These are Dr Rob Davis (South Africa), Dr Okechukwu Enelamah (Nigeria) and Amb Amgad Ghaffar (Egypt).
The four leaders took advantage of the Tokyo International Conference for African Development (TICAD) to address the stalled talks on the Continental Free Trade Area (CFTA) that was President Uhuru Kenyatta’s proposal during the African Union summit held earlier in Kigali, Rwanda.
Establishment of the CFTA is meant to boost intra-Africa trade (which is currently very low at 12 per cent) by bringing together 54 nations with a Gross Domestic Product of Sh250 trillion (USD 2.5 trillion).
“The four countries represent the four economic blocks. Also, they are the most active countries in the discussions on CFTA hence the importance of them spearheading the talks,” said Amb Nelson Ndirangu Director Economic Affairs at Foreign Affairs ministry who noted that the talks have so far covered just ‘basic grounds.’
According to a joint communique of from the four leaders, four areas identified for corporation are investment policies, laws and regulations, ease of doing business, infrastructure development, industrial development, manufacturing(textiles, clothing and automobile), agriculture, and digital economy.
“We (the ministers) have noted of the worrying and uncertain global economic situation, acutely conscious of complex trade development challenges facing African economies... in particular the slow pace of the CFTA negotiations,” read the communique.
It added: “Following our meeting with Chief negotiators on August 25, we note that we have made significant progress both on the areas of corporation and institutional framework for our Quadrilateral Group’s efforts.”
The ministers pledged to consolidate their efforts in line with the World Trade Organization and Post Africa Growth and Opportunity Act(AGOA) in moving forward pragmatically with regard to corporation in addressing specific challenges facing Africa’s economic growth and development.
“This will encompass flexibility and mutual interest,” read the communique. The ministers further called on the G20 Summit to be held in China in September to decide on specific measures that will deliver on trade and development dividends: “... to restore high quality and sustained growth to the global economy.”
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African leaders agree to use Museveni’s paper on Africa’s problems as development guide
African leaders meeting in the Kenyan capital Nairobi, on Friday agreed to use President Museveni’s paper on “bottlenecks facing Africa’s development” as a blue print to drive the conversation on the continent’s problems.
The decision was reached at by the leaders meeting for the African Peer Review Mechanism (APRM) chaired by President Uhuru Kenyatta at the Intercontinental Hotel, on the sidelines of the sixth Tokyo International Conference on African Development (TICAD).
President Museveni told the meeting that he had arrived at the 10 bottlenecks after watching the development scene in Africa for 50 years. “I have picked some ideas which are responsible for our lagging behind. The problem seems not to be addressing all issues in a comprehensive way.”
The motion to adopt the paper and task the APRM secretariat to expand it into a blue-print for the continent was moved by South African President Jacob Zuma and was unanimously supported. The proposal had earlier been backed by Senegalese President Macky Sall of Senegal and Ellen Johnson Sirleaf of Liberia in their earlier presentations.
According to President Museveni, Africa’s first bottleneck is ideological disorientation, which had fanned tribal and sectarian conflicts.
“A lot of chaos in Africa is because of misidentification. We need to ask, is identity more important than interests? Ask, who buys what you produce, is it your tribes mate or religious mate?”
The second bottleneck, observed by Mr Museveni, is a weak state exemplified in a weak army, adding that it is a result of the first obstacle.
“When you want to build an army and you look for people from your tribe, you should ask, can a sectarian army command respect of a whole country? In such circumstances, when you get a small rebellion the army collapses. You then bring in the UN who are armed tourists.”
The President commended the international community for speaking about the third bottleneck; human resource underdevelopment. He, however, said the issue had been raised in isolation of the other bottlenecks.
Underdevelopment of infrastructure is the fourth bottleneck, said Mr Museveni. He said many development partners were disinterested in building Africa’s infrastructure especially electricity.
“They do not care about dams, roads and the railway. As a consequence, only South Africa and Libya under Gaddafi had high electricity consumption. Importantly, poor infrastructure causes very high costs of doing business. You can’t attract investments, how then do you eradicate poverty if people are not employed?” he asked.
Because of poor infrastructure, the next bottleneck is failure to industrialize, the President said. This, he added, had forced Africa into exporting raw materials and ultimately donating a lot of revenue to the West.
Citing the Ugandan example where a kilogram of unprocessed exported coffee goes for $1 while the processed coffee in the West fetches $14, President Museveni asserted that Africans were the real donors – and unfortunately were donating their jobs too.
“Colonialism cut Africa into small countries with small populations that are not developed enough to support production. Without a united market you can’t attract investments.”
He commended African leaders for trying to bridge this gap by creating regional blocs and integration hence a bigger market.
The last obstacle, President Museveni noted, was democracy but added that most of Africa had addressed this and it was prevailing across the continent.
The APRM was held ahead of TICAD summit which ended on Sunday.
25th APRM Forum – Communiqué
The 25th Summit of the Heads of State and Government Participating in the African Peer Review Mechanism [APR Forum] was held on 26 August 2016 in Nairobi, Kenya. H.E. Uhuru Kenyatta, President of the Republic of Kenya, Chairperson of the APR Forum, presided over the Summit.
In his remarks H.E Kenyatta said the presence of his peers at the Forum is proof of their commitment to the cause of improving Africa’s governance, and to the hunger that Africans feel for a leadership that truly represents their interests and their hopes.
"This generation of leaders must rise to that challenge of leadership in the continent. We must show ourselves worthy of the responsibilities that our people have chosen us to undertake,” he urged his peers.
President Uhuru further paid tribute to APRM CEO, Professor Eddy Maloka for the substantial progress he has achieved in revitalizing the mechanism.
“There are few Africans like Prof. Maloka who have shown such intense dedication to good governance on the continent, and fewer still who can match his experience or education. The APRM has been revitalized. For the first time since it was established, it now has a five-year strategic plan,” he remarked. The Plan has been adopted by the Forum.
Speaking at the Forum, the African Union Chairperson, H.E Nkosazana Zuma elaborated on the achievements of the APRM and noted that the Mechanism could be pivotal in monitoring the African Union Agenda 2063 across the Continent through the involvement of the APRM National Structures. She also called on all AU member states to join the Mechanism.
Chairpersons of the APR Panel of Eminent Persons, Dr. Mekideche also presented a Report on the activities of the Panel since the last Summit in January 2016, with a focus on the status of the Country Review Process, challenges encountered, recommendations on the way forward, as well as the two review reports – for Chad and Senegal – which will be presented at the January 2017 Summit.
“The Panel is pleased to report on the substantive work that it has achieved since the last Forum in Addis Ababa, Ethiopia. Not only have we completed two country review missions in the last six months, for Chad and Senegal. We have also undertaken a Consultative Mission to Kenya for the Country’s Second Generation Review where it was agreed that Kenya would launch a Country Review Mission in October 2016 to allow for the presentation of the Review Report in January 2017,” he said.
Tabled at the Forum was Mozambique 2nd Progress Report on the Implementation of the National Programme of Action (NPoA). The Country’s President H.E. Filipe Nyusi highlighted the achievements made in the areas of Democracy and Political Governance, Economic Governance and Management, Corporate Governance, and Socio-Economic Development.
“Mozambique successfully held both general and local government elections which were internationally acclaimed as free and fair. We have made progress in passing the laws that fight corruptions and have achieved sound economic growth since 2007,” said President Nyusi. In response to the progress report, Presidents in attendance commended the people of Mozambique for their achievements however cautioned that there is still room for the country to improve on their electoral reforms. The Forum further encouraged the Country to continue its efforts in fighting against HIV/AIDS, reducing youth unemployment and promoting access to land in favour of its rural population.
In addition, the Forum deliberated on a presentation by Uganda President H.E Yoweri Museveni which highlighted the 11 Bottlenecks facing Africa’s development. President Museveni urged Africans to put common interests over political identities, religion and tribe.
He said, “lack of infrastructure development, slow human resource development and fragmentation of the African markets by colonization are among the bottlenecks impeding the Continent’s development”; “(i) Ideological disorientation; (ii) Interference with the private sector; (iii) Under-developed infrastructure; (iv) Weak states, especially the Army, Police, etc.; (v) Fragmented markets, market access and expansion; (vi) Lack of industrialization and low value addition; (vii) Underdevelopment of human resources; (viii) Under-development of agriculture; (ix) Underdevelopment of the services sector; (x) Attack on democracy and governance; and (xi) Nonresponsive civil service are all factors that affect negatively on the continent’s development,” said the Ugandan President.
In concluding the Forum undertook the following decisions;
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A commitment that APRM member states pay contribution arrears within three years,
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Agreed that APRM member states’ annual contribution increase from the current 100,000 USD to 200,000 USD with effect from 2017.
These decisions are a demonstration of commitment to the mechanism. The Forum also agreed to the proposal to declare 2018 “The Year of Universal Accession to the APRM” to get all AU member states to join the mechanism. The following Heads of State and Government attended the 25th APR Forum Summit:
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H.E. Johnson SirLeaf, President of the Republic of Liberia;
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H.E. Mackay Sall, President of the Republic of Senegal;
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H.E. Filipe Nyusi, President of the Republic of Mozambique;
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H.E. Yoweri Museveni, President of the Republic of Uganda;
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H.E. Jacob Zuma, President of the Republic of South Africa.
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IMF Executive Board annual discussions on CEMAC countries’ common policies
On July 13, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the annual discussions on Common Policies and Challenges of Member Countries with the Central African Economic and Monetary Community (CEMAC).
CEMAC growth was subdued in 2015. It slowed to 1.6 percent, from 4.9 percent in 2014, because of reduced public investment and lower oil production. Growth is projected to be 1.9 percent in 2016, as oil production and investment remain sluggish. From 2017 onward, growth is expected to reach 3½ percent a year, as oil prices gradually recover, some one percentage point below the average growth level of the past decade of high oil prices. Growth of money and credit to the economy turned negative in 2015 for the first time in a decade, contributing to keeping inflation low. The regional fiscal and current account deficits grew to 6 and 9 percent of GDP in 2015, respectively, as oil export proceeds fell by 32 percent. Continued low oil prices and high public expenditure will contribute to maintaining both deficits at about 6 and 8 percent of GDP in 2016, respectively. The gradual recovery in oil prices and the expected moderate fiscal consolidation should narrow the regional fiscal and current account deficits to 3 percent by 2021. Reserves have declined. Banks appear to have weathered the economic downturn thus far.
Policies to counter the oil-price shock need to focus on fiscal consolidation and real-economy reforms. In the wake of the oil-price shock, monetary financing has been the primary response tool. Although the non-oil primary deficit dropped by 8 percentage points of GDP in 2015, this response has been insufficient to check the overall fiscal deficit. Fiscal policy coordination among members should be strengthened and fiscal discipline enforcement is needed. Realeconomy reforms, focusing on improving the business climate and boosting private investment, are also needed to preserve macroeconomic stability.
CEMAC medium-term prospects are challenging. A weaker-than-expected oil price recovery or a relapse in security conditions in the Lake Chad region could undermine macroeconomic stability and private investment. Lower growth in China could dampen commodity prices – especially oil, lower demand, and reduce financing. In these challenging times, stronger regional institutions are necessary for promoting regional integration and supporting regional economic growth.
Staff report on the common policies of Member Countries
CEMAC is buffeted by the oil-price shock. The outlook has deteriorated, as members continue to suffer from the shock. Regional and national authorities have yet to take appropriate measures to address the economic downturn, whilst continuing to face substantial capacity constraints. Although the banking sector has weathered the downturn so far, government payment delays could undermine its soundness. Risks are significant: a weaker-than-expected oil price recovery or deteriorating security conditions could jeopardize macroeconomic stability.
Policy recommendations
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Policy mix. The policy response to the oil revenue loss and increased security spending has been insufficient. It has led to a contraction in reserves – now below recommended levels. Fiscal adjustment and real-economy reforms, focusing on improving the business climate and boosting private investment, are needed to preserve macroeconomic stability. An incomplete policy response could jeopardize external sustainability.
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Monetary policy and safeguards reform. The BEAC’s accommodative monetary policy has contributed to the decline in reserves and delayed fiscal consolidation. Meanwhile, the authorities still need to strengthen weak monetary transmission channels. The BEAC’s Board of Directors has mandated to proceed with two important safeguards recommendations.
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Macrofinancial linkages and the financial sector. Important links between the public and the banking sectors require (i) the non-accumulation of arrears to ensure the stability of the banking system; and (ii) a strong microprudential framework to sustain macrofinancial stability. Progress has been made in implementing some of the 2015 FSAP recommendations.
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Regional integration and convergence framework. CEMAC institutions continue to face internal constraints, which undermine their capacity to support regional integration and growth. The newly approved convergence framework can help to manage revenue volatility. Plans for a medium-term savings rule would help CEMAC to build fiscal buffers to deal with future commodity shocks.
A community blighted by low oil prices
The security situation in the Central African Economic and Monetary Community (CEMAC) improved in 2015, but the economic situation deteriorated markedly. On the one hand, security threats from Boko Haram in the Lake Chad region were reduced through regional military cooperation, but they continue to place a heavy fiscal burden on Cameroon and Chad. Following presidential elections in February 2016, the civil strife in the Central African Republic (CAR) is abating. On the other hand, the oil-price shock took a toll on CEMAC’s five oil exporting members. Oil prices have declined by more than 55 percent since June 2014, and with oil representing more than three-quarters of regional exports and half of fiscal revenues (in 2014), most countries are facing budgetary pressures. Despite its resource wealth, CEMAC has been lagging behind peers in economic performance. CEMAC’s economic challenges are compounded by a timid regional cooperation.
Regional growth more than halved in 2015 and medium-term prospects are uncertain. Growth slowed to 1.6 percent, from 4.9 percent in 2014, because of reduced public investment and lower oil production. Growth is projected to be 1.9 percent in 2016, as oil production and investment remain sluggish. From 2017 onward, growth is expected to reach on average 3½ percent a year, as oil prices gradually recover. Growth of money and credit to the economy turned negative in 2015 for the first time in a decade, contributing to keeping inflation low.
The region’s “twin” deficits widened in 2015 and are projected to grow in 2016. The regional fiscal and current account deficits grew to 6 and 9 percent of GDP in 2015, respectively, as oil export proceeds fell by 33 percent. Continued low oil prices and high public expenditure will contribute to maintaining both deficits at about 6 percent and 8 percent of GDP in 2016, respectively. The gradual recovery in oil prices and the expected moderate fiscal consolidation should narrow the regional fiscal deficit to 2½ percent by 2021. Similarly, the current account is projected to improve with recovering exports and lower public imports.
Fiscal dominance has come to the fore. In the wake of the oil-price shock, monetary financing has been the primary response tool. Although the non-oil primary deficit dropped by 8 percentage points of GDP in 2015, this response has been insufficient to check the overall fiscal deficit. A major weakness in CEMAC is the lack of fiscal policy coordination among members and the absence of fiscal discipline enforcement. In spite of a decade of high oil prices and robust growth, most CEMAC countries have failed to diversify their economies and build sufficient buffers.
Banks’ exposure to the public sector is the main transmission channel of macrofinancial risks. With dwindling oil revenues, public sector bank deposits have shrunk. The increase in government payment delays and the scaling down of public investment programs could increase banks’ non-performing loans (NPLs), especially to the construction sector. In turn, higher NPLs could limit credit to the private sector and undermine non-oil GDP growth.
The medium-term outlook is fraught with risks. A weaker-than-expected oil price recovery or a relapse in security conditions could undermine macroeconomic stability and private investment. Lower growth in China could dampen commodity prices – especially oil, lower demand, and reduce financing. Previous IMF staff advice has generated limited traction.
Policy discussions: Managing the economic downturn
An External Position at Risk
CEMAC’s non-oil competitiveness is poor and the external position could weaken further in the near term. At end-2015, reserve coverage was 4.6 months of future imports and represented 52 percent of broad money. Despite the depreciation of the euro in 2014-15, both the nominal and real effective exchange rates (REERs) appreciated during the 12 months to April 2016, because of the inflation differential and CFA franc appreciation vis-à-vis the currencies of trade partners. According to model-based assessments, the REER appears to be moderately overvalued (by about 6 percent) with respect to the current account norms. In addition, large structural competitiveness challenges persist.
Staff expressed concerns about the significant fall in reserves. Between December 2014 and March 2016, international reserves contracted by 41 percent in CFA francs. By end-March 2016, reserve coverage dropped to 3.9 months of prospective imports, below what is considered adequate (5 months) for a resource-rich monetary union with a fixed exchange rate. Staff projects that, without policy adjustment, reserve coverage could shrink in 2016 to a decade low. Staff urged a stronger CEMAC-wide policy mix (e.g., fiscal retrenchment; end to monetary accommodation; and structural measures) to forestall this.
Staff reiterated its call for the repatriation of foreign assets and improved reserve management. In a context of falling foreign assets, within and outside CEMAC, member states and their agencies (e.g., national oil companies) should repatriate them to support the Community’s external viability. The BEAC has made efforts to improve the management and performance of its reserves to encourage member states to comply with regional repatriation regulations. However, the current outlook requires additional measures, such as those recommended by the 2015 Financial Sector Assessment Program (FSAP). These include: (i) the definition of the optimal level of reserves; (ii) a better reserve portfolio structure to meet new liquidity requirements; and (iii) a new method to manage member states’ deposits and ensure that foreign reserves are backed by longterm resources (Selected Issues Paper-SIP-1). Higher remuneration of reserves should increase incentives for foreign asset repatriation.
The BEAC needs to strengthen its balance sheet. To maintain the required proportion of liquid reserves, the BEAC sold 37 percent of its investment portfolio (at market value) in 2015. This resulted in a significant realized profit for the BEAC, about one third of which was distributed to member states as dividends. Given the continuing decline in reserves, the BEAC may be required to pursue similar operations in 2016. Staff recommended retaining the full amount of future sales to boost the BEAC’s balance sheet.
Authorities’ views
The authorities shared staff’s concerns about falling reserves. They had implemented reforms to enhance reserve management, promote reserve repatriation, and make reserves management more transparent, which also bolstered the BEAC’s balance sheet. The authorities are working on a solution to pool reserves without requiring member states to repatriate all their foreign currency holdings by creating BEAC correspondent accounts in major international public and private financial institutions. They concurred that governments and private companies, especially oil companies, should fully comply with reserve pooling requirements. They considered that, in the event of a dramatic fall in reserves, the French Treasury’s guarantee will protect the peg. To ensure compliance with their obligations vis-à-vis the French Treasury, they conducted regular asset sales to match their liquidity needs in foreign currencies.
A New Convergence Framework for Regional Stability
The economic downturn underscores the need to overhaul the regional convergence framework. In late 2015, the CEMAC Commission presented a revised framework, to enter into force on January 1, 2017. The new framework includes a number of innovative features, including (i) a new fiscal rule based on a three-year average overall budget deficit; (ii) a public deficit ceiling, reinforced with a debt break; (iii) a revised inflation criterion; and (iv) additional secondary criteria. The Commission is exploring options to include a budgetary savings mechanism to help build buffers for future commodity shocks.
Staff welcomed the adoption of the new framework as an important step for strengthening macroeconomic surveillance. Although the framework does not fully reflect staff's earlier advice, it nonetheless constitutes progress in restraining the pace of debt accumulation. Staff considered that because of the difficulties in monitoring certain criteria (e.g., non-accumulation of arrears), the new framework should be complemented by a strengthened monitoring mechanism for primary and secondary criteria, including a mandate for the Commission to validate the data submitted. This would require strong political support and adequate resources. Staff supported creating a fiscal savings mechanism.
Staff encouraged the authorities to enhance regional policy coordination and harmonization. One element would be the implementation of a structural budget-balance rule which requires, inter alia, comprehensive data, technical forecasting capacity, and the ability to analyze sector linkages and business cycles (SIP 3). Because these take time to develop, the shortterm priority should be meeting the new fiscal criterion. Implementing the six regional public finance management (PFM) directives would also enhance coordination (SIP 4). Similarly, CEMAC authorities should promote harmonized tax policies to reduce dependence on foreign trade in favor of broadbased domestic taxes. This is particularly important, as international trade negotiations will lower custom tariffs.
Authorities’ views
The CEMAC Commission indicated that the new framework will be brought to CEMAC Heads of State for endorsement. Although the new framework had already been adopted by the ministers of finance, its approval by the presidents would reinforce its legitimacy. The approval would also help the implementation of new mechanisms, such as the budgetary savings instrument. To strengthen monitoring, the Commission would enhance cooperation with the BEAC to share macroeconomic data. The Commission was making a determined effort working with national authorities to have the CEMAC PFM directives incorporated into national legislation. They expected significant progress by end-2017.
A Regional Financial Sector Showing Vulnerabilities
So far, the financial sector has been able to cope with the challenging economic environment, but troubled banks remain an issue.
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Banks appear generally profitable, even though the situation varies by country and type of institution. Most banks have a business model, which relies on service fees, and which has partially shielded them thus far from the downturn. However, because of increasing NPLs, some banks have already suffered a significant reduction in their interest revenues.
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Bank liquidity has declined because of the drop in government deposits, but remains broadly adequate. Excess liquidity of banks at the BEAC represented 12 percent of their balance sheet in January 2016 against 15 percent in September 2014. Liquid assets and interbank deposits, excluding statutory reserves, remained stable at 26 percent of total assets during the same period. With the recent decline in reserve requirement, bank liquidity should rise to close to 30 percent, ensuring that banks remain liquid.
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Bank solvency ratios have remained high and relatively unchanged. At end-2015, capital to riskweighted assets represented about 13 percent, in line with the findings of the last FSAP. The increase in NPLs from 11.9 percent of total loans in September 2014 to 12.6 percent in January 2016 has not undermined overall bank soundness so far, as shown by broadly unchanged solvency ratios. During the same period, banks’ adjusted net capital remained also unchanged, because of the increase in equity in the banking sector by nearly 8 percent. The majority of NPLs derives from “connected” lending and does not come from the downturn. Similarly, the NPLs in microfinance institutions (MFIs) increased modestly, from 13.3 percent of total loans in December 2014 to 14.0 percent in September 2015. However, the regional banking supervisor (COBAC) reports that NPLs could exceed 20 percent in some MFIs.
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Eight of fifty-two banks have negative equity and do not comply with the solvency norm. Total assets of these banks is less than 5 percent of total bank assets, but the inability of the national and regional authorities to close them remains an issue and sends the wrong signal to the financial sector.
Staff noted that banks appeared to have weathered the economic downturn thus far, but vulnerabilities were increasing. These stem partly from delayed government payments to the private sector, and specifically the construction sector, which is heavily indebted to domestic banks. For instance, in Equatorial Guinea, credit to the construction sector represented 57 percent of gross bank loans at end January 2016. Recent stress tests showed that macroeconomic risks had increased in three countries, compared to the findings of the last FSAP. Tests show that if the oil price shock further spreads in the real economies, bank solvency will deteriorate. To assess this risk, the COBAC should run additional stress tests for all member countries.
Staff emphasized the importance of the effectiveness of the microprudential framework to prevent the spreading of macrofinancial risks. Given the importance of direct and indirect links between the public and financial sectors, ongoing reforms of the microprudential framework are critical to ensure financial stability. Progress has been made following the 2015 FSAP recommendations, especially in the treatment of connected loans; cross-border supervision; and treatment of NPLs. Additional efforts are necessary to implement the remaining FSAP recommendations. Staff encouraged the COBAC to increase the solvency ratio for systematically important banks, and develop bank supervision on a consolidated basis. Staff supported the COBAC’s efforts to enhance its supervisory framework through an effective risk-based supervision, focusing on liquidity and foreign exchange risks.
Staff encouraged the BEAC to develop its macroprudential framework. The analytical tools and institutional capacities needed upgrading to deal with the current economic challenges. The BEAC had created a Financial Stability Committee (FSC) in 2012, but the Committee's first working meeting took place only in April 2015. The Committee’s analytical agenda is ambitious, but constrained by the lack of macrofinancial data. The current approach of “expert judgment” does not provide a detailed risk mapping, but is a critical step in the design of vulnerability indicators.
Staff noted the improvement in bank supervision, following the hiring of new staff. However, following FSAP recommendations, a number of additional measures should be implemented to align COBAC’s supervisory framework better with the specificities of CEMAC. Given the banks’ varying risk profiles, it would be advisable to implement the Basel Pillar II approach, to allow the COBAC to adjust capital requirements to banks’ risk profiles. To reflect the weakness of some guarantees or collaterals for loans, the COBAC should increase risk weights applied to these assets for the calculation of the solvency ratio, to reflect more accurately the associated risk. Finally, the BEAC and national authorities should agree on resolving troubled banks in a timely manner.
Staff welcomed progress in the supervision of MFIs. The COBAC launched e-Sesame, a data collection system to improve financial information. In addition, increased staffing at the COBAC’s microfinance department should allow closer monitoring and more frequent inspections. The COBAC plans to update prudential regulation to raise the minimum capital requirement for MFIs and restrict lending to non-members. Staff noted, however, that strengthening governance within MFIs requires a more effective judicial system and more resolute prosecution of fraud.
Staff advised promoting financial inclusion. The BEAC, working in tandem with national authorities, should facilitate small and medium-size enterprises’ (SMEs) and households’ access to credit. With the increase in credit risk of public and construction companies, banks are looking for new customers, particularly SMEs. However, the lack of financial transparency, accounting reliability, and governance problems of SMEs hinder credit growth. Staff noted that mobile banking had been growing rapidly because of recent changes to the legal framework for issuing electronic money. This development should be supported by appropriate regulation and enhanced supervision.
Authorities’ views
The authorities agreed with staff’s assessment of the financial sector. They concurred that banks were only moderately affected by the economic downturn, because of their business model. They noted that some banks had strengthened their equity position. Nonetheless, they remained vigilant and were following closely the situation of the banking sector and stood ready, if needed, to implement contingency plans, such as appointing interim administrators for problem banks. They emphasized that the recent increase in COBAC’s staffing (34 new executives) would enable closer supervision and more on-site visits to banks and MFIs.
The authorities concurred with staff’s assessment of macrofinancial linkages. They agreed that enhanced microprudential supervision should be a priority and that a proper macroprudential framework should be in place to support financial sector development. They were committed to strengthening regulations with transnational supervision on a consolidated basis; implementation of Basel II Pillar II; and enhanced cooperation among regional financial institutions through the FSC.
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Partners launch framework to accelerate universal health coverage in Africa
African Heads of State and partners mobilize around plans for Universal Health Coverage to achieve 2030 Sustainable Development Goals
On 26 August 2016 at the Sixth Tokyo International Conference on African Development (TICAD-VI), African heads of state and partners vowed to accelerate progress toward universal health coverage (UHC) in Africa. To help countries implement their health reforms, the World Bank and the Global Fund to Fight AIDS, TB and Malaria (Global Fund) committed to invest $24 billion in Africa over the next three to five years.
The announcement was made ahead of the two-day TICAD conference, which is Japan’s flagship program for African development. One of the focal points at this year’s conference is expanding UHC in Africa.
“African countries can become more competitive in the global economy by making several strategic investments, including investing more in their people, their most prized resource,” said Jim Yong Kim, President of the World Bank Group. “A critical part of this commitment is to accelerate progress on universal health coverage – ensuring that everyone, everywhere has the opportunity to live a healthy and productive life.”
The World Bank and the World Health Organization (WHO), together with the government of Japan, Japan International Cooperation Agency, the Global Fund, and the African Development Bank also launched UHC in Africa: A Framework for Action, which provides a big-picture view of UHC in the region and identifies key areas that will be critical to achieving better health outcomes, such as financing, service delivery, targeting vulnerable populations, mobilizing critical sectors and political leadership.
“At the G7 Ise-Shima Summit in May, bearing this TICAD in mind, I took initiative in leading the discussion on reinforcing the global health architecture, which will strengthen responses to public health emergencies, and on promoting UHC, which will also contribute to crisis preparedness,” said Shinzo Abe, Prime Minister of Japan. “‘UHC in Africa’ will present guidelines and concrete framework for action that will serve as references for achieving UHC under the ownership of respective countries, as well as by cooperation among the international society.”
The funding announcements by the World Bank and Global Fund are one of several steps in the years ahead toward UHC in Africa. To that end, the government of Japan will support the World Bank and WHO’s annual report to track UHC progress in Africa. The World Bank and WHO have agreed to hold in 2017 in Tokyo a high-level annual meeting on monitoring progress toward UHC in Africa.
Through its International Bank for Reconstruction and Development and International Development Association windows, the World Bank Group expects to contribute $15 billion in the next five years to investments that are critical to UHC, including through the Global Financing Facility, the Power of Nutrition, early childhood development, pandemic preparedness, targeting the poor, crisis preparedness and response, and leveraging the private sector. The commitment assumes a successful IDA 18 replenishment.
The Global Fund’s $9 billion commitment for 2017 through 2019 includes $6 billion of investments in programs that treat and prevent HIV, TB and malaria, and also includes $3 billion of investments in systems for health such as strengthened procurement systems and supply chains, improved data quality and data management systems, and strengthened human resources for health. The commitment assumes a $13 billion Global Fund replenishment, which launches in September 2016.
“Reducing and preventing HIV, TB and malaria is critically important to alleviate the burden on health systems, but in order to accelerate universal health coverage and all of the health SDGs, we also are actively investing to build resilient and sustainable systems for health,” said Mark Dybul, Executive Director of the Global Fund to Fight AIDS, Tuberculosis and Malaria.
Although the evidence is clear that investing in health pays dividends for countries, challenges remain in the delivery and financing of health care.
“In 2014, African countries spent about $126 billion of domestic funding for health, and WHO estimates that an additional $65 to $115 billion in domestic funding can be mobilised annually over the next ten years,” said Margaret Chan, Director-General of the World Health Organization. “WHO is working with countries in Africa to generate those funds and help them shape the policies that will put them to best use.”
The World Bank Group, government of Japan and private sector partners recently launched the Pandemic Emergency Financing Facility, an innovative, fast-disbursing global financing mechanism designed to protect the world against deadly pandemics, which will create the first-ever insurance market for pandemic risk. It also will promote greater global and national investments in preparing for future outbreaks and strengthening national health systems.
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tralac’s Daily News Selection
The selection: Friday, 26 August 2016
TICADVI Summit 27-28 August: conference website
Twitter updates: @TICAD6Nairobi, #TICADVI, #TICAD6, #TICAD6NAIROBI,
Today’s featured side event – Role of the private sector in Africa's economic transformation – will be live streamed.
The Japan Times is posting special updates: access here
Kenyan perspectives on TICAD: Trade, financing top Japan-Africa forum’s agenda (Business Daily): The Japan before Ticad is quite obscure. Just like other African states, Kenyan firms have struggled to gain a foothold of the market which would be an alternative outlet for cut flowers, tea, coffee, nuts, fish fillets, tobacco and sisal fibres. “There are substantial exports of cut flowers to Japan and the market has been growing over time but we can’t compare to the EU,” Dr Margate Muchui, chief executive at Fresh Produce Exporters and Association Kenya told the Business Daily. “Exports of fruits and vegetables has however not taken off due to stringent access requirements for the Japanese market, especially the requirement to fumigate produce which makes doing business costly.” [Kenya takes lion’s share of Japanese funding in region, Ambassador Solomon Karanja Maina: Toward a more dynamic Japan-Africa partnership]
Japanese perspectives on TICAD: Summit seeks expanded investment and development (Japan Times): Their wish lists are expected to be highlighted in the Nairobi Declaration, which is expected to be adopted on 28 August, the last day of the two-day conference. The document would include pandemic prevention measures and call for high-quality infrastructure, a necessary engine for African development, to differentiate its commitment from China. But at the same time, the declaration is expected to emphasize the industrialization of the African economies and counterterrorism measures, a major shift from the framework focused on official development assistance. [Unique chance for open dialogue on African issues, Japan’s smaller businesses the key to long-term support of Africa]
IFAD’s Kanayo F. Nwanze: Massive food importation harming Africa’s economies: The $35bn a year that Africa spends on importing food should be used to create local jobs in agriculture, according to the President of the UN’s International Fund for Agricultural Development (IFAD), Kanayo F. Nwanze. Addressing the sixth Tokyo International Conference on African Development in Nairobi today, Nwanze is expected to tell African leaders that the potential for prosperity on the continent is enormous, but investments need to be redirected to developing the agricultural sector. Although it has a quarter of the world’s arable land, Africa generates only 10% of global agricultural output. “If even a portion of the money used for food imports was spent on creating jobs in rural areas, not only would the world’s largest youth population see a viable future on the continent, but Africa would be able to feed itself,” he said.
Estifanos Afeworki, Ambassador of Eritrea: Transfer to heavy industry is critical to future expansion (Japan Times): Most of the existing industrial enterprises in sub-Saharan Africa are mostly small scale. The need to shift to heavy industrial scale is critical now. Therefore, meeting the demands for efficient infrastructure facilities is a key factor for the successful achievements of the African Development Agenda 2063. The clarion call of Japan and African cooperation in the sixth Tokyo International Conference on African Development (TICAD VI) being the flow of foreign direct investment, know-how and technology to the industrialization, health and social stability of our countries, it is imperative to express and underline the fundamental mutual interest of collaboration in these key areas with Japan in this important summit being held in Africa for the first time.
Africa-Singapore Business Forum: Africa is on the ascent and Singapore must ride this wave, says Tharman
At the opening of the Africa-Singapore Business Forum on Wednesday, Deputy Prime Minister Tharman Shanmugaratnam cautioned Asia and Africa – the world’s biggest sources of consumption growth over the next few decades – against echoing the type of anti-trade and anti-globalisation sentiment that’s being felt elsewhere. More than 60 Singapore companies, including water-solutions provider Hyflux and shipping firm Pacific International Lines, are operating across more than 50 African countries, and counting. The latest available figures show that bilateral trade between Singapore and Africa has grown at a compounded annual growth rate of 5.2% since 2005, reaching $11.5bn last year; as of end 2014, Singapore’s cumulative direct investments into Africa stood at $22.1 billion.
SABF update: Govt must improve private sector engagement - FSE&CC (Swazi Observer)
Federation of Swaziland Employers and Chamber of Commerce chief executive officer Bonisiwe Ntando, says although government involves the private sector when adopting policies, for now the engagement remains superficial. Ntando was responding to the issues raised during the ongoing second annual Southern African Business Forum Conference. She said for Swaziland specifically, the consultations were not that effective. “We have just set up a trade facilitation committee, whereby private sector participates in, but, it is a new committee and you can imagine how old SADC is, why was the private sector not involved all along? However, we hope that now as we have started on this new path, the consultations will be sustained.”
COMESA policy processes: updates
@mdbrauch: @comesa_lusaka experts have adopted a revised COMESA Common Investment Area agreement on 3rd day of the meeting (and) Revised CCIA agreement adopted today will strengthen investment law and policy in and for Africa
@tembo_dorothy: COMESA gender ministers adopt regional gender framework & guideline for CAADP
@comesa_lusaka: Malawi and Mauritius are the only two COMESA countries that have so far signed the COMESA Social Charter
SACU: The capabilities driving participation in global value chains (World Bank)
The remainder of this paper is structured as follows. First, using the framework outlined above, we investigate which capabilities matters most for participation in GVCs – overall and within the 14 sectors identified (the 10 main final assembly sectors plus 4 intermediate sectors). Then, we use the example of countries within the Southern African Customs Union to illustrate how capabilities of these countries compare to other regions more involved in GVCs. This analysis gives a sense of the sectors SACU countries might target to advance their participation in GVCs, and which capabilities they might need to build in order to do that. Additional analysis not undertaken in this paper could further establish sector targets and specific policies required. [The analysts: Vilas Pathikonda, Thomas Farole]
Africa’s 2015 remittances (AU)
In 2015, $66bn in official remittances were sent from overseas and through intra-African remittance corridors. The top sending countries in 2015 were the USA ($8,87bn), Saudi Arabia (8,36bn), France (6,72bn), UK (5,51bn), and Italy (3,36bn). Intra-Africa remittances constituted 20%, at $12,8bn, sent from Cameroon (2,15bn), Cote d’Ivoire (1,66bn), SA (1,06bn), Ghana (1bn), Nigeria (0.9bn). The top 10 receiving countries: Nigeria ($20,66bn), Egypt, Tunisia, Algeria, Ghana, Senegal, Kenya, Uganda, Mali, South Africa ($0,87bn). [African Institute for Remittances to work with key market players to lower the cost of sending money to and within Africa]
NEPAD Infrastructure Project Preparation Facility: update (AfDB)
The two-day seminar, held in Abidjan, was also attended by other AfDB Infrastructure Specialists in energy from field offices covering Zambia, Mozambique, Rwanda and Angola, and was aimed at defining modalities for improved delivery aligned to the new NEPAD-IPPF Strategic Business Plan covering the five-year period 2016-2020. Discussions at the retreat also focused on strengthening internal capacity of NEPAD-IPPF with new working clusters based on defined roles and value addition through enhanced collaboration and synergies to improve operational effectiveness, efficient delivery and enhanced interface with clients. The four clusters are Project Delivery; Financing and Partnerships; Portfolio Management; and Communications and Outreach. [Q&A with NEPAD-IPPF's Shem Simuyemba]
Logistics Africa 2016: Sub-Saharan Africa’s emerging logistics property sector (Knight Frank)
“As Sub-Saharan Africa undergoes a wave of modern commercial property development, the logistics sector is emerging as a focus for activity. Already some leading Middle Eastern developers have targeted the sector; Kuwaiti based Agility has ambitious plans to create a network of logistics hubs across Africa, while Dubai’s DP World has been granted a concession to develop and operate a new logistics centre in Kigali, Rwanda,” says Andrew Marshall, Senior Surveyor in Logistics, at Knight Frank Middle East. According to Knight Frank’s Logistics Africa 2016 report, there is rising demand for high quality logistics space from retailers and consumer goods manufacturers seeking to expand their African operations and improve distribution networks and supply chains. Highlights from the report include:
Zimbabwe: Stop the rot at border posts (The Herald)
For instance, on a recent trip to Musina by bus, I realised Statutory Instrument 64 of 2016 and other restrictions may leave the State counting the losses while officials at the border will be smiling all the way to the bank. Based on what I witnessed, SI64 seems to be failing to restrict all the identified goods but has successfully benefited Zimra officials and other departments at the border. When we left Roadport bus terminus, the conductor made an announcement in the bus that passengers were not allowed to bring blankets, furniture, sofas and other banned goods but then invited those who wanted to bring the same to see him. And on our return, the whole bus trailer was full of the same goods the conductor said were banned. Apparently while the goods were being loaded into the bus, an official inside was demanding R200 from each passenger claiming the money was meant for officials at the border on the Zimbabwean side to facilitate easy passage where they would not be meticulous in searching goods on the bus and to allow banned goods to go through.
Rwanda, DR Congo farmers agree deal to ease trade (New Times)
Rwandan agri-business traders can now penetrate the DR Congo market following the signing of bilateral trading agreement between Private Sector Federation (chamber of farmers) and Congolese Farmers-Concessioners Association for Development. The deal, which is aimed at formalising cross-border trade between two countries, was signed, yesterday, in Goma city in eastern DR Congo, on the second day of a three-day agri-business trade mission organised by PSF. According to the agreement, the two parties will cooperate in promoting cross-border trade by identifying and sharing market opportunities for agricultural products. It was also agreed that the two parties share expertise among the trade leadership as well as enable joint investment to enhance trade.
South Africa's agricultural exports decline in 2015 (pdf, Agbiz)
In 2015, South Africa's agricultural exports declined for the first time in 10 years, after a drier season. Africa remained South Africa's largest market, accounting for 45% of agricultural exports - which is 1% below the 5-year average share. The EU accounted for 27% of South Africa's agricultural exports in 2015, with Asia taking up 12%, and the Middle East 7%. The Americas and the rest of the world (ROW) accounted for 5%, of South Africa's agricultural exports, respectively.
SADC and EU Economic Partnership Agreement: presentation by Ms Niki Kruger (Chief Director: Trade Negotiations) to SA's Portfolio Committee on Trade and Industry (pdf, DTI)
Power Africa updates: USTDA accepting proposals for clean energy projects through 26 September (USTDA), New partnership arrangement with Japan (USAID)
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Trade, financing top Japan-Africa forum’s agenda
The close to 4,000 Japanese delegates attending the sixth session of Tokyo International Conference on African Development (TICAD VI) are on a mission to rewrite history.
The team led by Prime Minister Shinzo Abe has also thrust Kenya, the gateway to Africa, on the cusp of history as the first country to host a TICAD session outside Tokyo.
The Japan before TICAD is quite obscure. Just like other African states, Kenyan firms have struggled to gain a foothold of the market which would be an alternative outlet for cut flowers, tea, coffee, nuts, fish fillets, tobacco and sisal fibres.
“There are substantial exports of cut flowers to Japan and the market has been growing over time but we can’t compare to the EU,” Dr Margate Muchui, chief executive at Fresh Produce Exporters and Association Kenya told the Business Daily.
“Exports of fruits and vegetables has however not taken off due to stringent access requirements for the Japanese market, especially the requirement to fumigate produce which makes doing business costly.”
Analysts see other challenges beyond the difficult market access rules. They reckon that a Japanese, unlike a Chinese or Indian counterpart, still conjures up an image of a European-type patronising bureaucrat.
“Africa has traditionally regarded Japan as elitist and West-like, being an OECD (Organisation for Economic Co-operation and Development) member just like rich states of US and UK,” said University of Nairobi political Science scholar George Katete.
“China and India discovered the strategic importance of Kenya (and Africa) early enough. They have won hearts not only by providing cheaper products but also by their ‘no-string-attached’ loans.”
China and India share ‘developing country’ tag with most African states. India which was colonised by British has particularly been vocal about its common heritage with Kenya.
“Japan has maintained high quality of products that it sells in Africa but high price has locked it out of the mass market enjoyed by Indian and Chinese firms,” said Dr Katete.
Japanese investors are also unaware of Africa’s business potential. Two months ahead of Nairobi TICAD, Kenyans in the diaspora had to organise SMEs seminar in Nagoya, the largest city in the Chubu region of Japan in May.
The goal of the seminar, which attracted 130 participants, according Kenya’s Tokyo Embassy, was market Kenya’s (and Africa’s) business potential to Japanese SMEs.
Being the backbone of any country’s economy, involvement of SMEs would ensure that a critical mass attended the TICAD which enters its climax in Nairobi on Saturday.
In a 2012, paper titled ‘Comparative study on Asian approaches to Africa: an introductory reflection’ presented to the University of Miyazaki, scholar Takuo Iwata echoed these sentiments.
The paper traces Japan’s laidback role to the period before 1990s when unlike Asia and China, Japan maintained no formal policy on Africa.
During that period, Japan had limited political communication with Africa, cut its overseas development assistance (ODA) to bare minimum and its firms were less interested in the continent.
Nairobi TICAD hopes to build on the momentum created by the previous TICAD forums. While trade volumes with Kenya is still low (Sh92.25 billion) compared to China’s Sh329.29 billion and India’s Sh261.47 billion last year, Japan has over the four years of Ticad been creating its way into nearly every sphere of Africa’s economy.
The Sh3.2 trillion TICAD initiative – whose sixth session is being held in Nairobi will see Japan catch up with other Asian states in controlling Africa’s energy, environmental management, infrastructure, education, tourism and agriculture. “TICAD is a latter-day repackaging of Japan’s role in Africa. I see it as a marketing effort,” says Dr Katete.
“Japan appears to be appreciating strategic importance of Africa. Its top leadership appear to be telling us to also think of Japan – not just China and India – in our shift to East policy.”
Food value chains
A TICAD progress report prepared by Japanese foreign affairs ministry shows that Japan is already training smallholder farmers on commercial farming in Kenya and 19 other countries in Africa.
The campaign dubbed Smallholder Horticulture Empowerment Project (SHEP) has so far benefited 1,324 farmers of East African Community, Egypt, South Africa, Lesotho, Zimbabwe, Madagascar, Ethiopia and Sudan. Others are Malawi, Mozambique, Namibia, Nigeria, Cote d’Ivore, Niger, Burkina Faso, South Sudan and Senegal.
“Japan has assisted for doubling gross rice production, promoting income generation of African smallholder farmers including women and youths, and establishing food value chains which links production, processing and logistics,” the progress report states.
And to a conflict-ridden region, Japan’s fence-sitting days are over. TICAD has transformed the Asian nation into an active peacekeeper. The report shows that Japan has not only been conducting counter-piracy operations at the East African coast (Gulf of Aden) since 2009 but has also contributed immensely to peacekeeping efforts in Africa.
TICAD progress report shows that Japan has contributed Sh100 million to fight piracy off the coast of Somalia, provided technical assistance to the Djibouti Coast Guard and contributed Sh100 billion to support various peace initiatives in Africa between 2013 and March 2016.
From last September, Japan has stationed its engineers in Nairobi to train East African peace-keeping personnel on how to operate heavy equipment under its Sh4 billion African Rapid Deployment of Engineering Capabilities project.
TICAD V Progress Report 2013-2015
As of 2015, the implementation status of the TICAD V Yokohama Action Plan (2013-2017) is good. This report summarizes the progress from January 2013 to the end of December 2015 (the data of 2015 includes provisional figures and some crucial progress until March 2016). The details provided by respective implementing bodies will be uploaded on the MOFA website database.
This progress report was co-written by TICAD co-organizers, and for the first time includes efforts made by Africa as well as Japan and TICAD partners. It showcases cooperative efforts among TICAD partners, including Africa and Japan, to support the continent’s development. Collaboration and synergy should be further pursued among stakeholders, particularly through South-South and triangular cooperation for increased impact and efficiency.
The priority areas of TICAD V still remain valid and steady implementation of initiatives by all parties is vital for continued progress. Where possible, further collaborations and synergies should be sought among stakeholders to increase impact and efficiency, as well as to avoid overlap and duplication.
Overview of Japan’s Development Cooperation for Africa
At TICAD V 2013, Japan announced its assistance package for Africa to provide up to approximately JPY 3.2 trillion (equivalent to US$ 32 billion) by utilizing private and public means, including ODA of approximately JPY 1.4 trillion (equivalent to US$ 14 billion), in the next five years (2013-2017). The progress of the above financial commitments is as below;
In February, 2015, the Government of Japan revised Japan’s Official Development Assistance Charter. This new Development Assistance Charter elaborates on Japan’s assistance through joint efforts of the public and the private sector through processes such as TICAD, so that Africa’s remarkable growth in recent years based on expanding trade, investment and consumption will lead to further development for both Japan and Africa. It also states that Japan will take particular note of Africa’s initiatives toward regional development and integration at the sub-regional level.
Bearing in mind that some countries are still prone to conflict or are burdened with an accumulation of serious development challenges, Japan will continue to actively engage in assistance for peacebuilding and assistance to fragile states from the perspective of human security, providing necessary assistance with a view to establishing and consolidating peace and stability, and solving serious development challenges on the continent.
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EAC Partner States are knocking into shape Draft SPS Legal Framework and Measures
The EAC Partner States of Burundi, Kenya, Rwanda, Tanzania, and Uganda, are knocking into shape a draft EAC Sanitary and Phytosanitary (SPS) Legal Framework and Measures.
In a four-day regional stakeholders meeting held from 22nd to 25th August 2016 in Nairobi, Kenya, Partner States Experts from Ministries of Agriculture, Livestock and Fisheries, Bureau of Standards, Plant Health Inspectorates, and Animal Resources critically reviewed and provided comments to improve and enrich the draft EAC SPS legal framework and the measures.
The meeting was also attended by officials from the Eastern Africa Farmers Federation (EAFF), the Eastern Africa Grain Council (EAGC), USAID Regional Economic Integration Office, the USAID East Africa Trade and Investment Hub, and EAC Secretariat officials.
Addressing participants, the EAC Deputy Secretary General in charge of Productive and Social sectors, Hon. Jesca Eriyo pointed out that SPS is a subject of fundamental importance to the region and that SPS measures had become an increasingly important topic of debate in international trade due to increasing awareness on food safety concerns.
The Deputy Secretary General noted that many people in the Community were not yet aware of SPS measures and therefore the need for Partner States to take drastic measures to disseminate SPS information widely. She urged Partner States to “work harder in order to achieve greater levels of competitiveness through diversifying the export base, adding value and enhancing the degree of compliance to the measures and standards prescribed in the destination markets”.
Mr. Protase Echessah, the Senior Agricultural Trade Expert, USAID East Africa Trade and Investment Hub underscored the collaboration between Hub and the East African Community which seeks to increase the competitiveness of select regional agriculture value chains and facilitate investment and technology that drives trade growth intra-regionally and to global markets. It is under this context that the Hub is supporting EAC to develop a regulatory framework to operationalize the SPS Protocol.
The Nairobi meeting recommended that EAC Partner States to work with relevant institutions to broadly harness the capacity and competencies required to inform and address regulatory matters on SPS. The meeting also urged the EAC Secretariat to expedite the process of securing Observer Status at WTO, OIE and IPPC in order to enhance its participation and role in SPS issues at international level.
Partner States were also urged to share relevant legal and policy documents with the Secretariat to enrich both the draft Bill. The EAC Secretariat is to convene another meeting of experts to finalize the EAC SPS Bill for presentation to the next Sectoral Council on Agriculture and Food Security.
Background
Article 108 (c) of the EAC Treaty and Article 38 of the Protocol on the Establishment of the East African Community Customs Union provide for the Partner States to harmonize Sanitary and Phytosanitary (SPS) measures in order to facilitate trade within the Community and other trading partners.
These provisions call for the need of EAC Partner States to put in place an effective SPS regime in order to control animal and plant diseases as well as facilitate trade. The objectives of the EAC SPS Protocol focus on promotion of trade in food and agricultural commodities in the EAC, strengthening coordination and cooperation in sanitary and phtytosanitary measures among EAC Partner States and enhancing sanitary and phytosanitary status through science based approach in the bloc. The EAC SPS Protocol was adopted in 2013 and a strong foundation aimed at supporting implementation of the SPS Protocol had been laid. A total of six sets of SPS measures have been developed and finalized.
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Importing food is harming the continent, UN agency head to tell African leaders
The US$35 billion a year that Africa spends on importing food should be used to create local jobs in agriculture, according to Kanayo F. Nwanze, President of the UN’s International Fund for Agricultural Development (IFAD).
Addressing the sixth Tokyo International Conference on African Development (TICAD) in Nairobi tomorrow, Nwanze is expected to tell African leaders that the potential for prosperity on the continent is enormous, but investments need to be redirected to developing the agricultural sector.
Although it has a quarter of the world’s arable land, Africa generates only 10 per cent of global agricultural output.
“African leaders are failing their people by their weak investments in agricultural inputs and infrastructure, and their lack of policy support for the sector,” said Nwanze on the eve of his departure.
“If even a portion of the money used for food imports was spent on creating jobs in rural areas, not only would the world’s largest youth population see a viable future on the continent, but Africa would be able to feed itself,” he said.
Convened by Japan, the purpose of TICAD is to promote high-level policy dialogue between African leaders and partners, with a focus on African-led development. This is the first time that TICAD will be held on the African continent. It will run until 28 August.
Although Africa is the world’s second fastest growing economic region, more than 300 million Africans live below the poverty line. Most live in rural areas and depend on agriculture for their livelihoods. Unemployment rates are close to 40 per cent.
“Economic growth alone is not enough. If we want a continent with food security and social stability, we have to ensure that development focuses on people. They do not want handouts. They want economic opportunities,” said Nwanze.
“At TICAD this year, I hope we can go beyond talking about Africa’s potential and discuss what is practically needed for Africa’s people to seize that potential,” he added.
While at TICAD, Nwanze will also participate in the launch of Japan’s Initiative for Food and Nutrition Security in Africa which will establish a framework for African countries to collaborate to improve their nutrition status.
Japan is a founding member and a leading contributor to IFAD – a specialized United Nations agency and international financial institution that invests in agriculture and rural development in developing countries around the world.