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tralac’s Daily News Selection
The selection: Friday, 8 April 2016
AU-EU College to College meeting: communiqué
During the meeting, discussions touched upon the preparations of the next Africa-EU Summit, which is to take place in 2017 in Africa, and on cooperation between the two Commissions. Discussions were structured around the five (5) priority areas of the 2014-2017 Roadmap adopted at the Africa-EU Summit in Brussels, Belgium in 2014: (i) peace and security;(ii) democracy, good governance and human rights; (iii) human development; (iv) sustainable and inclusive development and growth and continental integration; (v) global and emerging issues.
Remarks by EU's Federica Mogherini (Europa)
The European Union is the biggest donor to Africa and that is quite self-evident. It is less evident – and I think it is our interest to highlight this - that the European Union is the biggest trade partner for the African continent. 28% of Africa’s total trade (imports plus exports) takes place with the European Union and it has increased by 50% - 50 not 15%, 50! - in recent years. Let me make, to finish, a proposal to work on restabilising our ministerial meetings - the EU-African Union Ministerial Meetings - because I believe that we deserve constant political exchanges as we have between Commissions also at the ministerial levels. I believe that the level and the importance of our partnership and the broad spectrum of the issues we have on the table in our daily work deserves this upgrade somehow to make our partnership even stronger. This is what our people both need.
Tanzania: 'EU: We haven’t suspended aid' (Daily News)
The European Union has not made any decision to suspend financial aid to Tanzania, stressing that it is not the objective of the politico-economic union of 28 member states to cut support for the African country’s progress. "We are not happy with what happened in Zanzibar. But as members of the EU, we have not reached a decision to suspend aid to Tanzania,” the Head of the EU Delegation in Tanzania, Ambassador Roeland van de Geer, told the ‘Daily News’ in an interview. According to Ambassador van de Geer, between 2014 and 2020 the EU has allocated a total of 620 million Euros (about 1,538trl/-) for financial support to Tanzania in a six-year cycle. “We are still in preparation and discussions of support for the coming 2016/2017 fiscal year out of the six-year allocation,” he explained.
Global trade slows down to a five-year low in 2015 (WTO/UNCTAD)
Today's trade news is shaped by a marked slowdown in 2015 world exports. According to UNCTAD/WTO estimates, measured in current US dollars, global merchandise exports plummeted by 13% in 2015. Services exports declined by 6%. Measured in current US dollars, global merchandise trade was recorded at 16.5 trillion in 2015. International services flows, accounting for 22% of total world trade*, stood at an estimated 4.8 trillion. Developing and transition economies accounted for some 44% of global exports. Least Developed Countries' (LDCs) share in the world market remained at a modest 1.5%.
SA trade minister opens WIPO conference with call for appropriate IP (IPW)
A two-day international conference on intellectual property and development opened today at the World Intellectual Property Organization with calls from speakers for the IP system to be applied by nations in ways appropriate to their economies, even if it means allowing copying – just as the biggest IP-holding nations did when they were developing years ago. The theme was set by the opening keynote speaker, South African Trade Minister Rob Davies. “Strengthening and extending IPR regimes and enforcement are strongly advanced by countries at the cutting edge of innovation globally,” Davies said in his remarks, a copy of which is available here. “One can understand that, for those countries, it is of strategic value to use IP protection as a mechanism to preserve the rent-generating and other advantages that arise from the technological capabilities built up by their firms.”
Mauritius, Mozambique, Seychelles partner to boost trade, regional integration (World Bank)
The Accelerated Program for Economic Integration (APEI) is an initiative of five countries and the financing approved today is part of a two-series to support the initiative. This first operation supports Mozambique, Mauritius and Seychelles while the second will go on to include Malawi and Zambia as well. The initiative is expected to facilitate trade across the region and has the potential to facilitate the emergence of regional supply chains in the continent. The APEI reform program consists of commitments that the five countries have made among themselves and is structured in four pillars: (i) remove barriers to trade in goods, (ii) promote trade in services, (iii) enhance measures to facilitate trade, and (iv) improve the business environment. The reform program consists of a set of specific reforms in need of either (a) multilateral coordination or (b) bilateral coordination; and (c) country specific reforms that are necessary to allow firms to benefit from new market opportunities that economic integration will bring. Section 3 describes the APEI in greater detail. [APEI project documentation]
Transport costs reforms in SADC: where are we and where are we going? (tralac)
Beyond Gauteng however lies the southern African region with its burgeoning markets and trade potential. Durban is not better positioned to service this market than rival SADC ports. To get goods from Durban, via Gauteng’s inland ports, into the African hinterland, it is necessary to navigate one of Africa’s most notorious border posts, Beit Bridge, between South Africa and Zimbabwe. This suggests that alternative logistics routes, terminating at ports like Walvis Bay, Lobito and Luanda, on southern Africa’s West coast, and Maputo, Beira, Nacala and Dar es Salaam (and possibly the Bagamoyo container port) on the east, have a window of opportunity. Some of the factors that affect costs – especially regulatory factors that increase costs, hassle and delays – on these corridors lie within the control of the national governments of SADC. [The author: David Christianson]
Rusumo bridge unites Tanzanians, Rwandans (Daily News)
Long distance drivers to all Great Lakes regions have all the reason to celebrate as President John Magufuli announced that only three checkpoints will operate from Dar es Salaam to Rusumo border and remove all others that were operating previously, saying the move aimed at easing congestion and delays in transportation of goods. Announcing the decision in the event commissioned jointly by Dr Magufuli and Rwanda President Paul Kagame, Dr Magufuli mentioned the remaining three checkpoints that will operate as Lusahunga, Singida and Vigwaza.
Africa's $30bn rail renaissance holds ticket for trade (Bloomberg)
Not all the projects will be built on time, if at all, especially with the commodity-price slump weighing on those designed to move raw materials from mines to ports. And with Chinese growth slowing, the nation’s central role in African infrastructure development may diminish. Countries including Kenya and Ethiopia are also borrowing heavily to fund projects. For some African governments, the tougher economic conditions are requiring more imagination for funding rail investments, GE’s Konditi said. “I’m seeing more interest in creative financing -- leasing -- and I’ve seen more interest in letting the private sector drive some of the maintenance and service of the rail companies,” he said. “This environment is actually helping people to see things more creatively, in a very modern way.”
15th IntermodaL Africa 2016 conference: update (NewsGhana)
Mr Richard Anamoo also averred that trade volumes are increasing astronomically with its attendant vessel sizes increases which have direct implications on the berthing facilities at the ports, saying that there was the need for the expansion of port facilities to be able to accommodate the increasing volumes of vessels so as to avoid the risk of becoming “feeder ports.” In line with this, he indicated that, the Ghana Ports and Harbours Authority has signed an agreement with the Meridian Ports Services for a concession to equip the Tema Harbour with new facilities and expand its capacity to enable it to accommodate more cargo. According to him, the project will be executed at a cost of $1.5bn within three years, with the capacity of Twenty Equivalent Unit in line with the GPHA’s master plan for the Tema Port. The multi-purpose facility will include a new 1.4-kilometre quay for four container berths with 16-metre draft and a 3.85 kilometres breakwater within a dredged port access channel, 19 metres deep and 250 metres wide to accommodate larger vessels.
WACSOF workshop: ECOWAS Community Strategic Framework (NewsGhana)
Nana Asantewaa Afadzinu, Executive Director of the West Africa Civil Society Institute (WACSI) said the Community Strategic Framework was the successor to the Regional Action Plan instituted from 2011 to 2015 which set out how to work to implement the ECOWAS’ vision 2020. She noted that the CSOs meeting was a more deliberate effort on the part of ECOWAS to get civil society inputs into the design of the framework. Participants will not only look at what had been done so far but how it can be made practical. She stated that while ECOWAS had excellent normative frameworks, such as the Conflict Prevention Framework, applying it to the average citizen, such as the trader who had to cross borders to purchase their wares, was a major problem.
South Africa: Bulk exports fall 11.7% year on year in March (Business Day)
Policy uncertainty and logistics constraints meant that SA lost out on the 2003 to 2008 commodity price boom with annual bulk exports increasing a mere 2.8 Mt between those two years. Since then there has been a marked turnaround due to better policy co-ordination between mining companies and state-owned Transnet, so that volumes have improved by 45% or 52.3 Mt between 2008 and 2015. [SA's ports regulator embarks on reform of tariff strategy (Business Day)]
Addressing informality in Egypt (AfDB)
A recent African Development Bank publication proposes solutions for addressing informality in Egypt taking into account its disparate definitions as well as the various stakeholders involved in the issue. The publication highlights that labour market dynamics in Egypt have been characterised by three major trends since 1990. The first trend includes rapid growth of the informal economy, which now employs over half of Egypt’s workers. The second trend is a sharp decline of the formal private sector up to 2004, when government policies directed at formalising informal sector enterprises resulted in some firms joining the formal economy. Finally the third trend is the slow expansion of the public sector – despite the exigencies of structural adjustment – until 2000, when the government declared a hiring freeze. [Extra support for exporters (Ahram)]
Global food prices edge up in March; cereal production outlook robust (UN)
World cereal production in 2016 is set to reach 2,521 million tonnes, just 0.2% below last year’s and the third-highest on record, the FAO said today. According to the FAO Food Price Index, overall food prices rose 1% in March on the month, as soaring sugar prices and continued increase in palm oil quotations more than offset plunging dairy product prices.
Drought relief, energy and food security the focus of AfDB visit to Southern Africa
Rethinking development cooperation for the SDGs: country-level perspectives and lessons (ECOSOC)
Following a day of fruitful discussions in workshops and informal meetings, the UN Development Cooperation Forum High-level Symposium officially opened in Brussels, with senior UN officials urging delegations to ensure such cooperation is ‘a better fit’ for implementing the 2030 Agenda, including for vulnerable countries. [Conference www: presentations, documentation]
Climate Change Action Plan (World Bank)
To help countries meet this challenge, the World Bank Group today adopted a new Climate Change Action Plan, which lays out concrete actions to help countries deliver on their NDCs and sets ambitious targets for 2020 in high-impact areas, including clean energy, green transport, climate-smart agriculture, and urban resilience, as well as in mobilizing the private sector to expand climate investments in developing countries. In the Africa Region, resilience, food security, adaptation, and energy access need to be significantly improved. Climate-related shocks such as droughts, floods, and storm surges are already severely affecting the region. Food security is already an important issue in many parts of Africa today, and climate impacts through droughts and yield changes will have significant consequences for food security in the future. In addition, indexes consistently find adaptation needs to be the highest in the Africa region. On the energy side, the region has the lowest energy access (Figure 6), with access to solid fuels estimated at about 20% of the population, much lower than in other regions. Furthermore, the region has the lowest carbon emissions per capita.
Zambia: Electricity cost of service study, determination of economic cost-based tariffs (AfDB)
How Denmark plans to improve trade relations with Kenya (Business Daily)
Economic slowdown puts the brakes on middle class growth in Latin America (LAC Equity Lab, World Bank)
Trade Policy Review: Saudi Arabia (WTO)
China supports India in solar dispute at WTO (Livemint)
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World Bank Group unveils new Climate Action Plan
Plan to help countries meet Paris COP21 pledges
The World Bank Group on 7 April 2016 announced plans to help developing countries add 30 gigawatts of renewable energy – enough to power 150 million homes – to the world’s energy capacity, bring early warning systems to 100 million people and develop climate-smart agriculture investment plans for at least 40 countries – all by 2020.
These are among a number of ambitious targets laid out in the World Bank Group’s new Climate Change Action Plan, approved today, which aims to accelerate efforts to tackle climate change over the next five years and help developing countries deliver on their national climate plans submitted for the historic climate agreement reached at COP21 in Paris in December last year.
The release of the Climate Change Action Plan comes just two weeks before world leaders officially sign the Paris Agreement in New York. As part of the Paris process, 140 countries working with the Bank Group lodged national climate plans, known as Nationally Determined Contributions, or NDCs.
“Following the Paris climate agreement, we must now take bold action to protect our planet for future generations,” said World Bank Group President Jim Yong Kim. “We are moving urgently to help countries make major transitions to increase sources of renewable energy, decrease high-carbon energy sources, develop green transport systems, and build sustainable, livable cities for growing urban populations. Developing countries want our help to implement their national climate plans, and we’ll do all we can to help them.”
To maximize impact, the Action Plan is focused on helping countries shape national policies and leverage private sector investment. IFC, a member of the World Bank Group, aims to expand its climate investments from the current $2.2 billion a year to a goal of $3.5 billion a year, and lead on leveraging an additional $13 billion a year in private sector financing by 2020. As well its own financing, the World Bank also intends to mobilize $25 billion in commercial financing for clean energy over the next five years. The Bank Group will also continue to deepen its work to help countries to put a price on carbon pollution to create incentives for public and private sector decision makers to make the right climate choices.
The Action Plan recognizes that climate change is a threat to efforts to end poverty, and that there is an increasing urgency to protect poor people and poor countries. As part of its response, the Bank Group plans to bring early warning systems to 100 million people across 15 developing countries, and help bring adaptive social protection – social safety nets that can quickly support people affected by a disaster or an economic shock – to an additional 50 million poor people by 2020. At the same time, the Bank Group will pilot a new approach in 15 cities that aims to boost urban resilience by integrating infrastructure, land use planning and disaster risk management.
“If we don’t act, climate change threatens to drive 100 million more people into poverty in the next 15 years,” said John Roome, Senior Director for Climate Change at the World Bank Group. “The Action Plan will allow us to help developing countries more quickly, and in the areas where support is most needed, such as disaster preparedness, social protection, and coastal protection.”
The Action Plan also lays out plans to quadruple funding over five years to make transport systems more resilient to climate change, as well as invest at least US$1 billion to promote energy efficiency and resilient building by 2020. IFC sees a large opportunity for promoting climate-smart urban infrastructure, and its EDGE Green Building Program aims to have a presence in 20 markets over the next 7 years. The World Bank Group will develop climate smart agricultural investment plans for at least 40 countries, design sustainable forest strategies for 50 countries by 2020 and promote climate-informed fisheries management.
The Bank Group will also help “green” the financial sector through a coordinated approach across banking, pensions and capital markets to implement changes needed nationally and globally. It will also create special teams to work with countries to generate a robust pipeline of bankable projects, with a focus on areas like rooftop solar and boosting the growth of distributed solar in Sub-Saharan Africa
The Action Plan aims to deliver on the Bank Group’s commitment – announced in October 2015 – to increase climate financing to potentially $29 billion annually by 2020, with the support of its members.
It also sets out a new approach to take the growing threat of climate change into account across the Bank Group’s operations. Climate risk screening – which is already applied to projects supported by IDA, the World Bank’s fund for the poorest countries – will be extended across other World Bank operations in early 2017.
World Bank Group sets new course to help countries meet urgent climate challenges
Climate change poses an enormous challenge to development.
By 2050, the world will have to feed 9 billion people, extend housing and services to 2 billion new urban residents, and provide universal access to affordable energy, and do so while bringing down global greenhouse gas emissions to a level that make a sustainable future possible. At the same time, floods, droughts, sea-level rise, threats to water and food security and the frequency of natural disasters will intensify, threatening to push 100 million more people into poverty in the next 15 years alone.
Countries are now moving with increasing urgency to develop more sustainable energy and transport systems, strengthen the resilience of their cities, and prepare people, public services and infrastructure for climate shocks to come. More than 180 countries submitted pledges on climate action – the Nationally Determined Contributions, or NDCs – in the run-up to the historic Paris Agreement at COP21 in December 2015.
To help countries meet this challenge, the World Bank Group today adopted a new Climate Change Action Plan, which lays out concrete actions to help countries deliver on their NDCs and sets ambitious targets for 2020 in high-impact areas, including clean energy, green transport, climate-smart agriculture, and urban resilience, as well as in mobilizing the private sector to expand climate investments in developing countries.
![Image](http://www.worldbank.org/content/dam/infographics/780xany/2016/apr/Climate-Action-Plan-Final-FS.png)
To maximize impact, the Action Plan focuses on transformational actions and policy changes that will make a major contribution to addressing climate change. Under the Plan, the World Bank plans to double its current contributions to global renewable energy capacity, aiming to add 30 gigawatts of capacity and to mobilize $25 billion in private financing for clean energy by 2020. The Bank Group will also quadruple funding for climate-resilient transport, integrate climate into urban planning through the Global Platform for Sustainable Cities, and boost assistance for sustainable forest and fisheries management.
To accelerate private sector investment, the World Bank Group will work with regulators, create ‘green’ banking champions and continue to promote development of the green bond market.
The International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused exclusively on the private sector in developing countries, aims to increase its climate investments from the current $2.2 billion a year to a goal of $3.5 billion a year, and will lead on leveraging an additional $13 billion a year in private sector financing by 2020. IFC will expand its climate investments in sectors including grid-connected renewable energy, green buildings, industrial/commercial energy efficiency, and climate-smart urban infrastructure. IFC will also continue to use innovative financial instruments and advice to grow its business in distributed renewable energy, off-grid energy access, and climate-smart agriculture. At the same time, IFC will continue to advise its clients on how to use resources like energy and water in a more cost-effective way with less environmental impact.
“The ingenuity and innovation of the private sector, along with government action, will be critical for transitioning to a climate-resilient and low-carbon global economy,” said Nena Stoiljkovic, Vice President of Global Client Services at IFC. “IFC will focus on increasing its climate-smart investments in developing countries and leveraging untapped sources of private capital for climate financing.”
The Action Plan recognizes the urgency of building resilience against climate shocks, including through natural disasters and impacts on farming and agricultural supply chains. Climate-smart agriculture investment plans will be developed for at least 40 countries, with 100 percent of agriculture lending to be climate-smart by 2020. Priority areas will include the use of climate resilient seeds, high-efficiency irrigation, livestock productivity, and risk management. The Bank Group also aims to bring early warning systems for natural disasters to 100 million people in 15 countries by 2020. Over the same time period, the Bank Group will work to extend social protection systems that can adapt to climate impacts to 50 million people.
“The key question is how to leverage the resources available to meet the ambitious goals set in Paris,” said John Roome, Senior Director for Climate Change at the World Bank Group. “With the Action Plan, we will be helping countries to integrate climate change into their national policies, planning and budgeting; and to mobilize financing and use it for maximum impact.”
Under the Action Plan, the Bank Group will consider the risks and opportunities created by climate change across its country partnership frameworks. Climate risk screening is already applied to projects supported by IDA, the World Bank’s fund for the poorest countries, and will be extended to other operations in early 2017.
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High-level UN forum on development cooperation paves way for ‘leaving no one behind’
Following a day of fruitful discussions in workshops and informal meetings, the United Nations Development Cooperation Forum (DCF) High-level Symposium officially opened on 7 April 2016 in Brussels, Belgium, with senior UN officials urging delegations to ensure such cooperation is ‘a better fit’ for implementing the 2030 Agenda, including for vulnerable countries.
The DCF is a core function of the UN Economic and Social Council (ECOSOC), and in his remarks, the body’s President, Oh Joon, underscored: “Now is the time for all countries to translate the global goals that we agreed upon through the 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda into concrete national strategies and actions.”
Under the title ‘Rethinking development cooperation for the Sustainable Development Goals: country-level perspectives and lessons,’ the Symposium is focusing the range of actors on how development cooperation can be made a better fit for achieving the Sustainable Development Goals (SDGs) particularly in least developed countries and other vulnerable contexts. Further, the forum looks at how best to adapt development cooperation institutions to the recently adopted 2030 Agenda.
Mr. Oh said said that the “biggest challenge facing developing countries in realizing the new Agenda lies in capacity gaps” and highlighted the need to develop tailored national SDGs, integrate policies, mobilize resources, and operationalize the commitments on the ground.
The bold vision of “leaving no one behind” means bigger expectation for international development cooperation to help bridge these gaps, in particular in least developed countries (LDCs) and other vulnerable contexts, he noted, adding that at a Special Meeting of ECOSOC on the issue of Inequality he had convened last week in New York, delegations had had very productive discussions on how to reduce inequality among and within countries to achieve sustainable development.
He said development cooperation can help tap the potential of all development actors by: localizing the SDGs and building institutional and human resources capacities; spurring innovation, technology development and knowledge sharing; and promoting private sector engagement for sustainable development impact; as well as strengthening multi-stakeholder approaches, including citizen-based monitoring.
In his remarks, Wu Hongbo, UN Under-Secretary-General for Economic and Social Affairs, whose Department co-organized the event with Belgium, said the 2030 Agenda demands new ways of working and a change of mind-set from all development cooperation actors. “It inspires us to look closely at the inter-linkages between sectors. It requires us to break down the silos that stop us from working together.”
The new UN sustainability framework also compels actors to understand better specific national and local situations, and tailor our actions accordingly. And, it emboldens actors to work through much broader partnerships that embrace all stakeholders – including the world’s most vulnerable people, he stressed.
“A renewed approach to development cooperation is key to the 2030 Agenda for Sustainable Development. It can be a powerful lever for integrated and effective approaches to SDG implementation at all levels,” said Mr. Wu.
Against the backdrop of the current global challenges and the recent terrorist attacks, participants underscored the distinctive role of international development cooperation. Mr. Wu made it clear that: “We are here – and we stand with you – in the wake of the heinous terrorists attacks against Brussels. We will not let terror win over humanity, solidarity and peace. Development cooperation is such a vital way we work together, to secure the foundations for peaceful, prosperous and inclusive societies. Our work must go on. Indeed, we must lift it to the next level.”
Alongside high-level UN officials, Her Majesty, Queen Mathilda of Belgium, who was appointed by the UN Secretary-General as one of the SDG Advocates, and the Deputy Prime Minister of Belgium, Alexander De Croo, addressed the multi-stakeholder forum, which brings together representatives of national and local governments, parliamentarians, civil society, international organizations and the private sector.
The symposium concludes tomorrow and serves as the final preparatory event for the high-level meeting of the Development Cooperation Forum to be convened at UN Headquarters in New York on 21-22 July 2016.
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Drought relief, energy and food security the focus of Bank visit to Southern Africa
AfDB Group President Akinwumi Adesina concludes Friday, a five-day visit to three Southern African countries – Mozambique, Malawi and South Africa – where he pledged support for the countries’ energy, agriculture and infrastructure sectors, among others.
On Friday, the Bank announced a relief package of US $549 million in support of 14 countries most affected by the ongoing drought in Eastern and Southern Africa.
AfDB President pledged to increase financial support to Mozambiqu
The President of the African Development Bank Group (AfDB), Akinwumi Adesina, on Monday, April 5, 2016 had a one-day visit in Maputo, Mozambique, where he reaffirmed the commitment of the Bank to continue to support the growing Mozambican economy.
Leading a team of senior Bank staff, Adesina had a joint meeting with the Minister of Economy and Finance and Governor of the Bank Group, Adriano Maleiane; Energy and Mineral Resources Minister, Pedro Couto; Minister of Agriculture and Food Security, Jose Pacheco; as well as the Governor of the Bank of Mozambique and AfDB Alternate Governor, Ernesto Gove; and the Chairman of the electricity utility company (EDM), Mateus Magala.
“We are in a process of revitalizing our economy and we focus on the following priority areas: agriculture, energy and infrastructure. We need a lot of investments and AfDB has a lot to give,” the Minister of Economy and Finance said.
The Bank’s “High 5s”, five priorities of development, respond to this request. “I’m very keen to tell you that we will increase the allocation of funds in the field of energy. We will give maximum support to Mozambique for the energy sector,” the AfDB President said.
The AfDB plans to create an energy sector fund of US $12 billion over the next five years; and further mobilize about US $50 billion from the private sector, to ensure universal access to electricity in Africa by 2025.
“The Bank also plans to establish transformative partnerships for agriculture with the common goal of feeding Africa,” Adesina added. With regard to infrastructure, he has encouraged the development of regional projects and transnational roads.
Adesina was also received by President Filipe Jacinto Nyusi. The Bank President applauded his efforts to increase the country’s economy and pledged to substantially increase the financial support of the Bank to the country, and to assist in the following areas: job creation for young people and the fight against floods and drought.
Since the beginning of its operations in Mozambique in 1977, the AfDB Group has contributed approximately US $2 billion for 95 operations. These funds were allocated essentially to the transport, energy, agriculture sectors in addition to general budget support.
The current portfolio of the AfDB in Mozambique consists of 19 projects both in the public and the private sectors totaling more than $600 million.
AfDB President Adesina pledges support to Malawi and urges sustained reforms
The President of the African Development Bank Group (AfDB), Akinwumi Adesina, on Tuesday, April 5, 2016 began a two-day visit in Blantyre, Malawi, where he has pledged to continue supporting Malawi’s efforts to diversify its economy, achieve sustainable growth and reduce poverty.
Leading a team of senior Bank staff, Akinwima Adesina was received by Malawi President Arthur Peter Mutharika and his Government.
“As African leaders, we recognize the role the Bank plays in our economies, particularly in breaking the circle of food insecurity, and in the development of infrastructure and the private sector. In Malawi, we try to find long-term solutions for food security and private sector development. We know that we can succeed with the support of institutions like the African Development Bank,” Mutharika declared.
The AfDB President assured him that the Bank remains committed to the long-standing partnership with a shared objective of improving the lives of Malawians through social and economic transformation.
“We are here because we want to fully support you to meet the challenges facing the country. The Bank will increase its support in energy, agriculture, infrastructure, regional integration,” Adesina said. “We need to transform agriculture in Malawi and get young people into agriculture,” he added.
Adesina also noted with concern two major challenges facing Malawi: the difficult macro-economic situation – manifested in high inflation and slow growth – which has been compounded by the severe food shortage arising from weather shocks. However he commended the Government for its tenacity in tackling the challenges under difficult circumstances and for the remarkable reform efforts and bringing the International Monetary Fund Extended Credit Facility programme back on track.
He announced an AfDB’s drought response package of US $35 million for Malawi, of which US $1 million will be put towards immediate assistance and US $7 million for fast response, with the remaining amount for projects to deal with food insecurity in Malawi.
The President encouraged the Malawi Government to sustain the reform effort, particularly in fiscal policy and public financial management to restore macroeconomic stability and instill private-sector confidence. He reaffirmed the Bank’s commitment to assist Malawi to build resilience and achieve sustainable development through support for irrigation and other key national and regional infrastructure developments in energy and transport that are also key for private sector development and unlocking Malawi’s large potential.
Since assuming the Presidency of the Bank, Akinwumi Adesina has spearheaded actions by the institution to drive inclusive and green growth for Africa in areas of high impact, building strategic partnerships and mobilizing resources to scale up initiatives and operations on the continent, sharply focusing its work on five top priorities, the “High 5s”: Light up and power Africa, Feed Africa, Integrate Africa, Industrialize Africa, and Improve the quality of life for the people of Africa.
President Adesina noted that in Malawi, like the rest of Africa, less than 20 percent of the population has access to electricity, adding that Africa is simply tired of being in the dark. Therefore the African Development Bank’s New Deal on Energy for Africa aims to accelerate access to energy by 2025 and plans to invest over US $12 billion in the energy sector. It hopes to leverage US $40-50 billion in the energy sector in the next five years.
This was the AfDB’s President first visit to Malawi since assuming office on September 1, 2015.
Since 1969, the AfDB has financed more than 100 operations in Malawi to the tune of over US $1.2 billion. Its current portfolio comprises a total commitment value of US $310 million, with the infrastructure sector, including transport, water and energy, accounting for 60% of total commitments.
AfDB Group announces US $549-million drought response package for Eastern and Southern Africa
African Development Bank (AfDB) Group President, Akinwumi Adesina, announced Friday a relief package of US $549 million in support of 14 countries most affected by the ongoing drought in Eastern and Southern Africa. The AfDB acknowledged the severe impact of the El Niño weather pattern that is associated with abnormally high temperatures and the worst drought the region has seen in decades, leaving almost 36 million people in need of food assistance.
The drought response package announced by the AfDB Group consists of US $5 million in emergency relief and US $361 million in short-to-long term support from various windows of the Bank’s financial instruments. This amount represents new financial resources. Also, the AfDB will put in place a mechanism that would ensure faster disbursements of funds in ongoing projects, which were designed to build the affected countries’ resilience to drought. This will make available an additional amount of US $183 million in 2016.
Six countries are severely impacted and require immediate assistance from the Bank’s emergency resources. These include Ethiopia, Somalia, Lesotho, Malawi, Mozambique and Swaziland. The Bank will provide to Mozambique US $1 million of emergency support in 2016 and a further US $14 million for a wider drought-related plan in 2017.
The AfDB Group President also noted that cycles of drought and floods are natural phenomena integral to tropical weather and climate systems. However, in recent years, droughts and floods have been occurring with increased severity, frequency and variability in many parts of the Africa. Currently, Eastern and Southern Africa are experiencing severe droughts that have disrupted crop and livestock production systems in about 14 countries. The increased frequency and severity of droughts is linked to global warming due to greenhouse gas emissions. Adesina also said that African agriculture is nearly 95 percent rain-fed – thus highly vulnerable to fluctuations in rainfall patterns.
Noting the urgency for this response, President Adesina emphasized that there will be greater flexibility in the use of AfDB’s financial instruments, speeding up disbursements.
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South African Trade Minister opens WIPO Conference with call for appropriate IP
A two-day international conference on intellectual property and development opened today at the World Intellectual Property Organization with calls from speakers for the IP system to be applied by nations in ways appropriate to their economies, even if it means allowing copying – just as the biggest IP-holding nations did when they were developing years ago. The theme was set by the opening keynote speaker, South African Trade Minister Rob Davies.
The WIPO International Conference on Intellectual Property and Development is taking place on 7-8 April.
“Strengthening and extending IPR regimes and enforcement are strongly advanced by countries at the cutting edge of innovation globally,” Davies said in his remarks. “One can understand that, for those countries, it is of strategic value to use IP protection as a mechanism to preserve the rent-generating and other advantages that arise from the technological capabilities built up by their firms.”
But, he said, “in the history of development and ‘catching up’, successful strategies always appear to have involved ‘emulation’ that requires measures that are targeted at acquiring knowledge in increasing returns activities. Furthermore, all successful catching-up episodes occurred under condition of weak IPR regimes that permitted easier knowledge acquisition and imitation. During the 19th Century, today’s advanced economies used the IP system and the flexibility it accorded in a judicious manner as they pursued their industrialization. This allowed those countries to strengthen their IP regimes at their own pace, and in support of overall progress in their economic development.”
He cited Switzerland and the United States, two of the world’s strongest IP proponents nowadays.
Davies then noted that a small number of countries have moved from developing to developed countries, and followed a “heterodox of policy measures” to do so, including a variety of IP policies. He cited Korea, Singapore, and now India.
He characterised the different sides of the ongoing arguments for and against patents as a promoter of innovation.
“There are arguments that patents are unlikely to foster innovation in developing countries at early stages of industrialization,” he said. “The evidence on the extent to which patent protection, which is of particular relevance in the context of industrial policies, contributes to encouraging innovation is, at best, inconclusive.”
“Proponents of stronger IPR regimes, by contrast, suggest that IPR protection fosters innovation in reforming countries,” he said. “They also argue that stronger IPR facilitates transfers of technology to reforming countries, increases foreign direct investment (FDI), and spurs industrial development.”
“While generalized conclusions can offer insightful guidance, it may not be applicable at all times to all countries,” said Davies. “If that is the case, it is vital that research is undertaken in a manner that context specific, taking into account the level of development of the country under consideration, with a clear focus on its industrial profile and capabilities.”
“What are we to make about these complex, varied, and sometimes divergent accounts of the historical, theoretical and empirical dimensions of the question of IPR and industrialization?” he asked.
He said he would summarize the answer as follows: “First, historically, different paths have been taken to economic development and the IPR protection provided. Second, IP protection has been strengthened and evolved in different countries over time. Third, there is no unambiguous evidence that stronger IPRs foster industrial development and countries may require different approaches and policies dependent on their level of industrial development.”
“The range of unanswered questions suggests the need for a cautious approach to reform of IPR,” he said.
Davies also highlighted the flexibilities found in the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
And as regards its national policy, he said, “South Africa has had a long history of IPR protection and, as signatories of the WTO, we have adopted and implemented all our obligations under the TRIPs Agreement. As we review our IP policy, we are seeking to ensure that appropriate balances are struck in providing protection for innovation and ensuring that benefits are shared in society. In particular, we are interested in ensuring that the IPR regime in South Africa supports our wider development objectives and underpins our efforts at industrial development objectives.”
He described South Africa’s involvement in efforts toward a Pan-African IP Office, and activity in the regional IP offices of Africa. He also detailed efforts and hopes with WIPO, concluding:
“In all these efforts, we would want to be in a position to continue to call on WIPO, through the Committee on Development and Intellectual Property (CDIP) and pursuant to its development agenda, to support us to craft IP policies that support our objectives for African industrialisation. We look forward to continued dialogue and to hearing the advice and learning from experts at this conference over the next two days.”
Keynote Address by Dr Rob Davies, Minister of Trade and Industry of South Africa
Geneva, 7 April 2016
It is an honour to address the WIPO International Conference on Intellectual Property and Development. This gathering takes place during a period when many developing countries are formulating or reviewing their intellectual property (IP) policies, and therefore offers a timely and important opportunity to reflect on how the IP system can best assist developing countries including least developed countries achieve their wider development objectives.
We applaud WIPO for taking this step in its continued efforts to implement the 45 recommendations of the WIPO Development Agenda.
Africa’s Industrial Development Imperatives
I want to start by situating my remarks on IP protection in a wider historical view that all countries that have succeeded in breaking out of poverty and underdevelopment – beginning with Venice in the middle ages, through Britain in the 18th and 19th century, to the Asian newly industrializing economies, and to China and India today – all of them without exception have done so by nurturing a cluster of industrial activities characterized by increased, rather than diminishing, returns.
Nurturing has involved the identification and targeting of appropriate value adding activities, the deployment of public and private resources to support innovation, entrepreneurship and infrastructure development as well as the judicious use of tariffs and other forms of protection.
This understanding has informed South Africa and indeed Africa’s recognition that its sustainable development will, in great measure,be dependent on pursuing structural transformation of its economies through industrialisation.
Let’s step back for a moment: Over the last decade or so, Sub-Saharan African countries have shown impressive economic growth, outpacing advanced economies. That growth rate has also been above the average for all emerging and developing economies and while only Asia has recorded higher growth rates, the differential has been narrowing.
Seven of the top ten fastest growing economies in the global economy are African and Africa now offers the highest return on investment of any region in the world economy. Africa’s abundant natural resources, the growing consumer power of Africa’s emerging middle class and favourable demographics offer enormous potential for sustainable economic growth and development across the continent.
While all this has been positive, and suggests prospects for future growth and development are much improved, Africa’s growth path has been based primarily on commodity exports, particularly to Asian countries, as well as by strong consumption based on the rise of middle class consumers. There is a now wideningconsensus among African government and business leaders that growth on this path will not be sustainable in the longer term and that, to place the continent on a firmer footing towards sustainable development, Africa will need to pursue structural transformation of its economic base and build a more diversified productive capacity through industrialisation. The recent dramatic decline in a range of commodity prices, many of which are the mainstay of African production for export, should only redouble our efforts at industrialisation an economic diversification.
South Africa’s Industrial Policy Action Plan
In South Africa, the Government has chosen a growth and development path that prioritises industrial upgrading in more labour intensive sectors to generate sustainable and decent employment. Upgrading South Africa’s industrial base in this way and encouraging the production and export of more sophisticated value added products, require purposeful intervention in the industrial economy aimed at achieving dynamic, competitive advantages.
Our National Industrial Policy Framework (NIPF) and Trade Policy and Strategic Framework (TPSF) depart from the view that deliberate policy interventions are needed to address impediments to economic diversification, and specific measures are considered on a sector-by-sector basis, and these are dictated by the needs and objectives of sectoral strategies.
Two dimensions of this process may be instructive for the remarks I will make later more directly on IPR and economic development. First, our sectoral work is grounded in a ‘self-discovery’ process of engagement between government, business and labour, through which we collectively identify the specific measures and programmes needed to advance industrial development.
Second, our approach to tariff policy is one in which we make no a priori presumption of the benefits or costs of maintaining either low or high tariffs. Instead, tariff setting is assessed on the evidence obtained at firm and sector levels through detailed investigations that consider the impact of proposed tariffs on, amongst other things, economic output and employment across the value chain.
In short, tariff setting is evidence-based and the product of intensive consultations between affected stakeholders. Of course, the upper limits for tariffs are set by the binding obligations South Africa has undertaken in the WTO and in bilateral trade agreements.
IPR and Economic Development
If the proposition that industrial development and structural transformation are necessary for sustainable development in many developing countries is correct, the question of whether and how IP protection can support these objectives becomes relevant.
Considerable work has been undertaken in the relationship between IPR and economic development, including excellent work under the aegis of WIPO. In our reading of this literature, it seems clear that the international community is far from reaching convergence on the question. Indeed, this field of work remains a site of contestation.
While few policymakers, commentators or academics deny the importance of IP protection and enforcement, the questions revolve around nature of the standards that should be implemented and enforced, and whether this changes over time as countries industrialize and develop.
Strengthening and extending IPR regimes and enforcement are strongly advanced by countries at the cutting edge of innovation globally. One can understand that, for those countries, it is of strategic value to use IP protection as a mechanism to preserve the rent-generating and other advantages that arise from the technological capabilities built up by their firms. In this sense, such an approach could welll be understood as a de facto industrial policy and there is an argument to be made that this may need to be balanced by appropriate diffusion policies in catching-up countries.
In any case, in the history of development and ‘catching up’, successful strategies always appear to have involved ‘emulation’ that requires measures that are targeted at acquiring knowledge in increasing returns activities. Furthermore, all successful catching-up episodes occurred under condition of weak IPR regimes that permitted easier knowledge acquisition and imitation. During the 19th Century, today’s advanced economies used the IP system and the flexibility it accorded in a judicious manner as they pursued their industrialization. This allowed those countries to strengthen their IP regimes at their own pace, and in support of overall progress in their economic development.
We may recall that Switzerland did not institute a national patent law until 1888. When the law was introduced, it was very narrow in scope and did not provide protection to chemical inventions. It is argued that this allowed domestic chemical industries to develop imitative capacity. Today, Switzerland boasts some of the most innovative and accomplished chemical and pharmaceutical industries in the world. Similarly, countries such as Germany, Switzerland, France and Japan only introduced pharmaceutical product patent protection in the 1960s.
Only a handful of countries have made the transition from “developing” to “developed”. If one looks at the performance of the “Asian Tigers”, it is clear that they relied on a heterodox of policy measures to achieve industrialisation. For example, Korea’ relied less on FDI and initially acquired most of its technology through trade, reverse engineering and technology licensing. When it became competitive, its own companies began to invest heavily in R&D to develop their own innovative technology.
Singapore followed a different model. Singapore has always had an open trade regime and depended very much on FDI for its technology. While generally working with market principles, the government was heavily involved in attracting the kind of foreign investment that it believed would bring cutting edge technology that could underpin wider economic development. The development story of Singapore may be characterised as one of moving quickly from cheap unskilled labour to a knowledge-based economy. The government continued to invest heavily in education, skills and, in time, research and development. It has now become an important regional hub for knowledge-based services.
More recently, we can see that India pursued a somewhat different path in so far as it has taken advantage of the transitional provisions in TRIPS to develop a globally competitive pharmaceutical industry. By so doing, India has been able to increase global output and competition, thereby enhancing economic welfare. In the process, the industry in that country has become increasingly innovative and has sought to make greater use of the patent system.
The essential point of drawing on these examples is simply to reiterate that countries have taken different paths in pursuing economic development and they have used IP protectionin different ways and at different times to support their development effort.
Some Theoretical and Empirical Questions
Opponents of strong IPR typically raise concerns that stronger IPR raises the costs of protected goods and reduces the accessibility of innovations. They often argue that a stronger IPR regime is costly including with respect to the fact that stronger patents confer a greater degree of monopoly power on the patent holder that are often foreign-based multinationals.
Opponents also contend that stronger IPR regimes can retard industrial development, as weak IPR can function as a kind of infant industry policy, allowing indigenous firms to learn from, absorb and experiment with foreign technology at low cost. In other words, establishing a strong IPR regime prematurely limits the diffusion of innovative technology more widely and by imposing high prices for patent-protected goods thereby lowering consumer welfare.
The role of patent protection in promoting innovation has also been controversial. There are arguments that patents are unlikely to foster innovation in developing countries at early stages of industrialization. The evidence on the extent to which patent protection, which is of particular relevance in the context of industrial policies, contributes to encouraging innovation is, at best, inconclusive. Some studies contend that other factors, notably ‘first mover’ advantages, are more decisive in promoting innovation.
Proponents of stronger IPR regimes, by contrast, suggest that IPR protection fosters innovation in reforming countries. They also argue that stronger IPR facilitates transfers of technology to reforming countries, increases foreign direct investment (FDI), and spurs industrial development. They point to the growing literature that shows a correlation between IPR reform and industrial development and argue that the concerns that a shift to stronger IPR would undermine industrial development are overstated.
As the policy debate unfolds, there nevertheless seems to be a wide acceptance that research on the topic must be extended and deepened if we are to have a better grasp of the complex relationship between IPR reform and FDI flows, technology transfer and industrialization. While generalized conclusions can offer insightful guidance, it may not be applicable at all times to all countries. If that is the case, it is vital that research is undertaken in a manner that context specific, taking into account the level of development of the country under consideration, with a clear focus on its industrial profile and capabilities.
In countries at an early stage of industrialization where technologically mature technologies may be embedded in equipment, strong IPR regimes may be unnecessary. As the manufacturing production of a country becomes more diversified and higher value added is sought (e.g. fine chemicals, electronic equipment and consumer goods) IPRs may growingly narrow down the freedom to operate in the absence of a license authorizing the use of the protected technologies and designs. Where countries begin to develop their own innovation through greater investment in R&D, the demand for stronger IPR protection is likely to grow in tandem.
What are we to make about these complex, varied, and sometimes divergent accounts of the historical, theoretical and empirical dimensions of the question of IPR and industrialization?
I would summarize the answer as follows: First, historically, different paths have been taken to economic development and the IPR protection provided. Second, IP protection has been strengthened and evolved in different countries over time. Third, there is no unambiguous evidence that stronger IPRs foster industrial development and countries may require different approaches and policies dependent on their level of industrial development.
The range of unanswered questions suggests the need for a cautious approach to reform of IPR. It also suggests the need to strengthen capacity to assess the costs and benefits of IPR reform in the specific contexts where the reform is being considered or undertaken. In other words, it should be evidence-based and tested in extensive consultations with affected sectors, industries and firms. In short, there are no simple answers.
At this stage I think it is appropriate to recall paragraph 7 of the African Group’s proposal for the establishment of a Development Agenda for WIPO in which it stated:
“IP is just one mechanism among many for bringing about development. It should be used to support and enhance the legitimate economic aspirations of all developing countries including LDCs, especially in the development of their productive forces, comprising of both human and natural resources. IP should therefore, be complementary and not detrimental to individual national efforts at development, by becoming a veritable tool for economic growth”.
TRIPS and Flexibilities
Having made all these points, it is also clear that as many developing countries pursue industrialization, they do so in the context of an international IP regime that is more constrained than it was in the 19th century. The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) establishes extensive standards of IP protection that are almost without exception legally binding on all WTO Members.
While developing countries are committed to implementing and enforcing these standards, it is also clear that the TRIPS Agreement contains flexibilities that can be exploited to craft a greater developmental role for IP protection in respect to industrialisation.
Patents are likely to impact technologically dynamic sectors where domestic value added is higher as compared to sectors where more mature technologies predominate. Therefore, as countries pursue industrialization, we need to explore how best patent regimes can be designed to expand the opportunities for access and diffusion of technology.
As noted, whether or not IPRs in fact generate net benefits or costs to any particular country will depend on its productive profile, its R&D infrastructure, and the extent to which policy space is preserved to adapt the IPRs regime to local conditions and needs. In that context, governments retain an important role in ensuring that patentability standards such as the requisite level of inventiveness are appropriate and rigorous in order to avoid the introduction of patents that unnecessarily stifle local innovation and production.
Compulsory licenses are another avenue of policy flexibility permitted under the TRIPS Agreement that may be used as an instrument to promote domestic production where voluntary licenses are not available on reasonable commercial terms. There are several examples around the world where compulsory licenses were issued and employed successfully to ease access to affordable medicines.
Developments in South Africa
In South Africa, our National Development Plan (NDP) calls for greater emphasis on innovation, improved productivity and more intensive pursuit of a knowledge economy. We regard the IP system as an important policy instrument in promoting innovation, technology transfer, research and development, industrial development and more broadly – economic growth.
South Africa has had a long history of IPR protection and, as signatories of the WTO, we have adopted and implemented all our obligations under the TRIPs Agreement. As we review our IP policy, we are seeking to ensure that appropriate balances are struck in providing protection for innovation and ensuring that benefits are shared in society. In particular, we are interested in ensuring that the IPR regime in South Africa supports our wider development objectives and underpins our efforts at industrial development objectives.
In doing this, we aim to harness the capabilities across the government and draw in expertise across society through a strengthened national consultative process. We have taken this approach in two recent initiatives.
First, following many delays, we have recently ratified the WTO Paragraph 6 mechanism that allows the issuance of compulsory licenses for export of medicines to countries that lack pharmaceutical manufacturing capacity. As part of the future work to give greater effect to this effort, we will engage with our regional partners to make effective use of the regional waiver contained in the Paragraph 6 mechanism to augment what are relatively small markets by harnessing economies of scale.
Second, we are now engaged in a process to strengthen the capacity of the Companies and Intellectual Property Commission (CIPC) so that it is able in due course to undertake substantive examination of patent applications. For reasons of allocation of scarce resources, South Africa has traditionally used the “depository” system in terms of which patent applications are examined to determine whether they meet the patentability criteria only if the patents are challenged in litigation. The work being done to capacitate our registry to conduct substantive examination is crucial if the patent system is to truly fulfil its intended purpose of effectively promoting innovation.
Towards an African Agenda for Intellectual Property Protection
As I move to make my concluding remarks, it is appropriate that we reference the work we are doing with our partners on the African continent. South Africa has been active at AU in working toward the establishment of a Pan African Intellectual Property Organization (PAIPO). Key objectives of PAIPO include:
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Encouraging a harmonization of IP systems;
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Establishing platforms for policy discussions on how IP systems can serve as a tool for economic, cultural, social and technological development of the continent.
In a region exclusively comprised of developing countries and least developed countries, PAIPO aims to pursue a pro-development and balanced approach to IPR protection.
Sub regional configurations on the African continent have done significant work on integrating IP into their developmental policy mix. The Common Market of East and Southern Africa (COMESA) has a comprehensive IP policy while the East African Community (EAC) and Economic Community of West African States (ECOWAS) have polices on IP and TRIPS flexibilities.
As for IP institutions, the African Regional Intellectual Property Organization (ARIPO) and Organisation Africaine de la Propriété Intellectuelle (OAPI) serve as registration offices for much of the continent and together with international partners, provide policy support. The key challenge for the African continent is to improve coordination of the different initiatives to promote efficient use of resources and ensure alignment in approaches to IP pursued by ARIPO and OAPI and sub-regional policies, informed by the African continent’s development objectives. Such collaboration will give rise to convergence of standards.
ARIPO and OAPI have recognised the need to align their approaches and have begun working toward integrating their functions into the broader AU vision on IP. South Africa will work with regional partners to facilitate increased coordination.
African countries have consistently strived for the promotion of IP regimes which are balanced and supportive of their public policy objectives. In recent years, there has been much debate over the extent to which the WIPO Development Agenda (DA) recommendations have been effectively implemented as well as reservations over the extent to which the development dimension has been mainstreamed in WIPO’s work. The implementation of some of these recommendations remains at best a work in progress, particularly when it comes to the delivery of technical assistance to poorer countries and the promotion of innovation and access to knowledge. Recommendation 1 of the WIPO DA underlines that “WIPO technical assistance shall be, inter alia, development-oriented, demand-driven and transparent, taking into account the priorities and the special needs of developing countries, especially LDCs, as well as the different levels of development of Member States.” Africa has also been a strong advocate for the conclusion of legally binding global norms for the protection of genetic resources, traditional knowledge and traditional cultural expressions against misappropriation particularly in the context of WIPO’s main body dealing with these issues, the IGC.
In all these efforts, we would want to be in a position to continue to call on WIPO, through the Committee on Development and Intellectual Property (CDIP) and pursuant to its development agenda, to support us to craft IP policies that support our objectives for African industrialisation. We look forward to continued dialogue and to hearing the advice and learning from experts at this conference over the next two days.
I wish us all a successful Conference and thank you for your attention.
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Africa makes great strides towards Zero Hunger, despite hurdles
Africa has made great strides in tackling hunger – achieving a 30 percent drop in the proportion of its people facing hunger over the 1990-2015 period – but climate change, conflict and social inequality continue to present major challenges in the continent’s quest for a future free from hunger and want, FAO Director-General José Graziano da Silva said on 7 April 2016.
While the overall proportion of Africans who are food insecure has dropped, there are “significant variations” in the numbers of food insecure can be seen from country to country, he noted.
“Africa’s economic performance remains robust with growth rates above the global average. However, vulnerability to climate change is high, post-harvest losses are considerable, natural resources are being depleted, and not everyone is benefiting from the proceeds of the current strong economic growth. Access to remunerative income, social protection systems and decent employment opportunities remain narrow for too many rural households,” FAO’s Director-General said.
He was speaking at the official opening of the FAO’s Regional Conference for Africa, taking place this week in Abidjan with the participation of the Prime Minister of Côte d’Ivoire, Daniel Kablan Duncan.
Graziano da Silva urged his listeners to continue to work together to harness the power of the food and agriculture sector as a catalyst for inclusive growth, poverty reduction and fighting hunger, saying: “In spite of the many hurdles along the way, today I urge you to look at how far we have come in the journey to end hunger in our lifetimes.”
The conference’s theme “Transforming African Agri-food systems for inclusive growth and shared prosperity” mirrors the vision of the African Union and its NEPAD Planning and Coordinating Agency to realise a renewed vision for Africa’s agriculture sector.
“This conference adds momentum to the push for a fundamental shift in the orientation of Africa’s agricultural and rural development towards transforming the lives of Africans under the 2014 Malabo Declaration and outlined in the Africa’s Agenda 2063,” the FAO Director-General said.
More than 300 people are participating in the event, including 51 African ministers of agriculture and related sectors, as well as technical experts and development specialists, representatives of regional organizations and institutions, members of civil society, and the private sector.
El Niño and other crisis pose challenges
Graziano da Silva highlighted climate change and conflict as two particularly pressing challenges for Africa.
The ongoing El Niño cycle is affecting large parts of the African continent, especially the southern sub-region as well as parts of East Africa, notably Ethiopia and Tanzania, and has taken a major tool on agriculture, he noted, while conflicts in the Central African Republic, Somalia, and South Sudan continue to have serious food insecurity repercussions.
FAO is working in all these hotspots, providing farmers with seeds, tools, and other support vital to maintaining and strengthening their ability to produce food and earn income.
“These crisis vividly remind us of the importance of scaling up resilience interventions targeting vulnerable populations whose livelihoods mainly depend on agriculture, livestock, fisheries forestry and other renewable natural resources,” according to Graziano da Silva.
He also underscored the importance of preventing future disease epidemics like Ebola, which impacted food security and people’s livelihoods in West Africa. FAO has recently launched a five-year programme in Africa to monitor and tackle emerging pandemic threats at their source in animals, working in 13 countries, he said.
Africans for Africa
Delivering on the 2025 Zero Hunger challenge as part of the Sustainable Development Goals (SDGs) will require the efforts of an alliance of partners, and “FAO stands ready to support Africa member states in the delivery of the SDGs in firm collaboration with the African Union, other regional institutions and humanitarian and development partners,” Graziano da Silva said.
In support of CAADP, FAO has participated in the formulation of 95 agriculture and food security investment projects in 40 countries in Africa, with financial support from partners such as the AfDB World Bank and IFAD, the agency’s Director-General pointed out.
And in 2012 FAO helped pioneer the innovative Africa Solidarity Trust Fund (ASTF), which mobilizes funds donated by African countries in support of food security projects in less-well off parts of the continent. So far, $34.5 million have been allocated to 15 programmes and projects in 36 different countries, boosting efforts to eradicate hunger.
He encouraged governments to continue to resource the fund, which is working to transforming African agriculture and make it an engine for shared growth and prosperity.
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Mauritius, Mozambique, and Seychelles Partner to Boost Trade and Regional Integration
The World Bank Board of Executive Directors on 7 April 2016 approved a total of US$29.9 million for Mauritius, Mozambique and Seychelles to support their efforts to collaborate and create regional reforms that will improve the trading environment within Africa.
“The above countries recognize the perverse effects of barriers to trade, and they’ve agreed to collaborate in the implementation of reforms aimed at removing those barriers,” said Mark Lundell, World Bank Country Director for Mozambique, Mauritius and Seychelles. “This initiative is built on an increasing body of knowledge on the barriers that continue to restrict trade in goods and services in Africa and the economic benefits of deeper economic integration between African countries.”
The International Development Association (IDA)* credit approved today will support the Accelerated Program for Economic Integration (APEI) that will help to improve the policy environment for trade in APEI countries. The program will focus on removing barriers to trade, promoting trade in services, and boosting resources to facilitate trade.
“This innovative project supports the countries in jointly removing barriers to trade which impact heavily on poor people,” said Anabel Gonzalez, Senior Director for World Bank Group Trade and Competitiveness Global Practice. “The more rapid economic integration that this partnership between Mozambique, Mauritius, and Seychelles seeks to achieve will open up new regional markets, improve competitiveness and create jobs.”
Reducing non-tariff barriers that stifle regional markets in food products will increase incentives for production and increase food security in the region. Opening up regional trade in services in areas such as transport is expected to increase competition and drive down transport prices. Increased risk management at borders, and stronger coordination among border agencies will reduce dwell time, and hence costs at borders. Improved access to trade information through trade portals will reduce the scope for rent seeking and corruption related to trade which impinge particularly heavily on small traders, many of whom are women. Finally, reducing the costs to import inputs and export final goods will make companies more productive and competitive. It will increase market size for operators, allowing companies to benefit from economies of scale, and generate new opportunities for investment.
The APEI is an initiative of five countries and the financing approved today is part of a two-series to support the initiative. This first operation supports Mozambique, Mauritius and Seychelles while the second will go on to include Malawi and Zambia as well. The initiative is expected to facilitate trade across the region and has the potential to facilitate the emergence of regional supply chains in the continent.
“This initiative supports African countries’ growing realization of the need to improve regional trade, which remains extremely fragmented in the continent,” reminded Ahmadou M. Ndiaye, World Bank Director for Regional Integration. “For example, completing border compliance procedures takes an exporter in the region 108 hours and $542 on average, compared with a global average of 64 hours and $389. This reminds us of the need to press ahead with trade reforms as supported by our own World Bank regional strategy for Africa.”
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about $19 billion over the last three years, with about 50 percent going to Africa.
tralac’s Daily News Selection
The selection: Thursday, 7 April 2016
tralac’s Annual Conference started today in Swakopmund: all the downloads
The EU-AU College-to-College meeting is being held today in Addis: a commentary by Jean-Claude Juncker, Nkosazana Dlamini-Zuma 'EU–Africa: a common future'
Tomorrow in Gaborone: SADC's candidate for AUC Chairperson, Dr Pelonomi Venson-Motoi, will detail her candidacy
The G20 launches Global Platform on Inclusive Business
Richard Sezibera: 'Integration is not the work of an individual; it needs joint action' (The EastAfrican)
Any challenges?: The only strategic threat I see is the lack of focus or a narrow focus on nationalistic agendas. Domestication of decisions made at the regional level is sometimes slow. This has delayed the full implementation of the Common Market Protocol. But as the integration agenda deepens, the EAC will have to design mechanisms for faster, cost-effective decision making, pool partner states’ sovereignty into central entities with the capacity to drive the agenda, and agree on a sustainable financing mechanism.
Valentine Rugwabiza: 'EAC One Network Area has potential to transform Africa' (The EastAfrican)
Introduced in October 2014, the One Network Area aims to harmonise tariffs on mobile voice calls, SMS and data transmission within the EAC. Today, roaming charges between Rwanda, Kenya and Uganda have been removed, making all mobile calls between the three countries local. This has led to a minimum 400% increase in the volume of calls — a direct benefit to EAC citizens and African businesses operating across the region’s borders. Previously, making calls across the EAC was more expensive than calling Europe, America or Asia. The second phase of the ONA initiative is underway, with telecom operators revising SMS and data charges downwards. Rwanda began this process in August 2015, and the idea is to have a truly integrated regional bloc with all mobile telephony barriers removed. [The author is Rwanda’s Minister for East African Community]
Tanzania: Govt to double development spending, cut aid dependence (IPPMedia)
The Minister for Finance and Planning, Philip Mpango, yesterday outlined government plans to spend a total of 29.539 trillion/- in its coming annual budget, of which 11.82trn/- will be allocated to development projects - an unprecedented 40.02% of the total budget. Up to 75% of the funds to be set aside for development expenditure will be financed by domestic sources, thanks to a marked improvement in the government’s tax collection efforts through the Tanzania Revenue Authority, plus a raft of ongoing public cost-cutting measures. [World Bank expert faults Tanzania exports terrain]
Madagascar: the use of detailed statistical data in customs reform (World Bank)
Using original customs data, this paper aims to identify, in Madagascar, some high-risk products and high-risk operators (importers and brokers). The proposed method is complementary to risk analysis methods based on compliance. A two-step procedure is adopted. Based on discrepancies in trade statistics (mirror statistics), the paper presents products or sectors in which customs fraud is deemed to be significant. A quantification exercise of customs losses is provided. Then, through the use of highly disaggregated customs data, high-risk operators (importers and brokers) are identified. Despite the fact the methodology is straightforward, to our knowledge there is hardly any paper using this approach (at the importer/broker level) due to the fact that it is usually difficult to get access to such information.
The paper demonstrates how useful such detailed customs data can be and should convince the Head of Customs and/or Ministers of Finance to give access to them to researchers, since they can be used for an operational use. For researchers, it enables to identify some fraud techniques and collusive practices. The use of export data provided by exporting countries allows us to compute for each sector/product the mirror gap. The mirror gap is, for each product/sector, defined as the difference between export X to Madagascar reported by the exporting country and import M from the exporting country as reported by Madagascar customs. Export data are downloaded via the United Nations platform COMTRADE. [The authors: Cyril Romain Chalendard, Gael Raballand, Antsa Rakotoarisoa] [Madagascar: Economic management reform support programme appraisal report (AfDB)]
Zimbabwe to protect local industry (Financial Gazette)
Zimbabwe's Finance Minister, Patrick Chinamasa, says government will protect critical industrial sectors from cheap imports, as the country struggles to stem de-industrialisation, which has undermined the economy and worsened a liquidity crunch. Speaking at a conference for on procurement organised by Buy Zimbabwe a day after Tata sought government protection in London after running into problems with imports, Chinamasa said industries with the potential to expand into the region would be protected from foreign competition. He, however, said local companies had to demonstrate their capacity to produce fairly priced, high quality goods before approaching government for protection. [EALA lawmakers challenge Rwandans on competitiveness (New Times)]
Ethiopian parliament ratifies bill to join regional insurance agency
The Ethiopian national parliament on Wednesday ratified a draft bill allowing Ethiopia to join the African Trade Insurance Agency. The African Development Bank provided a $7.5m loan for Ethiopia to join ATIA and to buy a share in the agency. With the stated amount, Ethiopia can buy 75 shares and become a shareholder in ATIA. Benin, Burundi, DRC, Kenya, Madagascar, Malawi, Rwanda, Tanzania, Uganda and Zambia are shareholder in ATIA. ATI was launched in 2001 with the financial and technical support of the World Bank and the backing of seven African countries.
CEMAC: public financial management reforms (IMF)
The event, 4-6 April, took stock of public financial management reforms in the CEMAC countries since the adoption five years ago of regional directives that aim at modernizing and improving the management of public finance and strengthening the regional integration process. The IMF, in close coordination with the above-mentioned development partners, has provided extensive technical assistance to support the directives’ drafting and implementation, assisted by the generous support of Japan. Despite a wide diversity of national contexts and capacity level, significant results have been achieved at the country level. However, important challenges remain to be addressed.
West Africa: update on regional programme to harmonize and modernize living conditions surveys (World Bank)
Uganda: IMF review mission (IMF)
The mission welcomes the 2016/17 budget currently before parliament, which envisages a continued scaling-up of infrastructure investment while boosting domestic revenue by 0.5 percent of GDP, in line with the objective to raise Uganda’s revenue performance to levels observed in regional and other peers. The mission encourages the authorities to continue building capacity and controls to manage large public investment projects.
Mike Muller: 'Why water footprinting should be used with caution as a regulation tool' (IOL)
Southern African countries illustrate the complexities. They import more virtual water in food that has been produced elsewhere than they export. The region buys water-intensive cereals like rice from places like Thailand. Then it exports water-efficient crops like fruit and tobacco to the US, Europe and China that earn more dollars and create more jobs. But the virtual water in agricultural trade does not always flow from water-rich to water-poor countries. South Africa and Malawi have less water per person than most of their neighbours. Water footprinting would suggest that they should use less water for agriculture while other countries produce the region’s food.
Status of tobacco production and trade in Africa: factsheets (WHO/UNCTAD)
The lack of information on tobacco growing and tobacco trade has often been a concern for policy makers looking to advance tobacco control policies in the counties. This report will enable policy-makers and public health experts to develop a better understanding of the impact of trade liberalization on the domestic production and consumption of tobacco, but also of tobacco control measures such as WHO’s Framework Convention on Tobacco Control (WHO-FCTC) in the African continent.
CAADP Partnership Platform: delegate briefing
The 12th CAADP PP (11-14 April in Accra) will help build a shared understanding of country and regional needs and expectations to roll out the Implementation Strategy and Road Map including launching efforts to form technical partnerships to align with and support implementation. CAADP faces new implementation challenges that will require evolving partnerships, including partnerships to integrate major initiatives and flagship efforts that are now in place making contributions to the areas and targets of the Malabo Declaration.
Wheat destined for Ethiopia's hungry stuck in port logjams (Bloomberg)
South Africa: Transnet ports task team in place for large grain imports (Business Day)
WTO's Trade Statistics and Outlook: update
Chart 5 illustrates growth in the dollar value of world commercial services exports since 2013 broken down by major services categories. Commercial services trade recorded a 6.4% year-on-year decline in 2015, although transport services registered a larger drop of nearly 10% as prices for sea shipment of dry bulk cargo fell to record lows last year. Other types of services exports, such as travel and other commercial services (a category that include financial services) saw smaller declines of around 5.5%.
STRI: The trade effect of regulatory differences (OECD)
Little systematic analysis of the economic effect of international regulatory cooperation has taken place hitherto. This study contributes to filling this gap by proposing a methodology for quantifying regulatory heterogeneity and demonstrating how it can be used for estimating the gains from regulatory cooperation, using the raw data contained in the Service Trade Restrictiveness (STRI) database. The study presents and describes bilateral indicators of regulatory heterogeneity and provides a first assessment of how regulatory differences contribute to trade costs in their own right. This aspect has become essential in evaluating the impact on 21st century trade agreements.
ADB announces increased support to Mozambique in 2016/2017 (Macauhub)
Angola to open loan talks with IMF (VOA)
No company leaving Ghana over ‘poor’ economy – Mahama (GhanaWeb)
President Uhuru Kenyatta: statement during the meeting with African Ambassadors accredited to Germany
Egypt: Currency uncertainties, falling demand drive business activity to 31-month low (Ahram)
South Africa: Politics hindering policy, says S&P (Business Day)
Emerging markets show more resilience to capital flow cycle (IMF)
Kenneth Rogoff: 'Anti-Trade America?' (Project Syndicate)
Russia Economic Report 35: the long journey to recovery (World Bank)
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Emerging markets show more resilience to capital flow cycle
Despite lower capital inflows and higher capital outflows since 2010, emerging market economies have remained resilient.
A new study, published in the IMF’s April 2016 World Economic Outlook report, takes a closer look at more than 40 emerging market economies to understand the drivers of declining capital flows since 2010. The analysis also examines the modest impact of the declines compared to earlier episodes in the 1980s and 1990s, when prolonged downswings in capital flows resulted in a higher incidence of financial and debt crises. Capital flows refer to all financial flows –bank, foreign direct investment, and portfolio investment between residents and non-residents.
The study finds that a considerable portion of the decline in net capital flows – about $1.1 trillion from 2010 to late 2015 – can be linked to investors’ concerns about diminished growth prospects in emerging market economies relative to advanced countries, with bouts of risk aversion and, more recently, the prospect of tighter financial conditions in some advanced economies playing a role. Yet, structural and domestic policy factors strongly determine the extent to which different countries are affected. Hence, policymakers can take action to ameliorate the effects of the expected growth slowdown on capital flows and financial stability going forward.
Emerging market resilience: now and then
Surges and declines in capital flows are hardly new. Some past downturns in capital flows have also been linked to investors’ concerns about the prospect of growth slowdowns in emerging nations – for instance, due to lower commodity prices and cyclical bouts of over-optimism and pessimism, sometimes triggered by less benign global financial conditions. Yet, the study shows that emerging market economies have so far weathered this slowdown in capital flows more than in previous cycles (see chart).
The study cites several factors for this resilience:
First, emerging market economies are more widely integrated in global capital markets, with higher foreign assets, including foreign exchange reserves, which give these economies greater latitude to manage the capital flow decline.
Second, policy frameworks in many emerging market economies have generally improved over time, reducing the effects of lower capital flows on country risk. Indeed, better debt management strategies and macroprudential policies marked a change in the currency composition of public and private debt in these economies over the 2000s. As a result, these economies have been less vulnerable to abrupt currency depreciations that could raise the foreign debt burden, and risk country insolvency. Indeed, capital flow declines in many emerging market economies in 2010-15 have been less abrupt than in previous cycles and the turnaround of external current accounts has been more gradual.
Finally, another important change has been the move to greater exchange rate flexibility, which has helped cushion the effect of a global contraction in external financing on individual economies. After all, depreciations make outflows more costly and help attract new inflows by making domestic assets cheaper to the foreign investor. At the same time, exchange rate depreciations – when they are orderly and do not take the form of abrupt adjustments, as in several crises of the past – can act as an effective shock absorber for consumption and employment, mitigating growth slowdowns and hence further drops in inflows due to heightened country risk.
In general, the analysis finds that external (“push”) factors that drive capital flows – like global growth, global risk aversion, and interest rate differentials – had less of an impact in emerging market economies with greater exchange rate flexibility.
Gearing back up
The study’s findings have salient policy implications.
Countries are not simple bystanders to the global financial cycle. The slowdown in capital flows reinforces the need for a continued policy upgrade in emerging market economies.
Specifically, prudent fiscal policies (which help lower public debt and manage it better), macroprudential policies (which help limit currency mismatches), exchange rate flexibility (which can work as a shock absorber), and prudent foreign exchange reserve management (which can help smooth bouts of investors’ risk aversion) help mitigate the contraction and the domestic spillovers of the global capital flow cycle in individual emerging market economies.
The study also highlights that increased vigilance needs to be exercised with regard to capital outflow dynamics, which can pose significant risks, but are not yet sufficiently understood.
The authors of this report are Rudolfs Bems (lead author), Luis Catão (lead author), Zsóka Kóczán, Weicheng Lian, and Marcos Poplawski-Ribeiro, with support from Hao Jiang, Yun Liu, and Hong Yang.
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G20 leaders launch Global Partnership and website to help advance inclusive business
The G20 officially launched the Global Platform on Inclusive Business (GPIB) on 5 April 2016 in Nanjing, China. The Platform is a global partnership that will provide support to policymakers and accelerate the adoption of inclusive business policies and programs globally.
The GPIB is being implemented under the Chinese 2016 G20 Presidency. The creation of the Platform was called for in the Leaders Call on Inclusive Business issued at the G20 Leaders Summit in November 2015 in Ankara, Turkey. During the Summit, leaders also endorsed the G20 Inclusive Business Framework. The GPIB will connect policymakers and businesses to better understand the role that governments can play in supporting inclusive companies more effectively.
“The Chinese G20 Presidency is happy to announce the launch of the Global Platform on Inclusive Business,” said Zhang Shaogang, Chair of the DWG meeting. “GPIB seeks to connect policy-makers and businesses. It is both pro-poor and pro-business and strives to better understand the role of governments in supporting inclusive business.”
Inclusive businesses provide low-income men and women with goods, services, and improved livelihoods by including them in their core business model. Inclusive businesses – by working directly with low-income people – have the potential to be a driving force for inclusion and sustainability. These are companies that extend last-mile water, power, and mobile phone service to customers in rural areas. They train and create markets for small farmers. They treat low-income patients and teach low-income students.
However, companies struggle with challenging operating environments and gaps in the institutional, informational, and infrastructural conditions that are required to make inclusive markets work. These issues prevent companies from reaching the 4.5 billion people who are considered to be living at the base of the economic pyramid.
“By establishing this platform, the G20 has taken a great step towards improving the enabling environment for inclusive businesses,” said Eriko Ishikawa, Global Head of the Inclusive Business team at the World Bank Group’s International Finance Corporation (IFC). “The World Bank Group welcomes the significant contribution by the G20 as it will send a signal to policymakers worldwide.”
As a part of the GPIB, www.g20inclusivebusiness.org was created for policymakers to access research on inclusive business policies and soon-to-be launched online courses. This is the first platform designed specifically to support policymakers on this topic and is being implemented jointly by the World Bank Group and United Nations Development Programme (UNDP). By identifying, analyzing, and addressing policy issues specific to inclusive business, the platform has the potential to unlock widespread opportunities for businesses to grow, replicate, and expand.
“We believe the Global Platform on Inclusive Business will become the go-to place for policymakers interested in advancing inclusive business,” said Pedro Conceiçao of UNDP. “Given the potential for inclusive business to contribute to the 2030 Agenda, it is important that we provide policymakers information and evidence-based policy options to accelerate the growth of these businesses.”
The platform was launched during a workshop preceding the G20 Development Working Group meeting. Representatives from G20 and developing countries had the opportunity to learn from their peers that have already begun to support inclusive business and implement inclusive business policies and programs. Participants discussed specific policy instruments that they are using to facilitate inclusive business and shared their experiences on being early adopters of inclusive business policies. The workshop also included feedback from companies on what is and is not working when it comes to inclusive business policy.
IFC is the largest global investor in inclusive business having supported over 450 companies. IFC captured its experience in inclusive business in its November 2014 report: Shared Prosperity through Inclusive Business. The report taps into its evidence base to offer challenges and solutions for businesses at each step of the business value chain.
The UNDP is active in inclusive business through its Business Call to Action (BCtA) initiative, a multilateral alliance established in 2008. BCtA highlights the contributions of its 137 member companies to the evolving field of inclusive business.
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Trade growth to remain subdued in 2016 as uncertainties weigh on global demand
Growth in the volume of world trade is expected to remain sluggish in 2016 at 2.8%, unchanged from the 2.8% increase registered in 2015. Imports of developed countries should moderate this year while demand for imported goods in developing Asian economies should pick up. Global trade growth should rise to 3.6% in 2017, WTO economists reported on 7 April.
Risks to this forecast are mostly on the downside, including a sharper than expected slowing of the Chinese economy, worsening financial market volatility, and exposure of countries with large foreign debts to sharp exchange rate movements. On the other hand, there is some upside potential if monetary support from the European Central Bank succeeds in generating faster growth in the euro area.
“Trade is still registering positive growth, albeit at a disappointing rate,” WTO Director-General Roberto Azevêdo said. “This will be the fifth consecutive year of trade growth below 3%. Moreover, while the volume of global trade is growing, its value has fallen because of shifting exchange rates and falls in commodity prices. This could undermine fragile economic growth in vulnerable developing countries. There remains as well the threat of creeping protectionism as many governments continue to apply trade restrictions and the stock of these barriers continues to grow.”
“However, we should keep these figures in perspective. WTO Members can take a number steps to use trade to lift global economic growth – from rolling back trade restrictive measures, to implementing the WTO Trade Facilitation Agreement. This Agreement will dramatically cut trade costs around the world, thereby potentially boosting trade by up to $1 trillion a year,” Azevêdo added. “More can also be done to address remaining tariff and non-tariff barriers on exports of agricultural and manufactured goods.”
On the basis of the forecast for 2016, world trade will have grown at roughly the same rate as world GDP for five years (at market exchange rates), rather than twice as fast as was previously the case. Such a long, uninterrupted spell of slow but positive trade growth is unprecedented, but its importance should not be exaggerated. Overall, trade growth was weaker between 1980 and 1985, when five out of six years were below 3%, including two years of outright contraction.
Alternative indicators of economic and trade activity in the opening months of 2016 are mixed, with some pointing to a firming of trade and output growth while others suggest some slowing. On the positive side, container throughput at major ports has recovered much of the ground lost to the trade slowdown last year, while automobile sales – one of the best early signals of trade downturns – have continued to grow at a healthy pace in developed countries. On the other hand, composite leading indicators from the Organization for Economic Cooperation and Development point to an easing of growth in OECD countries, and financial market volatility has continued in 2016. Therefore trade growth may remain volatile in 2016.
MAIN POINTS
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World merchandise trade volume expected to grow by 2.8% in 2016, unchanged from 2.8% in 2015, as GDP eases in developed economies and picks up in developing ones.
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Trade growth should accelerate to 3.6% in 2017, still below the average of 5.0% since 1990. Risks to the forecast are tilted to the downside, including further slowing in emerging economies and financial volatility.
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South America recorded the weakest import growth of any region in 2015 as a severe recession in Brazil depressed demand.
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Exports of developed economies lagged behind developing countries in 2015,with 2.6% volume growth in the former and 3.3% in the latter.
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Developed economies imports surged last year while developing countries stagnated, with growth of 4.5% in the former and 0.2% in the latter.
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A sharp trade slowdown affected all regions in 2015Q2 but was mostly reversed by the end of the year.
Details on trade developments in 2015
The 2015 result marks the fourth consecutive year in which growth in world merchandise trade stayed below 3.0% on an annual basis. Trade was also unusually volatile over the course of the year, falling in the second quarter in both developed and developing countries before rebounding in the final half (Chart 1).
Chart 1: Volume of merchandise exports and imports by level of development, 2012Q1-2015Q4
Source: WTO Secretariat
The weak but still positive growth of merchandise trade volume in 2015 contrasted with the sharp decline in the dollar value of trade, which fell 13% to $16.5 trillion, down from $19 trillion in 2014. (See Appendix Tables 1 to 6 for details on trade in current dollar terms by country and region). This discrepancy was mostly attributable to strong fluctuations in commodity prices and exchange rates, which were in turn driven by slowing economic growth in China, resilient fuel production in the United States, and divergent monetary policies across leading economies. Volatility in financial markets also dented business and consumer confidence and may have contributed to reduced global demand for certain durable goods.
World trade in commercial services last year registered a smaller decline in current dollar terms (exports down 6.4% to $4.7 trillion) than merchandise trade, with goods-related services such as transportation experiencing stronger declines (down 10.3% to $870 billion) than other categories. The relative strength of services is not surprising, since this type of trade tends to be less sensitive to business cycles than trade in goods.
The preliminary figure of 2.8% for world trade growth in 2015 refers to the average of merchandise exports and imports in volume terms, i.e. adjusted to account for differences in inflation and exchange rates across countries. This figure is in line with our most recent forecast of 2.8% from last September, but that forecast did not predict some regional developments.
Exports from North America came in below expectations, while shipments from oil exporting regions (Africa, Middle East and the Commonwealth of Independent States) were stronger than anticipated. Meanwhile, European imports were stronger than predicted while those of oil producing regions were weaker. The relative strength of Europe's trade can be explained by the recovery of intra-European Union trade, while the softness of oil producers' imports is explained by low oil prices, which deprive these countries of the export revenues that they need to pay for imports.
Negative import growth in South and Central America in 2015 was mostly due to the severe and ongoing recession in Brazil, although other distressed countries in the region contributed to the negative result as well. Meanwhile, the decline in imports of oil producing regions is mostly explained by the slide in world oil prices, which slashed these countries' export revenues.
Trade developments in 2015 by region, product and services category
The volume of world merchandise trade has grown at a slow, steady pace in recent years, but this consistency belies changes in the contributions of WTO geographic regions to trade volume growth over time (Chart 3).
Asia contributed more than any other region to the recovery of world trade after the financial crisis of 2008-09. However, the region's impact on world import volume growth declined last year as the Chinese and other Asian economies cooled. Asia contributed 1.6 percentage points to the 2.3% rise in the volume of world merchandise imports in 2013, or 73% of world import growth, but in 2015 the region contributed just 0.6 percentage points to the global increase of 2.6%, or 23% of world import growth.
In contrast, Europe has mostly weighed down world trade since the financial crisis, actually reducing global import demand growth in 2012 (‑0.7%) and 2013 (‑0.1%). However, in 2015 Europe was again making a large positive contribution, accounting for 1.5 percentage points of the 2.6% increase in world import volume, or 59% of global trade growth. The gradual recovery of intra-EU trade in 2014 and 2015 was responsible for much of the rebound in Europe, as the drag exerted by the European sovereign debt crisis faded.
North America made a positive contribution to world import growth last year (1.1%), while negative contributions were recorded in 2015 for South and Central America (-0.2%) and Other regions, which covers Africa, the Middle East and CIS countries (-0.4%).
Chart 2: Contributions to world trade volume growth by region, 2011-2015
Annual % change
Source: WTO Secretariat
Asia also did more than any other region to lift merchandise export volume growth between 2011 and 2014, but its contribution fell below that of Europe in 2015. In the latest year, Asia was responsible for 1 percentage point of the 3.0% rise in world merchandise exports, or 35% of export growth, whereas Europe's 1.3 percentage point contribution accounted for 44% of the rise.
North America's contribution to exports growth in volume terms was close to zero in 2015 as demand for US goods slowed in Canada, Asia and South and Central America. Meanwhile, South and Central America and other regions made small positive contributions to export volume growth. The combination of increased export volumes in oil producing regions and falling imports in Asia likely contributed to falling energy prices in 2015, as oil supply outstripped energy demand, causing prices to plunge.
Chart 3 shows quarterly merchandise export and import volumes for the four years ending in 2015Q4. It highlights the fact that all geographic regions were affected to varying degrees by the trade slowdown in the first half of 2015, although the impact was strongest in the second quarter. Imports of resource dependent economies (mostly in South and Central America and Other regions) were squeezed by falling export revenues and did not see their imports recover in the second half of 2015, whereas imports of the more industrialized regions (Europe, North America, Asia) staged a partial recovery in the second half.
Chart 3: Volume of merchandise exports and imports by region, 2012Q1-2015Q4
(Seasonally adjusted volume indices, 2012Q1=100)
Source: WTO Secretariat
The WTO does not have a product breakdown of world trade growth in volume terms, but such a breakdown can be estimated for year-on-year growth in the dollar value of merchandise trade. This is shown for broad product groups in Chart 4, which illustrates that fuels and mining products were responsible for more than half of the drop in trade values in 2015, but that slowing trade in manufactures and agricultural products also contributed significantly to the overall decline. Among manufactured goods, the products where trade values notably declined in 2015 were office and telecom equipment, chemicals and other machinery (which includes investment goods and durables other than automobiles), while clothing and textiles only made a small contribution to growth.
The dollar value of intra-Asia imports of manufactured goods is estimated to have fallen around 5% in 2015, roughly in line with the decline of Asian imports of manufactured goods worldwide. This would seem to indicate a broad-based decline in trade values, perhaps more closely related to price fluctuations than to changes in production and consumption patterns. However, Asian imports of other machinery (a category that includes capital goods) registered a stronger decline of around 8%, suggesting a downturn in investment in the region. In particular, China's imports of other machinery from Europe and North America were down 15% and 8%, respectively, in 2015 based on Secretariat estimates. This falloff in investment may be temporary, driven by financial volatility, exchange rate uncertainty and unsettled monetary policy in 2015.
Chart 4: Contributions to year-on-year growth in world merchandise trade by product, 2014Q1-2015Q4
Year-on-year % change in current dollar values
Source: Secretariat estimates based on mirror data for available reporters in the Global Trade Atlas database.
Chart 5 illustrates growth in the dollar value of world commercial services exports since 2013 broken down by major services categories. Commercial services trade recorded a 6.4% year-on-year decline in 2015, although transport services registered a larger drop of nearly 10% as prices for sea shipment of dry bulk cargo fell to record lows last year. Other types of services exports, such as travel and other commercial services (a category that include financial services) saw smaller declines of around 5.5%.
Chart 5: Growth in the value of commercial services exports by category, 2013-15
% change in US$ values
Source: WTO Secretariat
The drop in world commercial services exports was less than the 13.5% slide in the dollar value of merchandise exports, which was strongly influenced by fluctuations in primary commodity prices (See Appendix Tables 1 to 6 and Appendix Chart 1 for detailed breakdowns of merchandise and commercial services trade by region and leading traders). According to statistics from the International Monetary Fund, primary commodity prices have fallen by more than 50% on average since January 2014, with drops of around 20% for food and beverages, 30% for metals, and 65% for energy (fuels).
There is no volume indicator for services trade akin to the WTO's merchandise trade volume indices, but physical measures of services trade such as passenger arrivals and container port throughput (Chart 6) point to a resumption of growth after a slowdown in the middle of 2015.
Chart 6: Container shipping trend throughput index, January 2007 – January 2016
Seasonally adjusted trend index, 2010=100
Source: Institute for Shipping Economic and Logistics
Outlook for 2016 and 2017
The WTO's forecast of 2.8% growth in the volume of world merchandise trade for 2016 and 3.6% trade growth for 2017 are based on consensus estimates of real GDP at market exchange rates from economic forecasters (Table 1). According to these estimates, world GDP should grow 2.4% this year and 2.7% next year, with growth slowing slightly in developed countries in 2016 and picking up modestly in developing ones.
Exports of developed and developing countries should grow at around the same rate in 2016, 2.9% in the former and 2.8% in the latter. Meanwhile, imports of developed economies are expected to outpace those of developing countries in 2016, with a 3.3% rise in the former compared to a 1.8% increase in the latter.
Asia is expected to record the fastest export growth of any region this year at 3.4%, followed by North America and Europe, each at 3.1%. South and Central America and Other regions will lag behind at 1.9% and 0.4%, respectively. North America should see its imports increase by 4.1% this year, while Asian and European imports should both register growth of 3.2%. Finally, imports of South and Central America and Other regions are set to contract again this year as oil and other commodity prices remain low, but the degree of contraction should be less.
Risks to the trade forecasts remain tilted to the downside. Business and consumer confidence has slipped recently in developed countries. As a result, forecasters now expect slower GDP growth in the European Union and the United States in 2016, followed by a rebound in 2017. Financial instability in Asia has mostly abated but could return if economic data come in above or below market expectations. On the other hand, more accommodative monetary policy from the European Central Bank could spur growth in the euro area and boost demand for goods and services, including imports.
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Closing remarks by AUC Chairperson Dr. Nkosazana Dlamini Zuma at the 2016 Joint AU-UNECA Ministerial Meetings
Remarks by Dr. Nkosazana Dlamini Zuma at the Closing Session of the Joint AU-UNECA Ministerial Meetings on Finance, Monetary Affairs, Economic Planning and Integration – Addis Ababa, 5 April 2016
It gives me great pleasure to make these closing remarks, following the successful Joint meetings of African Ministers of Finance, Monetary Affairs, Economic Planning and Integration.
We’ve had a week of packed meetings, all focused on the central question of our time: how to achieve economic transformation in order to change the lives of African men, women and children, young and old, urban and rural for the better. Hence, our discussions on our critical African priorities – skills, industrialisation, infrastructure development, intra-Africa trade, agriculture and agro-processing.
The wealth of information and the diversity of views and experiences shared, the lessons learned, the commitments undertaken, as well as the political determination garnered during these meetings are extremely useful not just to our individual countries and institutions, but to the entire world as these will facilitate Africa’s implementation of both Agenda 2063 and the Sustainable Development Goals (SDGs).
As we have so often heard during these meetings, as we implement Agenda 2063, we will be implementing the SDGs.
It is clear that implementation on a number of the priorities of Agenda 2063, and the approaches discussed in these fora, have started, at country levels, between countries, in the RECs and at continental level. This forum of Ministers is therefore going to be increasingly becoming a platform for sharing experiences, but of course we must do more.
As we therefore renew our implementation efforts, let me emphasis a few things:
Firstly, it is essential for African countries to domesticate Agenda 2063 and its First Ten-Year Implementation Plan with their National Development Plans, beyond the twenty-three countries and RECs that have already started. Of course, as ministers responsible for planning your leadership in this regard is critical.
Secondly, there is a need to speed up the alignment of Agenda 2063 and SDGs common indicators, as well as monitoring and evaluation and reporting frameworks for the two agendas, at all levels at the national, the regional and continental levels, and be the basis for cooperation between all the actors involved in the development process, be they local or external.
The indicators themselves must be easy to monitor, and aligned, so that we don’t place an onerous burden of multiple reporting on countries.
Thirdly, the success of both Agenda 2063 and SDGs can only be guaranteed if the implementation processes, the projects and delivery mechanisms include women and the youth. The empowerment of women and the youth are not acts of charity; they are the essential ingredient to success and an imperative for our development.
Fourthly, there is need for a change of mind-set. We need to believe in ourselves, in our capacities and the capacities of our people. It is said that when you believe that you can, you find ways to do it. If you believe that you can’t do it, you will see many excuses to confirm why it cannot be done.
So Africa does not lack the resources, Africa does not lack the finance needed to spur its development. It is that Africa is not using its resources effectively: not collecting as much revenue as it should through an efficient and broad tax regimes; bleeding resources through illicit financial flows; and Africa also is not investing its private, pension and sovereign funds in African projects and sectors that can impact positively on development and growth.
It has been widely discussed during these meetings that what is needed in most cases is not even policy reform, but simple administrative improvements and diligent implementation of existing policies. Cases have been cited where these simple administrative changes have doubled revenue collections within very short spaces of time.
Fifthly, the importance of statistics cannot be over emphasised. Good statistics provide good evidence; good evidence provides good analysis, which in turn provides good solutions. Our continent is judged, valued, described and rated on estimates and guesstimates, which are often not even our own estimates. It is true that if we want to know our true worth as countries, as a continent and as a people, whether the Africa we want before 2063 is on track, we must invest in producing our own statistics – accurate, good quality and timely statistics.
Sixthly, we must popularise and communicate at national level, at regional level, in different sectors and the media our programmes and the progress we are making. Only when our people know what we are planning and doing, can they become involved and help shape their continent.
Lastly, but not the least we must implement Africa Agenda 2063 not forgetting African solidarity, our programme must be inform by African solidarity, and the spirit of Pan Africanism, so that indeed, work together, assist one another and develop together. Together, we must celebrate our successes, and help to address our weaknesses together. This includes pushing ahead on silencing the guns and building democratic and effective governance and institutions.
Let me conclude by once again, commending all of you for the tremendous work that you have done. A special word of thanks to the UNECA for hosting us, for jointly organizing these meetings and for the quality work to ensure that these meetings are a success.
The rich ideas and recommendations made at these meetings are a call to action. Let us rise to the challenge, the responsibility and the confidence that the citizens of Africa and posterity have reposed on us.
Let us implement, implement and implement!
I thank you all!
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The use of detailed statistical data in customs reform: the case of Madagascar
To carry out their various missions (collecting revenue, facilitating trade, and ensuring security), many customs administrations have established a risk management unit. In developing countries, however, because of the lack of dedicated human and material resources, intelligence and risk analysis remain insufficiently developed. In view of the lack of resources, this paper proposes a simple methodology aiming at detecting risky import operations. The mirror analysis first helps to identify and target products or sectors with the greatest risk.
Based on the examination of customs declarations patterns (data mining), it is possible to identify and target higher risk economic operators (importers and customs brokers). When implemented in Madagascar, this method has helped to reveal probable fraud cases in the present context of customs reform. Estimates suggest that, in 2014, customs fraud reduced non-oil customs revenues (duties and import value-added tax) by at least 30 percent.
Introduction
With a per capita gross domestic product (GDP) of US$449 (2014), Madagascar is one of the five poorest countries in the world. To finance the country’s development, there must be a significant increase in the state budget. With this end in view, the tax revenue ratio, which is one of the lowest in Africa (around 10% of GDP), should increase.
In order to increase domestic revenue mobilization, Madagascar revenue collection authorities (i.e., tax and customs administrations) should notably combat fraud more effectively. The fight against tax evasion involves that revenue collection authorities should detect more to deter more. To this end, the analysis of discrepancies in international statistics may be very helpful. Zucman (2013) uses the differences between international assets and liabilities to evaluate the degree of tax evasion by households. Based on Bhagwati (1964), Raballand et al. (2012) use discrepancies in trade statistics to identify and assess customs frauds. In a perfect scenario, any statistical anomaly—that is, any difference between the declared export value (price, volume, weight) and the declared import value for the same trade flow, is suspect. When exports are not taxed, the exporting company has no incentive to make a non-compliant declaration. In such a situation, assuming that the gap is due to the importer is therefore a reasonable assumption.
Using original customs data, this paper aims to identify, in Madagascar, some high-risk products and high-risk operators (importers and brokers). The proposed method is complementary to risk analysis methods based on compliance (see e.g. Geourjon and Laporte (2012)). A two-step procedure is adopted. Based on discrepancies in trade statistics (mirror statistics), the paper presents products or sectors in which customs fraud is deemed to be significant. A quantification exercise of customs losses is provided. Then, through the use of highly disaggregated customs data, high-risk operators (importers and brokers) are identified.
Despite the fact the methodology is straightforward, to our knowledge there is hardly any paper using this approach (at the importer/broker level) due to the fact that it is usually difficult to get access to such information. The paper demonstrates how useful such detailed customs data can be and should convince the Head of Customs and/or Ministers of Finance to give access to them to researchers, since they can be used for an operational use. For researchers, it enables to identify some fraud techniques and collusive practices.
The use of export data provided by exporting countries allows us to compute for each sector/product the mirror gap. The mirror gap is, for each product/sector, defined as the difference between export X to Madagascar reported by the exporting country and import M from the exporting country as reported by Madagascar customs. Export data are downloaded via the United Nations platform COMTRADE. Notice that, in view of the time lag in uploads to COMTRADE, by the national institutes of statistics, a wait period of a few months should be observed before downloading the most recent annual bilateral trade data. Due to this time lag, the mirror analysis cannot identify new trends in customs fraud in Madagascar.
Based on mirror gaps, we are then able to identify some sectors/products for which noncompliance seems common. Estimates suggest that undervaluation and misclassification in 2014 accounted for a loss of revenue of US$53.7 and US$42.4 million, respectively.
Total estimated losses (96 million of US$ or MGA 232 billion) represented 30 percent of total non-oil revenues collected by customs. The analysis indicates that clothing (textile, footwear and leather goods) and high tech products (telephones, digital cameras) seemed to be substantially undervalued in 2014. Undervaluation of clothing products and telephones (and digital cameras) are, respectively, estimated at US$25.4 million and US$13.6 million.
Regarding misclassification, the paper highlights that, in Madagascar, some customs tariff headings not subject to duties and value-added tax (VAT) were probably used, in 2014, for tax evasion purposes. Considering that abnormal statistics (e.g. inconsistent unit values) are indicative of fraud, there is reasonable evidence that some high-taxed goods were declared as zero-taxed products, notably fertilizers and rice. The declared unit value of imports of rice and fertilizers (products exempt from duties and VAT) largely exceeded corresponding world prices. Based on discrepancies in trade statistics, we estimate losses in VAT revenues at US$12 million. Despite the fact that rice imports were almost systematically physically inspected, i.e., directed through the red channel, very few infractions had been reported. This figure suggests that there were probably collusion agreements between some economic operators and some customs agents. As the number of reported cases of fraud sharply increased in 2015, such bad practices seem to have declined.
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tralac’s Daily News Selection
The selection: Wednesday, 6 April 2016
Featured tweet, infographic, @AdanMohamedCS: Kenya is leading the continent in regional integration thanks to trade and immigration reforms.
Featured global trade policy process: G20 Trade and Investment Working Group meeting concluded yesterday in Nanjing – an update, China's G20 trade policy ambitions
26th African Union Summit: the Decisions and Declarations have been released by the AUC.
AU-UNECA Conference of Ministers: report of the Joint Committee of Experts
Assessment of progress on regional integration in Africa: In the ensuing discussion, it was noted that the pace of integration in Africa was relatively slow and that increased momentum was needed to meet the milestones established in the Abuja Treaty. Participants observed that strong continental institutions were needed to enable Africa to roll out its development agenda. Experts were informed about the challenges that some countries experienced in applying Agenda 2063 and the 2030 Agenda at the national level. An assessment of previous development agendas in terms of implementation and lessons learned could be critical to success in implementing the two agendas. Experts noted the need to implement the Agendas within national contexts, and that countries needed to adopt specific tools and mechanisms to successfully integrate the Sustainable Development Goals and Agenda 2063 into their national development plans. It was recommended that a road map be developed to facilitate the integration of the two agendas into national contexts. In the light of the discussion, the Joint Committee made the following recommendations:
2016 African Business Outlook Survey (ECN)
The Economist Corporate Network surveyed over 120 Africa-based executives for the 2016 African Business Outlook Survey. The majority (69%) indicated that profit margins were the same or higher than their firms’ global averages. Well over 50% of respondents reported that their firms’ expectations of growth were realistic. However, around 47% cited their firms’ level of investment to be too low to achieve targeted growth expectations. Respondents reported that their firms’ growth and investment expectations are weighted to East, West and Southern Africa. Executives indicated that their top three markets in 2015 - South Africa, Nigeria and Kenya - would remain their key markets for at least the next six years. However, they anticipated that Nigeria would surpass South Africa as the top market by 2021. Given the near-term challenges faced in South Africa and Nigeria, the executives’ ranking suggested that they are looking through the current economic cycle, as well as seeing the commercial importance placed of Sub-Saharan Africa’s two largest economies.
John Page: 'Commodities, industry, and the African Growth Miracle' (Brookings)
The 2016 Spring Meetings of the International Monetary Fund and World Bank occur during uncertain times for the “African Growth Miracle.” Beyond supporting improvements in the “investment climate” - structural reforms by another name - and pushing its Doing Business agenda, the Bank and the larger donor community have ignored Africa’s industrialization challenge for more than 20 years. By any measure Africa’s failure to industrialize is striking. In 2013 the average share of manufacturing in GDP in sub-Saharan Africa was about 10%, half of what would be expected from the region’s level of development. Africa’s share of global manufacturing fell from about 3% in 1970 to less than 2% in 2013. Manufacturing output per person is about a third of the average for all developing countries and manufactured exports per person, a key measure of success in global markets, are about 10% of the global average for low-income countries.
New Afreximbank strategy to increase intra-African trade to $250bn by 2021 (StarAfrica)
The African Export-Import Bank is to implement a new strategy aimed at driving industrialization across Africa and increasing intra-African trade by at least 50% in the next five years. A statement by Afreximbank on Tuesday said that The Afreximbank Intra-African Trade Strategy, approved by the Board of Directors at its quarterly meeting in Johannesburg on Saturday, would see the Bank work with partners to ramp up trade among African countries to $250bn from its current level of about $170bn by 2021. It added that the strategy would involve expanding existing trading activities within Africa’s regional economic communities, integrating informal trade into formal frameworks, reducing trade barriers and minimizing the foreign exchange costs of intra-African trade.
Bankers meet to tackle Africa’s trade challenges (Moneyweb)
The International Chamber of Commerce’s Banking Commission will, for the first time, host its annual meeting in Africa, as it seeks to tackle problems around trade and supply chain finance on the continent, which hinder foreign direct investment. Under the theme ‘Trade and supply chain finance: enabling new trade corridors in and with Africa’, the conference takes place this week Wednesday and Thursday at Johannesburg’s Sandton Convention Centre.
Africa and Britain sign new deal to boost trade (Daily Nation)
UK Export Finance, the British export credit agency on Tuesday signed a deal with the African Trade Insurance, which will see the latter offer UK exporters information about growing markets on the continent. “UKEF and ATI will be able to identify and promote real business opportunities where UK and African companies can work together, and to provide the local market knowledge needed to facilitate trade,” said ATI chief executive officer George Otieno, after the partnership signing. [Mind Africa's trade finance gap]
Tanzania: Mining companies hit back at 'tax dodging' allegations (IPPMedia)
A ruling by the Tax Revenues Appeals Tribunal in Dar es Salaam last week asserted that Acacia Mining Plc (previously known as African Barrick Gold or ABG) was carrying out a "sophisticated scheme of tax evasion” that allowed it to dodge paying over $41.25 million (an estimated 90 billion/-) as withholding tax to the Tanzania Revenue Authority over a period of four years. Acacia, which is Tanzania’s biggest gold mining firm, has moved to quickly deny the accusation and said it intended to lodge an appeal against the tribunal ruling.
Tony Watima: 'Regional trade agreements, not WTO, are the future' (Daily Nation)
Unfortunately the good old days, when WTO was unquestioned as the world body to liberalise trade are behind it, for three reasons.
Chinese factories to be blueprints of future African deals (ecns)
Although three countries (Kenya, Ethiopia and Tanzania) already have been chosen for the Chinese factory-relocation pilot project, Paul Jourdan said that the success of the move will depend largely on how fast African governments will implement policies to speed up regional integration. "A continental free trade area will flatten border barriers, hence making transportation between countries cheaper, and (it) opens a bigger consumer market," he said. Jourdan applauded export taxes imposed by countries such as Ethiopia, which encourage investors to move to the next step of value-addition.
Mozambique: Limit truck overloading (SPEED Programme)
Cornelder de Moçambique, operator of the Beira Port, has recently taken such a positive step by requiring that trucks entering the port comply with legislation which limits their weight and dimensions. If all ports and terminals, every major border crossing, all major industrial complexes, and other logistical operators took direct responsibility for ensuring that all trucks leaving their premises were compliant with load and other vehicle regulations, a significant reduction in overloading might result. Another group that would actually welcome the ability to control loads are the operators of road concessions such as TRAC and Estradas de Zambezi. Overloading is a serious and costly problem for them, but the authority to control overloaded vehicles remains out of their direct control. [The author, Larry Herman, is a development and transportation economist]
Shippers’ lobby says trials on new cargo clearance system impressive (Business Daily)
A new regional cargo clearance system, presently being piloted at the Mombasa port, has raised hope in the fight against undervaluing of goods and illegal imports. A shippers’ lobby termed the initial results from the ongoing trials on the Advance Cargo Shipment Information System as impressive. “We will use the information that we are receiving from shippers to analyse their experience. If positive responses outweigh the negatives we will lobby to have Kenya adopt it,” Mr Gilbert Langat, the CEO of the Shippers Council of East Africa, told Shipping & Logistics.
Mwai Kibaki: 'It is time to rethink strategy to conserve Africa’s water sources' (Daily Nation)
The recently launched United Nations World Water Development Report 2016 themed, 'Water and Jobs' marks a turning point in global viewpoints on water governance and international water politics. According to the report, globally, 78% of jobs are water dependent in varying degrees. This lends a whole new meaning to the oft-quoted, yet hackneyed dictum “water is life”. Africa has vast unexploited water potential. So, what are we doing with this resource to improve Africa’s lot? I believe Africa has what it takes to overcome her water predicament, but we need to ask ourselves a few questions.[The author is UNESCO's special envoy for water in Africa]
Jose Graziano da Silva: 'Acting now to end hunger in Africa by 2025' (New Times)
The next few years will thus be crucial for Africa if we are to go down in history as the Zero Hunger Generation. Under the theme ‘’Transforming African Agri-food systems for inclusive growth and shared prosperity,” FAO will meet with the continent’s agricultural leaders during its biennial regional conference taking place in Abidjan, Côte d’Ivoire on 4-8 April 2016. This is a timely event, for a number of reasons. [The author is the Director General of the FAO]
South Sudan: Food gap widens – new UN assessment (FAO)
Civil strife and unfavourable rains have further reduced crop production in South Sudan, contributing to a cereal deficit of 381,000 metric tons – 53% greater than in 2015 – and aggravating the already severe food shortages, two UN agencies have warned. Cereal prices have shot up nearly five-fold since early last year, making it increasingly difficult for people to get enough to eat, according to a new joint Crop and Food Security Assessment Mission report by the FAO and the WFP.
Rwanda: Comprehensive food security and vulnerability analysis (WFP)
Chronic malnutrition in Rwanda have fallen significantly in the last three years, but still remain stubbornly high, especially in rural areas, finds a new study conducted over three years by the Rwandan Ministry of Agriculture with support from the World Food Programme. The Comprehensive Food Security and Vulnerability Analysis report in Rwanda found that levels of stunting among children aged under five dropped to 36.7% in 2015, down from 43% at the time of the last analysis in 2012.
Rwanda: IMF completes review mission (IMF)
Over the medium term, growth prospects remain in line with Rwanda’s high potential, and the mission welcomes ongoing initiatives to promote export diversification and encourage local production of what Rwanda currently imports, in order to improve Rwanda’s resilience to external shocks. These policies will, however, take time.
Payment aspects of financial inclusion: seven guiding principles (World Bank)
The Payment aspects of financial inclusion report builds on a document that underwent public consultation in late 2015 and seeks to tackle barriers to the adoption and usage of transaction accounts, which sit at the heart of retail payment services. The seven guiding principles are:
Tanzania inches closer to oil discovery on Lake Tanganyika (IPPMedia)
Imports of cheap crude palm stifle Uganda’s oilseed farming (The EastAfrican)
Mbeki panel ramps up war against illicit financial flows (Africa Renewal)
Guinea-Bissau government ready to host China/CPLP trade cooperation meeting (Macauhub)
AFRITAC South: update (IMF)
China’s Great Transition: what it means for Canada (Bank of Canada)
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Increasing economic growth in fragile states can help prevent future refugee crises – World Bank President
World Bank Group President Jim Yong Kim said on 5 April 2016 that the world’s powers need to pay far greater attention to boosting developing economies and creating jobs in the most fragile countries in order to give more opportunity to people in those nations and to prevent future refugee crises.
Speaking at the German Institute for Economic Research, Kim noted that boosting inclusive economic growth and reducing extreme poverty was critical to helping avoid an even greater refugee crisis in the coming years. Citing World Bank projections that extreme poverty globally would only fall to 6 percent by 2030 if economic growth mirrors the average growth rate of the last decade, Kim said that would mean that in the most fragile states, the poverty rate would remain extraordinarily high, at 47 percent of the population.
“All of Europe and all of Germany are rightly focused on the refugee crisis on the continent today, but if fragile states still have 47 percent of their people living on less than 2 euros a day by 2030, while the developed world prospers, the flow of migrants and refugees will not stop,” said Kim.
Kim stated that how the World Bank Group engages in the fight against poverty will need to change, and that global issues such as forced displacement carry important implications for how the World Bank will operate going forward.
“For instance, our Board – in a groundbreaking decision just last month – offered Jordan, a middle-income country, rates that we had reserved for the poorest countries, because of their enormous generosity in hosting more than 1 million Syrian refugees,” Kim stated. “We have provided an initial $100 million loan at concessional rates normally reserved for only the poorest countries and will provide an additional $200-400 million dollars in concessional financing to build a special economic enterprise zone, which will help create many thousands of jobs for both Syrian refugees and Jordanians over the next five years. This is a truly novel effort that must now be taken to scale and implemented in other countries as well.”
Kim noted that the planet is increasingly interdependent, requiring collective action.
“It has never been so painfully clear that the world is interconnected,” said Kim. “Major issues that evolve in a developing country now swiftly move to affect developed countries – and vice versa – more than ever before: Climate change, pandemics, refugees, terrorism, and economic downturns all move seamlessly around the world.”
To address these and other pressing issues, Kim called for three major shifts in how the World Bank would work.
“First, addressing the challenge of global threats that cross boundaries and regions will become ever more central to achieving our mission. The World Bank Group’s major focus for many years has been to respond to individual countries’ needs. That will remain the core of our approach, but that’s not enough. Our country-focused work must be complemented with a much more robust commitment to move further upstream and tackle at their core, the issues that affect the entire planet.
Second, we must focus much more effectively on managing risk and uncertainty. The agenda is already changing in many of our development activities with greater emphasis on disaster risk management; targeted investments in the face of climatic uncertainty; and scaling up support for innovative social protection programs for those just above or close to the poverty line.
And the third major change for us is that we must do much more to address the deep pockets of poverty and rising inequality in countries at every income level. This includes investing and supporting middle-income countries that face the challenge of fragility, especially when the spillover effects from fragility can threaten both its neighbors and countries on the other side of the earth. If we leave these problems unresolved, the risk of growing conflict and extremism in these contexts will become very real, as we have seen in the Middle East, North Africa, and Latin America.”
In addition to the crisis of forced displacement, Kim noted another is the threat of pandemics.
“On the threat of pandemics, a survey of 30,000 insurance industry experts around the world found that pandemics topped the list of extreme long-term risks that matter most for the insurance industry,” said Kim. “The Ebola epidemic and now the Zika pandemic have reminded all of us that we are nowhere near prepared enough for a faster-moving pandemic. What would happen if a pandemic as swift and lethal as the Spanish Flu of 1918 struck today? Modelers have shown that it would be found in all of the world’s urban centers within two months, and could lead to tens of millions of deaths and a loss of as much as 5 percent of global GDP – or roughly $4 trillion dollars.”
To tackle this challenge, Kim stated that members of seven different World Bank Group teams – experts in the fields of health, agriculture, the private sector, treasury operations, development finance, insurance, and communications – are now working closely with the World Health Organization and other UN agencies, reinsurance companies, supply chain experts, governments and civil society groups to design a Pandemic Emergency Financing Facility, set to launch later this spring.
“This new facility will fill a lethal gap in the international financing system that was exposed by the Ebola crisis. To fight Ebola, it took many months after the initial recognition of the outbreak for the world to mobilize a large-scale disaster response. Now, we’ll have a system that uses an innovative, insurance-based mechanism, with a pre-determined and transparent set of criteria that will activate a response. When specific parametric triggers are set off, the Pandemic Emergency Financing Facility will release monies within days to developing countries and international agencies to help stop the outbreak. Essentially, we will be creating a response system that will cost millions of dollars per year that could save hundreds of thousands, if not millions, of lives – and save billions, if not trillions, of dollars.”
Kim concluded by stating that in our increasingly interconnected planet, the World Bank is changing as the world changes.
“We will never forget that the World Bank Group is a cooperative of countries and our role is to work with our clients so that they can achieve their highest aspirations. But it is now exceedingly clear that we will never end extreme poverty and boost shared prosperity if we don’t tackle global threats like pandemics, climate change and forced displacement in partnership with our member countries – one region, one country and one person at a time.”
Development in a Time of Global Interdependence
Remarks by World Bank Group President Jim Yong Kim, as prepared for delivery
Good afternoon. I’d like to thank our host today, Mr. Fratzscher, and the German Institute for Economic Research/DIW. We are grateful that we can have this event in such a remarkable setting. And I would also like to thank the German government and its representative to the World Bank, our good friend Ursula Mueller. I would like all Germans to know that you have an absolutely outstanding, brilliant, compassionate ambassador to the developing world in Ursula.
The world today faces challenges that are as complex and vexing as at any time in my memory. Think for a moment about how the world has changed in just two years. In April 2014, Europe had not yet experienced the massive flow of refugees from many countries. Two years ago, the world had not yet awoken to the horrible epidemic of Ebola as it spread through the West African nations of Guinea, Liberia, and Sierra Leone. And we didn’t yet have the most recent alarming evidence of the impact of climate change, with global temperatures rising to record levels and the Arctic emerging from a winter that wasn’t a winter at all.
Now think for a moment about other events in just the last five months, which brought violent extremism to the doorsteps of Europe and around the world – the horrific attacks in Paris, the attacks in Brussels just two weeks ago, the acts of terror in Lahore recently that killed 29 children playing in a park, and the horrifying violence in so many other places – Istanbul, Ankara, Bamako, Tunis, Jakarta, Ouagadougou, San Bernardino, Mogadishu, and a remote resort in Cote d’Ivoire.
It has never been so painfully clear that the world is deeply interconnected. Major issues that evolve in a developing country now swiftly move to affect developed countries – and vice versa – more than ever before: Climate change, pandemics, refugees, terrorism, and economic downturns all move seamlessly around the world. What happens in Aleppo affects Berlin, and what transpires in Beijing is felt in Buenos Aires. In the context of these enormous challenges, what is to be done? How does an institution like the World Bank Group, with our mission to end extreme poverty and boost shared prosperity in the developing world, react in this time of multiple crises, an increasing interconnectedness, and a slowing global economy?
From the perspective of an individual country, our strategy remains the same – support economic growth, invest in people and insure that people don’t fall back into poverty. But in order to more effectively confront the global public threats I’ve mentioned, our vision has changed and will need to change even more going forward.
First, addressing the challenge of global threats that cross boundaries and regions will become ever more central to achieving our mission. The World Bank Group’s major focus for many years has been to respond to individual countries’ needs. That will remain the core of our approach, but that’s not enough. Our country-focused work must be complemented with a much more robust commitment to move further upstream and tackle at their core, the issues that affect the entire planet.
Second, we must focus much more effectively on managing risk and uncertainty. The agenda is already changing in many of our development activities with greater emphasis on disaster risk management; targeted investments in the face of climatic uncertainty; and scaling up support for innovative social protection programs for those just above or close to the poverty line.
And third major change for us is that we must do much more to address the deep pockets of poverty and rising inequality in countries at every income level. This includes investing and supporting middle-income countries that face the challenge of fragility, especially when the spillover effects from fragility can threaten both its neighbors and countries on the other side of the earth. If we leave these problems unresolved, the risk of growing conflict and extremism in these contexts will become very real, as we have seen in the Middle East, North Africa, and Latin America.
Berlin is the right place to talk about this fundamental shift in the way we work. Germany has demonstrated that industry, even small and medium enterprises, can adapt to take advantage of globalization, while keeping the social costs of these adjustments low. Germans have shown that fiscal prudence is not incompatible with extraordinary generosity – keeping national budgets balanced while welcoming more than a million people displaced by conflict in the Middle East. Germany has also been among the most generous donor countries throughout the economic crisis, and we are very grateful for Germany’s stalwart support of IDA, which is the World Bank Group’s fund for concessional loans and grants to the poorest countries.
Germany also is the most open among the major economies; trade is more than twice the share of GDP as compared with the United States, China, Japan, the United Kingdom, and France. Small and medium enterprises in Germany – the Mittelstand – have increased productivity, generated exports, and created jobs at impressive rates. Germany’s unemployment rates have remained low through both prosperous times and economic crises. This country has shown how big economic, social, and environmental improvements can be made – and all at the same time.
But before describing in greater detail our evolving approach to achieving global public goods, I want to provide some context about the current state of the global economy, which makes tackling these global threats all the more urgent.
In the United States and the European Union, growth rates have been picking up during the last three years, and we expect this trend to continue this year. While we continue to be concerned about low growth in advanced markets, given our focus, we are especially concerned about the slowdown in emerging markets, where growth rates have fallen by almost 1 percentage point since 2013 – from more than 5 percent to about 4 percent. China is one reason, but the economic contractions in Brazil and Russia are also major factors.
In our view, there are three major drivers of this slowdown – slower growth in trade, increasing difficulty in gaining access to capital, and lack of progress in job creation.
Trade has been a powerful engine of economic development for low-income countries, and the slowing in the growth of trade – roughly half the rate it was growing before the financial crisis – has had a large impact across the developing world. Imports of goods, for example, grew by more than 6 percent annually in the 1990s and 2000s but since the crisis, import growth has averaged 3 percent. As the voices of protectionism grow louder on both sides of the Atlantic, we know that protectionism hurts poorer countries the most. But it also disproportionately hurts the poor in richer countries. In the United States, for example, the purchasing power of the poor would be cut by more than half if the economy were closed to trade.
Stock market volatility, which reflects uncertainty and fear among investors, has been the highest since the crisis in the Eurozone in 2010. This has been bad news for developing countries as investors pulled $40 billion dollars from emerging market bond and equity markets in the last quarter of 2015, the biggest outflow since the collapse of Lehman Brothers in 2008.
But most worrying for us is the slow recovery in employment in almost every part of the world. An additional 75 million people were still jobless five years after the end of the global financial crisis. The International Labor Organization has found that the share of young people who are neither studying nor working has been rising in three countries for every one where we’ve seen a decrease. The problem is most severe in the Middle East. Since 2007, unemployment among young people increased the most in Middle East and North Africa. We have to attack this problem on multiple fronts at the same time but one of the most important steps we must take is to make it easier for small and medium enterprises to do business in this region.
Just a week ago, I was traveling in the Middle East and North Africa on a joint trip with the UN Secretary-General Ban Ki-moon. Everywhere I went I heard from young people and many others that the biggest reason so many were attracted to the cause of extremism was the lack of jobs, and the overall lack of hope for their future. If we are going to pull out the roots of extremism, we need political solutions to end conflict – but we need much more than that. We need to create jobs first and foremost, and to do that we need to help the most fragile and conflict-affected countries start building their economies and offering opportunities, especially for women and young people.
We should also insert a dose of realism here. In this year of constrained resources – especially in Europe as donor countries are finding that they will have to use some of their overseas development assistance to support refugees inside their borders – how do we increase our investments in developing countries, end extreme poverty, and address these crises?
One of the imperatives that we have been repeating over and over is that developing countries should enact structural reforms that can improve the business climate and create greater confidence in the private sector, which is where the overwhelming majority of job creation occurs. And let me be specific here – what we are talking about is moving from a system in which only certain elites get access to capital and corrupt bureaucracies engage in outrageous rent-seeking, to one in which capital, a license to do business and all other necessary inputs are distributed transparently and fairly to all citizens.
We are also convinced that developing countries can dramatically increase their self-funding by collecting more taxes more fairly from their citizens. IMF Managing Director Christine Lagarde and I are doing all we can to help countries build more equitable and effective tax systems and we estimate that developing countries could increase domestic resource mobilization anywhere from 2 to 4% of their GDP. If we reached just 2%, that would be equal to roughly $450 billion or 3 times current ODA. And we’re not talking about taxing the poor – most developing country tax systems are quite regressive and the rich do not pay their fair share of taxes.
But to accomplish any of our goals, we must expand the use of innovative financial tools. The World Bank Group, other multilateral development banks, and donor countries such as Germany are working to provide financing at much lower rates for projects that create jobs in the places most desperately in need of them.
For instance, our Board – in a groundbreaking decision just last month – offered Jordan, a middle-income country, rates that we had reserved for the poorest countries, because of their enormous generosity in hosting more than 1 million Syrian refugees. We have provided an initial $100 million loan at concessional rates normally reserved for only the poorest countries and will provide an additional $200-400 million dollars in concessional financing to build a special economic enterprise zone, which will help create many thousands of jobs for both Syrian refugees and Jordanians over the next five years. This is a truly novel effort that must now be taken to scale and implemented in other countries as well.
Boosting economic growth and creating jobs in fragile settings is an urgent task. Our economists project that if economic growth merely mirrors the average growth rate of the last decade, we would reduce extreme poverty globally to only 6 percent in 2030. And that would mean that in the most fragile states, the poverty rate would remain extraordinarily high: 47 percent of the population. All of Europe and all of Germany are rightly focused on the refugee crisis on the continent today, but if fragile states still have 47 percent of their people living on less than 2 euros a day by 2030, while the developed world prospers, the flow of migrants and refugees will not stop.
As daunting as the refugee crisis appears at the moment, we must not forget that the world faces other major threats that undermine developing and developed countries alike – two of the most pressing ones are climate change and the threat of a future pandemic.
Credible sources have argued that successive droughts in Syria played a role in the current crisis, and there’s no doubt that climate change is contributing to rising tension and the loss of livelihoods in many parts of the world due to water scarcity, rising tides, and the increasing number of extreme weather events.
The global temperatures for January and February both broke records. The data – compiled by NASA – found that the average global surface temperature in February was 1.35 degrees Celsius warmer than the average temperature for the month of February during an earlier 30-year period, a far bigger margin than ever seen before. Even the North Pole was warm – in late December the temperature approached 0 degrees Celsius, or more than 30 degrees Celsius above average.
In advance of the COP21 climate summit in Paris in December, the World Bank Group pledged to increase our climate financing by as much as a third by 2020 – up to $29 billion dollars a year. Global leaders surprised even the optimists by agreeing at COP21 that the world should aspire to hold global temperatures well below 2 degrees Celsius above pre-industrial times. Chancellor Merkel deserves great credit – along with UN Secretary-General Ban Ki-moon, French President Hollande, and President Obama, among others – for pushing and prodding so many governments and institutions, the World Bank Group included, to do their part.
Now that we have the agreement, we have to work with unprecedented urgency if we are to have any chance to reach the targets. I have learned on two recent trips – one to Pakistan and one to Vietnam – that we have to move even more quickly than I had thought. Both Vietnam and Pakistan are moving forward with their plans to build coal-fired power plants – in Vietnam, they are planning to install 40GW of coal fired power, roughly the equivalent of half of all the energy currently available in sub-Saharan Africa. Why? Because the price for coal-fired power is currently cheaper than renewables – 9 to 10 cents a kilowatt hour for coal and 11-12 cents for solar and wind in both countries. In Mexico, Peru, the United Arab Emirates, and many others parts of the world, we have shown that with innovative financing that crowds in the private sector, we can help make the switch to cleaner energy by creating overwhelming financial incentives to do so. In Peru, we were able to sign a deal for 4.8 cents per kilowatt hour, and in Mexico, IFC, our private sector group, just closed a deal for solar that went for a cost of 3.2 cents per kilowatt hour. In Vietnam and Pakistan, we are trying to respond with great urgency, asking leaders of both countries to reconsider renewable sources of energy if we and others can help bring down the price of renewables. Moreover, solar and wind power can be provided much more quickly than coal fired power – months instead of years – meaning that increased access to electricity for voters can happen in “this” political cycle, not the next.
What’s holding us back? We still don’t have agreement on how the pledged financial resources for COP 21 will be used and we will need help from donors if we are to provide more concessional financing to countries like Pakistan and Vietnam. Conversations are happening but the window to move on these mitigation measures in time to reach our targets is closing very quickly.
On the threat of pandemics, a survey of 30,000 insurance industry experts around the world found that pandemics topped the list of extreme long-term risks that matter most for the insurance industry. The Ebola epidemic and now the Zika pandemic have reminded all of us that we are nowhere near prepared enough for a faster-moving pandemic. What would happen if a pandemic as swift and lethal as the Spanish Flu of 1918 struck today? Modelers have shown that it would be found in all of the world’s urban centers within two months, and could lead to tens of millions of deaths and a loss of as much as 5 percent of global GDP – or roughly $4 trillion dollars.
We have been asked by Chancellor Merkel, Prime Minister Abe of Japan, and other leaders to work on crafting a financing mechanism for a pandemic response. We knew we needed 1) sources of finance that can be mobilized quickly; 2) country health systems that are able to respond to outbreaks; and 3) a level of international coordination that we haven’t had to date. Over the last year, we’ve brought together members of seven different World Bank Group teams – experts in the fields of health, agriculture, the private sector, treasury operations, development finance, insurance, and communications – to work closely with the World Health Organization and other UN agencies, infectious disease modelers, reinsurance companies, supply chain experts, governments and civil society groups. They have been designing what we are calling the Pandemic Emergency Financing Facility, which we are planning to launch later this spring.
This new facility will fill a lethal gap in the international financing system that was exposed by the Ebola crisis. To fight Ebola, it took many months after the initial recognition of the outbreak for the world to mobilize a large-scale disaster response. Now, we’ll have a system that uses an innovative, insurance-based mechanism, with a pre-determined and transparent set of criteria that will activate a response.
When specific parametric triggers are set off, the Pandemic Emergency Financing Facility will release monies within days to developing countries and international agencies to help stop the outbreak. Essentially, we will be creating a response system that will cost millions of dollars per year that could save hundreds of thousands, if not millions, of lives – and save billions, if not trillions, of dollars.
I’ve talked about three huge global threats that affect all of us – forced displacement, climate change, and pandemics. But there’s another threat that has escaped the world’s serious attention, and frankly it is the issue which is the most damning for all of us working in development: the unconscionably high rates of childhood stunting in middle- and low-income countries. The 30 and 45 percent (with some estimates as high as 70 percent in some countries) of children in many African and Asian countries literally have fewer connections in their brains than their non-stunted classmates.
The effects of stunting have life-long consequences not only for the individual, but for countries as well. How will countries compete in what will certainly be a more digitalized global economy in the future when 30 to 45 percent of their children do not have as many neuronal connections in their brain as children in other countries that they must compete with?
Some may say that the problem is too difficult, or there are too many factors that we need to address before we can make any progress, but that’s simply not true. It’s clear that through early childhood interventions, such as proper nutrition and stimulation and providing a safe environment, it’s possible to dramatically lower the rate of stunting in relatively short periods of time. In Peru, for instance, after decades of trying but making little progress, authorities cut stunting in half – from 28 percent to 14 percent – in just eight years by persuading parents and leaders that the height of their children mattered. They created incentives for families to access nutrition services, encouraged mothers to interact with their babies, and improved the environments of some homes.
The payoff can be enormous. One study on increasing preschool enrollment in 73 countries found that every dollar invested in preschool resulted in up to $17 dollars in benefits in terms of higher future wages.
Of all our investments in infrastructure, I believe that investments in grey matter infrastructure could be the most important of all. Neuronal infrastructure is quite possibly the most critical infrastructure that countries need in facing an uncertain future – where economic growth will depend much more on digital competency in an increasingly service-oriented economy and much less on low-skilled jobs in agriculture and manufacturing. It also calls into question our fundamental moral convictions. Many of us have been saying with great conviction that we believe in equal opportunity for all – but that’s an empty slogan if a country has 45 percent of its children who are stunted. So today I call on all of us to start a movement to end childhood stunting so that we can build strong resilient societies that will grow and benefit everyone.
Let me conclude by saying that in this rapidly changing world, the number of threats are growing and they are increasingly global. We cannot ignore them. We must act. As the lawyer, novelist, poet, and policymaker Johann Wolfgang Von Goethe once said, “Knowing is not enough; we must apply. Willing is not enough; we must do.” At the World Bank Group, we know what the threats are, we have transformed our organization over the last few years, and now we are better equipped to tackle these global threats.
We will never forget that the World Bank Group is a cooperative of countries and our role is to work with our clients so that they can achieve their highest aspirations. But it is now exceedingly clear that we will never end extreme poverty and boost shared prosperity if we don’t tackle global threats like pandemics, climate change and forced displacement in partnership with our member countries – one region, one country and one person at a time.
Thank you very much.
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Africa’s cities of the future: Proper planning key to sustainable cities
One of the objectives of Sustainable Development Goals is to have sustainable cities that provide opportunities for all, including access to basic services, energy, housing and transport. In this special coverage, Africa Renewal looks at some African cities like Lagos and Kigali that are on the move and others such as Abidjan and Mogadishu that are recovering.
With an annual economic growth rate of about 5% over the last decade, driven mainly by the commodities boom, African cities have seen skyrocketing population growth, forcing governments to face a host of development challenges.
Africa is urbanizing at a rate of 4% per year, according to UN-Habitat, the United Nations agency tasked with assisting national programmes relating to human settlements through the provision of capital and technical assistance, particularly in developing countries. Population shifts from rural to urban areas lead to a number of challenges such as overcrowding, pollution and crime, among others.
“Urbanization in the Africa of today is an untapped tool for development and economic growth,” says Joan Clos, the executive director of UN-Habitat.
Over the next 15 years, cities in Africa will experience higher growth rates than other regions of the world, predicts Oxford Economics, a British firm that specialises in global forecasting and quantitative analysis for business and government, with Cape Town, Dar es Salaam, Johannesburg and Luanda becoming Africa’s major economic giants.
Jean Pierre Elong Mbassi, the secretary-general of United Cities and Local Governments-Africa (UCLG-A), a body representing over 1,000 African cities, describes sustainable cities as “cities of the future today,” meaning those that can withstand the intense pressure from rapid development and urban investments but have a low impact on the environment.
Economic growth and a rapidly growing population of about 1 billion mean more urbanization in Africa than in any other continent, with major cities in Africa currently contributing about $700 billion to the continent’s GDP. This figure is set to grow to $1.7 trillion by 2030, notes Oxford Economics.
UN-Habitat says rapid urbanization, especially in cities in the developing world, is bringing challenges in the distribution of people and resources, as well as in land use, which leads to inefficient land-use patterns. Cities growing horizontally are struggling to deal with increasing urban populations and are not likely to be sustainable over the long term because of challenges with congestion, infrastructure, pollution and social disaggregation.
An increase in migration from rural to urban areas can exacerbate poverty and inequality as people pour into the cities in search of jobs and opportunities, straining available services such as water, transportation and garbage collection.
“Urbanization, particularly in the developing world, has been accompanied by increased levels of crime, violence, and lawlessness. Global studies show that 60% of all urban residents in developing countries have been victims of crime at least once over the past five years, 70% of them in Latin America and Africa,” says UN-Habitat’s website.
Women and children are often the most affected, especially when fear hinders their access to basic services in the city. Crime and insecurity in the city restrict urban social and economic development, and often jeopardize opportunities and policies that support the poor in urban areas.
Sustainable cities
The need for sustainable cities is particularly urgent, considering cities generate over 70% of global carbon emissions. The one billion slum dwellers worldwide suffer the impacts of air pollution from indoor cooking, proximity to traffic and industry, contaminated water and inadequate sanitation, among other environmental health risks.
UN-Habitat suggests a three-pronged approach to sustainable cities, based on effective and comprehensive urban legislation, proper urban planning and design, and adequate financing for projects. The three principles can be levers for the transformation of cities and human settlements into centres of environmental, economic and social sustainability.
Climate change is a recent consideration in the planning of sustainable cities. Africa’s urban environments are particularly susceptible to flooding and outbreaks of diseases such as malaria. However, these can be mitigated through proper planning, effective policy implementation, the protection of ecologically sensitive areas, reforestation and the use of waste in energy generation, among other measures.
Given the economic and social challenges faced by many African cities, can they offer a high quality of life for residents through the provision of efficient basic services while at the same time ensuring that the environment is safe and clean?
“Yes, potentially,” says Mr. Mbassi, adding that this would require a pace of development in Africa that should not necessarily resemble that of the West.
“We should plan cities according to their specific situations and the needs of the local people, to ensure that cities include everyone and the poor are not marginalized in terms of accessing all the services a city has to offer,” Mr. Mbassi told Africa Renewal in an interview.
A new agenda
Working with the UN Economic Commission for Africa, UCLG-A developed the Africa Urban Agenda (AUA) to be adopted by African leaders in July 2016. The Agenda consists of actions Africa needs to take to improve its cities and settlements and to promote urbanization as a catalyst for Africa’s structural transformation. It represents Africa’s inputs into the Global Urban Agenda to be adopted at Habitat III, a conference on housing and sustainable urban development to be hosted by UN-Habitat in October 2016 in Quito, Ecuador.
Countries attending Habitat III, the first UN world summit after the adoption of the SDGs and the Paris climate change agreement, are expected to adopt the “New Urban Agenda” for the 21st century.
It is clear that urban planning requires a shift from viewing urbanization mainly as a problem, to seeing it as a tool for development, UN-Habitat says in UN-Habitat Global Activities Report 2015: Increasing Synergy for Greater National Ownership.
At a meeting organized by UN-Habitat and the Economic Commission for Africa (ECA) in Ethiopia in March 2014, called “The Role of Urbanization in the Structural Transformation of Africa,” the director of political affairs at the African Union Commission, Khabele Matlosa, said that African countries need to adopt new development models designed to take advantage of urbanization by facilitating structural transformation, creating jobs and addressing social inequality and poverty while creating habitable settlements with equal opportunities for all.
Starting smart to end slums
Although with good planning urbanization, industrialization, sustained economic growth and human development can be mutually reinforcing, there is urgent need for safe settlements too, according to a report by UN-Habitat, The State of the African Cities 2014: Re-Imagining Sustainable Urbanization.
Sub-Saharan Africa has a slum population of 199.5 million, which, according to UN-Habitat, is a sign of “a poorly planned and managed urban sector and, in particular, a malfunctioning housing sector.”
Africa is home to big slums such as West Point in Liberia’s capital, Monrovia, with more than 75,000 people, and Kenya’s Kibera slum in Nairobi, which is the largest in Africa, with over 2 million people.
Africa requires around 4 million housing units per year, with over 60% of the demand required to accommodate urban residents. Effective planning regulations and their enforcement will help cities deal with the growth of informal settlements and provide a map for how the cities will grow and develop, while promoting economic growth.
This article appears in the April 2016 edition of Africa Renewal, published by the United Nations.
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26th African Union Summit: Decisions and Declarations
The 26th African Union Summit of Heads of State and Government was held from 21 to 31 January 2016 in Addis Ababa, Ethiopia, under the theme “African Year of Human Rights, with particular focus on the Rights of Women”.
On 29 March, the Commission of the African Union presented the amended decisions of the 28th Ordinary Session of the Executive Council, held on 27 and 28 January 2016, and those of the 26th Ordinary Session of the Assembly of the Union, held on 30 and 31 January 2016. It was noted that a number of corrections had to be effected on the following Decisions:
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Decision Assembly/AU/Dec.603 (XXVI) on Africa’s Engagements in the Global Climate Negotiations
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Decision EX.CL/Dec. 899(XXVIII) on the Activities of the PRC
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Decision EX.CL/Dec.917(XXVIII) on African Candidatures for Posts within the International System
The amended Decisions and Declarations may be downloaded below.
Decision on the Domestication of the First Ten-Year Implementation Plan of Agenda 2063
The Assembly,
1. TAKES NOTE of the Report of the Commission on the Domestication of the First Ten-Year Implementation Plan (FTYIP) of Agenda 2063 and REITERATES that it is a common continental framework for socio-economic development;
2. COMMENDS the Member States that have integrated Agenda 2063 in their National Development Frameworks;
3. WELCOMES the continued collaboration with the United Nations (UN) Economic Commission for Africa (UNECA), the African Development Bank (AfDB), the Regional Economic Communities (RECs) and the African Capacity Building Foundation (ACBF) in the operationalization of Agenda 2063, and the development of:
i) Indicators for the First Ten-Year Implementation Plan (FTYIP), and their convergence with the UN Sustainable Development Goals (SDGs);
ii) A Monitoring and Evaluation Framework;
iii) A Capacity Assessment Study and its Plan.
4. CALLS UPON the UN Secretary General to expeditiously establish a Global Partnership for Sustainable Development Data through Intergovernmental Process as captured in the latter’s Synthesis Report – the Road to Dignity;
5. REQUESTS the Commission to;
i) Facilitate, in collaboration with UNECA and AfDB, statistical reforms in countries, including legislative reforms, human resources development and financial resources in the context of implementation of Agenda 2063 FTYIP and the SDGs;
ii) Finalise the Draft Monitoring and Evaluation Framework of Agenda 2063 and expedite its institutionalisation, and report at the next ordinary session of the Assembly through the Executive Council, in July 2016;
iii) Develop detailed proposals of the Flagship Projects, their implementation arrangements and their financial implications;
iv) Ensure continuous popularization and awareness raising of Agenda 2063 through all available platforms.
6. ALSO REQUESTS as follows:
i) All African Union (AU) Organs to internalise and align their respective programmes with FTYIP of Agenda 2063;
ii) The Pan African Parliament (PAP) to work with National and Regional Parliaments and the Economic, Social and Cultural Council (ECOSOCC) to mobilize its constituency to ensure the alignment of their agenda with Agenda 2063.
7. URGES Member States, the RECs, the Commission and the NEPAD Planning and Coordination Agency (NPCA), in partnership with UNECA, AfDB, and ACBF to validate and integrate the recommendations of the:
i) Domestic Resource Mobilisation Strategy into the National Financing mechanisms / frameworks;
ii) Capacity Assessment Study into the curricula (education systems) at different levels to make education system responsive to the National, Regional and Continental needs;
8. REQUESTS the Commission to report on the implementation of this decision regularly to the Assembly, through the Executive Council.
Decision on the Mekele Retreat of the Executive Council
The Executive Council,
1. TAKES NOTE of the outcomes of the Retreat of the Executive Council held in Mekele, Ethiopia on 24 and 25 January 2016;
a) The Africa We Have, The Africa We Want
2. UNDERSCORES the paradox that Africa is rich, yet Africans are poor remains the burning issue that the current African leaders and people must resolve, as we implement Agenda 2063, as acknowledged by the Bahir Dar retreat;
3. REQUESTS the Commission to:
i) Ensure with the NEPAD Planning and Coordination Agency (NPCA), and in collaboration with the United Nations Economic for Africa (UNECA), the African Development Bank (AfDB) and Member States that the First Ten Year Implementation Plan of Agenda 2063 integrates the centrality of African unity, ownership and, resolve to advance and defend continental aspirations and priorities;
ii) Organise another retreat before the next ordinary session of the Executive Council scheduled for July 2016, to allow for in-depth discussions on the paradox of rich Africa, poor Africans as well as on changing mind-sets and other relevant issues.
b) On domestication of Agenda 2063 and its First Ten-Year Implementation Plan
4. TAKES NOTE of the progress made in the domestication of Agenda 2063 and its First Ten Year Implementation Plan (FTYIP);
5. UNDERSCORES the importance of participation of African people, in all their sectoral and other formations, for implementation of the continental mission, and REQUESTS Member States, the Commission and NPCA, the Pan African Parliament, the Economic, Social and Cultural Council (ECOSOCC) and other AU Organs and institutions as well as the Regional Economic Communities (RECs), to continue popularizing the Agenda 2063 aspirations, priorities and flagship programmes;
6. URGES Member States that have not yet started domestication, to do so and REQUESTS the Commission to continue to provide support on the same, and report on the conclusions of domestication to the ordinary session of the Executive Council scheduled for July 2016;
7. REQUESTS the Commission and all other AU Organs, RECs and continental institutions to align their Strategic and Master Plans to the FTYIP and ensure maximum coordination in its implementation, in the spirit of complementarity and subsidiarity;
8. ENCOURAGES Member states and RECs to strengthen national and regional planning systems to drive implementation by establishing national focal points, and for government wide mainstreaming, and domestic resource mobilisation and allocation;
9. RECOGNISES the convergence between Agenda 2063 and the Sustainable Development Goals (SDGs), and the work done by the Commission to embed the seventeen (17) SDGs in the FTYIP, and in its results and monitoring and evaluation framework;
10. TAKES NOTE of the following:
i) Progress in the development of the Monitoring, Evaluation and Framework for Agenda 2063, and WELCOMES the measurement framework by the African Statisticians-Generals on the Strategy for Harmonization of Statistics in Africa, for the FTYIP;
ii) The report by the African Capacity Building Foundation (ACBF) on ‘The Assessment of Internal and External Risks associated with the implementation of the AU’s Agenda 2063’ and the mitigation strategies proposed therein.
11. REQUESTS the Commission to gather reports from Member states and to present a progress report to the 2nd Bahir Dar Ministerial Follow-up Committee on Agenda 2063 to be held before the next ordinary session of the Executive Council scheduled for July 2016.
c) On Agenda 2063 flagship projects
12. TAKES NOTE of the progress report of the Commission on the flagship projects, and REQUESTS the Commission to fast-track development of the proposals to catalyse implementation of Agenda 2063 and facilitate integration.
d) On capacities for implementation of Agenda 2063
13. TAKES NOTE WITH APPRECIATION of the comprehensive report on Capacities for Implementation of Agenda 2063 by the African Capacity Building Foundation (ACBF) commissioned by the Commission;
14. ACKNOWLEDGES the role of ACBF in strengthening African capacities, through its programmes with AU Organs including the Commission, the RECs and Member States and PLEDGES the support of Member States to ensure that ACBF is strengthened, and CALLS ON continental and international partners to continue to provide financial support to ACBF in pursuance of its mandate;
15. CALLS ON Member States to urgently develop a continental initiative on Critical Technical Skills, and to prioritise investments in the development of skills, especially in the Science, Technology, Engineering and Mathematics (STEM) areas, essential for implementing Agenda 2063, including vocational skills and trade technicians, as well as the design and management of large-scale projects.
e) On free movement of people and the African passport
16. WELCOMES the report of the Commission on this issue, including the lessons from countries such as Rwanda, Seychelles, Mauritius, the Islamic Republic of The Gambia and the Regional Economic Communities (RECs) such as the Economic Community of West African States (ECOWAS), the East African Community (EAC) and the Southern Africa Development Community (SADC) on free movement of people, and the process outlined towards the adoption of a Protocol on Free Movement of People by January 2018;
17. REAFFIRMS its commitment to free movement of people and goods, and of Africans having free access to all AU Member States, as amongst the enduring project of Pan Africanism and African integration, and that its benefits include facilitating tourism, intra-African investments and trade, people to people integration and cooperation, and the circulation and utilization of skills in the continent;
18. URGES all Member States to adopt:
i) Necessary measures to ensure the issuance of Visas on arrival for citizens of AU Member States with the option to stay in a Member State for up to thirty (30) days. NOTING, however, the concerns raised with regards to security and the threat of terrorism and international crime, ACKNOWLEDGES the need to develop parameters to deal with those concerns, and ENCOURAGES all Member States to continue to work with security and intelligence agencies on this and other related matters with a view to availing the facility of issuance of Visas on arrival for citizens of Member States as soon as practically possible;
ii) The process outlined towards the adoption of a Protocol on Free Movement of People by January 2018, which should come into immediate effect in Member States.
19. REQUESTS the Commission to present the ordinary African passport to Heads of State and Government at the next ordinary session of the Assembly scheduled for July 2016 and the passports for other categories such as Foreign Ministers, Heads and staff of AU organs, and Members of the PRC.
f) On tourism and wildlife conservation
20. REQUESTS the Commission, to ensure the following, to achieve the goal of making Africa the preferred tourist destination, of both African and global tourists, and building a strong Brand Africa:
i) Allocation of adequate resources to tourism activities in the Commission budget and mobilise support of all stakeholders in the continent, including international partners like the United Nations World Tourism Organization (UNWTO);
ii) The elaboration of a continental Tourism policy and strategy as a priority activity, and mainstreaming of tourism in Agenda 2063 and other AU programmes, and to advocate for greater investment in tourism;
iii) Convene the Ministers responsible for Tourism before the end of 2016 or beginning of 2017 within the framework of the relevant STCs, to review progress and provide guidance.
21. UNDERLINES as follows
i) Wildlife, through ecotourism, is and can be, a source of revenue if properly and sustainably managed;
ii) The importance of conservation as it benefits local communities, including women.
22. DECIDES that poaching, illicit trade in wildlife products and bio-piracy should be vigorously combatted and CALLS FOR a review of the total ban for acceptable social and economic gains.
g) On the comparative study on the African Union working methods and streamlining business of Summits
23. TAKES NOTE of the Report on the Comparative Study on the Working Methods of the African Union (AU) and the Streamlining of the AU Summits and ENDORSES the recommendations contained therein;
24. URGES Member States to:
i) Expedite the ratification of the revised Protocol on the Pan-African Parliament (PAP) adopted in Malabo, Equatorial Guinea in June 2014 in order for its speedy entry into force and REQUESTS the Commission to distribute the Malabo Protocol to Member States after the Retreat;
ii) Implement in collaboration with the Commission, the Assembly decisions on the working methods of the AU.
25. REQUESTS the Commission to establish an internal Technical Committee to study the recommendations contained in the study and facilitate implementation of Decision 582 (XXV) adopted by the 25th Ordinary Session of the Assembly in Johannesburg, South Africa in June 2015 and report to the next ordinary session of the Executive Council through the Ministerial Follow-Up Committee on the Implementation of Agenda 2063.
h) On the renewal of the mandate of the Bahir Dar Ministerial Follow-up Committee on Agenda 2063
26. RECALLS the decision of the Executive Council endorsed by the Assembly on the 1st Bahir Dar Ministerial Follow-up Committee, composed of Cameroon (Central), Rwanda (East), Algeria (North), Angola (South) and Ghana (West), the outgoing and incoming Chairpersons of the Executive Council, namely Zimbabwe and Chad as well as the AU Commission Chairperson, the Chairpersons and Executive Secretaries of the 8 RECs, the CEO of the NEPAD Planning and Coordination Agency, the Executive Secretary of the United Nations Economic Commission for Africa (UNECA) and the President of the AfDB, that the membership be renewed every two (2) years to allow for rotation and regional balance;
27. ENDORSES the Mekele Retreat recommendation for membership of the 2nd Bahir Dar Ministerial Follow-up Committee as follows: the five (5) rotating regional representatives are Cameroon (Central), Rwanda (East), Algeria (North), Namibia (South) and Burkina Faso (West). The other Members of the Committee shall remain as listed in the above paragraph 26.
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Acting now to end hunger in Africa by 2025
The international community’s adoption of the 2030 Sustainable Development Agenda has positioned the food and agriculture sector as a catalyst for achieving inclusive global growth and eradicating poverty and hunger.
Africa is well placed to attain the universal set of goals. African Heads of State and Government have courageously agreed to eradicate hunger by the year 2025. This is a great challenge – as Africa has aimed higher – but also a great opportunity.
The next few years will thus be crucial for Africa if we are to go down in history as the Zero Hunger Generation.
Under the theme ‘’Transforming African Agri-food systems for inclusive growth and shared prosperity,’ FAO will meet with the continent’s agricultural leaders during its biennial regional conference taking place in Abidjan, Côte d’Ivoire on 4-8 April 2016.
This is a timely event, for a number of reasons.
First, it draws on the momentum created by the 2014 Malabo Declaration through which African leaders called for a fundamental shift in the continent’s agricultural and rural development, in line with the aspirations of Africa’s Agenda 2063, which emphasizes unity, self-reliance, integration and solidarity.
Also in 2014, African nations joined all other states in adopting the Rome Declaration and its related Framework for Action at the Second International Conference on Nutrition.
Second, FAO’s Regional Conference also comes hard on the heels of the recent COP 21 climate change agreement, which presents Africa with numerous opportunities to develop its climate adaptation and mitigation responses.
Africa is already feeling the impacts of climate change, including an increase in the severity and frequency of droughts, floods and other extreme weather events. A clear example of this is the current El Niño with its devastating effects on the livelihoods of farmers and agro-pastoralists in Eastern and Southern Africa.
Climate change will also increase the risk of transboundary plant and animal pests and diseases, which will need control and adequate responses.
A number of other challenges lie ahead that the continent’s leaders must embrace and turn into opportunities.
It is expected that more than half of the projected global population growth between now and 2050 will occur in Africa – adding 1.3 billion people to the continent’s population.
African agriculture markets are projected to surpass US$1 trillion over the next thirty years. These demographic and economic trends represent both a huge opportunity and a challenge for African Agriculture and the agri-food system.
By investing in African food systems, on the way we produce, collect, store, transport, process, package and distribute foods, we can produce the food Africans eat and create a dynamic sector that generates jobs and livelihoods for our youth.
By investing in African institutions to educate people, to establish and rigorously apply food standards and to monitor food safety, we can improve our diets and our health and create a more nutritious food system.
African governments will need to reengage in the systematic implementation of sound rural development policies and programmes that maximize opportunities for young people, family farmers, strengthen their capacities, and facilitate access to sustainable technologies and productive resources needed to drive broad-based growth in the agricultural sector and rural economy.
Africa currently imports US$50 billion in food. Persistent food import dependency remains a serious problem for many African countries, especially as high food import bills take money away from other important development agendas without resolving food insecurity.
Dependence on food imports should not be the rule. Africa has the potential to be not only self-sufficient but also to become a major food exporter to the rest of the world.
To feed itself, Africa needs to build on its regional integration potential. There is significant scope for expanding intra-regional trade of strategic food commodities. Strong sub-regional institutions and consistent, predictable trade policies and regulations are critical elements for increased movement of goods between countries.
Thanks to the impetus provided by the New Partnership for Africa’s Development and the Comprehensive Africa Agriculture Development Programme, it is now widely agreed that enhancing intra-African trade holds a key role for overcoming Africa’s food import dependency and food insecurity problems.
Actions taken by African leaders are essential, and so are actions by the rest of the world. Sustained political commitment at the highest level is necessary so that any growth recorded on the continent reaches the poorest and the most vulnerable.
South-South Cooperation provides an important way through which developing countries can help each other to bridge the technological gap that exists in food production, agriculture and the rural economy in general.
In Abidjan, we will invite all conference participants to promote the African Solidarity Trust Fund – an important instrument of South-South Cooperation – and to partner in sharing expertise and best practices in agriculture as well as financial resources.
Eradicating hunger by the year 2025 and achieving the SDGs by 2030 require targeted and innovative interventions, including food, health and sanitation assistance, social protection, education and training and improved infrastructure – all with a special focus on the most vulnerable. This will create the “virtuous cycle” of local development, leading to food security and improved nutrition.
This can happen only if women in Africa are empowered and put at the front line of development efforts, then Africa can be freed from hunger and also obtain better nutrition.
FAO, for its part, with its available expertise and resources, stands ready to support Africa in achieving its priorities in firm collaboration with the African Union, other regional institutions, and humanitarian and development partners.
Now is the time for African leaders to act together. By doing so, they can ensure that their continent can achieve, in a sustainable and environmentally sound way, a better future for all.
The writer is the Director-General of the Food and Agriculture Organization of the United Nations (FAO). The article was written on the occasion of the 29th Session of the FAO Regional Conference for Africa (4-8 April 2016, Abidjan).
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Food gap widens in conflict-stricken South Sudan – UN assessment
2016 cereal deficit about 53 percent higher than in 2015; food prices soaring as markets collapse
Civil strife and unfavourable rains have further reduced crop production in South Sudan, contributing to a cereal deficit of 381,000 tonnes – 53 percent greater than in 2015 – and aggravating the already severe food shortages, two UN agencies warned on 5 April 2016.
Cereal prices have shot up nearly five-fold since early last year, making it increasingly difficult for people to get enough to eat, according to a new joint Crop and Food Security Assessment Mission report by the Food and Agriculture Organization of the United Nations (FAO) and the World Food Programme (WFP).
The crisis in South Sudan is marked by alarming levels of hunger. Some 5.8 million people, or nearly half of the country’s population, are unsure where their next meal will come from, while the rate of severe food insecurity has now reached 12 percent, double the rate of one year ago.
“South Sudan is facing a deadly blend of conflict, economic hardship and poor rains. Together, they are worsening a hunger gap that we fear will force more people to go hungry and increase malnutrition,” said WFP Country Director Joyce Luma. “This report makes it clear that improving the food situation requires a peaceful resolution to the conflict.”
“Food insecurity has spread to areas previously considered relatively stable, highlighting the cumulative impact of conflict, economic downturn and climactic shocks,” said Serge Tissot, FAO Representative in South Sudan.
Localised production failure, markets paralyzed by crisis
South Sudan’s cereal shortfall is mainly the result of unfavourable rains in parts of the Bahr el-Ghazal and Equatoria states and disruptions to cropping activities caused by worsening insecurity.
South Sudanese families are forced to cope with soaring cereal prices, which are driven by a combination of the sharp devaluation of the local currency and higher transport costs.
Links between cereal-producing areas – mostly in the Equatoria and Bahr el-Ghazal states – and main markets have become extremely difficult due to heightened insecurity, a proliferation of roadblocks and exorbitant ad hoc taxes levied on commercial transporters along major trade routes.
“Despite huge potential for agricultural production – more than 90 percent of South Sudan’s land is arable – just 4.5 percent of available land was under cultivation when the country gained independence in 2011. Now, after over two years of civil war, this percentage has significantly decreased due to widespread insecurity, damage to agricultural assets and limitations in traditional farming methods,” said Tissot.
“Yet crop production is possible in the stable areas within conflict-affected states, and is more important than ever. Communities cannot rely on markets or aid deliveries for food, and therefore need to produce on their own,” he added. “FAO is working with farmers, fishers and herders, providing them with emergency livelihood kits, seeds, tools, animal health support and training.”
Bridging the food gap
The report makes a series of recommendations for immediate action to address hunger, strengthen domestic food production and reduce the food gap in 2016 and into next year.
Most urgent is the need for an immediate improvement of security across the country. In addition, agencies like WFP, FAO and partner organizations need sustained access and resources to provide targeted food and livelihood assistance to the very vulnerable households in areas with the highest levels of food insecurity, especially in parts of Greater Upper Nile and Eastern Equatoria. Where appropriate, provision of livelihoods assistance – such as seeds or tools – that allow communities to produce their own food is required to withstand market disruptions. Improving people’s access to micronutrient- and protein-rich food could be achieved through the distribution of fishing kits and use of nutrition vouchers to be traded for locally sourced vegetables, fish and milk.
Other recommendations include: supporting the 2016 cropping season across all of South Sudan by ensuring access to agricultural and fisheries inputs; strengthening farmer and pastoral field schools; expanding veterinary campaigns aimed at keeping people’s livestock healthy; and, in conflict-affected areas, assisting in re-establishing livelihoods whenever possible by helping in land preparation and access to inputs.
In 2016, FAO and WFP, together with their partners, will support efforts that aim to increase food availability, strengthen livelihoods and build resilience.
Under the 2016 Humanitarian Appeal, FAO appealed for $45 million to assist 2.8 million people with seeds, tools and other inputs to produce food and keep their livestock healthy, and strengthen the Government’s efforts to boost food security. The current funding gap is 16.1 million to meet this goal.
WFP plans to provide food assistance and specialized nutrition support for about 3 million people in South Sudan in 2016, but has a funding gap of $241 million for the next six months.
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Imports of cheap crude palm stifle Uganda’s oilseed farming
The Kazimingi area of Jinja, once designated as Uganda’s industrial hub, is today a shell of rusty disused oil mills and crumbling buildings – testimony to a bygone era, when smallholder farmers prospered by growing cotton and other oil seeds to feed the mills.
Kazimingi is just one of the many ghost towns spread all over Uganda – towns that were built around an oil seed industry that no longer exists. Since the early 1980s, Uganda has been struggling to revive its vegetable oil industry to satisfy both immediate consumer demand and revive a domestic value chain.
At least four big millers – Mukwano, Bidco, Nile Agro and Tasco – have set up big vegetable oil processing plants in the country. But while they have the capacity to convert locally produced oil seeds, the lure of cheap value addition from imported southeast Asian crude palm means local farmers are still in limited.
According to recent Customs data, Kenya, Tanzania and Uganda spent $2.2 billion on crude vegetable oil imports between 2013 and 2015. Kenya led with imports of $1.14 billion, followed by Tanzania and Uganda at $604 million and $462.3 million respectively.
Independent policy analysts argue that of these three countries, two Uganda and Tanzania could save close to $500 million in foreign exchange annually if they substituted imports with locally produced oil seeds such as sunflower, soya, sesame and maize. This would also have a positive impact on the social status of communities because as much as 30 per cent of that value would be retained by producer communities, according to some estimates.
They further say that if duty were imposed on palm oil, which is currently zero-rated, and the farmers and manufacturers given incentives, East Africa could soon be growing its own oilseeds and developing a vertically integrated vegetable oil industry.
Under the current situation, much of the profits from the vegetable oil trade go to just two firms – Wilmar (an associate of Bidco) and Louis Dreyfus Commodities. The two control bulk liquid storage for crude palm oil in Mombasa and Dar es Salaam ports. Most of the unaffiliated oil millers buy their supplies of crude palm oil from these two firms, which both have palm plantations in Malaysia and Indonesia.
Storage facilities
“Their model is to supply from their own plantations because they have a monopoly of local storage facilities. There is neither a level playing field nor any initiative to create an oilseed platform in East Africa,” said an industry player.
Louis Dreyfus Commodities declined to answer our questions while our calls to Bidco went unanswered.
“Unfortunately, I am unable to give any comments on our business to the media,” Louis Dreyfus Commodities oilseeds manager for East Africa Anthony Kariuki wrote in response to our enquiries.
For a decade now, Uganda has attempted to substitute imports with a massive palm oil project on the Ssese Islands of Lake Victoria.
Wilmar and Bidco are partners in Oil Palm Uganda Ltd, the company that in 2003 signed a 25-year concession to develop a 40,000-hectare oil palm estate in Ssese. Of this, 26,500ha was supposed to be a nuclear estate run on the company while smallholder farmers would grow oil palm on the rest.
About $120 million was committed to the first phase that included the processing plant in Jinja. Wilmar holds a 60 per cent stake in Bidco Uganda.
At current consumption rates, an estate of that scale will at full production account for 40 per cent of Uganda’s vegetable oil needs but Oil Palm Uganda has so far developed only 6,500ha, which at peak will yield 20,000 tonnes of refined vegetable oil.
Analysts question whether that output matches the economic and social costs of the project. While Bidco delivers 20,000 tonnes, it is allowed to import 100,000 tonnes of unrefined vegetable oil from Wilmar’s plantations in Southeast Asia.
The company was given exemption from corporate tax for the 25-year duration of the project on production from its Ugandan estate with VAT deferred for 12 years starting 2003. With an open licence to import from its mature and cheap estates, however, some wonder if Wilmar has sufficient incentive to grow the business in Uganda.
Activists also argue that in promoting oil palm, the government ignored alternatives with a better multiplier effect on the economy and a smaller environmental impact.
Frank Muramuzi, head of the Friends of Earth Uganda chapter, says the country’s decision to promote palm oil over other alternatives, is a poor one when the environmental and social costs are factored in.
“A lot of biodiversity has been lost and hundreds of millions of dollars in revenue foregone in tax incentives yet there is no obligation on the investor to give anything back to the community. Replacing natural forest with plantation palm was a bad choice. Worse, the people who were economically displaced by the project have not received adequate compensation,” he said.
“There are two ways of looking at it,” said a medium-scale oil miller in eastern Uganda. “Palm can employ thousands while Oilseeds can employ millions. Look at Brazil and Argentina. Why are they pushing for oilseeds and not palm? The way to go is to promote smallholder farmers as opposed to large plantations,” he added.
Furthermore, besides other industries such as textiles that can develop as spinofts from cotton seed production, for instance, a robust animal husbandry industry can be developed based on the byproducts from processing oil seeds into edible oil.
Until mid-October 2015, East African currencies were under siege as a resurgent US economy saw the local units rapidly erode against a bullish greenback. The Ugandan currency lost close to 30 per cent of its value against the US dollar between January 2014 and August 2015. Economists blamed this on the huge gap between the country’s exports and imports.
Trade deficit
“The trade deficit in goods and services has almost tripled since 2005/06, from $1 billion in that year to nearly $3 billion in 2014/15. In the past fiscal year, the trade deficit was 12.6 per cent of GDP. It is forecast to reach $3.9 billion in 2017/18,” Bank of Uganda Deputy Governor Dr Louis Kasekende told a forum on Directions, Prospects and Challenges for the Ugandan economy” at Makerere University last November.
Robert Kanusu, a political leader in Uganda’s Busoga region argues “our governments need to wake up and support the development of indigenous vegetable oil value chains or East Africa will continue to bleed foreign exchange. The first step should be to acknowledge that we have been spending billions on edible oil, then work out a detailed plan to establish an oil platform.”
Connie Masaba, the manager of the vegetable oil development projects in the Ministry of Agriculture said: “We are promoting both oilseeds and palm but palm oil is preferred because it is 10 times more productive per unit area than oil seeds. Besides, it is a perennial crop and unlike oilseeds, once planted, it does not compete with other crops for land yet you would need a lot of land to achieve a comparable output.”
According to her, a hectare of palm in Uganda can yield 3-4 tonnes of crude palm oil per annum, which cannot be matched by oilseeds. She said Uganda’s long-term strategy should be expansion of palm growing beyond the Ssese Isles to areas around Lake Victoria in Mayuge and Jinja districts.
That aside, Ms Masaba said, the government policy is to promote both palm and oil seeds. Oilseeds are being promoted in eastern and northern parts of Uganda but beyond the efforts of private miller Mukwano Group to establish a value chain around sunflower, government backing is not visible. For instance, of the $53 million IFAD committed to the Uganda vegetable oil programme, just $1 million was given as a grant for oilseeds.
According to Ms Rowena Matovu, co-ordinator for the oilseeds project at SNV Netherlands, the key challenge for oil seed development has been the absence of sustained market opportunities.
“The private in the oilseed sub-sector is still reluctant to invest because there is no guarantee that benefits will accrue directly to them. This means that poverty reduction is slowed down where necessary investments are not taking place,” she said.